Sitting of 21 March 1977

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

    USSR (Credit)
    Mr. Blakerasked the Secretary of State for Trade how much of the Anglo-Soviet line of credit of £950 million arranged in 1975 has been taken up at the lastest available date; and if he will make a statement.
    Mr. Hooleyasked the Secretary of State for Trade what major contracts have been secured by British companies for the supply of goods or equipment to the USSR under the £1,000 million line of credit negotiated in 1975; and what is the aggregate total value of these contracts.
    The Secretary of State for Trade (Mr. Edmund Dell): Signed contracts concluded within the terms of the Anglo-Soviet Agreement in 1975 total £188 million. Other major contracts are under negotiation and I have every expectation that more contracts will be concluded. It is not customary to identify the contracts placed under this agreement.
    Mr. Blaker: Is the Secretary of State aware that the distinguished Soviet exile Andrei Amalrik has made the point that, by transferring resources to the Soviet Union by means of generous credits of this kind, the West is helping the Soviet Union to maintain its police State?
    Mr. Dell: We are simply competing with credits given by other Western countries. It is necessary to do so if we are to get business with the Soviet Union, and it is our wish to build up trade with the Soviet Union. That seems to us to be the right objective.
    Mr. Hooley: Is my right hon Friend aware that these figures show how important trade is with the Soviet Union and how many jobs depend on the expansion and development of that trade?
    Mr. Dell: It is certainly true that many jobs depend on this trade. I must say, however, that I am disappointed about the speed with which trade under this agreement is being negotiated and I shall certainly look for a considerable improvement over the next few months.
    Mr. Churchill: Can the Secretary of State confirm that not one penny of profit will accrue to Britain under any contract placed as a result of this line of credit? Furthermore, can he deny that approximately 50 per cent. of the total production costs of anything that the Soviets purchase under this agreement will be footed by the British taxpayer?
    Mr. Dell: I cannot confirm either of the facts which the hon. Gentleman suggests. These contracts bring employment to this country, and I do not think that the firms concerned will enter into them if they do not think it worth while to do so.
    Mr. James Lamond: Is my right hon. Friend's wish for an improvement in this position likely to materialise now that the most recent five-year programme in the Soviet Union has started? Is it not necessary for us to make it as easy for our industrialists to sell things to the Soviet Union as other countries in Europe are doing, in an effort to build up trade and friendship with the Soviet Union?
    Mr. Dell: I am sure that it is necessary, if we are to get business with the Soviet Union, for us to grant competitive credit terms. I hope that my hon. Friend is right in suggesting that perhaps further business will be coming under the five-year plan. Certainly we shall look for further business. We were assured by Mr. Gromyko last year that it was the intention of the Soviet Government to put business up to the limit of this agreement, and we are disappointed that nothing like that has yet been achieved.

    Export Promotion
    Mr. Frank Allaunasked the Secretary of State for Trade if he will expand

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    the governmental export promotion sales organisation and staff.
    Mr. Dell: The export promotion organisation of my Department is adjusted, when necessary, in consultation with the British Overseas Trade Board, which advises me on the resources needed to provide appropriate services and promotional aids for exporters.
    Mr. Allaun: Will my right hon. Friend and the Secretary of State for Defence switch the 390-strong Defence Sales Organisation to promoting non-military engineering and other exports? Will my right hon. Friend take into consideration the policy of President Carter that commercial matters should not be the only grounds for considering exports but that peace should also be taken into account, since war would cost us far more than the loss of a few arms orders?
    Mr. Dell: As my hon. Friend knows, defence sales are under the control of the Defence Sales Organisation and my right hon. Friend the Secretary of State for Defence. Non-military exports, on the other hand, are sponsored by my Department, and I will consider the resources that are necessary for assisting these exports in accordance with our judgment of the requirements. As I say, we shall adjust the resources devoted when we think it necessary.
    Mr. Michael Morris: Is the Secretary of State aware of the grave dissatisfaction of exporters with the recent changes in the policy of the British Overseas Trade Board with regard to joint venture schemes in outward bound missions? Will he have another look at these changes? In any case, is it not time now, Wednesday aside, for publication and review of all our export services?
    Mr. Dell: The hon. Gentleman knows that a review is going on of many matters in that area. As for the grave dissatisfaction of exporters, the British Overseas Trade Board was asked by me to make certain savings in connection with the public expenditure cuts last year, and it assured me that it could do so without affecting the main thrust of its activities. I do not think it should be asumed that all expenditure in promoting exports is cost-effective. We give far more assistance in joint ventures and overseas trade fairs than the great majority of our main
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    industrial competitors. I am satisfied that we are giving the help that is required.

    Import Controls
    Mr. Anthony Grantasked the Secretary of State for Trade which industries he is considering to subject to selective import controls.
    Mr. Dell: The Government are ready to use temporary selective import controls to protect any normally viable industry which is suffering serious injury as a result of increased imports.
    Mr. Grant: Assuming for a moment that the Government continue in office, will the right hon. Gentleman beware that in any protectionist war foreign competitors carry a much bigger clout than we do? In particular, is the right hon. Gentleman aware that in the paper industry there are three important lines of imports which British producers cannot produce in sufficient quantities? Will he remember the interests of the consumer in all this?
    Mr. Dell: The interest of the consumer is one matter that has to be considered. The Government have made public their position on import controls. Our policy is well known, it has been discussed in the House repeatedly, and I have no change to announce today.
    Mr. John Garrett: Does my right hon. Friend agree that the hardest hit of all industries, by foreign countries, and the fastest declining, is footwear, and that the industry has every right to expect greater protection against foreign countries than it has had so far?
    Mr. Dell: We control imports of footwear from Eastern Europe, and we have duties on, for example, Brazilian footwear. I am aware of the problems of the footwear industry, and we have taken action to give it protection. On the other hand, in our relations with Eastern Europe there are other considerations that have to be taken into account, and one is our exports to those countries.
    Mr. William Shelton: Is the right hon. Gentleman satisfied with the criteria by which dumping is established, and is he happy with the proposed transfer to Europe in the next month or two of responsibility for anti-dumping regulations?
    Mr. Dell: The criteria for dumping are laid down both in our own legislation and in the GATT anti-dumping code. We have been using that legislation more rapidly and more effectively in recent months than ever before, and I think that there have been some expressions of satisfaction from industry on that account.
    As for the transfer of responsibility on 1st July to the European Commission, the House knows that last year I discussed this matter with Sir Christopher Soames, and more recently I discussed it again with Vice-President Haferkamp to make sure that they are aware of the need to build up staff in Brussels to handle the case load that they will face when the transfer takes place. It is the intention to maintain a unit in my Department to assist in the investigation of anti-dumping cases.
    Mr. Ronald Atkins: Is my right hon. Friend aware that the Department of Applied Economics at Cambridge has again come out in favour of selective import controls as a safeguard in a necessary expansion of the economy, which is the only way to prevent unemployment rising to more than 2 million?
    Mr. Dell: Although the department has kindly sent me a copy of its report, I have not yet had an opportunity of reading it in full. My impression is that, unlike my hon. Friend, it wants not selective import controls but general import controls. I think that would involve dangers, to which attention has been drawn on many occasions. If the forecasters, including those forecasters, are right in suggesting that this country will shortly be moving into a balance of payments surplus, it will make it even more difficult to use the sort of policy instrument recommended by Cambridge.

    England and Scotland
    Mr. Crawfordasked the Secretary of State for Trade if, following the work being done by the Scottish Council Research Institute on the input-output model of the Scottish economy, he will re-examine the feasibility of his Department's conducting a survey into the value of cross-border trade, including food and drink, between England and Scotland.
    The Under-Secretary of State for Trade (Mr. Michael Meacher): No, Sir. The Department of Industry is already sponsoring a research project which is concerned with assessing the merits of alternative methods of estimating trade flows between different areas in the United Kingdom, including those between Scotland and England. The suggested survey would still entail substantial official costs on top of additional commercial costs which we do not think would be justified.
    Mr. Crawford: Does not the Minister's reluctance to initiate such a study show that he and his Department are frightened of the possible results, and that they do not wish the people of Scotland to know that Scotland's trade is basically in balance, unlike England's?
    Mr. Meacher: I take it that the evidence on which the hon. Gentleman purports to make his case that Scotland is in balance is drawn from an article by Michael Fry which appeared in the Scotsman on 14th February, which suggested that the preliminary results of the Scottish Council Research Institute's input-output project suggested that Scotland was in balance in 1973. The directors of the project said afterwards that the article was based on incomplete data, which was subsequently misinterpreted. There is, therefore, nothing in the hon. Gentleman's case to answer.
    Mr. Canavan: Is it not true that cross-border trade in drink has been greatly improved by the bevy of SNP Members in this House?
    Mr. Meacher: I am sure that members of the SNP have made their contribution to the £300 million or more earnings from Scotch whisky.
    Mr. Alexander Fletcher: Is the hon. Gentleman aware that this is part of the SNP's campaign to create physical barriers between Scotland and 'England, including Customs posts and other impediments to the free movement of capital, goods and, indeed, people? Will the hon. Gentleman investigate whether, because of this alarming propaganda by the SNP, its prominent supporters, such as Sir Hugh Fraser, are selling out in Scotland and investing funds in London and elsewhere?
    Mr. Meacher: I do not think that anyone, other than members of the SNP, allows his political fantasies to run away with him and ingnore the hard-headed economic facts of interdependence between Scotland and England.

    Concorde
    Mr. Tim Rentonasked the Secretary of State for Trade what representations he has received in the light of the New York Port Authority's decision regarding landing rights for Concorde in New York.
    Mr. Neubertasked the Secretary of State for Trade what efforts his Department is making to back up the efforts made by British Airways and Air France to obtain landing rights for Concorde at New York.
    Mr. Adleyasked the Secretary of State for Trade if he will make a statement on the question of Concorde's landing rights at New York.
    Mr. Dell: The Port of New York Authority decided to postpone its decision so that it could consider any new proposals on how the noise impact of Concorde on local communities could be reduced. Its next meeting is on 14th April. The court hearing has been postponed, but a new date will be set this week.
    Mr. Renton: Will the right hon. Gentleman confirm that if by any unlikely chance the Government are still in office in June they will not sign a new Bermuda Agreement until the American Government have lived up to their obligations under the present one and have ensured New York landing rights for Concorde?
    Mr. Dell: We shall sign a new agreement on 22nd June, or before, if we negotiate a new agreement that is satisfactory to us. Among the problems with the existing agreement, as the hon. Gentleman suggested, is that we have not been able to obtain our true rights in respect of landing Concorde in New York. There are many problems about the current agreement and many improvements that we could make. If we can get a satisfactory agreement, we shall sign it.
    Mr. Neubert: Will the right hon. Gentleman confirm today's report in an American newspaper that, whereas the
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    French Government have spent more than $2½ billion on the promotion of Concorde in the United States, our contribution has been only $100,000? As we each have a stake in the commercial success of Concorde, is there not a danger of our spoiling this aircraft for a penn'orth of tar?
    Mr. Dell: I do not think there is any doubt about the commercial success of Concorde at Washington. There is no doubt that it would be a commercial success if it was allowed to fly into New York. That is not the issue. The issue is obtaining our rights to secure admission for this aircraft to New York.
    Mr. Adley: Is the right hon. Gentleman aware that in a Written Answer to me last Thursday the Foreign Office said that
    "a party to a treaty may not invoke the provisions of its internal law as justification for its failure to perform a treaty."—[Official Report, 17th March 1977; Vol. 928, c. 305.]
    Is not that precisely what President Carter is doing? In that case will the right hon. Gentleman consider, as part of his renegotiation of the Bermuda Agreement, taking action specifically against New York, not against other United States cities, and withdrawing traffic rights between New York and Britain, and New York and France, until this aeroplane is accorded the rights to which it is entitled under the treaty?
    Mr. Dell: I do not think it would be right at this time to talk about the steps we might take in certain circumstances if we do not secure admission to New York. As the hon. Gentleman knows, and as I said in my answer, there is a further meeting on 14th April. We have a court case outstanding under which we can proceed. It is entirely premature to make the sort of threats that the hon. Gentleman invites me to make.
    Mr. Terry Walker: Has my right hon. Friend had any chance to speak to his right hon. Friend the Secretary of State for the Environment about the report in yesterday's newspapers concerning the Noise Advisory Council's report on Concorde being made available to the New York Port Authority? Would he care to comment on that?
    Mr. Dell: I have had an opportunity of talking to my right hon. Friend about this. The question which is the basis of

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    this matter in New York is whether Concorde can meet the noise requirements of Kennedy Airport. We believe that it can. We believe that that has been demonstrated to the New York Port Authority. We see no justification for its keeping Concorde out of New York.
    Mr. McCrindle: Is the Secretary of State able to tell the House whether the load factor on the Concorde route between London and Washington has been above or below expectations and, at the same time, whether the level of complaints from those living around Dallas Airport has likewise been above or below expectations?
    Mr. Dell: We have been favourably surprised by the low level of complaints from people living around Dallas Airport. The hon. Gentleman knows that Concorde has been operating to Washington at a satisfactory level of capacity. Whether that is below or above the expectations of British Airways I would not like to say.
    Mr. Walter Johnson: Is not my right hon Friend aware that what angers the British people about this situation is that if the Americans had been first in the field with supersonic aircraft we would have been expected to receive this aircraft with open arms? Is this not a case of sour grapes on the part of the Americans?
    Mr. Dell: I certainly think that my hon. Friend is right in suggesting that if the aircraft was American we would have been expected to receive it in London. I welcome the statements which have been made by various aircraft manufacturers in the United States recently and by others saying that Concorde should be allowed into New York.
    Mr. Channonasked the Secretary of State for Trade what progress he has made on obtaining new routes for Concorde.
    Mr. Hastingsasked the Secretary of State for Trade what supersonic routes for Concorde are at present under negotiation; and whether he will make a statement.
    The Under-Secretary of State for Trade (Mr. Clinton Davis): Apart from New York, we are concentrating our efforts on
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    securing Concorde routes to Melbourne and Tokyo.
    Mr. Channon: Can the Minister say what progress he is making in his negotiations with the Governments concerned response from the Australian Government. ment will take an initiative with the new Government of India on this important matter?
    Mr. Davis: We have had a favourable response from the Australian Government. Negotiations are still continuing with the Indonesians about supersonic overflying rights. The Indian Government have objected in the past, and we shall have to await developments with interest as and when the new Indian Government are formed.
    Mr. Hastings: Is it not true that, whether or not the Indian Government continue to object, there is now no problem over a Far Eastern route? We could start it. Is not such a route vital for the future of Concorde, irrespective of whether we get permission to go to New York? Does not the Minister agree that it is extremely disappointing to see how slowly British Airways seem to be getting this route going? Air France has trained sufficient crews. Why is there a delay here? Will the Minister put pressure on British Airways?
    Mr. Davis: I do not accept that British Airways have been slow in dealing with this matter. There has been an industrial dispute which has slowed up the opportunity to train crews. Matters are not as simple as the hon. Gentleman suggests, because far more crews are needed to deal with the London-Melbourne route than any other route. Nevertheless, I can assure the House that British Airways are proceeding with this issue as rapidly as possible. We must, of course, see what happens with regard to New York, because that situation impinges upon the operation of the London-Melbourne route.
    Mr. Maxwell-Hyslop: Since the Minister has demonstrated that he is powerless to stop Air France flying up the English Channel supersonically and in so doing causing great disturbance, through sonic boom, over South-West England, will he ensure that he does not apply for routes which involve supersonic flying up the English Channel?
    Mr. Davis: I have done my best to keep the hon. Gentleman informed of the progress which is being made over a specific complaint which has affected a substantial number of people. The hon. Member knows, as do other hon. Members, that this matter is being carefully investigated. The flights and the noise are being monitored. I hope that the hon. Gentleman, instead of making constituency points, will recognise that it is not a demonstration of powerlessness on the part of the Government but rather a recognition of the need to investigate this matter in depth before coming up with the sort of simplistic solutions which he has put to me.

    Cotton Imports
    Mr. Ronald Atkinsasked the Secretary of State for Trade what percentage of the home market for cotton textiles is supplied by foreign imports; and how this compares with the previous percentages over the last 20 years given at five-year intervals.
    Mr. Meacher: It is estimated that the share of the home market for cotton yarn, in terms of weight, supplied by foreign imports in 1976 was 25 per cent., and for cotton cloth, in terms of area, it was 62 per cent. The comparable figures for 1959 were 4 per cent. and 31 per cent. respectively. With permission, I will include figures for intervening years in the Official Report.
    Mr. Atkins: Does not this show a serious decline in the Lancashire cotton industry? Is there any hope that the industry will eventually survive? If there is such hope, in which direction must it look for help?
    Mr. Meacher: We believe that through the Multifibre Arrangement we have already brought more help than ever before to the textile industry. We are taking a tough bargaining stance in the renegotiation of the arrangement in Geneva, particularly over cumulative disruption and the downward adjustment of growth rates, which are the two key problems for the textile industry. If we can succeed here—and we intend to try—the textile industry will be in a stronger position than ever before.
    Mr. James Lamond: Has my hon. Friend's Department had the opportunity
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    of examining the level of imports of cotton yarn from India recently? Could he have a look at that?
    Mr. Meacher: The import level of cotton yarn from India is about 20 per cent. I might add that it is exceeded by imports of cotton yarn from the EEC, which are 22 per cent. It is not, therefore, the largest supplier. I am glad to take this opportunity to announce that with regard to Indian hand-loom textiles, exports of which to the United Kingdom enormously increased in 1976, we have, in collaboration with the EEC, managed to secure a substantial cut-back in trade. In the case of woven shirts, which reached a level of 7·6 million pieces in 1976, we are today announcing a cut-back to 5·45 million for 1977. For women's shirts and blouses, which reached a level of 11 million in 1976, we are announcing today a cut-back to 7·4 million pieces. This is a substantial cut-back and I am sure that the House will be pleased to hear of it.
    Following are the details:
    The figures for the intervening years were as follows:

    Cotton Yarn (in terms of weight)

    per cent.

    1961

    8

    1966

    7

    1971

    12

    Cotton Cloth (in terms of area)

    per cent.

    1961

    39

    1966

    39

    1971

    48

    Figures prior to 1959 are not comparable with those for later years.

    Special Steel Imports (Price)
    Mr. Hardyasked the Secretary of State for Trade if he has received evidence that certain imported special steel products are currently offered for sale in the United Kingdom at prices which are well below those applying in the producer countries.
    Mr. Meacher: Yes, Sir. In each case brought to its attention my Department is taking appropriate action.
    Mr. Hardy: Is my hon. Friend aware that when action is taken and is known about in South Yorkshire it will be widely

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    welcomed? Will he confirm that in at least two cases imported special steels are available for sale in Britain at prices 50 per cent. below the price charged in the countries of origin? Will he show urgency in taking action on this issue?
    Mr. Meacher: I have listened carefully to what my hon. Friend has said about a figure of 50 per cent. Our investigations, which are nearly completed, in several areas dealing with imports from different countries show that the figure may be substantially lower. I recognise, however, that there is a significant problem. Dealing first with Japan, which is perhaps the price leader, we have had an understanding on high-speed tool and stainless steels from last September for the first half of this year. In a few days' time we hope that negotiations will begin again in Tokyo for the second half of this year. Similarly, in the cases of Sweden and Austria we are ensuring that there are no breaches in the ECSC rules. In the case of Spain, where we already have a provisional charge on stainless steel imports, we have a full investigation in progress which started last month. We hope to announce the results very soon.
    Mr. Tim Renton: Can the Minister tell the House what he thinks about the latest EEC discussions on general steel imports and whether he agrees that there may be a necessity for minimum prices on a number of steel products and import licences for all imported steels coming into the EEC? Is he taking part in the discussions?
    Mr. Meacher: Of course, we are participating in discussions over the evolution of the EEC's steel policy at this particularly difficult time. I do not think it would be appropriate for me at this point to say exactly what we have proposed or what conclusions we hope will be reached. The considerations that the hon. Gentleman has mentioned are relevant.

    Aircraft Noise (Gatwick)
    Mr. Geoffrey Johnson Smithasked the Secretary of State for Trade what proposals he has for reducing the present maximum noise limits at Gatwick Airport.
    Mr. Clinton Davis: I have no plans to reduce them at present.
    Mr. Johnson Smith: Is it not vital that the noise levels should be progressively reduced in view of the fact that a considerable number of people live within the monitoring points and in fact are closer to the monitoring points and are, therefore, subjected to greater noise than the so-called official noise limits?
    Mr. Davis: I am aware of the noise problem at Gatwick. The hon. Gentleman will know from the consultation document issued on the London airports that there is likely to be, because of the projected increased use of Gatwick, a short-term worsening of the situation. That is unavoidable. On the other hand, he will also know that I have taken steps to restrict very substantially the number of night jet movements during the summer, and there is now a consultative document out to deal with the question of night jet movements at Heathrow and at Gatwick.
    Mr. Molloy: Is my hon. Friend aware that the endeavours of himself and of his Department to reduce noise at Heathrow Airport are very much appreciated, but would he not accept that to suggest the simple transfer of some elements of traffic from one London airport to another is not really constructive? In view of his remarkable endeavours in the past three months, can he state whether any progress has been made in reducing night flights at Heathrow?
    Mr. Davis: The redistribution of noise is always a problem, but it is separate from the need to utilise more effectively the facilities which will become increasingly available at Gatwick, and it is necessary that we should do that.
    On the question of the reduction of night jet noise, only last week I issued the consultative document putting forward the options that are available for dealing with this matter. They comprehend essentially possible closures as far as night jet movements are concerned or gradual phasing out of noisier aircraft while permitting quieter aircraft to continue to operate. These matters should be carefully considered.
    Mr. Johnson Smith: In view of the Minister's highly unsatisfactory answers, I beg to give notice that I shall raise the matter on the Adjournment at the earliest possible moment.
    Mr. Hordernasked the Secretary of State for Trade whether he is satisfied with the arrangements for monitoring aircraft noise at Gatwick.
    Mr. George Gardinerasked the Secretary of State for Trade what are his current arrangements for monitoring the noise levels created at Gatwick Airport as experienced in the main adjacent centres of population.
    Mr. Clinton Davis: The noise caused by each jet aircraft take-off is recorded by the automatic noise monitoring system using four fixed microphones. In addition, sample measurements of aircraft noise are taken at a variety of other places around the airport.
    Mr. Hordern: Is the hon. Gentleman aware that many of those who live near Gatwick Airport believe that airline pilots know exactly where these microphones are and do their best to avoid them? Will he either use his powers to get the airlines to fly on their proper flight routes or move the microphones to where the aircraft fly?
    Mr. Davis: We believe that it is better to try to persuade those who have infringed the noise limits to adopt a better and more reliable course than they have in the past rather than engage in confrontation. The evidence is that the infringements constitute about one-half of 1 per cent. of all jet take-offs. At Heathrow the position has improved substantially. At Gatwick the position has not altered materially since last year.
    Sir G. Sinclair: Is the hon. Gentleman aware that, having taken fairly robust steps to limit night noise at Heathrow, he has not taken comparative steps to help at Gatwick, where the nuisance is increasing—and he knows that it is increasing?
    Mr. Davis: The hon. Gentleman is quite wrong, and he knows that he is wrong. The permitted number of night jet flights has been reduced by 25 per cent. in the summer and by 30 per cent. in the winter. This is a direct result of action which my Department has taken over the course of the last few years.

    Tanker "Globtik Venus"
    Mr. Canavanasked the Secretary of State for Trade what investigations he
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    has made into recent events concerning the tanker "Globtik Venus"; and if he will make a statement.
    Mr. Clinton Davis: On 3rd March the Attorney-General was asked to consider whether any criminal offence had been committed in connection with this incident, and inquiries are being urgently pursued. The industrial dispute involving the original crew has been resolved and the vessel is expected to sail from Le Havre at the end of this week.
    Mr. Canavan: In view of today's reports about another planned raid similar to the "Globtik Venus' incident, will the Government take immediate and firm action against those responsible for setting such a dangerous precedent? Is it not sheer cant and hypocrisy for the Tories to make polite gestures towards the trade union movement when two members of their Shadow Cabinet are connected with Globtik Tankers Limited, which hired the gang of thugs to try to beat the trade union movement into submission?
    Mr. Davis: I have no evidence to confirm what was said in the report in the Daily Mail this morning. As I have indicated, we are considering very carefully the action which should be taken in the circumstances arising out of the "Globtik Venus" matter.
    What is far more important than the activities of the two hon. Gentlemen to whom my hon. Friend has referred is the reaction of the Opposition and the weasel words of the hon. Member for Hertfordshire, South (Mr. Parkinson). He said that he could not see any reason, nor did the Opposition, to hold a strong view about the recruitment of mercenaries to undertake this outrageous action. The House and country will now know where the Opposition really stand on matters affecting industrial disputes.
    Mr. Parkinson: What I in fact said in the course of my remarks was that unreasonable actions often produced unreasonable reactions. In no way did I condone the action of Mr. Tikkoo, but I said that in the circumstances he had been provoked. Is the hon. Gentleman aware that he is repeating or setting for himself the low standard which he demonstrated in replying to the debate?
    Mr. Davis: Lectures about low standards ill become the hon. Gentleman. What he said was:
    "This was not the way in which I would reclaim a ship of mine, but I do not own any ships. I do not see any reason"—[Official Report, 7th March 1977; Vol. 927, c. 1120.1
    Hon. Members: Reading.
    Mr. Speaker: Order. It is very unfair to others who have later Questions on the Order Paper to go over a debate which has already been held.
    Mr. Davis: The Opposition disgraced themselves on that occasion.
    Mr. Prescott: Is my hon. Friend aware that the leader of the gang of armed mercenaries recruited on Humberside, a Mr. Miller, has criminal convictions for rape, buggery, larceny and possession of firearms? He is not a defender or upholder of the law. It is extremely noticeable that the unions have praised the Minister's action in dealing with this matter but have noticed with astonishment that there has been little noise from the Opposition, who had a lot to say about the Shrewsbury Two and the Clay Cross rebels.
    Mr. Davis: Not only the trade unions but the General Council of British Shipping and the employers condemned the action. The only people out of step were the Opposition.
    Mr. Nott: Is the hon. Gentleman aware that, with the single exception of the hon. Member for Feltham and Heston (Mr. Kerr), although there is great gloom on his side of the House today, he will have to think of an issue other than the "Globtik Venus" on which to fight the election? His answer was very unsatisfactory indeed.
    Mr. Davis: The relevance of the "Globtik Venus" issue is that it depicts in all its nakedness the real way in which the Conservative Party looks at trade unions. We are not gloomy; but I think that the Opposition should not be quite so self-satisfied. They resemble turkeys lust before Christmas.

    Power Plant Industry
    Mr. Rostasked the Secretary of State for Trade when he expects to respond to the CPRS Report on the
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    future of the electrical power plant industry.
    Mr. Meacher: The Government are carefully considering all aspects of the proposals in the CPRS report and will be responding as soon as possible.
    Mr. Rost: Does the Minister agree that the only way in which we can maintain in this country a viable electrical power plant industry with an export capability is by having a flourishing nuclear industry? Will he have words with the Secretary of State for Energy and remind him that some crucial decisions must be taken on the future of the nuclear industry in this country if the electrical power plant industry is to survive?
    Mr. Meacher: That is a matter for my right hon. Friend. I shall bring the hon. Gentleman's remarks to his attention. All these matters are being taken into account in our examination of the CPRS Report on the electrical power plant industry.
    Mr. Conlan: In any consideration of the report, will my hon. Friend make it perfectly clear that the Government's attitude is that rationalisation of the industry will not be made an excuse for substantial factory closures in any part of the industry, with substantial numbers of people losing their work?
    Mr. Meacher: The proposal for rationalisation of the industry was one of the five main recommendations made by the CPRS. We are now examining its report. Before any conclusions are reached we shall have the fullest consultation with all those concerned, including particularly the trade unions.
    Mr. Hugh Fraser: Before the Minister makes the decision, will he put to the House the Government's genuine energy policy? Will he assure the House that there will be no nonsense about building the unnecessary Drax power station without the consent of hon. Members?
    Mr. Meacher: The proposal about the Drax B station was again one of the recommendations of the CPRS Report that we are examining. The right hon. Gentleman's question is more relevant to the Secretary of State for Industry. All I can tell him is that this has been fully

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    considered along with all the other recommendations in the report.
    Mr. Whitehead: Will my hon. Friend take into consideration the fact that we have heard nothing from him today that we did not hear during the last Question Time when his Department appeared? Will he now say that before Easter we shall at least get some progress in regard to export credits, because these are vital to the firms of Babcock and Wilcox and Clarke Chapman which are at the heart of our industrial strategy?
    Mr. Meacher: I appreciate the significance of those industries with regard to exports. I can only reiterate what I said before—that we exclude no option in examining how we can give assistance in respect of exports. My hon. Friend will not expect me to spell out the ideas that we have been examining, but I can assure him that there has been a great deal of discussion on this issue. I am also aware of the urgency of the matter. My right hon. Friend the Secretary of State for Industry has said that it would be some little time before he could make an announcement, but we are aware of the need to make an announcement as quickly as we can.
    Mr. Crawford: Does the Minister realise that many thousands of employees at Babcock and Wilcox will not be prepared to wait "some little time" for an announcement?
    Mr. Meacher: It is precisely because we are engaged in the fullest consultations on the proposals, which must be wide-ranging and comprehensive, that we cannot produce conclusions before the House quickly. I am sure that the hon. Gentleman would prefer us to reach the right conclusion rather than one which perhaps might appeal to him but which would certainly have a devastating effect on employment.
    Mr. Buchan: In view of certain developments overseas, which were a disappointment to us and to Babcock and Wilcox, will my hon. Friend press upon his right hon. Friend the imperative nature of getting the Drax B order through as quickly as possible? Will he also bear in mind that only a few short months ago the SNP, which is now speaking weasel words in favour of the workers in Babcock and Wilcox, was asking for
    902
    a cut-back in the electricity generating programme, which would plunge my local factory into total redundancy?
    Mr. Meacher: My hon. Friend has again hit the nail on the head. I shall certainly draw his remarks to the attention of my right hon. Friend. We intend to produce a report to the House as soon as we possibly can, but I ask hon. Members to recognise that very extensive consultations have to be undertaken. There are many interests involved and we want to get it right.

    Air Fares
    Mr. Hal Millerasked the Secretary of State for Trade what control he exercises over the level of air fares in connection with International Civil Aviation Organisation obligations.
    Mr. Clinton Davis: Membership of the International Civil Aviation Organisation places no obligations on the Government with respect to the level of air fares.
    Mr. Miller: Is the Minister telling the House that he has absolutely no say in the setting of air fares? Will he tell us what particular steps he has taken to do something about the excessively high level of fares in Western Europe? Has he suggested to his colleagues in the Council of Ministers that European rates should be declared a cabotage route?
    Mr. Davis: The Air Service Agreement with other countries gives the Governments concerned the right to control air fares on the services they cover. Fares are normally agreed between IATA and submitted for approval to both sides. If either Government is dissatisfied, the matter is settled by negotiation. The question of European fares is under review in Europe. As the hon. Gentleman well knows, the CAA has recently given close attention to this, and I am awaiting its report.

    Civil Aviation (Bermuda Agreement)
    Mr. Arnoldasked the Secretary of State for Trade what further progress has been made on renegotiating the Bermuda Agreement.
    Mr. Dell: The fourth round of negotiations for a new Air Services Agreement was held in London from 28th February

    903
    to 11th March. Some progress was made towards agreement on the methods of regulating capacity on North Atlantic services and establishing tariffs. The negotiations will be resumed in Washington on 28th March.
    Mr. Arnold: Is it not the case that the Americans have still absolutely no intention of restricting the activities of their airlines to a policy of single designation? What is the Government's policy with regard to regulation as opposed to competition?
    Mr. Dell: The Government are in favour of competition, but not by means of putting such grossly excessive capacity on the North Atlantic that it means a gross waste of fuel at a time when energy conservation is important and leads to excess fares paid by customers travelling over the North Atlantic. It is not true to say that the United States has entirely ruled out the idea of single designation. What we are concerned with is a system of capacity control. In the last negotiations the United States made certain proposals in this regard. We are now negotiating with the United States, and I am sure that the hon. Gentleman would not wish me to reveal the whole of our negotiating position.
    Mr. Warren: Within the concept of capacity control, will the Minister consider introducing regulations for the control of air freight and passenger charter flights?
    Mr. Dell: We have, of course, considered whether charter should come within the renegotiation. The present view of both parties is that it should not, althugh charters are closely connected with services across the North Atlantic. That is the basis upon which we are negotiating at the moment and it seems more convenient to both sides. We want a memorandum of understanding with the United States to govern the operation of charters, and I think that that is better done outside these negotiations.
    Sir J. Langford-Holt: As the United States Government have already stated that they do not have the authority to stop aircraft in certain circumstances landing within the United States, is the right hon. Gentleman satisfied that they
    904
    are in a position of authority to sign such an agreement?
    Mr. Dell: That is a very interesting question which we shall have to discuss during the negotiations. We have had many disagreements with the United States Government on the interpretation of the Bermuda Agreement. One of the reasons why we wish to renegotiate the agreement is so that we can have an agreement that both sides understand and which is actually operated. We believe that there are cases where the United States has not operated the Bermuda Agreement. The landing rights of Concorde at New York are one example.

    Arab Boycott
    Mr. Sainsburyasked the Secretary of State for Trade whether he will take measures to deny Government support and facilities for various kinds of trade transactions in order to combat the discriminatory effects of the Arab trade boycott.
    Mr. Dell: My Department and the British Overseas Trade Board will continue to give advice and assistance to British exporters to the markets of the Middle East.
    Mr. Sainsbury: Is the Secretary of State aware that the Government's lack of action has contrasted very unfavourably with that of other Gov1ernments in taking positive action against the boycott, against which they have expressed positive disapproval?
    Mr. Dell: Our position in practice is the same as that of other Governments. We have indicated that we oppose and deplore the boycott, which lacks international authority. We have also said that it must be left to the decision of individual companies how they react in particular situations, although we give advice. In practice, our position is the same as that of our partners in the European Community and other Governments.
    Mr. Greville Janner: Is my right hon. Friend aware that the authentications by the Government of boycott documents is regarded as a gross offence to Israel and those concerned with free trade? Will he reconsider this practice with the Foreign

    905
    Secretary, who has openly condemned the Arab trade boycott?
    Mr. Dell: As my hon. and learned Friend knows, this is a question for my right hon. Friend the Secretary of State for Foreign Affairs. It has been explained by Ministers in that Department, however, that what is authenticated is the signature of notaries.
    Mr. Hugh Fraser: Is the right hon. Gentleman aware that the United States Government and the Government of Canada and their Departments of Trade have come out forcibly against the concept of a boycott against the interests of international trade? Surely he should be seriously considering bringing legislation in this country into line with that proposed by the United States and Canada.
    Mr. Dell: We, too, have expressed our opposition to the boycott. I am examining what the United States is doing. It has further proposals for legislation which may be brought before Congress. As far as I am able to say at the moment, the practical effect of the present United States position is that it leaves to individual companies their own decisions as to how they react in the situation they are faced with. The practical effect, therefore, seems to be the same as the practical effect of our policy. If there are changes, we shall observe them.
    Mr. Geoffrey Finsberg: What advice is the right hon. Gentleman giving to industries for which his Department is the sponsoring Ministry? Is he telling them to make up their own minds, or is he telling them to take the advice which the Government are giving and not give in to boycotts?
    Mr. Dell: We give private advice on this matter to companies which ask us for it so that they may be aware of the nature of the problems known to us. A fact which is relevant in this context is that in 1976 our exports to Israel, I am glad to say, went up very substantially at a time when imports by Israel were stable or declining. In that respect, we have a good record in our trade with Israel. That is perhaps one measure by which our policy can be considered.

    Industrial Democracy
    Mr. Ridleyasked the Secretary of State for Trade what consultations he has
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    so far held on the Bullock Report; and with what results.
    Mr. Jim Lesterasked the Secretary of State for Trade what consultations he has had with the CBI or other employers' associations on the recommendations of the Bullock Committee; and if he will make a statement.
    Mr. Dell: I have had discussions with the CBI and the British Institute of Management. I have also received the views of a number of other organisations. It is too soon to talk about results.
    Mr. Ridley: In his discussions with the CBI, did not the right hon. Gentleman realise that the CBI was implacably opposed to the majority report? If his earnest to work with the private sector means anything at all, could he not make a gesture and say that the Government have now decided to drop the whole proposal?
    Mr. Dell: No, I will not make that gesture. Advances in industrial democracy will be of value to industry. I am aware that the CBI is implacably opposed to the majority report. It has made that perfectly clear. Nevertheless, very useful discussions with the CBI are currently going on, and the Government are committed to introducing legislative proposals on this subject by the summer.
    Mr. Nott: Since the Government apparently have abandoned the majority proposals of Bullock, will they now put in its place the whole of the Liberal Party's policy for participation, and are we to assume that the Prime Minister will announce on Wednesday that this is the new policy of the Government?
    Mr. Dell: At any rate, the hon. Gentleman concedes to the Liberal Party that it has a policy on participation. That is more than he can claim for his own party.
    Mr. Kelley: Is my right hon. Friend aware that in no sense can there be any political democracy until there is some form of economic democracy, that at least the Bullock Report is moving in that direction, and that it should be looked upon benignly by the Government?
    Mr. Dell: We are trying in this area to get a consensus about the way in which industrial democracy shall be

    907
    advanced in this country. That is the process going on in Europe. We believe that this country cannot dissociate itself from that process. That is why in my discussions I am trying to seek a consensus about a basis on which to proceed.

    Laker Airways Skytrain
    Mr. William Sheltonasked the Secretary of State for Trade what progress he has made in bringing the United States of America to accept Skytrain services as part of the Bermuda Agreement.
    Mr. Dell: On 18th February our Embassy in Washington formally asked the United States Government to issue an operating permit to Laker, in accordance with the Bermuda Agreement. However, as I informed the House on 14th February 1977, I envisage negotiating a special arrangement with the United States to cover the operation of Sky-train instead of including it in the new Air Services Agreement.
    Mr. Shelton: Does the right hon. Gentleman accept the view held in some quarters that the apparent lethargy by his Department springs in part from its recent defeat by Mr. Laker?
    Mr. Dell: The hon. Gentleman's accusation is unjustified. I made an announcement in the House on 14th February. On 18th February we made representations to the American Government asking them to issue a permit so that the Laker Skytrain could operate. The CAB has now asked Mr. Laker for further information. It is our wish to get the Laker Skytrain into the United States, and we shall exert all necessary pressure to that end.
    Mr. McCrindle: Has there yet been any indication that an application for a licence will be made by an American counterpart of the Laker Skytrain?
    Mr. Dell: Not yet. But obviously, if the United States Government indicate to us a wish to discuss that matter, we shall ourselves be ready to discuss it with them.

    Motor Vehicle Headlamp Bulbs
    Mr. Edwin Wainwrightasked the Secretary of State for Trade how many
    908
    light bulbs of the type used in motor car headlamps were imported into the United Kingdom during each of the past four years.
    Mr. Meacher: Imports of all vehicle bulbs not exceeding 28 volts were 22 million, 28 million, 34 million and 49 million respectively for the four years to 1976.
    Mr. Wainwright: Does my hon. Friend realise that the importation of these bulbs is doing great harm to companies in this country? Is he aware that these companies are saying that the cost of materials is equal to, if not greater than, the cost of these imported bulbs? Is not that dumping? Will my hon. Friend do something about the quality of these bulbs by letting the public know that they are very much below the standard of bulbs manufactured in this country?
    Mr. Meacher: That last point is a matter for my right hon. Friend the Secretary of State for Transport. My hon. Friend asked me about dumped bulbs. The Lighting Industry Federation submitted an anti-dumping application to us last year, but it withdrew it a couple of months ago because it could not provide domestic prices for comparison for more than a few of the 200 different types of bulbs imported. We are therefore examining the possibilities either of operating through the Commission to seek price and quantitative action from the Eastern bloc suppliers or of across-the-board import restrictions for all suppliers. I hope that one or other of these routes will he successful.

    Steel
    Mr. John Ellisasked the Secretary of State for Trade what are the latest figures for import and export of steel.
    Mr. Meacher: In the 12 months ending February this year, 4 million metric tons of ingots, semi-finished and finished steel were imported and 3·6 million metric tons exported.
    Mr. Ellis: Does my hon. Friend agree that the figure for imports is incomprehensible to many people, given that we are cutting back on production? If this is due to the cyclical production of steel, does not my hon. Friend agree that we should be making investment now? In

    909
    that event, will he have a word with British Steel at Scunthorpe so that it might put forward plans for increasing blast furnace capacity there?
    Mr. Meacher: The question of imports is undoubtedly affected by the fact that customers were lost when the British Steel Corporation could not meet the demand in 1974 during the after-effects of the three-day week. [Interruption.] Hon. Gentlemen may laugh, but it is a fact which their business friends realise. Once customers are lost to cheap imports, it is very difficult to get them back. Opposition Members may try to conceal their embarrassment about the disaster of two years ago, but the effects of it are still being felt. We are encouraging the British Steel Corporation to increase investment as a result of the funds that we are making available both for investment and for stocking.
    Mr. Tim Renton: Coming back to something rather more recent than the three-day week, is the Minister satisfied that the Japanese are following the voluntary restraint on exports of steel agreed with Britain and other EEC countries in November? If he is not satisfied, what action does he intend to take?
    Mr. Meacher: In respect of special steels, we are having discussions with the Japanese in Tokyo on the 28th and 29th of this month. In regard to high speed steel the Japanese have generally kept to the forecast, but on tool steels and stainless steels there is some dispute. On bulk steels, I draw attention to the fact that we made an announcement on 14th March that we intend to investigate the Japanese light sections and flats.
    Mr. Flannery: Will the Minister take note of the deep concern that is felt in all steel areas, including Sheffield, about imports of steel? Will he accept that at the new Thrybergh Mill near Rotherham recently when proper investment took place—which did not happen under the Conservative Party—a world record for production of steel was achieved?
    Mr. Meacher: That is a very interesting and important point.

BUSINESS OF THE HOUSE
The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): With permission, I wish
910
to make a statement about the rearrangement of business.
At the end on Tuesday, following the opening of the defence debate, the motion on financial assistance to the Meriden Motor Cycle Co-operative.
On Wednesday, debate on the Opposition censure motion.
On Thursday, Lords amendments to the Social Security (Miscellaneous Provisions) Bill, motion on the Family Income Supplements (Compuutation) Regulations and motions on the European Communities (Definition of Treaties) Orders. As already announced, the Chairman of Ways and Means has opposed Private Business for consideration at 7 o'clock.
On Monday 28th March, conclusion of the debate on the Defence Estimates.
Mr. Pym: Will the Leader of the House indicate upon what motion the debate on the defence White Paper will take place tomorrow?
Mr. Foot: The debate will open tomorrow and conclude next Monday. Before then we shall have put down a motion—[interruption.]—we shall have put down a motion in plenty of time for the Opposition to make up their minds by how much they wish to increase public expenditure in this field.
Mr. Pym: Are we to assume that the Government have not yet tabled a motion?
Mr. Foot: We have not yet tabled a motion but there will be plenty of time for the Opposition to decide by how much they wish to increase public expenditure.
Mr. Pym: Will the Leader of the House indicate whether the motion will be for the Adjournment of the House or will it be a substantive motion on the defence White Paper?
Mr. Foot: As I have already indicated, the right hon. Gentleman will have a full opportunity to tell the country by how much his party will increase public expenditure on defence.
Mr. English: Can my right hon. Friend suggest where the overwhelming majority of Liberal Members are? Is their absence of any significance. Are they in any particular place?
Mr. Speaker: Order. We are dealing with the business for the rest of the week.
Mr. Rost: On Wednesday's business, can the Leader of the House reassure us, and put the nation out of its misery, by telling us that Labour Members will be voting on this matter?
Mr. Ioan Evans: Will my right hon. Friend accept that we appreciate the Opposition spokesman realising that we shall decide which motions we debate next week?
Mr. Foot: Let us proceed to the debate on Wednesday, and I am sure that it will then be satisfactory to proceed to the business next week.
Mrs. Winifred Ewing: Does the Leader of the House appreciate that the Tories' tears on censure are of the nature of crocodile tears? It was only because the Scottish National Party put up two Tellers last Thursday that—
Mr. Speaker: Order. I must tell the hon. Lady that we are dealing with business.
Mr. Goodhew: Will the Leader of the House ensure that before we begin the debate tomorrow we know what motion we are speaking upon?
Mr. Foot: I am sure that the hon. Member will be capable of making a speech whether there is a motion down or not.
Mr. Gow: Will the Lord President answer the question put by my right hon. Friend the Member for Cambridgeshire (Mr. Pym)? Upon what motion will tomorrow's debate take place, and does the Lord President intend that the Government will put down a motion on defence?
Mr. Foot: I do not think that the House should be worried. There will be the first day's debate tomorrow— [HON. MEMBERS: "On what?"]—and in plenty of time for Monday, when the House will wish to reach a conclusion on the matter, there will be a motion on the Order Paper.
Mr. Ian Gilmour: Will the Leader of the House explain why he is not putting a motion down tomorrow?
Mr. Foot: The right hon. Gentleman can appreciate the situation perfectly well. There is a normal practice in this House whereby when there is a two-day
912
debate on these matters, the Division takes place on the second day. The motion will be put down in plenty of time for hon. Members to put down amendments to it if they wish to do so.
Mr. David Price: I must press the Leader of the House. It is intolerable to start a two-day debate without a motion in front of us. Surely it is not unreasonable, 24 hours beforehand, to know the motion on which we shall be voting next Monday. In a multi-party Parliament I am sure that the minor parties at least will require that much of the Government.
Mr. Foot: It is perfectly simple to debate the matter in the way in which I have indicated. The House will reach a conclusion on Monday in the way I have described.
Mr. Gow: On a point of order, Mr. Speaker. The Lord President has come here to make a statement on tomorrow's business. Should he not tell us on what motion tomorrow's debate will take place?
Mr. Speaker: That is not a point of order for me. The Leader of the House decides such matters.
Mr. Onslow: On a point of order, Mr. Speaker. How is it that if there is no motion, the subject of the debate can be confined to defence? If there is no motion surely it is open to the House to talk on all matters of importance?
Mr. Speaker: I shall rule on that when I see the motion.

STATUTORY INSTRUMENTS
Mr. Speaker: We shall now take the motion on Statutory Instruments in the name of the right hon. Gentleman the Leader of the House. The Question is—
Mr. Tim Renton: On a point of order. Mr. Speaker —
Mr. Speaker: It is customary to wait until I have finished before hon. Gentlemen raise points of order.
Mr. Renton: I apologise, Mr. Speaker. I stand rebuked.
Ordered,
That the Health Services Board (Deputies) Regulations 1977 (S.I., 1977, No. 323) be referred to a Standing Committee on Statutory Instruments, &c. — [Mr. Foot.]

BUSINESS OF THE HOUSE
Mr. Tim Renton: On a point of order, Mr. Speaker. If I may refer to your previous remarks, may I take it that you have some cognisance, which is denied to the rest of us, of what is in the motion? You said that when you saw the motion you would give your ruling whether it would be possible to raise matters other than defence. May we take it that you know more about the subject than we do?
Mr. Speaker: What I said was quite clear. I said "when" I saw it. I do not know any more than the rest of the House on this matter.
Mr. Goodhew Mr. Goodhew rose—
Hon. Members: Sit down.
Mr. Speaker: If it is a genuine point of order, I shall hear it.
Mr. Goodhew: I hope you will agree that it is a genuine point of order, Mr. Speaker. The right hon. Gentleman the Leader of the House has given the impression that there will not be a motion before the House tomorrow. All we are trying to find out is whether, if there is not to be a motion before the House, you can or cannot guide us today or tomorrow.
Mr. Speaker: If the Liberal Party does not mind, I shall fall back on a Liberal saying. We must wait and see.

ORDERS OF THE DAY

  REDUNDANCY REBATES BILL
  Order for Second Reading read.
  3.42 p.m.
  The Minister of State, Department of Employment (Mr. Harold Walker): I beg to move, That the Bill be now read a Second time.
  Let me say frankly at the outset that this Bill is a consequence of the defeat on Second Reading on 7th February of the Reduction of Redundancy Rebates Bill. In doing so, I am telling the House nothing of which it is not already fully aware, but I want to make it quite clear that I am not going to try to be coy with the House or be other than candid and open about our purpose.
  Having said that, let me also make it clear that this is not a rehash of the earlier Bill. That Bill had the simple purpose, as I explained on 7th February, of reducing employers' rebates from the Redundancy Fund from 50 per cent. to 40 per cent.
  This Bill, of itself, does not reduce the rebate at all. It is quite different in concept since it enables the rebate to be varied—varied up or down. I shall not mislead the House, let me hasten to add, about our early intention—and I shall come to that in a few minutes. I repeat that I want to be candid and open about our intention. But I believe that the formula on which this Bill is based is not only different but is a better approach than the earlier one. Let me say why that is the case and why it may be more attractive, or perhaps less repugnant, to hon. Gentlemen opposite.
  This is not the first time that a Government have sought to vary the rebate from that provided for in the 1966 Act— and I am sure it will not be the last, if not least because hon. Gentlemen opposite, it I understand their attitude, would like to see it varied upwards, if not now, perhaps at some future time. Whether the best way to do so is through primary legislation— with all that accompanies it, not least the demand on Parilament—is open to question. But notwithstanding the cautious approach that all of us should have when confronted with
  916
  enabling legislation, I think we should now recognise the need for flexibility in this matter—and equally recognise that it is a flexibility better exercised by order rather than by the sometimes long and cumbrous procedures entailed by a Bill.
  Furthermore, I am sure the whole House will hope that the circumstances which have made necessary a reduction in the rebate will prove to be of short duration. No one will be more pleased than I to see a return to a more generous level of rebate. When those changed circumstances arise, I am sure that hon. Gentlemen opposite will join me and my right hon. Friend in wishing to be able to restore higher levels of rebate more speedily than by passing a Bill through Parliament. I regret that we did not go for an enabling Bill in the first place— not just because we lost the vote of 7th February, but because it seems to make better sense.
  I should now like to say something about the Bill itself. It is intended to enable rebate to be varied between one of 10 different rates over the range of 35 per cent. at the bottom level to 80 per cent. at the upper level. At no time would it be possible under the proposed measure to introduce rebate at the rate of 40 per cent. The House has made its views clear and we must respect them. Nevertheless, we have thought it right to make provision for a near alternative.
  Mr. David Mitchell: The Minister said that the precise rates laid down in the earlier Bill are not included in this legislation and added that there was an alternative. What are the Government's intentions? Obviously they are introducing this measure with the intention of using it.
  Mr. Walker: I shall come to that point a little later in my speech. I have already said that I want to be frank and candid about our intentions. I am hesitant to inflict tedious explanations on the House. If I thought that we all understood the way in which the Bill will operate, I should be quite happy to say no more on the subject. But at first sight the Bill is not particularly easy to understand, and some explanation might be helpful.
  A redundancy payment is calculated at three different rates according to age and length of service. The highest rate is

  917
  one-and-a-half week's pay for each complete year of service over the age of 41. The second, or middle, rate is one week's pay for each year of service below that age, but after age 22. The third and lowest rate applies to service from age 18 to 21.
  The method chosen for calculating rebate for the 1965 Act was to set down three different fractions of a week's pay, each of which corresponded to one of the rates at which entitlement to a redundancy payment accrued. All this may seem complicated, but in practice it is relatively easy. For example, the rebate payable in respect of service which counts at the rate of one-and-a-half week's pay is three-quarters of a week's pay. Similarly, the rebate payable against the two lower entitlements of one week's pay and half a week's pay are one-half and one-quarter of a week's pay respectively.
  The same principles apply to the sets of fractions set out in the schedule to the Bill. Accordingly, the first set of fractions of 21/40ths, 7/20ths and 7/40ths equate to a flat rebate rate of 35 per cent. The second set of fractions produce a rebate of 41 per cent. and the third set of 45 per cent. Thereafter, each set of fractions increases the rebate rate by 5 per cent. until it reaches a maximum of 80 per cent. at the top.
  The two limits have been carefully chosen. A figure of 35 per cent. represents the lowest point to which rebate can be reduced without further legislation. The 80 per cent. maximum is broadly equivalent to the rebate of one and one-sixth week's pay, or very roughly 78 per cent., which was payable under the original 1965 provisions in respect of the one-and-a-half week's pay entitlement.
  What emerges from all the seeming complexity is really a simple system of varying rebate. It will be unnecessary to bother employers with the detailed processes leading up to the overall rebate. In practice, all they will need to know in order to claim their full entitlement is the percentage rate to be applied.
  As I said at the outset, this is an enabling Bill. One point to which we gave the most careful consideration was whether the powers should be exercised subject to the affirmative procedure, or
  918
  whether it was sufficient to seek to adopt the negative resolution procedure. We came to the conclusion that adequate parliamentary control can be exercised by making the order subject to annulment by resolution of either House.
  There is nothing devious about this. In no sense should it be taken to imply a hope on the part of the Government that it may be possible to slip through an order without anybody noticing. Advance publicity has to be given to changes in rebate. Employers need to know their entitlement. Even therefore if an order is overlooked on being laid, its existence cannot escape notice for more than a few days at the most, thus giving ample opportunity for objections to be raised as necessary.
  The Bill will also amend the Northern Ireland legislation. As I explained to the House on the 7th February, Northern Ireland is not covered directly by the Redundancy Payments Act 1965, but by parity legislation contained in the Contract of Employment and Redundancy Payments Act (Northern Ireland) 1965. Given that in practice the two schemes are operated as a single system, Clause 2 seeks to short circuit the lengthy Order in Council procedures by providing a similar enabling power for exercise in Northern Ireland.
  Mr. Graham Page: In respect of Northern Ireland an order will never come before the House.
  Mr. Walker: That is true, but I can give the House the assurance that we shall proceed on strict parity lines. Therefore, when an order that applies to Great Britain is laid before the House, hon. Members representing constituencies in Northern Ireland will have the opportunity to express any objections and views.
  There are two points that follow from the right hon. Gentleman's intervention. The first is that the enabling power will be vested in the Department itself rather than in the Minister. I understand that that follows convention for which there is well-established precedent. The second point has already been dealt with in my reply to the intervention. I assure the House that use of the powers in the way that I have described—on the basis of maintaining strict parity—should avoid

  919
  any absurdities that could arise if different rates of rebate were applied over any length of time.
  Having dealt with the mechanical details of the Bill, now turn to the question that was raised by the hon. Member for Basingstoke (Mr. Mitchell) about the way in which the Bill will be used.
  Initially, we propose to make an order reducing rebate to 41 per cent. This will have the direct effect of reducing the public sector borrowing requirement. Put very simply, rebates are paid from the Redundancy Fund. By definition these payments are public expenditure. If the Fund is in deficit it has to be financed by borrowing from the National Loans Fund which involves a direct charge on public funds by any definition. On the other hand, if it is in surplus, that has the effect of reducing the public sector borrowing requirement through being invested in Treasury Bills or stock. There can be no argument about this. It is a matter of fact.
  The hon. Member for Brentford and Isleworth (Mr. Hayhoe) was interviewed on Radio 4 on the morning after the debate on the earlier Bill. I hope that the transcript does not misquote him. He said—when challenged about the Opposition's attitude on public expenditure and when reminded that his party has repeatedly said that the Government should cut public expenditure—that the Bill would not cut public expenditure. He said that the money involved was in the Redundancy Fund and that all the money in the Fund comes from industry — and I do not challenge that. He also said that the money in the Fund was all used for making redundancy payments and could not be used for anything else.
  In fact, as I have just described, when the Fund is in surplus, it is committed by the provisions of the Redundancy Payments Act 1965, Section 26(3), to use that money as directed by the National Loan Commissioners and to invest it in Government stock. To that extent, it does offset the public sector borrowing requirement. Equally, when the Fund is in deficit, that deficit is incurred against the public sector borrowing requirement.
  The hon. Member for Brentford and Isleworth also said that Ministers had made no attempt during the debate, to
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  justify the Bill on the ground of public expenditure. I am sure that the hon. Gentleman did not intend to do us an injustice, but that was the main burden of my speech. In a brief speech, I emphasised that point at least four or five times.
  Mr. Barney Hayhoe: When I said that the money could not be used for any other purpose, I was paraphrasing what was said by the Minister in introducing the Bill on 26th April 1965.
  Mr. Walker: No doubt the hon. Gentleman has had an opportunity since then to look at the 1965 Act which says that any moneys forming part of the Fund may from time to time be paid over to the National Debt Commissioners and invested by them, in accordance with such directions as may be given by the Treasury, in such securities as are authorised by Parliament, as investments for savings banks funds. It has been modified since by the Social Security Act 1973.
  Mr. David Mitchell: Is that not a direct contradiction of the economic policy of the Chancellor who has said that his purpose is to try to attract more investment and funds into industry? The Minister is now telling the House that the Government will take money out of industry and put it back into the hands of the Treasury. That is in direct opposition to the Chancellor's policy.
  Mr. Walker: I understood that the Opposition want reductions in public expenditure and that they are critical of the Government for not reducing it adequately. This is a reduction in public expenditure. I was replying to the point that was made by the hon. Member for Brentford and Isleworth in a radio interview when he said that we had not made out a case for the Bill on the ground of public expenditure.
  Mr. Douglas Henderson: Is the Minister not aware that last week there was a sizeable majority against the Government's public expenditure White Paper? Can the Minister tell us what the economic effect of the Bill will be? This question was raised when the subject was debated previously and the hon. Gentleman suggested that it would be £80 million per

  921
  annum. Can he say whether that figure will be changed as a result of what he intends to do today?
  Mr. Walker: I shall answer at least a part of that point in a moment. This is an enabling Bill and its effect will depend on the terms of the order that will be laid before the House and on what the House decides to do in respect of that order.
  Mr. Henderson: I am sorry to press the point, but the hon. Gentleman has been kind enough to explain the effect of these different permutations in the table. Surely it is possible to give permutations for the economic effect of each level set by the table.
  Mr. Walker: If the hon. Gentleman will let me continue, I may be able to satisfy him on at least part of his question.
  It has been stated in the House on a number of occasions that the Redundancy Fund is intended to be self-supporting. There is nothing in a proposed reduction of rebate which detracts from this principle in any way. At the moment, the Fund is in surplus to the extent of approximately £7 million. If rebate is reduced naturally we expect that the surplus will increase. This increase will have a direct beneficial effect on the public sector borrowing requirement. Admittedly if that surplus is allowed to grow unreasonably, it could give rise to problems in the future.
  But machinery exists for adjustment and it can be used as and when necessary. Either the Fund's income can be reduced by cutting the allocation which is made front the employer's share of class 1 earnings-related contributions — at present 0·2 per cent. — or alternatively, the rate of rebate can be increased. Of these two possibilities, it is the second that could be done most easily and quickly under the provisions of the Bill. I have already put the case for being able to make future changes with the minimum of delay according to the requirements of the economy and the state of the Redundancy Fund.
  There is also the question whether the Government are justified in looking to employers for a further contribution intended to play a relatively modest part
  922
  in a vitally important overall package. Looked at in isolation the savings may appear small. For example, on the basis of the best estimates we have been able to make for 1977–78, each 1 per cent. of rebate is the equivalent of approximately £1·8 million on the Fund for a full year.
  It may help the hon. Member opposite who put a point to me if I quote a full year saving for 41 per cent. rebate. The answer is £16·2 million. To put it another way, expenditure from the Fund will be reduced by approximately £1·35 million a month—and I hope hon. Members opposite will find that helpful. The actual amount saved during the coming financial year must depend of course on how soon it is possible to reduce the rebate and on how quickly we can introduce the order, have it approved by the House and made effective.
  These figures may seem small when compared to the £1,000 million July package. Taken by themselves they may not seem worth bothering about, but that would be missing the whole point of the exercise. The package announced by the Chancellor last July is fundamental to the healthy economy of the country. It went much wider than simply cutting expenditure and reducing the public sector borrowing requirement. Its declared aim was the deliberate encouragement of an upturn in the economy. It was also spread to do the least damage bearing in mind the need to preserve rightly important social and economic priorities. Directly or indirectly, there can be very few people in this country who have not been required to make a contribution in some form or other, however small, to the stringent measures dictated by our economic circumstances.
  We believe it not unreasonable to ask employers to make an additional contribution within the context of the package as a whole. I appreciate that some employers may feel the impact more harshly than others. Even so a sense of proportion must be retained. For example, the maximum additional cost to an employer of a reduction in rebate to 41 per cent. will be something less than three weeks' pay for each employee made redundant. On average, the amount will be much smaller, in most cases a week's pay or less. Additional costs of this order should not be difficult to assimilate.

  923
  As I made clear at the outset, this is an enabling Bill. It will not reduce rebate, but, given all the circumstances which surround its introduction, it would have been wrong for me to attempt to conceal in any way the immediate use to which we propose it should be put on enactment. On this occasion, and I freely acknowledge the stimulus to clearer thinking which was given by the House through its rejection of an earlier Bill, we have produced a more useful and flexible instrument for the administration of the statutory scheme. I think that the Bill achieves this object. I have no hesitation in asking for the support of the House for this measure.
  4.2 p.m.
  Mr. Barney Hayhoe: Six weeks ago the House rejected the Second Reading of the Reduction of Redundancy Rebates Bill by 130 votes to 129. I am not sure whether it was entirely the eloquence and arguments that we deployed from the Opposition side of the House, or the fact that the Prime Minister and the Chancellor of the Exchequer were absent unpaired, that led to the defeat, but for the first time since 1888 a Government were defeated on a Second Reading.
  Now the Government have brought in another Bill and, although less obnoxious in form in certain respects, it is perhaps just as poisonous in effect. The question that we posed last time was "Why have it at all? "That question remains unanswered.
  The Bill has not been asked for by Jack Jones, nor by Tom Jackson, nor any of the other puff merchants for the Labour Party—I am thinking of their comments on radio recently. Certainly the CBI does not want it. Who does want it?
  Mr. Graham Page: Evidently the Labour Party does not want it. Has my hon. Friend not noticed the serried ranks on the Benches opposite?
  Mr. Hayhoe: I imagine that Labour Members have other things to contemplate. We are not discussing unemployment, but perhaps many of them are contemplating the unemployment that will face them as a result of events later this week and next month.
  The public expenditure arguments are the only arguments that the Minister
  924
  tried to deploy, but what he said was fatuous. The words that I used in the radio broadcast were taken straight from what the then Minister of Labour, Mr. Gunter, said on Second Reading of the original Act:
  "The Redundancy Fund itself will be quite separate from the National Insurance Fund and will be used solely to finance redundancy payments, not for any other purpose."— [Official Report, 26th April 1965; Vol. 711, c. 44.]
  That is clear, and it is also clear that it was not intended that the legislation should be used as a back-door way of collecting revenue from industry.
  The Minister of State said that employers had to make a contribution as a result of the package, and presumably the contribution that he had in mind was that they should get less rebate while continuing to pay the levy to the Redundancy Fund at the previous level. I understand that the difference is the equivalent of 0·03 per cent. If the object of the Bill is to levy this charge, equivalent to 0·03 per cent. more on the general levy than the level of rebate justifies, it is a nonsense in the context of a package which also imposed a payroll tax of 2 per cent.
  The Minister seems to have forgotten that the package included a proposal for making a surcharge of 2 per cent. on national insurance contributions. That was asking employers to make a contribution with a vengeance. It was sucking out £1 billion from the resources available to industry. His suggestion that 0·03 per cent. is significant in that context is fatuous and absurd.
  There is no public expenditure case for the Bill except on what I described on Second Reading of the former Bill as a:
  "wholly pernickety, bureaucratic, legalistic interpretation".—[Official Report, 7th February 1977; Vol. 925, c. 1132.]
  If that is the cap that the Minister of State wishes to wear, I shall not deny him its use.
  Mr. Harold Walker: Perhaps I have not understood the hon. Gentleman's argument, but is he saying that the amount is insignificant, while accepting that it still counts against public expenditure, or is he persisting with the line that the money cannot and should

  925
  not be counted against public expenditure? He should remember that during the 1970– 74 Conservative Government the Department of Employment and the Treasury considered the income and outgoings of the Redundancy Fund to be debits or credits against public expenditure.
  Mr. Hayhoe: I made my point clearly in my speech on the last Bill and in the extract from it that I have just quoted. Perhaps the Minister was so busy thinking up his intervention that he did not listen to what I was saying.
  I accept that public expenditure Is involved if one takes the most narrow, pernickety, legalistic and bureaucratic interpretation, but if we look at this matter in the context of the effect on industry of the measures announced recently, together with the 2 per cent. surcharge, the Bill makes no sense.
  The Government are facing a great political crisis. They are a divided, demoralised and discredited Administration who have run out of steam. The dry rot of Socialism is going through the fabric of their whole being. Yet they come to the House, presumably to rally the Labour faithful—just look at the empty spaces behind the Minister—with this insignificant irrelevance of a Bill.
  The Leader of the House also gives priority to this Bill. We could be debating the confidence motion today. The Leader of the House, presumably after consulting the Prime Minister, has decided that we should not debate that issue but that we should deal with this earth-shattering Redundancy Rebates Bill. Perhaps the reason is not the relative priorities, but that the Leader of the House and the Prime Minister want more time to try to cobble together some grubby and shady deal that will enable them to survive on Wednesday night.
  We could have had a debate on unemployment or on the difficulties confronting teenagers who have not got jobs. If today had been allocated as a Supply Day, issues of that kind could have been debated.
  We could have debated the way in which the Government are imposing by diktat a substantial increase in the price of gas. Is it not interesting that the
  926
  Government cannot make a Supply Day available to the Opposition but can find time for this insignificant and irrelevant little piece of legislation?
  I do not think that people outside wholly understand how the agenda for this place works. On most days the agenda is determined by the Government. The Opposition have the opportunity of determining what will be discussed only khen a Supply Day is made available to them, or in the very exceptional circumstances of putting down a censure motion, or something of that kind.
  Therefore, the Government prefer to use the time of Parliament to debate this kind of issue rather than some of the more substantial issues which worry many people. If they have not the guts to put important matters before the House, they should at least allow the Opposition a Supply Day so that they can do so.
  The Leader of the House is strangulating Parliamentary debate on issues by bringing forward such Bills and clogging up the Order Paper with this kind of measure. We see both the Government and the Department of Employment giving this Bill priority. That fact, I suggest, demonstrates their manifest unfitness to remain in charge of the nation's affairs.
  The Bill underlines and lends emphasis to the Government's shortcomings. I shall explain why. The defeated Bill was explicit. It followed precedent as well, because changes had been made in rebates. Therefore, the previous Bill, which the House defeated, at least had those virtues. However, this Bill is nonspecific and is an enabling measure. I suppose that all Governments have sought such legislation. They ask the House for broad general powers. I wholly accept that Conservative Governments have done that in the past. But we should recognise the dangers of enabling legislation.
  The Minister of State said that it was flexible, that it did not need to go through the cumbersome procedure of a debate in this House. What does it do? It enhances the power of the Executive and diminishes the rôle and power of Parliament.
  The changes proposed by the Government in the Reduction of Redundancy Payments Bill were subject to debate and amendment in Committee. If Members

  927
  wanted to argue against the 40 per cent. or 41 per cent. which is now proposed, they had the opportunity to do so at the time and in the circumstances in which a change was proposed. But hon. Members will now be given no chance other than accepting or rejecting what the Government put before them. The use of the order procedure means that no amendments can be taken. Therefore, that gives an advantage to the Executive. It is certainly flexible from the Executive's point of view. It is not cumbersome, because the Government do not have to argue their case in detail before Parliament and have it undergo the scrutiny which takes place in Committee.
  In my judgment that typifies the Socialist Government's approach to legislation. They prefer enabling legislation. It is much easier to roll it through. Indeed, leading Socialist thinkers have often argued that the right course for an incoming Socialist Government is to have one simple debating Bill and then do practically what they like by order subsequently.
  This Bill covers three financial elements. First, there is the maximum level of pay for calculating entitlement. That was covered by Schedule 1 of the original Act and was amended in the Employment Protection Act. That enabled the Government to change the maximum level of pay to be taken into account in determining the amount of redundancy payments to which an individual was entitled. There was the power for changes to be made by order, but by affirmative order. It was necessary for the Government to get a resolution of both Houses of Parliament to do that.
  The second financial part of the original legislation was the amount of charge to be levied across industry. That was Section 27 of the 1965 Act. Again, that was amended and new provisions were written into the Social Security Act 1973— Section 122. But again that carried forward the idea that changes would be made by order and that the affirmation of both Houses would be required.
  Now I turn to the percentage of rebate which would go to the firms concerned. The figure was written into the 1965 legislation, which was debated and amended in Committee. In 1969 the then Government asked for a change. Six
  928
  weeks ago the Government asked for a change. They sought by legislation to modify the amount of rebate. Now we have the Government seeking this enabling legislation, which will not follow the affirmative procedure which was followed for the previous legislation where changes were envisaged from the start—obviously less important changes than the change in the percentage of the rebate which in 1969 was held to be changed only as a result of legislation. Now the Government are trying to achieve that change by way of the negative procedure. That is entirely wrong.
  In addition, there is the point made by my right hon. Friend the Member for Crosby (Mr. Page) that, while we, at any rate, can debate a Statutory Instrument which would apply a change in rebate for the United Kingdom, there would be no necessity for a similar debate in this House regarding Northern Ireland. That is a considerable change from the provisions of the original legislation and of the proposal which was before us six weeks ago.
  It is typical of the Government that they should be so contemptuous of the rights of the House and of the rights and powers of Back Benchers that, having been defeated, they should come forward with a measure which takes power away from the House, which seeks to avoid the detailed discussions which would follow changes in the amount of the rebate, and which gives greater power to the Executive.
  Of course the Bill itself is small and relatively unimportant, insignificant and irrelevant to our economic problems by itself, but I submit that it is highly significant and relevant if we look at how the issue has been handled by the Government. The truth is that the facts of parliamentary life at the moment prevent the Government from steam-rollering through Parliament their damaging devolution Bill and prevent them from even bringing before Parliament their doctrinaire direct labour proposals.
  But we see the arrogance of the Socialists and of Socialist Ministers in the way in which they are putting this Bill before the House. Since Parliament has rejected the Bill when it was specific, they come forward with a broad enabling measure seeking to do by the negative procedure what has normally been done

  929
  by amending legislation. It is in utter and total opposition to that arrogance, as well as in opposition to the Bill itself, that we shall vote tonight.
  4.21 p.m.
  Mr. Graham Page: Unlike my hon. Friend the Member for Brent-ford and Isleworth (Mr. Hayhoe), I do not object to this small Bill being discussed in the House now, because it raises a very important constitutional issue. The Minister of State, in his usual charming, courteous and persuasive way, put over what sounded like a modest and reasonable case. Who would have dreamt that in fact he was telling us that the House has already chucked out the Bill once and that, therefore, the Government will in future achieve its aim "under the counter".
  The Minister of State is saying that the Government will not ask the House to approve the details of the scheme, but they will do it by order, and by a form of order that he attempted to justify, as so many Governments have in the past, by saying, "We must have flexibility in this matter," that is to say, the Executive must have flexibility. That merely means that the Executive want to go behind the House of Commons and cheat Parliament and the Back-Bench Members. I say that because it is well known that if subordinate legislation is subject to negative resolution only, it has little or no chance of being debated in the House. If subordinate legislation is merely subject to annulment, it comes to the House for debate only by the grace and favour of the "usual channels".
  The Back Bencher has little or no chance of bringing a Prayer before the House these days. If he wishes to do so he has to go to the merits Committee—the Statutory Instrument Committee—which sits in the mornings and is very badly attended. There are no votes in such Committees. The Committee merely takes note of an order.
  Let us suppose that a negative order is brought forward under Clause 1 of the Bill and an hon. Member puts down a Prayer for its annulment, so it is sent upstairs. An order under the Bill might increase the levy imposed on certain citizens, but when it goes upstairs the Committee may say only, that it has taken
  930
  note of the order. This is not the right way to treat the House when discussing increases in levies that may be imposed on certain citizens.
  Even if it is by affirmative order, it is difficult enough to cover all the issues in the one and half hours allowed for debating affirmative orders. But at least in that case we have a fixed one and a half hours, whereas with an order that is subject to annulment we cannot debate it after 11.30 p.m., and, if there have been two or three votes after ten o'clock, the debate will be cut down to perhaps three-quarters of an hour.
  This endeavour to come before the House and say that the rate of rebate in redundancy payments shall be decided in this way in England, Wales and Scotland is cheating the House. It is impossible, even by an order that is subject to affirmative resolution, to amend the order or debate any amendment to it, and it is certainly impossible with an order that is subject to negative resolution.
  The Minister of State said, perhaps by a slip of the tongue, that the order would require the approval of the House. But it will not do so if it is by negative resolution. An hon. Member might see the order on the Order Paper as having been laid before the House and might be quick enough to put down a Prayer to annul it. The Minister said that someone would see it on the Order Paper within a matter of days and put down a Prayer to annul it.
  There is a convention that Departments should not make an order operate in less than 21 days from its being laid before the House, but how many orders disregard that convention at present? The 21-day convention is not fully observed, particularly in money orders that come before the House. If it were observed there might be some chance of annulling orders before they come into operation, but in practice that is not possible.
  I come now to Clause 2, which deals with Northern Ireland. On the face of it, any order affecting Northern Ireland could be annulled by resolution of Parliament, but in fact under the Northern Ireland Act 1974, no subordinate legislation which is subject to the negative resolution procedure comes before this House at all.
  Any subordinate legislation which needs the approval of Parliament is laid

  931
  before us with the possibility of a Prayer to annul it. On the face of it, Clause 2 states that the order will require a negative resolution to annul it, but under the Northern Ireland Act 1974 that does not happen. This order for Northern Ireland is not even made by the Secretary of State. It is made by the Department of Manpower Services for Northern Ireland. It is possible, and has been done in the past, for such an order to be required to be made by the Secretary of State, in which case it comes before the House if an hon. Member puts down a Prayer against it. Why did not the Minister adopt that procedure? It is possible to do this under existing legislation, and has been done in recent legislation. He should have adopted that course in this case.
  It is preposterous that, having lost the Bill on the first occasion, the Government should bring in another Bill before the House and say that, as they cannot get it through a full House, they will do it by negative resolution procedure, which it is almost impossible to debate on the Floor of the House. I hope that we shall divide against this Bill.
  4.29 p.m.
  Mr. Douglas Henderson: I agree with the remarks of the right hon. Member for Crosby (Mr. Page) who has brought out some of the most important defects in the Bill. I find it quite astounding that the Government have not learned and have not listened to what was said in the debate on 7th February.
  The Government do not command an obedient majority from their followers but have to seek the support of a majority of other hon. Members to sustain their legislation. Against that background they are going completely against that support in reintroducing the Bill in a sneaky and back-door way, as the Minister has done. I was amazed to hear the Minister of State, for whom I have a great regard, say that the rate is not exactly 40 per cent. as it was when the House turned down the Bill last time, but that it will be 41 per cent. That is unworthy of the Minister of State and of any Government who hope to command respect and, on occasions, support from anyone other than their own devoted and obedient followers. They cannot continue in that
  932
  spirit and in that light, and that must add a certain piquancy to our discussions later this week. Clearly, unless the Government can show that they can learn the lesson of the views of the House, they have no right to remain in Government, and the sooner they are replaced the better.
  At the beginning of the debate the question was posed of who wants the Bill. It seems slightly incongruous, in view of the figures which we have discussed on many occasions, that the Government should be straining so hard to get what the Minister of State now tells me will be about £ 16·2 million from the 41 per cent. of rebate. In a sense, the Government are going for the widow's mite. We have heard that it is not the Government who want the Bill. The Government have said that they regret having to bring the Bill before us. The Bill is certainly not wanted by the other parties in the House. They voted against the Government on the last occasion. One can assume only that the Bill is wanted by the IMF alone.
  Following the Chancellor's package of measures last July, we are hearing a different tune from the Government. We are hearing how the Chancellor has £1 billion, £2 billion, or £3 billion— who knows exactly how much? We hear that he will lay this before us in eight days' time. That is the largesse which will be offered to the electorate in the forthcoming election campaign. But here we are arguing over a Bill which, although having been defeated, is reintroduced in substantally the same form and will produce £16·2 million. Once more, that does not seem to me to be the act of a Government who are taking account of the views of the House and of political realities.
  The Minister said that the maximum cost to any employer would be three weeks' pay for each employee made redundant. I calculate that with some companies that could be between £200 and £250. That could mean a sizeable pay-out for a small company. Suppose that 10 or 20 people were made redundant in a small company. They would have to be paid out at a time when the company was least able to bear the expense. The Minister says that the expense would not be great, but the incidence of this tax— for that is what it is— comes when the company is already in difficulties.

  933
  There is an air of unreality about all this. The Minister cannot expect us to believe that this Bill will not adversely affect companies, particularly small companies. That arrangement demonstrates the saddest aspect of the lack of logic in the Minister's argument.
  On Second Reading of the original Bill, the Minister was unable to give any extrapolation of the figures with a rising trend of unemployment. But unemployment in Scotland has increased by about 2,000 a week over the last three months, and figures from the Department of notifications under the Employment Protection Act seem to show that we are talking in terms of at least 1,000 a week for the next three months.
  Mr. Harold Walker: The House must be cautious of seeking to establish a correlation between the level of and number of redundancy payments and the level of unemployment. There is no clear correlation. For example, between 1975 and 1976 there was a significant rise in unemployment, and yet the rate of redundancy payments made in 1976 was significantly below that of 1975. I can make a forecast. The Government expect that in 1977 the number of redundancy rebate payments will be between 250,000 and 270,000, but it would be misleading to draw from that conclusions about the level of unemployment. There are so many factors involved that one cannot establish a clear correlation between the two.
  Mr. Henderson: I am sure that the Minister would not argue that there is no relationship at all between unemployment and redundancy. It would be interesting to know whether the Department has figures which show whether as a result of the Employment Protection Act, which defines the rights of work-people made redundant, there is a much clearer link between redundancy and unemployment than was hitherto thought to be the case. Perhaps the figures might reveal a pattern which will develop in the future.
  No doubt the Minister, like other hon. Members, has been notified about potential redundancies in the construction and engineering industries. We are told that in Scotland Babcock and Wilcox may have up to 1,500 redundancies, with
  934
  possibly another 550 in Standard Telephones and perhaps 2,000 to 3,000 in shipbuilding over the next six months. Redundancies are also expected in jute, steel and textiles.
  The Scottish economy is facing a very serious situation. I hope that the Minister will not try to underestimate that situation and will not say that it is impossible to calculate what the effect of it on jobs will be. Of course, if the Government plan to contribute less, people in Scotland will have to pay more as the rate of redundancy there goes up. That will take more money out of the Scottish economy, money which will run down the bottomless sink in Whitehall to be squandered as so much money is squandered by Whitehall.
  The Minister of State has not convinced me that the Bill is in any way suitable or appropriate. He has not convinced me that the Government have listened to the voice of the House on 7th February. I must therefore recommend my hon. Friends to oppose the Bill tonight.
  4.38 p.m.
  Sir Anthony Meyer: Until I listened to the Minister of State I was doubtful of the wisdom of my party in deciding to vote against the Bill. But the Minister of State's speech reminded me of a highly respectable figure in a Whitehall farce who is discovered with his trousers down as the curtain goes up on Act II, having been seen at the end of Act I with his hand in the till. My doubts about voting against the Bill are therefore evaporating very rapidly.
  I am against the Bill not so much because it is the wrong way to cut Government expenditure. If I were pushed, I am sure that I could think of much worse days of doing that. Certainly the Government have managed to find some. I am against the Bill not solely because it is directly contrary to the Government's much-proclaimed industrial strategy. That strategy never was credible. The only credible form of industrial strategy for this country is to change Governments as quickly as possible.
  The additional cost to the employer directly as a result of the Bill may very well prove critical. It may very well prove critical particularly in those industries and in those parts of the country

  935
  where the Bill' will be most used. The hon. Member for Aberdeenshire, East (Mr. Henderson) put his finger on this very well, and I echo what he said also with regard to Wales. The effect of the Bill can only be to penalise those parts of the country which are already the worst hit by the problems arising from redundancy. This is a further load imposed on employers, who are already staggering under the impact of the surcharge on employers' contributions, who are already affected by the operations of measures such as the Employment Protection Act, by various other measures which the Government have enacted concerning trade unions, and also by., some of the consequences of legislation concerning equal opportunities.
  As to the whole concept of shielding employees from the consequences of redundancy and of trying to ensure security of employment by legislation, the evidence seems to be accumulating that this complex of legislation is now not merely ineffective but beginning to become counter-productive. The concept of redundancy payments, like that of wage-related unemployment benefits and of employment protection, is all right at a time of industrial expansion. In a country such as the United Kingdom, where old industrial habits die hard, it is most important to induce employees to move out of declining firms and industries into growing firms and industries. It could very well be that measures such as these may be helpful in the context of getting people into the frame of mind in which they readily accept the idea of moving from one firm or industry to another.
  At a time of declining opportunities and a contracting economy such measures reinforce' the downward spiral and make it more' difficult to move people from unproductive to productive employment. Many firms might be able to stage some kind of recovery if they could shed two or three employees and streamline their operations— those employees would go off elsewhere, and so on— but the impact of having to contribute to the Redundancy Fund and having to make an increased contribution to it under the Bill may have precisely the effect to which the hon. Member for Aberdeenshire, East has just referred. It may be critical in driving a small firm into bankruptcy.
  936
  Yesterday I was speaking to a meeting of the National Federation of Self-Employed. The self-employed are very much concerned by the effect that all these measures are having on them and on small businesses in inhibiting their growth and discouraging them from expanding and taking people into new jobs. As the representative of an area body badly affected by a sudden spurt in unemployment— caused very largely by the simultaneous failure or contraction of huge employers, such as the British Steel Corporation, Hawker Siddeley Aviation and Courtaulds— I am more conscious than any other hon. Member of the vital importance of enabling small firms to expand and of encouraging people to become self-employed.
  The best way of securing a very rapid diminution in the unemployment figures is by concentrating on what can be done at the very bottom end with the very smallest businesses— the self-employed. The time has come, therefore, not just for tinkering with the existing measures for employment protection and redundancy but for taking a radically new look at the whole complex of legislation that is supposed to govern the creation or the preservation of employment.
  It is no good looking to the present government for any such radical new look. The Government in these matters, if not in all others, are completely under the thumb of the unions. The unions themselves, alas, seem to be completely under the thumb of those whose thinking on these matters is totally arthritic.
  I am sure that a number of hon. Members who have been in contact with trade union leaders recently have found welcome evidence of some individual trade union leaders thinking in bolder terms than others, but the plain fact is that such views are not effectively represented on the General Council of the Trades Union Congress, and show very little sign at present of making headway in the trade union movement.
  The Under-Secretary of State for Employment (Mr. John Golding): I am very pleased with the observations just made on trade union leadership. Does the hon. Gentleman subscribe to the view, put from the Opposition Front Bench, that these leaders are puff merchants?
  Sir A. Meyer: I am not quite sure what the Under-Secretary of State means. I was listening very carefully to my hon. Friend the Member for Brentford and Isle-worth (Mr. Hayhoe) and I did not hear him use that particular phrase.
  I am making a very serious point. Despite the fact that certain trade union leaders are now well aware of the need for a very radical re-think of our employment policies, and of the fact that intelligent employment policies will produce a permanent increase in the level of employment in this country and a permanent reduction in the level of unemployment, such policies would now necessarily entail an increase in unemployment over the next couple of years. It is simply not possible to run away from this fact.
  Whatever party is in power, it will have to accept increased unemployment figures for the next two years or more. The real question is whether at the end of those two years we shall have a permanent reduction in the level of unemployment, or whether, on the contrary, the temporary increase will turn out to be part of a permanent increase in unemployment.
  By that acid test the Government have totally failed, because they are incapable of any fresh or original thought on the subject. The present Bill is merely an acceptance of the fact that we have a set of measures which is the most to which the trade union movement would allow the Government to assent. These measures are manifestly failing and have to be tinkered with and in some respects made worse.
  Since the Minister of State has said nothing whatever to disabuse me of the belief that this minor measure will now make the Redundancy Payments Act itself a questionable piece of legislation, and make it slightly but significantly worse, I shall have little hesitation in voting against it.
  4.49 p.m.
  Mr. David Mitchell: Last week we had government by abdication. This week we have government by subterfuge and deviousness.
  On 7th February the Government sought to increase the employer's proportion of the cost of redundancy. The House of Commons said "No". Today we have a Bill to enable the Government
  938
  to do exactly the same thing. Of course, there are two changes. First, the Bill permits the Government to do it by an order which will come up for approval in the House in the dead of night. The Government might expect to get it through when perhaps the House is thinly attended— not that it would be possible for the Labour Benches to be much more thinly attended than they are at the moment. The Government are taking this course in order to get through what they could not get through by their Bill lost in February.
  I was interested to hear the Minister's comment that hon. Members might find this Bill more attractive than its predecessor. He said that he himself did. He said that this procedure would be better than the long and cumbersome procedures and pressures of the House. It means that the Government will be able to introduce legislation by order, approved, if time is found for discussion at all, in the dead of night. The hon. Gentleman is one of the nicest and kindest men in the Government, but I wonder whether he realises the implication of his statement. If the procedures and pressures of the House are a nuisance to a Government, is not that what democracy is about? Is not that what the House of Commons is here for? Is not the view he has expressed getting dangerously near to contempt of Parliament?
  It will not be lost on hon. Members that if the procedure outlined by the Government in the Bill, which would enable them to do by order what they were unable to do by debate on the Floor of the House, is followed, such an order could not be amended. It could only be either overturned or not. Contrary to the terms of the Bill which the Government lost on 7th February, there would be no Committee stage for an order, and no opportunity to probe line by line and clause by clause with amendments seeking to change what the Government were proposing. There would be none of that. The House would be left with the straightforward choice of accepting an order or not, and that choice would be given mostly in the dead of night. In effect, therefore, this Bill, unlike its predecessor, would allow the Government to do by subterfuge what they could not do on 7th February.

  939
  Secondly, the Bill reduces the extra contribution to be made by employers. It does so only slightly, but we must be grateful. The Government will take only £16½ million out of industry under this Bill instead of the £18 million they proposed to take under the lost Bill. But I believe that we must look at this Bill against the background of the unemployment situation. Although there may be a statistical aberration, to which the Minister referred, one cannot separate unemployment and redundancy, and I shall discuss a key point where the two impinge upon one another. We are considering the Bill against the background of an unemployment figure of over 1⅓ million, which is expected to go to 1¾ million. We have a Government who want employment but do not care for or understand or even want employers.
  The Bill piles yet another burden on industry on top of all the other burdens that it already has to suffer. It is difficult to know what is the last straw which breaks the camel's back in this case—whether it is the burden of inflation, which means that industry needs more money in order to achieve the same turnover; whether it is increased corporation tax, which takes money out of the business community at the very time when inflation means that it needs more; whether it is increased income tax; whether it is increased national insurance contributions, or whether it is the new surcharge which is to come in next month—the jobs tax, the surcharge of 2 per cent. on national insurance for everyone in employment.
  I do not know which of those burdens is the worst, but the total, with this £16½ million piled on top, will clearly lead to an increase in unemployment. It seems that the Government's slogan could well be "unemployment". Perhaps, if we are to have a General Election soon, they will go to the country on the slogan "We are the party that has managed to double unemployment in only two years. Put us back to continue the good work." I do not know whether that will be the case, but this Bill will certainly add to the unemployment.
  Before the Minister sat down, to thunderous applause from both of his supporters in the Chamber, he said that the Bill would have the effect of reducing the public sector borrowing requirement,
  940
  because if there were a surplus on the redundancy fund it would go to the Treasury. But we know the policy of the Government as outlined by the Chancellor of the Exchequer in his Budget Statement 12 months ago and reaffirmed by him in the economic debate last summer. He told us that he wanted to see a transfer of resources from the consumer and the Government into industry. Yet we are now being asked to approve a Bill to take another £16½ million out of industry and put it into the hands of the Government. The contradictions are all too clear.
  The Minister said that he did not feel it wrong to ask employers to make this additional contribution in the national interest. But is it in the national interest to denude industry of the funds that it needs for investment? Is it in the national interest to denude it of another £161 million which might otherwise go into modernisation or re-equipping? The Bill will lead directly to an increase in unemployment, and I do not see that that is in the national interest.
  The truth is that in 1976 and 1977 the burden of carrying the Government has broken the back of industry. As the process has gone on, the number of unemployed and the number of bankruptcies have risen. There is now the additional burden of £16½ million, but it will not be spread thinly across industry. The Minister cannot say "But it will cost each employer only so much". It is being placed specifically on firms which are in the greatest financial difficulty.
  No company pays people off unless it has to. No company makes people redundant unnecessarily. On the contrary, machines and empty factories do not make profits; they do not help to earn for shareholder, investor, manufacturer or management. They mean a dead loss. When a company reluctantly decides, because of its financial situation, that it has no option but to pay off some of its employees, at that time of acute financial pressure the Government say "You will pay more towards the redundancy payments than you would have done previously". In effect, when a company has had a bad year and is in its weakest financial position, this scheme will translate that bad year into bankruptcy. I know a number of firms which have had to face the fact that if

  941
  they paid off the number of employees they needed to pay off in order to remain in a viable position they would bankrupt themselves because of the Bill.
  Another important point has been made to the Government, but with no response—that there is no right under the companies legislation for any company to accumulate reserves against this liability. Therefore, the liability comes along and the company is unable to accumulate free of tax, a fund with which to meet it. What is more, family companies, close companies and companies which under the tax legislation are forced to pay out their profits in dividend are not allowed to retain the profits within their finances unless they are for immediate investment. They are in the position that they cannot retain the funds necessary to meet redundancy payments because they have had to pay out the money to the shareholders.
  I have a third reason for opposing the Bill, and that is the lost opportunity, to which my hon. Friend the Member for Flint, West (Sir A. Meyer) referred, to rationalise the whole area of what happens when a man becomes either redundant or unemployed in other ways. The redundancy payments legislation helps most those who may need help least. I go further: it may give no help to those who are most in need.
  I shall give two examples to the House. There is the case of a married man with three children living in Scotland who, as the representatives of the Scottish National Party will bear out, is suffering from rising unemployment under the present Government. He finds it difficult to get work in Scotland. He is being driven—as were so many, including my grandfather—to England to seek work. He had the misfortune of changing his job in Scotland a couple of years ago, and now he has lost his job because of rising unemployment. He searches England for a job, finding one, perhaps, in Basingstoke. He has to meet the cost of moving which is much higher, and he has the cost for a while of keeping two homes, yet he has no redundancy payment. He is in great need, but he receives no help.
  I am glad that the Minister has returned to the Chamber. I was making the point to him about the lost oppor-
  942
  tunity to rationalise all that happens when a man loses his job whether through redundancy or in other ways. I was indicating that there are men who are in great need but who get not one penny from the Redundancy Fund, but other men may receive help.
  There is another example from my constituency, where a builder made three men redundant. He did not want to do so, but a contract had ended and demand for construction work was shrinking. He had no option but to pay off the men. There was another building contractor, literally across the road, who took on those three men. They simply crossed the road. I do not know whether they were paid slightly more or less or the same, but I imagine that there was no distinctive difference. They suffered no cost, and they received a substantial sum in redundancy payment. The original builder nearly had a strike on his hands. The other men whom he had not dismissed said "Please, why do you not make us redundant? We could have worked across the road next week for somebody else and we could have had that nice sum of redundancy money in our pockets, yet we got nothing."
  Irrationally, the system often pays out according to how lucky one has been. The luckier one has been, the longer one has had a job and has not been out of work, the more good fortune one has and the more one gets in the payout. The greater the misfortune one has, when one has perhaps changed jobs a number of times and one's employer has gone bankrupt under this Government, the more one suffers.
  Mrs. Winifred Ewing: Would the hon. Gentleman add to his examples the kind of situation which obtains in Moray and Nairn, where a Government-subsidised bus company is able so to undercut all local contractors in the Grampian Region between Inverness, Peterhead and Aberdeen that they are driven out of business? The undercutting means that the Alexander buses are taking on contracts at a loss. Local contractors are having to allow men to become redundant, but they immediately get jobs with Alexander. Money from the ratepayer's pocket is making that undercutting possible. The result is that small businesses engaged in transport in the area are being driven out of existence.
  Mr. Mitchell: I am happy to accept the hon. Member's additional example. I could expound to the House for a long time on other examples of the sort of unfair competition subsidised by the Government and ratepayers which is leading to people being made redundant and, therefore, to claims upon the Redundancy Fund, but I am sure that I would not be allowed to do so because there are others who wish to take part in the debate.
  One can think of, for example, the electricity industry. It has fine show- rooms in the High Street, paid for out of electricity charges on the individual consumer, where it sells electrical equipment, heaters, cookers and so on. The Government subsidise that activity, but by their action they bankrupt the small private enterprise electrical contractor and sales company that is operating alongside the showroom.
  The Minister looks annoyed. I assure him that if he looks at what is happening he will discover that what I have been describing is the case. He will see that the return on assets, where separate accounting has taken place in some of the electrical industries, is such as would have driven bankrupt any private enterprise company.
  If the House wants to look further, there is the direct labour organisations of local authorities. They frequently drive local builders out of business because they act without private accounting, and by using ratepayers' money they are able to make losses and conceal them in a way that no private enterprise firm would be able to use. These examples add to the point made by the hon. Member for Moray and Nairn (Mrs. Ewing). I give one example. In Glasgow it costs more than £4,000 more to build a house through a direct labour department than through private enterprise. These are examples of areas where people are being made redundant as a result of Government activities and therefore calling for additional money from the Redundancy Fund.
  I repeat that an opportunity has been lost. I hope that the Minister will take back the Bill—although it may, happily, be defeated again as was its predecessor— and, in the short time still available to him as a Minister in this Government, consider how he can roll together and rationalise redundancy payments and
  944
  wage-related unemployment benefits. They are related to the difficulties and the suffering of unemployment, unlike the redundancy payments. I hope that he will look at the whole area of retraining.
  If we roll these two things together into a rationalised programme for giving financial and other help to people when they become unemployed, we shall be helping the economy and we shall bring fairness into an area which is so unsatisfactory at present. Above all, we shall be doing something to prevent the growing level of unemployment occasioned by firms having to make payments at their weakest possible moment—when they have to pay people off.
  5.9 p.m.
  Mr. Fred Silvester: I shall not detain the House for more than a couple of minutes, but I think it is right to draw attention to the distinctive difference between this debate and the one in February. This debate does the House no credit. In February, the Bill presented an opportunity for the House to discuss the redundancy payments scheme. It did so, in a debate which, for all its faults, and even though it lasted for only three hours, got together a number of comments that were worthy of the House. Hon. Members made a number of useful points about the scheme and a number of suggestions.
  My hon. Friend the Member for Basingstoke (Mr. Mitchell) and others are trying to inject that same view into this debate. That debate even occurred with two Labour Back Benchers taking part. The debate took place, and, having discussed the redundancy payments scheme and having taken account of the Government's overall economic problems and the fact that they wanted to cut down on our borrowing requirements, the House decided this was not the way to do it. It was a simple matter for the House to take that decision in a useful and valuable debate. We now have that thrown back in our faces, with the result that today we have a debate that is empty, not so much of argument, because we have been trying to keep that up, but of purpose.
  One has only to look at the schedule to the Bill to realise what a tawdry measure this is. Even the fractions show what we are talking about. One chunters down the first column dealing with fortieths

  945
  until one looks at Item 2 where the fraction suddenly splits into 123/200. The purpose of that is to enable the Minister to put a loin cloth on this dreadful Bill. The Minister is an honourable man and it is unfortunate that he has been put in the position of having to introduce the Bill.
  Let me recap on three small points about the Bill, and what we said before and what we say now. It is right for the Government to decide to cut their borrowing if they desire to do so, but it must be right for the House to decide that there are certain areas which they should not touch. If we do not have any latitude in the matter, the House might as well pack up and go home if at all times what the Government say must take precedence.
  If the House decides, as it clearly did, not by accident but of its own will, that something should not be done, and if the Government come back in the same Session with identical proposals, disguised though they may be, and spit in the face of the House of Commons, they ought to be thoroughly ashamed of themselves. The arguments put forward in that debate are still true today. They have been rehearsed, and the Government have presented no answer to them.
  This Bill is an attempt to cut public expenditure at the expense of companies. The Government are taking money from industrial potential and using it for other purposes, but the argument advanced by the Government to date has been that where cuts have to come, and where economies have to be made, industry at least must be allowed to go forward. The Government have shown again that their priorities slip whenever it suits their political convenience.
  Thirdly, and it came out loud and clear in the previous debate, the redundancy rebates system is an integral part of the whole way in which we tackle unemployment. If we tackle it in this way, with a hotchpotch measure that makes matters worse at a time when, as the hon. Member for Aberdeenshire, East (Mr. Henderson) said, companies are at their most vulnerable, we shall do a great disservice.
  The Minister comes from an area in which there is substantial unemployment.
  946
  I come from an area in which unemployment is even higher. It is not sensible for any Ministers who are concerned, as I am sure present Ministers are, with introducing suitable measures to deal with the unemployment situation to come to the House with legislation which is ill thought out for the circumstances with which we are dealing.
  During the past two years we have seen measures which might have had their heart in the right place when they started but which have cumulatively had a deleterious effect on employment prospects. This is becoming increasingly recognised, and if the House is not given an opportunity to debate rationally and calmly and come to a decision, as it did in February, and have an effect on proposed measures, the Government are taking us for a ride, and this exercise is a complete waste of time.
  5.14 p.m.
  Mr. David Madel: The first thing about this short debate is the note of surprise that has been struck by my hon. Friends that we are debating a measure that has been brought back to us in this way. I think we are all agreed that the Bill is not really necessary. The Minister will recall that in the earlier debate in February the hon. Member for Aberdeenshire, East (Mr. Henderson) raised a question about consultation before the Redundancy Rebates (No. 1) Bill, if I may so call it, was introduced.
  The Minister replied to the hon. Gentleman in this fashion:
  "I return once more to the questions put by the hon. Member for Aberdeenshire, East. It is true that there were no consultations"—
  that is before the Bill was introduced—
  "but the hon. Member would have been fairer had he indicated to the House that in a previous Question he had asked me how many representations had been made."—[Official Report, 7th February 1977; Vol. 925, c. 1182.]
  Whether it be consultation or representation, the fact that the Bill was ordered to be printed by the House of Commons on 10th March 1977 has not given industry very much time in which to have consultations and to make representations to the Government on why a second shot should not be made at introducing a Bill of this nature. One would have thought that, having lost the Second Reading of the Bill in February, the Government would

  947
  have allowed a considerable period to elapse before making any attempt to bring forward fresh legislation.
  The Minister of State, in an open and honest speech— at least most of it was that— talked about how the calculations had been arrived at and indicated that a complicated procedure had been gone through. My hon. Friend the Member for Manchester, Withington (Mr. Silvester) rightly drew attention to the fact that to avoid falling foul of the Public Bill Office and the parliamentary draftsmen the Government in the calculations in the schedule leap from 21/40 to 123/200. Presumably, the Statutory Instrument implementing a change in the redundancy rebates will cite which set of fractions in the schedule to the Bill is to be substituted in Schedule 5 of the Great Britain Act and Schedule 6 of the Northern Ireland Act. We no doubt have to wait until the Statutory Instrument is introduced to see which fraction is used.
  Secondly, mention has been made of why 41 per cent. has been used in one of the calculations when all the other percentages go up in multiples of five, from 35 per cent. minimum to 80 per cent. maximum. Again, I assume that 41 per cent. has been arrived at because the Government did not want to fall foul of the parliamentary draftsmen and the Public Bill Office, but we should like an assurance that if the Bill ever gets on to the statute book, before the Government start tinkering around with these percentages, industry, and especially small businesses, will be properly consulted.
  The Bill refers in the Explanatory and Financial Memorandum to the effects of the Bill on public service manpower and says:
  "The changes in public service manpower resulting from the Bill are expected to be minimal."
  In the original Bill it said:
  "No changes in public service manpower are expected to result from the Bill."
  I assume that the reason for that is that, because of the new calculations and the rather complicated 41 per cent. calculation that has to be made, extra work will be necessary and more time may be needed and that may lead to more people having to be employed.
  A number of points have been reiterated in the speeches today, and I
  948
  want to emphasise one point made by my hon. Friend the Member for Basingstoke (Mr. Mitchell). He touched on it today, but he went into it in greater detail on the previous occasion, and it is as relevant today as it was on 7th February. My hon. Friend referred to the contingent liability of small firms and said:
  "It is a liability against which a firm is not allowed to make a reserve."—
  that is the liability for redundancy payments—
  "It is a liability that cannot be entered in the accounts, although it is clearly an expenditure that will have to be met at some stage. There is a strong case for the Minister saying to the Government that there should be an allowance in terms of companies providing reserves for this purpose. That could be mixed in with the way in which the Chancellor deals with the system of stock relief, which is offset against profit. I do not propose to enter into the details, only to say that representations should be made to the Treasury." — [Official Report, 7th February 1977; Vol. 925, c. 1148.]
  My hon. Friend was specific, but when the Minister wound up the debate on that occasion no answer was given to my hon. Friend's question. Assuming that the Government can stagger on, we are entitled to know whether the Department of Employment has drawn this matter to the attention of the Chancellor, who in eight days' time may have an opportunity to make some alterations along the lines mentioned by my hon. Friend on 7th February. It is a point put to us since the debate took place. There has been no answer from the Government. Today provides an opportunity for that answer. There is certainly an opportunity to do something when the Budget comes before us next Tuesday.
  The negative order procedure has been touched on in relation to the three elements in the Redundancy Fund which must be kept in balance. By Section 86 of the Employment Protection Act there is:
  "the general level of earnings … the national economic situation and … such other matters as"
  the Secretary of State
  "thinks relevant."
  The way the Government propose to introduce this legislation is via the negative procedure, but changes to the other elements I have mentioned can be brought about by affirmative resolution and according to specific criteria. As we

  949
  see it, the new form would allow changes in the level of rebate which would be subject only to the negative resolution. No criteria for change are offered. Many speeches have drawn attention to this issue. There is an opportunity for the Government to think again about it.
  When the Minister began his speech he said that in due course it might be possible for higher levels of redundancy rebates to be paid. This debate gives us another chance to look more widely into the whole question of redundancy payment provision. When we won the vote on 7th February we hoped that the Government would allow a considerable time to elapse before attempting anything like this again, not least because we invited them to think more deeply and consult more widely on this issue of redundancy payment provision.
  I leave the Government with some thoughts and suggestions on this subject and draw their attention to the Continental situation. I hope, even at this late stage, that they will look at these matters rather than charge on with the Bill, or attempt to do so. They will agree that there is little sign of the Redundancy Payments Acts since 1965 having reduced collective resistance to changes entailing redundancy. They might also agree that there is not much evidence of lump sum payments helping redundant workers to find better jobs by enabling them to look round at leisure and make a considered choice of a new job.
  Equally, there is no evidence of payments unnecessarily prolonging periods of unemployment or of their being expended in an irresponsible way. Payments are neither more nor less than financial compensation for loss of job, which is only tenuously and indirectly linked to the cost of redundancy. The Government ought to discover whether increased weekly benefits for the unemployed would be a more equitable form of financial compensation for loss of job and would be more likely to contribute to a more relaxed and rational approach to job-seeking.
  If we look at the situation up to 1976 we find that generally the employment service had succeeded in placing about 15 per cent. to 20 per cent. of those laid off in major redundancies. That propor-
  950
  tion has not increased very much in the past 20 years, although there are signs at last that special on-site services where there is mass redundancy are being more effective. Government retraining is considered by few and appeals to fewer people. It has been taken up by only a relatively small number of those made redundant. It is hoped that the latest figure will show an improvement.
  What we are worried about is the provision to assist in geographical transfers. This is even less generally known and used than are the training provisions. On the Continent there are four alterations, and measures which I invite the Government to consider before proceeding further with this Bill. On the Continent a great deal of resources and much expertise are devoted to placement training and assistance with geographical transfer with regard to the labour market generally and the internal labour markets of enterprises. Secondly, greater protection is given in existing jobs for those employees who suffer most from redundancy and who are most difficult to employ, particularly the older workers.
  Thirdly, the promotion of manpower planning within enterprises and the development of an agreed social plan is there to cope with the need for redundancy. Fourthly, although the Government have put effort into their job-creation activities, some of this effort, alas, has not been very effective. More attention and greater resources are devoted to effective job creation on the Continent than in this country.
  There is, of course, a close relationship between unemployment benefit and redundancy payments. The two are inextricably entwined. Having fallen down on 7th February, the Government should look again at this Bill, at what I have said about the background to redundancy payments, what the situation is in the EEC countries, and to remember that there is no pressure for the Bill from industry, small or large businesses, or from the unions.
  We might ask "From whence cometh the pressure?" Is it only that the Government want to salvage their own pride? If so they are going about it the wrong way. They would have been able to perform a much greater service to the nation and to the House if they had said

  951
  "We are spending six months thinking about this question" rather than charging ahead with a Bill which is so complicated and unnecessary.
  5.25 p.m.
  The Under-Secretary of State for Employment (Mr. John Golding): The hon. Member for Bedfordshire, South (Mr. Madel) referred to the fact that the previous Second Reading of this Bill was the first occasion since 1888 that a Bill has been lost on Second Reading. I accept the entire responsibility. My former colleagues in the Whips' Office share that view. The truth is that I am accident prone, having been hit by a bus and lightning, among other minor disasters. To lose a Bill after my first speech at the Dispatch Box was an event which should have been readily foreseen by the Deputy Chief Whip sitting here next to me, who should have known better.
  Losing the Bill was not the only mistake I made that evening. I feel bound to report a bad error concerning redundancies in Northern Ireland which I have had to correct in a letter to the hon. Member for Harrow, West (Mr. Page). In that letter I said:
  "On 7th February— which turned out to be a black night all round for us—I quoted an estimated 'redundancy rate in 1977– 78 of 31,000 and of approximately 33,000 in 1976– 77. I shall try to let the hon. Member have more precise figures'.
  In the event it appears that I gave you false redundancy figures; those that apply in this case are much less, 8,000 for 1976–77 and 6,500 for 1977– 78."
  I apologise to the House for that mistake.
  The hon. Member for Brentford and Isleworth (Mr. Hayhoe) has a bad habit of being offensive. I do not mind him sneaking off and saying nasty things on the radio about my hon. Friend and me. We are used to it. We are quite ready to put up with it, although it would be better if he would name us rather than leaving us anonymous. I do object, however, to the hon. Member being offensive under the protection of parliamentary privilege to people outside this House. To describe the trade union leaders of this country as "puff merchants"—
  Mr. Hayhoe: That was just about Mr. Tom Jackson and one or two colleagues, who, I think, behave as puff merchants for
  952
  the Labour Party. I would not apply that term to all trade union leaders.
  Mr. Golding: The two gentlemen referred to were Jack Jones—
  Mr. Hayhoe: No.
  Mr. Golding: I made a careful note. The reference was to Jack Jones and Tom Jackson. They were singled out as names that would be known.
  Mr. Hayhoe: This is a question of recollection. The reference to "puff merchants" was to Tom Jackson and others who have been speaking on the radio as public relations protagonists for the Labour Party. I did not include Jack Jones in that, although I accept that I had said earlier that Jack Jones had not demanded this Bill, as far as I knew.
  Mr. Golding: No doubt the hon. Member will have the chance to correct Hansard and make certain. For an Opposition Front Bench spokesman on employment matters to describe people of that standing as "puff merchants" is totally irresponsible. We shall not get industrial peace by using intemperate language of that sort.
  I say in passing that I do not want to be misunderstood. Members of my union have taken Tom Jackson to task for speaking for the whole of the telecommunications industry. But we should not use intemperate language of that sort under the protection of parliamentary privilege. If the hon. Gentleman is to abuse people, he should do it outside, face to face, so that they can answer back.
  Mr. Hayhoe: It is an interesting observation by the Minister that it is a term of abuse to describe someone as an unpaid PR puff merchant for the Labour Party. If in his book that is a term of abuse, so be it.
  Mr. Golding: Our recollections differ. The hon. Gentleman will have to go again to the Hansard office to make sure that appropriate corrections are made to the record—a practice to which I am not unaccustomed myself. Let it be a lesson to the hon. Gentleman to be more temperate in his language because, as in the previous debate, when he referred to our Permanent Secretary in terms which he should not have used, he has a bad habit of being carried away when he is at the

  953
  Dispatch Box or before a microphone. We advise him to be more conciliatory in his approach.
  There is very little that I want to say about the speech of the hon. Member for Brentford and Isleworth. The hon. Member for Manchester, Withington (Mr. Silvester), who was yawning his head off at 4.15, summed up the reaction to the hon. Gentleman's speech.
  Mr. Silvester: The yawn had more to do with a four-week old baby in the middle of the night than with my hon. Friend's speech.
  Mr. Golding: I should perhaps congratulate the hon. Gentleman, but I do not know how he could have told the difference between the hon. Gentleman and a four-week old baby in the middle of the night.
  It was apparent from the speech of the hon. Member for Brentford and Isleworth that, to a large extent, the arguments used in the previous debate had been abandoned. I am glad that the hon. Gentle man has departed from them. He spoke mainly about the technical procedure. I am sure that in Committee this matter will be the subject of long and intensive debate.
  Mr. Graham Page: Is the hon. Gentle- man undertaking to make a change in Committee from the negative to the affirmative resolution procedure?
  Mr. Golding: Of course I am not, otherwise I should have said so. I have said that it is certain that this matter will be debated at length.
  I turn to the speech of the hon. Member for Aberdeenshire, East (Mr. Henderson) —
  Mr. Graham Page: The hon. Gentleman cannot pass over in a sentence like that an important constitutional matter which has been raised by every hon. Member who has spoken. He cannot chuck it overboard like that.
  Mr. Golding: The answer to that is, who cannot?
  We appreciate that the amounts involved are relatively small. The hon. Member for Aberdeenshire, East referred to them as the widow's mite. It is a fact of public expenditure that small amounts
  954
  add up to substantial amounts, and that is why ceilings are applied to public expenditure and reductions are suggested in the public sector borrowing requirement.
  I wish to deal with the question of consultation. We have received, even after the last debate, no formal representations from the CBI. I was concerned to hear it said in our last debate that I had not considered the representations from the County Councils Association. But it seems that those representations were not sent to me or to my Department. We have received no representations from the association, as we have received no representations from the CBI. Had representations been made, had we refused to consider them, and had we refused to consult if we had been asked by these outside organisations to do so, the hon. Gentleman would have been correct to chide us for it.
  Whenever I have been asked to consult on or discuss any issue of this sort, my attitude has been to do so. But we have received no formal representations from the CBI, never mind the County Councils Association.
  Mr. Henderson: I am surprised by the hon. Gentleman's remarks. The shortness of notice between publication of the Bill and the date of Second Reading may have something to do with it. However, I do not want to be unfair. The hon. Gentleman has mentioned the CBI and the County Councils Association. What about the TUC? Has not the hon. Gentleman asked the TUC for its opinion on the Bill?
  Mr. Golding: No; I have not consulted the TUC on the Bill.
  Mr. David Mitchell: Should not the hon. Gentleman have discussed with the TUC a Bill that will increase unemployment?
  Mr. Golding: I do not believe that it need necessarily lead to an increase in unemployment; but I must get on. [Interruption.] I was long enough in the Whips' Office to know that when the Deputy Chief Whip frowns at me, I must get on.
  It is important that we deal with the question of the difficulties of small firms, but if it is a choice between granting and not granting the temporary employment

  955
  subsidy, I shall keep the temporary employment subsidy, because it is the Government measure which has been of greatest assistance in reducing redundancies, not only in Scotland, but elsewhere. That is the best way in which we could have responded since December to this question.
  We do not underestimate the importance and gravity of unemployment in Scotland, although we expect fewer rebates to be paid next year. But let me make it clear that the Tory alternative is to increase redundancy. The right hon. Member for Leeds, North-East (Sir K. Joseph) and the hon. Member for Flint, West (Sir A. Meyer), who has apologised for not being present, made it clear that they do not want assistance to go to firms in trouble. If they were on the Government Front Bench, Scotland would be in trouble, because they would refuse financial assistance.
  Mr. Henderson: Since the Government are unable to cope with the situation and since the Tories will increase unemployment, does not the hon. Gentleman conclude that the best thing we can do in Scotland is to become independent?
  Mr. Golding: That is not a view that I hold. But the hon. Gentleman would carry a heavy responsibility if, by any mischance, members of the Opposition were to be in the Departments of Employment and Industry and refusing assistance to people in Scotland threatened with redundancy.
  The Government's policy is to save firms wherever possible. British Leyland was saved with the commitment of £300 million. Chrysler, which is of great importance to Scotland, had £162 million committed, £54 million being saved. The temporary employment subsidy has created 27,682 jobs in Scotland. The hon. Member for Flint, West said that the whole concept of shielding employees proved ineffective, but it has not been ineffective in the British motor car industry or British industry generally, and certainly not in Scotland.
  The hon. Member for Basingstoke (Mr. Mitchell) said that we did not want to help employers. In that case, I should like to know what I have been doing day by day when I have been receiving deputations from employers to save their
  956
  firms and have assisted in doing so. Day by day we in the Department of Industry and the Department of Employment have constantly met joint deputations of employers and trade unionists begging us to save their firms and their jobs. Whenever possible we have taken the view that it is right to do so at the present time. We are appalled that Opposition Members want to depart from that view.
  Mr. David Mitchell Mr. David Mitchell rose—
  Mr. Golding: I shall not give way. The hon. Member for Bedfordshire, South asked a question about contingent liability.
  Mr. David Mitchell: On a point of order, Mr. Speaker. When a Minister attacks an hon. Gentleman in the House is it not usual for him to give way to allow that hon. Member to respond?
  Mr. Deputy Speaker (Mr. Bryant God-man Irvine): The hon. Gentleman knows that when the Minister is in charge of the Floor it is his actions that are paramount.
  Mr. Golding: It is in the interests of brevity, Mr. Deputy Speaker, that I get on. This point has not been raised again with the Treasury, but I shall undertake to do so following the debate.
  We believe that the payment of redundancy benefits has reduced resistance to change. Mr. Gunter said on introducing the original Bill:
  "The purpose of redundancy pay is to compensate a worker for loss of job, irrespective of whether that leads to any unemployment. It is to compensate him for the loss of security, possible loss of earnings and fringe benefits, and the uncertainty and anxiety of change of job."—[Official Report, 26th April 1965; Vol. 711, c. 36.]
  I agree with the hon. Member for Bedfordshire, South when he says that we ought to do everything possible to increase placement, training and mobility allowances and to do whatever we can to protect existing jobs and to do more for job creation. I hope that Opposition Members who are constantly attacking the Manpower Services Commission for doing just that very thing will listen to his words.
  The hon. Gentleman talked about protecting people in existing jobs. I hope that he will have a word with his right hon. Friend the Member for Leeds, North-East who wants firms to go to the wall

  957
  and workers to be declared redundant in the name of classical orthodox economics.
  Mr. Graham Page: Before the Minister sits down is he not going to deal with the charge that he is trying to get legislation by negative order instead of bringing it forward in primary legislation?
  Mr. Golding: No.
  Mr. David Mitchell: Because the Minister cannot.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 220, Noes 183.

  Division No.89

  AYES

  [5.44 p.m.

  Abse, Leo

  Forrester, John

  Mulley, Rt Hon Frederick

  Allaun, Frank

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

  Murray, Rt Hon Ronald King

  Archer, Peter

  Freeson, Reginald

  Newens, Stanley

  Armstrong, Ernest

  Garrett, John (Norwich S)

  Ogden, Eric

  Ashley, Jack

  George, Bruce

  O'Halloran, Michael

  Ashton, Joe

  Gilbert, Dr John

  Orbach, Maurice

  Atkins, Ronald (Preston N)

  Ginsburg, David

  Orme, Rt Hon Stanley

  Atkinson, Norman

  Golding, John

  Ovenden, John

  Bagier, Gordon A. T.

  Gould, Bryan

  Owen, Rt Hon Dr David

  Barnett, Rt Hon Joel (Heywood)

  Gourlay, Harry

  Palmer, Arthur

  Bates, Alf

  Graham, Ted

  Park, George

  Benn, Rt Hon Anthony Wedgwood

  Grant, George (Morpeth)

  Parker, John

  Bishop, E. S.

  Grocott, Bruce

  Pavitt, Laurie

  Blenkinsop, Arthur

  Hamilton, James (Bothwell)

  Perry, Ernest

  Booth, Rt Hon Albert

  Hardy, Peter

  Phipps, Dr Colin

  Bottomley, Rt Hon Arthur

  Harrison, Walter (Wakefield)

  Price, William (Rugby)

  Bray, Dr Jeremy

  Hattersley, Rt Hon Roy

  Radice, Giles

  Brown, Hugh D. (Provan)

  Healey, Rt Hon Denis

  Rees, Rt Hon Merlyn (Leeds S)

  Brown, Robert C. (Newcastle W)

  Heffer, Eric S.

  Richardson, Miss Jo

  Buchan, Norman

  Hooley, Frank

  Roberts, Albert (Normanton)

  Buchanan, Richard

  Hoyle, Doug (Nelson)

  Roberts, Gwilym (Cannock)

  Butler, Mrs Joyce (Wood Green)

  Huckfield, Les

  Robinson, Geoffrey

  Campbell, Ian

  Hughes, Robert (Aberdeen N)

  Roderick, Caerwyn

  Canavan, Dennis

  Hughes, Roy (Newport)

  Rodgers, George (Chorley)

  Cant, R. B.

  Hunter, Adam

  Rodgers, Rt Hon William (Stockton)

  Carmichael, Neil

  Irvine, Rt Hon Sir A. (Edge Hill)

  Rooker, J. W.

  Carter, Ray

  Irving, Rt Hon S. (Dartford)

  Roper, John

  Castle, Rt Hon Barbara

  Jackson, Miss Margaret (Lincoln)

  Rose, Paul B.

  Clemitson, Ivor

  Janner, Greville

  Ross, Rt Hon W. (Kilmarnock)

  Cocks, Rt Hon Michael

  Jay, Rt Hon Douglas

  Sandelson, Neville

  Cohen, Stanley

  Jeger, Mrs Lena

  Sedgemore, Brian

  Coleman, Donald

  Jenkins, Hugh (Putney)

  Selby, Harry

  Conlan, Bernard

  Johnson, James (Hull West)

  Shaw, Arnold (Ilford South)

  Cook, Robin F. (Edin C)

  Johnson, Walter (Derby S)

  Sheldon, Rt Hon Robert

  Cowans, Harry

  Jones, Alec (Rhondda)

  Shore, Rt Hon Peter

  Cox, Thomas (Tooting)

  Jones, Dan (Burnley)

  Silkin, Rt Hon John (Deptford)

  Crawshaw, Richard

  Judd, Frank

  Silkin, Rt Hon S. C. (Dulwich)

  Crowther, Stan (Rotherham)

  Kaufman, Gerald

  Silverman, Julius

  Cryer, Bob

  Kelley, Richard

  Small, William

  Cunningham, G. (Islington S)

  Kerr, Russell

  Smith, John (N Lanarkshire)

  Cunningham, Dr J. (Whiteh)

  Kilroy-Silk, Robert

  Spearing, Nigel

  Davidson, Arthur

  Kinnock, Neil

  Spriggs, Leslie

  Davies, Bryan (Enfield N)

  Lamborn, Harry

  Stallard, A. W.

  Davies, Denzil (Llanelli)

  Lamond, James

  Stewart, Rt Hon M. (Fulham)

  Davies, Ifor (Gower)

  Latham, Arthur (Paddington)

  Stoddart, David

  Davis, Clinton (Hackney C)

  Lever, Rt Hon Harold

  Stott, Roger

  Deakins, Eric

  Lewis, Arthur (Newham N)

  Strauss, Rt Hon G. R.

  Dean, Joseph (Leeds West)

  Lewis, Ron (Carlisle)

  Summerskill, Hon Dr Shirley

  Dell, Rt Hon Edmund

  Lipton, Marcus

  Swain, Thomas

  Dempsey, James

  Lomas, Kenneth

  Taylor, Mrs Ann (Bolton W)

  Doig, Peter

  Loyden, Eddie

  Thomas, Jeffrey (Abertillery)

  Dormand, J. D.

  Luard, Evan

  Thomas, Mike (Newcastle E)

  Douglas-Mann, Bruce

  Lyon, Alexander (York)

  Thomas, Ron (Bristol NW)

  Duffy, A. E. P.

  McCartney, Hugh

  Thorne, Stan (Preston South)

  Eadie, Alex

  McDonald, Dr Oonagh

  Tierney, Sydney

  Edge, Geoff

  McElhone, Frank

  Tinn, James

  Ellis, John (Brigg & Scun)

  MacFarquhar, Roderick

  Tomney, Frank

  English, Michael

  MacKenzie, Gregor

  Tuck, Raphael

  Ennals, David

  McMillan, Tom (Glasgow C)

  Urwin, T. W.

  Evans, Fred (Caerphilly)

  Madden, Max

  Varley, Rt Hon Eric G.

  Evans, Ioan (Aberdare)

  Magee, Bryan

  Wainwright, Edwin (Dearne V)

  Ewing, Harry (Stirling)

  Mallalieu, J. P. W.

  Walker, Harold (Doncaster)

  Faulds, Andrew

  Marquand, David

  Walker, Terry (Kingswood)

  Fernyhough, Rt Hon E.

  Marshall, Dr Edmund (Goole)

  Ward, Michael

  Fitch, Alan (Wigan)

  Maynard, Miss Joan

  Watkins, David

  Flannery, Martin

  Mellish, Rt Hon Robert

  Watkinson, John

  Fletcher, Ted (Darlington)

  Mendelson, John

  Weetch, Ken

  Foot, Rt Hon Michael

  Molloy, William

  Weitzman, David

  Ford, Ben

  Morris, Rt Hon J. (Aberavon)

  Wellbeloved, James

  White, Frank R. (Bury)

  Williams, Sir Thomas (Warrington)

  Young, David (Bolton E)

  White, James (Pollok)

  Wilson, Alexander (Hamilton)

  Whitehead, Phillip

  Wilson, Rt Hon Sir Harold (Huyton)

  TELLERS FOR THE AYES:

  Whitlock, William

  Wise, Mrs Audrey

  Mr. Joseph Harper and

  Williams, Rt Hon Alan (Swansea W)

  Woodall, Alec

  Mr. Peter Snape.

  Williams, Rt Hon Shirley (Hertford)

  Woof, Robert

  NOES

  Adley, Robert

  Grant, Anthony (Harrow C)

  Nelson, Anthony

  Alison, Michael

  Gray, Hamish

  Neubert, Michael

  Arnold, Tom

  Grieve, Percy

  Onslow, Cranley

  Atkins, Rt Hon H. (Spelthorne)

  Grist, Ian

  Oppenheim, Mrs Sally

  Bain, Mrs Margaret

  Hall, Sir John

  Page, Rt Hon R. Graham (Crosby)

  Baker, Kenneth

  Hannam, John

  Page, Richard (Workington)

  Banks, Robert

  Harrison, Col Sir Harwood (Eye)

  Parkinson, Cecil

  Beith, A. J.

  Hastings, Stephen

  Penhaligon, David

  Bennett, Sir Frederic (Torbay)

  Havers, Sir Michael

  Percival, Ian

  Bennett, Dr Reginald (Fareham)

  Hayhoe, Barney

  Price, David (Eastleigh)

  Berry, Hon Anthony

  Henderson, Douglas

  Prior, Rt Hon James

  Biffen, John

  Higgins, Terence L.

  Pym, Rt Hon Francis

  Biggs-Davison, John

  Hordern, Peter

  Raison, Timothy

  Boscawen, Hon Robert

  Howe, Rt Hon Sir Geoffrey

  Rathbone, Tim

  Bottomley, Peter

  Hunt, David (Wirral)

  Rawlinson, Rt Hon Sir Peter

  Bowden, A. (Brighton, Kemptown)

  Hurd, Douglas

  Rees, Peter (Dover & Deal)

  Braine, Sir Bernard

  Hutchison, Michael Clark

  Renton, Rt Hon Sir D. (Hunts)

  Brittan, Leon

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

  Rhodes James, R.

  Brooke, Peter

  Jessel, Toby

  Ridley, Hon Nicholas

  Brown, Sir Edward (Bath)

  Johnson Smith, G. (E Grinstead)

  Ridsdale, Julian

  Bryan, Sir Paul

  Johnston, Russell (Inverness)

  Rifkind, Malcolm

  Budgen, Nick

  King, Tom (Bridgwater)

  Roberts, Michael (Cardiff NW)

  Burden, F. A.

  Kitson, Sir Timothy

  Rodgers, Sir John (Sevenoaks)

  Butler, Adam (Bosworth)

  Knox, David

  Rossi, Hugh (Hornsey)

  Carlisle, Mark

  Langford-Holt, Sir John

  Rost, Peter (SE Derbyshire)

  Chalker, Mrs Lynda

  Latham, Michael (Melton)

  Royle, Sir Anthony

  Churchill, W. S.

  Lawrence, Ivan

  Sainsbury, Tim

  Clark, Alan (Plymouth, Sutton)

  Lawson, Nigel

  Shaw, Michael (Scarborough)

  Clark, William (Croydon S)

  Lester, Jim (Beeston)

  Shersby, Michael

  Clarke, Kenneth (Rushcliffe)

  Lewis, Kenneth (Rutland)

  Silvester, Fred

  Cockcroft, John

  Lloyd, Ian

  Sinclair, Sir George

  Cooke, Robert (Bristol W)

  Loveridge, John

  Skeet, T. H. H.

  Cope, John

  Luce, Richard

  Speed, Keith

  Cormack, Patrick

  McAdden, Sir Stephen

  Spicer, Michael (S Worcester)

  Costain, A. P.

  McCrindle, Robert

  Stainton, Keith

  Crouch, David

  McCusker, H.

  Stanbrook, Ivor

  Davies, Rt Hon J. (Knutsford)

  Macfarlane, Neil

  Stanley, John

  Dean, Paul (N Somerset)

  MacGregor, John

  Steel, Rt Hon David

  Douglas-Hamilton, Lord James

  Macmillan, Rt Hon M. (Farnham)

  Stewart, Rt Hon Donald

  Drayson, Burnaby

  McNair-Wilson, M. (Newbury)

  Stewart, Ian (Hitchin)

  du Cann, Rt Hon Edward

  McNair-Wilson, P. (New Forest)

  Stokes, John

  Durant, Tony

  Madel, David

  Stradling Thomas, J.

  Dykes, Hugh

  Marten, Neil

  Tapsell, Peter

  Ewing, Mrs Winifred (Moray)

  Mates, Michael

  Taylor, R. (Croydon NW)

  Fairgrieve, Russell

  Mather, Carol

  Tebbit, Norman

  Farr, John

  Maudling, Rt Hon Reginald

  Temple-Morris, Peter

  Finsberg, Geoffrey

  Mawby, Ray

  Thatcher, Rt Hon Margaret

  Fisher, Sir Nigel

  Maxwell-Hyslop, Robin

  Thorpe, Rt Hon Jeremy (N Devon)

  Fletcher, Alex (Edinburgh N)

  Mayhew, Patrick

  Townsend, Cyril D.

  Fookes, Miss Janet

  Meyer, Sir Anthony

  van Straubenzee, W. R.

  Forman, Nigel

  Miller, Hal (Bromsgrove)

  Wainwright, Richard (Colne V)

  Mills, Peter

  Wakeham, John

  Fowler, Norman (Sutton C'f'd)

  Miscampbell, Norman

  Walder, David (Clitheroe)

  Fraser, Rt Hon H. (Stafford & St)

  Mitchell, David (Basingstoke)

  Walker, Rt Hon P. (Worcester)

  Fry, Peter

  Moate, Roger

  Wall, Patrick

  Gardiner, George (Reigate)

  Moore, John (Croydon C)

  Walters, Dennis

  Gardner, Edward (S. Fylde)

  Morgan, Geraint

  Warren, Kenneth

  Gilmour, Rt Hon Ian (Chesham)

  Morgan-Giles, Rear-Admiral

  Weatherill, Bernard

  Gilmour, Sir John (East Fife)

  Morris, Michael (Northampton S)

  Goodhew, Victor

  Morrison, Charles (Devizes)

  TELLERS FOR THE NOES:

  Goodlad, Alastair

  Morrison, Hon Peter (Chester)

  Mr. Spencer Le Marchant and

  Gow, Ian (Eastbourne)

  Mudd, David

  Sir George Young,

  Gower, Sir Raymond (Barry)

  Neave, Airey

  Question accordingly agreed to.

  Bill read a Second time.

  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  NUCLEAR INDUSTRY (FINANCE) BILL
  Not amended (in the Standing Committee), considered.
  NUCLEAR INDUSTRY (FINANCE) BILL
    Clause 1

      GOVERNMENT GUARANTEE OF COMPANIES' BORROWING, ETC.
      5.58 p.m.
      Mr. David Penhaligon: I beg to move Amendment No. 1, in page 1, line 12, leave out subsection (2).
      Mr. Deputy Speaker (Mr. Oscar Murton): With this it will be convenient to discuss Amendment No. 4, in page 1, line 18, at end insert—
      '() The specified circumstances mentioned in subsection (2) above shall be those set out by the Secretary of State by order (made by statutory instrument and subject to negative resolution by the House of Commons) within six months of the coming into force of this Act.'
      Mr. Penhaligon: In the view of the Liberal Party, in many ways this provision is the whole guts of and certainly refers to the real controversy in this Bill. We as a party for some time have been gradually increasing our doubts about the wisdom of a number of aspects of nuclear power, and this subsection refers to the issue which disturbs us most at the moment.
      As it stands, the clause in effect gives permission to the British nuclear fuel industry to make guarantees to overseas customers to repay them sums of money which they will advance to us for the building of the reprocessing plant at Windscale. Our basic and fundamental objection is that this seems a rather peculiar way of legislating—making guarantees for sums of money for a project which is the subject of a public inquiry at the moment.
      It is our view that the decision on reprocessing is a political one, but one that we hope will be based on the facts. Until a public inquiry has taken place, we do not believe that there are sufficient facts available on which to base the decision.
      6.0 p.m.
      We wish to remove this subsection so that when the House does discuss the
      962
      matter it will be better informed about the arguments for and against a nuclear reprocessing plant at Windscale. The real worry of the Liberal Party in relation to reprocessing is the increased chances of the proliferation of plutonium throughout the world, particularly in countries without access to that substance.
      When this matter was debated in Committee we asked the Minister just how a guarantee could be made that the plutonium could be kept under lock and key, so to speak. We asked for an assurance that tremendous efforts would be made to ensure that the "book-keeping" on plutonium was such that it could not be taken by a third party on an illegal basis.
      The scientists believe that the best bookkeeping they can do on this matter would give an error of about 2 per cent. The charge of plutonium required for a single fast breeder reactor is of the order of 1·1 tonnes. Two per cent. of 1·1 tonnes means that for a single charge for a single fast breeder reactor the accuracy of the bookkeeping is plus or minus 22 kilograms. People who are experts suggest that the minimum quantity of plutonium needed for any nuclear weapon is 6 kilograms. Therefore, it would appear that the maximum error which would not be detected would be the disappearance of 20 kilograms of plutonium. No one would know, yet that would be enough to make three weapons.
      Far larger quantities of plutonium at this moment are being generated in thermal reactors. The average charge for a thermal reactor is 25 tonnes of uranium 253 and 238. Even when that particular reaction stops, the vast bulk of what is left in the reactor is uranium 235 and 238. Out of the original 25 tonnes I understand that about 24 tonnes are left. The only reason why reprocessing is considered at that particular stage is that it is no longer possible to make the pile go critical. In other words, reaction stops.
      That reminds me of a simple physics experiment that many of us performed at school. Two different plates were put in acid and as a result a bulb lit up. When the bulb went out the reason was the oxidisation of the plates. The particular skill involved here is making sure that the chemical reaction does not foul itself up. So it is with thermal reactors. After a period of about two years the

      963
      reaction stops because the by-product of the reaction is such that in effect it can no longer be started up.
      If one reprocessed 25 tonnes of two sorts of uranium and the by-products, one could release the uranium and presumably use it again. It is the by-products that are really crucial. Even on one charge of one nuclear reactor there are 250 to 350 kilograms of plutonium. It is the belief of many people, including the Liberal Party, that reprocessing on the scale envisaged by some will make available to the world very large quantities of plutonium in a relatively short period. It will not just be the plutonium from the fast breeder reactors to which I have referred, but there will be substantial quantities also from the thermal reactors.
      The Bill, if implemented, will mean that the overseas contract, about which so much is being said in the Press, will begin the process towards extraction of these materials. The particular guarantee most likely to come to fruition in the near future is the one from Japan. This is a guarantee against a sum of £400 million offered by the Japanese Government as an advance payment to British Nuclear Fuels Limited to build the reprocessing plant. A lot of questions are being asked about the guarantees in these circumstances.
      If the plant does not get planning permission, the Japanese will get their money back, and no one would dispute that. If the plant is built and is discovered not to function for numerous reasons, the Japanese will not have their money returned. Some questions have been asked about the right of the Japanese and other overseas countries to information giving the precise technical reasons why the plant had failed and they had lost their £400 million. The assurance was given that they would have no right to any technical information as they would not be involved in any technical decisions in building the project. I can never recollect Governments overseas showing such remarkable generosity with such a large sum of money. The Japanese are desperate to get reprocessing out of their own country, not least because the plant they are trying to build does not seem to work.
      The third possibility is of the plant being half built with the Japanese money,
      964
      and the Americans then using their power to ban the transfer of what was their uranium 235 and 238 to third countries. The vast bulk of uranium came originally from America and in the contracts under which they sold to other countries there was the power to say "No" to that country selling or transferring the uranium to third countries.
      I am told that a combination of the various groups on 9th March petitioned the United States Energy Research and Development Administration in what is called a rule-making hearing at which discussions about the re-processing of nuclear fuel originate in the United States. As recently as last year the Ford Administration introduced temporary bans on the transfer of such fuels from Japan and Spain to Windscale. That ban was rescinded, but there is a good possibility—and a few people think a likelihood—that the ban will be reimposed, and therefore the Japanese will not be allowed to send the material to the United Kingdom in any case.
      In that event what will happen to the £400 million? The Government must have applied their mind to this question. Will the Americans pay damages if certain decisions are taken? That is hardly a possibility. Will Britain return to Japan the money lent to us, money that we have already spent, or will Japan take the view that that money will be lost?
      There is enormous anxiety in the United States over the subject of reprocessing in Western Europe, mainly at Windscale and in France. We all know that very great efforts have been made by the United States and indeed by ourselves to stop the spread of plutonium. If the material to which I have referred is released from what is left in the reactor, enormous quantities of this material will exist and it will be available for people to use almost as they choose.
      I have tried to outline in brief the proliferation problem. It is not only a matter of third or fourth countries obtaining this material. I am told that, given a source of plutonium, any country could obtain the services of nuclear advisers and out of that material make a bomb. That is one important side of the proliferation question. Tht other aspect that worries me equally is what will happen if

      965
      guerrillas in any country manage to obtain a small quantity of this material and use it in guerrilla warfare in a way that the world has not yet experienced.
      The main argument advanced in favour of this form of nuclear reprocessing is on the lines "If we do not do it, somebody else will." That has been the defence of the prostitute over the centuries. I do not dismiss that argument out of hand, but experience leads us to think differently. The United States has built two or three reprocessing plants within the last decade, every one of them has been shut down, and the losses have been enormous. The Japanese have been trying to do their own reprocessing and their plant does not work. The plant leaks and cannot be used.
      The only people who appear to have a plant working on any scale are the French. They have already entered into commitments extending that equipment to the maximum capacity. There is little likelihood of the French building enough equipment to grab all the contracts, if I may put it that way.
      It is nonsense for the House to approve these borrowing powers when the project to which the expenditure refers is in the process of public inquiry about safety and a number of other factors. This House will abdicate its responsibility if it does not take those matters strongly into consideration. The matter of reprocessing is a political decision, and the more we can base that decision on facts, the better. The inquiry has been set up to try to elicit all the factors from arguments for and against, and it is absurd for this House to pass judgment before we have heard the arguments.
      6.15 p.m.
      The Minister was asked on Second Reading whether we were to sign any more contracts for the reprocessing of nuclear waste from third countries. We already have substantial quantities of such material in the United Kingdom. We require an answer to that question before deciding how to dispose of this material. Many arguments can be put against the continued importation of nuclear waste until we decide what we are to do about the situation. Relatively speaking, there is no great problem in dealing with the material that is already in the United
      966
      Kingdom, because we have a substantial number of ponds where this material may be watched, cooled and kept under careful conditions. That material can continue to be dealt with in ponds until we have reached a final solution on the disposal of 600 or 700 kilograms of waste.
      Are the British Government contemplating further contracts for the storage of other countries' waste? I do not understand why it is regarded as so important for Britain to store other people's waste. It is said that the Japanese do not wish to store their own waste because they are in an area of high geological activity and are worried that escapes of this material could lead to great loss of life. No doubt the Japanese are right to be worried about these factors, but they are building their own power stations in which these materials are used and have also built their own reprocessing plants. I suggest that the Japanese should seek to cope with three units of this material instead of the present figure of two units.
      I do not fully understand the pressures on this country to import this material. There is the slightly cynical view held by some that the final solution in getting rid of this waste is a long way off—and that certainly applies to a solution that is acceptable to public opinion. It is said that the Japanese take the view "If there is to be a dump, it is better that it should be in the United Kingdom than in Japan."
      I have tried to give an outline of my reasons for wishing to delete subsection (2). We are also discussing Amendment No. 4, which seeks to provide a similar level of protection, because it will make the legislation subject to negative resolution by the House of Commons. That would bring the political decision back to the Floor of the House, so that these matters may be debated and considered against the knowledge that is then at our disposal. It is precisely for that reason that we are asking this. Until the reprocessing inquiry at Windscale has been completed, we do not have the best information to make a logical decision.
      Mr. Arthur Palmer: The hon. Member for Truro (Mr. Penhaligon) used the word "we". Is the Liberal Party officially opposed to nuclear power stations?
      Mr. Penhaligon: No. The Liberal Party is not officially opposed to power stations. I mean nuclear power stations. To be against all power stations would be a difficult policy to adopt. We are saying that because of our luck in finding other sources of material and because of the potential energy saving that exists through massive schemes of insulation and the improvement of the efficiency of transport equipment, the country does not require a final decision to be made about the use of nuclear power yet. There is a breathing space and it can be used for the House to concentrate its mind on the facts as they are revealed, and not all the facts have yet been revealed. The House can then come to a logical decision.
      It is for those reasons that I move the amendment. It is intended to enable the House to make a decision after the public inquiry has been held, and I hope that it will receive widespread support.
      Mr. Frank Hooley: We are told that the state of the economy is now such that we must guard and watch over every pound of proposed public expenditure. Yet in such a situation we are presented with a Bill that cheerfully proposes a commitment of £1,00) million of taxpayers' money in an area that is technologically and politically highly controversial. I doubt whether anyone knows exactly what direction the argument will take and what policies will be deployed over the next 10 years. Yet the Bill proposes that the British taxpayer should bear the burden of £1,000 million, £500 million for existing work and another £500 million for work that is dubious in many respects—some of which have been mentioned by the hon. Member for Truro (Mr. Penhaligon)—and which carries the greatest possible technical, political and international uncertainties.
      I do not wish to go over the technical questions that have been touched upon by the hon. Member for Truro. It is generally known that there are great and considerable technical controversies about reprocessing. There is great political controversey over whether it is necessary and about its political implications. America cannot be regarded as a technologically backward country, yet the American Government appear to have suspended judgment on reprocessing for a period and are using possibly rather strong-arm
      968
      tactics on some of their allies to persuade them not to spread reprocessing technology around the world too lightheartedly.
      Subsection (2) proposes the most extraordinary commercial arrangement that one could envisage. It says that if BNFL persuades a customer to put up money for a reprocessing plant, if something goes wrong, neither BNFL nor the customer but the British taxpayer would have to stump up. There is an open guarantee up to £500 million—and that is not a fleabite—that if anything goes wrong between the overseas customer and BNFL, the British taxpayer will be required to stump up.
      Mr. Penhaligon: I pursued this point in some depth through Parliamentary Questions and I think the Minister will probably agree that if, for technical reasons, the plant fails, the overseas customer will lose his money. I received that information as a result of parliamentary Questions and I pass it on as a point of interest.
      Mr. Hooley: It is up to the overseas customer if he is prepared to enter into a contract on that basis. If BNFL goes for such a contract and can persuade the overseas customer to accept it, the customer or BNFL should stand the loss.
      I find it extraordinary that no provision appears in Clause 1 that BNFL must use its best possible technical expertise, that it must go into the commercial implications and possibly take special advice on the technology or the commercial viability of the contract. There is an open-ended offer of £500 million of taxpayers' money to enable BNFL to go ahead with a contract that is generally accepted to be technologically and politically of considerable uncertainty.
      I certainly do not call into question the technical competence of BNFL scientists and engineers and their wish to do a good job, but this is an extremely hazardous and uncertain area. There was a disastrous accident at Windscale as recently as four years ago that resulted in the closing of part of the plant. Windscale has been struggling to recover from that for some time.
      There was recently an unfortunate leak of radioactive liquid of some kind that

      969
      caused, perhaps unnecessarily, public anxiety about processing and the safety requirements at Windscale. We also know that, as a result of considerable pressure from the public and hon. Members, the Secretary of State for the Environment has called in a planning application for a particularly controversial aspect of work at Windscale. In the light of this I find it extraordinary that the House should be asked to commit the taxpayer to a potential outlay of £500 million—although I agree that the amount would not have to be anything like as large—for a reprocessing plant that has been the subject of so much controversy on technical, planning and international diplomatic grounds.
      There is another consideration. The hon. Member for Truro said that the Japanese had not got far with their reprocessing. My impression is that they are not doing too badly. I was in Japan a fortnight ago and, according to the Press, the Japanese seem to be making some technical progress with the plant. This matter raises questions about the diplomatic relationship with regard to nuclear fuel between the United States and Japan. The United States may exert pressures on the Japanese Government not to go ahead with the reprocessing plant, even if the Japanese proved technically competent to build and operate it. But that is a matter for Japan and the United States.
      Mr. T. H. H. Skeet: I dare say that the hon. Member for Sheffield, Heeley (Mr. Hooley) is aware that in The Guardian of 16th March it was indicated that the Japanese plant that will be ready and coming into operation shortly will be able to deal with 250 tonnes of oxide fuels a year. In that case the plant would not serve Japan's existing power stations and it is essential for the Japanese to try to obtain the English contract.
      6.30 p.m.
      Mr. Hooley: I am not disputing that. I think that I remember seeing that report. I am not certain what the Windscale capacity for the Japanese contract was supposed to be, but I think that it was about 600 tonnes a year, which is not widely different from the figure quoted by the hon. Gentleman.
      970
      I am not quibbling about the exact figures and I accept that, at least in the short term, Japan would find it convenient to have its fuel reprocessed at Windscale. However, we are not talking about the short term; we are talking about a major new project that is the subject of a planning inquiry by the British Government and about a technological process that has been called into question by a country as technologically sophisticated as the United States.
      It is strange that we should be expected to give a blank cheque to BNFL and to tell the firm that, whatever it does, it cannot lose, that it can sign any contract with the Japanese, because if something goes wrong, for political, technical, or other reasons, the taxpayer will bail it out. There is no incentive for BNFL to examine carefully the commercial implications of the contract.
      My reading of the clause and the Explanatory Memorandum does not indicate that BNFL will be under any constraints if advance payments have to be repaid. That is an odd way of dealing with public money.
      We are constantly told that nuclear power is the cheapest form of power available. This calculation turns on whether a particular station is used for base loading and run continuously or brought in to meet peak load demand. One can never work out the cost of such things as research and development over the past two decades, the processing of fuel and the associated research and technology. I sometimes wonder whether we have been given an accurate assessment of the cost per unit of electricity generated from nuclear sources and when I see a Bill that asks for £1,000 million of taxpayers' money to continue the programme, I become more dubious about the real cost of nuclear power to this country.
      It would be out of order to have a wide-ranging discussion on fuel and energy policy, though it has some bearing on the Bill. I have some reservations on the provision to give the Secretary of State authority, subject to parliamentary approval, to provide capital for the existing activities of BNFL, which I am not calling into question, but if we underwrite another £500 million for a contract

      971
      that has attracted within the United Kingdom and internationally so much uncertainly and criticism, that would be a curious act by this House at this time.
      Mr. Palmer: The question that I put to the hon. Member for Truro (Mr. Penhaligon) goes to the root of the matter. We must make up our minds whether we want electricity derived from nuclear fission or not. If we are to get the massive blocks of power for the future to maintain our industry when fossil fuels eventually run out, I can see no way of obtaining them except by nuclear fission and power stations operating that principle. This has been the accepted wisdom in these matters for a considerable time.
      The hon. Member for Truro said that the Liberal Party was not against nuclear power stations or against power stations generally—which was reassuring—and that in any economy with nuclear power stations, reprocessing facilities must be provided. That has been done in this country.
      The Select Committee on Science and Technology considered reprocessing in considerable detail in 1968–69. We thought then that it would eventually be a fairly important trading and commercial business for this country, which was well ahead of most other nations in nuclear power.
      One of our recommendations was that a separate State trading company should be set up to do this work. We looked upon it as legitimate commercial trading business. We needed this reprocessing ability for our own stations and, as sensible people, we thought that Britain, as a commercial and industrial nation, should take on this work. I am glad that the Government of the day implemented that recommendation.
      Mr. Penhaligon: Can the hon. Gentleman explain why a reprocessing facility is needed now or at any time in the next decade when we seem to have got along quite well without it for the past 20 years?
      Mr. Palmer: There is a constant movement of nuclear fuel between a power station and a reprocessing plant. The question of how much fuel is kept at a power station and how much is taken
      972
      for reprocessing at Windscale is a matter for arrangement, but a reprocessing facility is part and parcel of a nuclear power system. We cannot have a nuclear power station and then decide that there should not be any reprocessing.
      I often think that many of the opponents of reprocessing are actually against nuclear power generally and it would certainly be more honest to say that we should not have nuclear power stations at all than to say that we can have the stations but we must not have the reprocessing.
      Mr. Robin F. Cook: My hon. Friend has said that there is no nuclear power which does not have reprocessing as part of the industry, but the Canadian system, CANDU, was specifically designed to exclude the reprocessing of fuel. The Canadians do not reprocess oxide fuel. I visited Windscale with our hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) and was advised by scientists there that it is as possible to vitrify without reprocessing as with reprocessing. The only reason for reprocessing is the added economic benefit which it can bring, although this depends on having a fast breeder reactor to give it commercial viability. Without that, there is no need for commercial reprocessing.
      Mr. Palmer: I am aware of the points made by my hon. Friend the Member for Edinburgh, Central (Mr Cook). I have seen the CANDU power station at Pickering. It is a highly successful plant. It is possible to arrange these matters so as not to have reprocessing, but that is not the nature of our nuclear power programme.
      Mr. Jim Marshall: Does my hon. Friend agree that with our power stations reprocessing is required because we cannot allow nuclear waste to build up indefinitely? Does he also agree that one of the advantages—it may not be the main one in the long run—is that it decreases by nine-tenths the volume which ultimately has to be buried somewhere? Does he further agree that, if reprocessing is to be continued, the nuclear power industry is the only fuel-producing industry which is fully self-contained and has to bear all the costs, including reprocessing costs?
      Mr. Palmer: My hon. Friend has underlined the point I am trying to make. I wish people would be honest and say that they are against nuclear power stations instead of trying to get at the nuclear power programme by attacking the financial arrangements for reprocessing. We have the reprocessing facilities. It is good, sensible, commercial business, subject to safeguards, to obtain such business internationally.
      The hon. Member for Truro said that the United States had doubts about reprocessing. It may be that the United States does not have engineers as good as ours in this area. We must not necessarily assume that they can do everything. We must look at this matter from the point of view of our own stations. We have the reprocessing capacity and we can us it commercially. That was the sensible recommendation of the Select Committee in 1969.
      I congratulate the BNFL on the great success that it has made of the task that was given to it. It is a successful State trading company.
      With large capital transactions of this kind, there must be a Government guarantee. There must be sufficient financial arrangements. If we leave out the subsection, the Bill will be wrecked. I think that that is the real intention behind the amendment. However, I wish that the hon. Member for Truro would do it in a more straightforward way.
      The Under-Secretary of State for Energy (Mr. Alex Eadie): A number of general points have been made with which I should like to deal before turning to other aspects of the debate. I think that the most useful course is for me to deal with the substance of Amendment No. 1.
      As I indicated during earlier debates on the Bill, the Government's intention in taking these powers is to enable them to guarantee advance payments made by overseas customers to finance their share of the proposed oxide reprocessing plant at Windscale, which, as the House knows, is to be the subject of a public inquiry. In view of the sums involved—the limits proposed in the Bill relate to the estimated cost of the plant—the Government believe that it is reasonable that customers should be guaranteed a return of these payments should BNFL be unable to repay in the limited circumstances which
      974
      have already been explained in great detail.
      6.45 p.m.
      In addition, we cannot rule out the possibility that other aspects of BNFL's business, such as uranium enrichment or hexafluoride conversion, might be financed in a similar way. If the terms were right, we would not wish BNFL to be denied access to financing its investment in this manner because the Government could not guarantee such advance payments. In principle, therefore, the amendment is unacceptable. If the indirect object of the amendment, as the hon. Member for Truro (Mr. Penhaligon) has explained, is to discourage and, if possible, prevent BNFL from undertaking overseas reprocessing work, that is a mistaken objective.
      There are two important advantages in undertaking this kind of work. Not only is it attractive commercially, but it assists our non-proliferation objectives. By taking on work of this kind for foreign countries, we help to discourage the development of reprocessing plants overseas.
      Mr. Hooley: Am I right in thinking that Sir John Hill is on record as saying that there is no commercial viability in reprocessing and that the cost is far greater than the value of the material recovered?
      Mr. Eadie: My hon. Friend is wrong in thinking that. We discussed these matters at great length in Committee and to some extent on Second Reading.
      Mr. Penhaligon: The hon. Member for Sutton and Cheam (Mr. Macfarlane), who is not present, made a long and careful speech outlining why it was not as profitable as the Minister thought. The hon. Gentleman's reply was that the hon. Member for Sutton and Cheam had his experts and he had his own. That was the end of the Government's reply.
      Mr. Eadie: I think that the hon. Gentleman has been very unfair to the hon. Member for Sutton and Cheam (Mr. Macfarlane). I think that the hon. Member for Ross and Cromarty (Mr. Gray) will recall that his hon. Friend the Member for Sutton and Cheam spoke at great length on the non-proliferation argument and that I responded to that argument. The hon. Member for Truro may not agree on how the hon. Member for Sutton

      975
      and Cheam put the argument. It is for both of them to argue that matter. I suggest that it was in the context of the non-proliferation argument, and I complimented the hon. Gentleman on it.
      Mr. Hamish Gray: For the sake of the record, perhaps I should point out that the hon. Member to whom reference has been made is my hon. Friend the Member for Carshalton (Mr. Forman), not my hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane).
      Mr. Penhaligon: I am sorry. I thought that it was the hon. Member for Sutton and Cheam.
      Mr. Eadie: Yes, it is the hon. Member for Carshalton (Mr. Forman).
      The main arguments advanced against undertaking the process are that it might not be safe, that we might find ourselves having to store the resulting nuclear waste, and that there might be heavy losses if advance payments had to be returned because of technological or other difficulties in operating the plant.
      As to the first argument, as my right hon. Friend the Secretary of State for the Environment said on 22nd December, the relevant safety considerations will be examined at the forthcoming public inquiry. As to the second argument, contracts are to contain clauses giving the option to return waste to the country of origin and to discontinue the reprocessing obligation if this cannot be done. As to the third argument, I repeat the assurances already given that the technological risk in these contracts will be borne by the customer, not by the company, and that advance payments will be repayable only in circumstances which would not represent a loss to the company. I hope that the House will reject Amendment No. 1.
      On Amendment No. 4, I think that the hon. Member for Truro to some extent tied his arguments to those in support of Amendment No. 1, so I would advocate the same arguments as I used on Amendment No. 1.
      I come now to the point of substance that the hon. Member for Truro raised. He was concerned about undertaking the storage of irradiated fuel and taking in such fuel before knowing how residual waste will be disposed of. I refer him to
      976
      the remarks made on Second Reading by my right hon. Friend the Secretary of State. I shall not quote my right hon. Friend's words, but the hon. Member for Truro can refer if he wishes to Hansard of 8th February, at col. 1256. when this matter was dealt with at great length.
      The hon. Member for Truro also argued about America, but I ask him to recollect that I dealt with the issues of proliferation and safeguards at great length in Committee, as he will see if he looks at columns 75 and 76 of Hansard. On the question of American intervention, the hon. Member asked about the implications for the Japanese contract of any United States restraint or other international restraints on the shipment of irradiated fuel. My right hon. Friend the Secretary of State for Energy explained the implications in a Written Answer on 23rd December, when he stated:
      "It is usual for nuclear fuel to be supplied subject to a requirement that it will not be transferred by the recipient to another country without the suppliers' authorisation. This is the only international restraint on the transfer of spent fuel from Japan to the United Kingdom for reprocessing. This requirement is not new, and authorisation has never been refused for transfer to the United Kingdom."—[Official Report, 23rd December 1976; Vol. 923, c. 299.]
      The Government of the United States are currently reviewing the conditions under which authorisations for transfers were granted, in the light of the conclusion of the review of nuclear export policy. If the United States stopped BNFL reprocessing, the risk would fall on the customer. Repayments would be due in under the limited circumstances that I have described at length.
      Mr. Skeet: I understand that the Minister is referring to existing contracts. The American Government have authorised transfer to the United Kingdom for reprocessing. Will the hon. Gentleman take a step further and explain what will happen to the new contract which is likely to come into operation? Would the United States exercise a veto in that case? If it did, there would be great problems for the United Kingdom.
      Mr. Eadie: The hon. Member for Bedford (Mr. Skeet) posed the same question in Committee.
      Mr. Skeet: I did not receive an answer.
      Mr. Eadie: I said in Committee that one reason why I could not give an answer was that I was not privy to the decisions of the American Government. I am still not privy to the decisions of the American Government.
      Mr. Skeet: The hon. Gentleman should ask.
      Mr. Eadie: The hon. Gentleman is putting a question to me as if I knew what the decisions of the American Government were. I have replied as best I can to the debate, and I hope that the House will reject the amendment.
      Mr. Gray: It is not the intention of the official Opposition to vote on this amendment, although the hon. Member for Truro (Mr. Penhaligon) says that he will vote on it.
      Mr. Penhaligon: We will.
      Mr. Gray: To some extent the amendment of the hon. Member for Truro was irrelevant at this stage of the proceedings. Those of us who were on the Committee heard him deal with this subject at great length, and he was given the same answers as he has received today. I think that the hon. Member for Truro has a genuine desire to see more parliamentary scrutiny. That could well be achieved if he interested himself in the next Opposition amendment.
      The Liberal Party has to make up its mind about its attitude to the whole nuclear industry. In the part of the United Kingdom that I represent, the North of Scotland, there is a United Kingdom Atomic Energy Authority establishment at Dounreay. In the years that I have been in politics I do not recall any Liberal candidate or any representative of the Liberal Party taking exception to that establishment at any time. The former Liberal Member for Caithness and Sutherland, who is now Lord Mackie, would be willing to confirm that the Liberals in that part of the country did not take exception to Dounreay when it was created, and, to my knowledge, they have not taken exception to it since.
      Waste fuel has been moved from that part of the country to Windscale for many years. This has been known, and no objection has been taken to it. It seems rather strange that at this stage a great deal of anxiety should be expressed about it. I do not say that the anxiety is not justified, and I wholly support every conceivable measure which would ensure the safety of transport of any spent fuel, but it seems surprising that such concern should be expressed at this stage.
      Mr. Penhaligon: The reason is fairly obvious. We are about to build a reprocessing plant. If I judge the feeling of the House correctly, the House is about to vote a very large sum of money to build a plant for which the House has also agreed that there should be a public inquiry. The House will be voting the money before that public inquiry has reported. That seems to be lunacy of the first order, even if all the hon. Gentleman's other points are valid.
      Mr. Gray: The whole point—which the hon. Member for Truro had not spotted—is that the House will be voting on an extension of the limits. The fact that a public inquiry is to take place is a complete safeguard and should answer the hon. Gentleman's point.
      It is not unusual for a Government to come to the House and ask for limits to be extended. If the Government continue in office for much longer—let us hope that they do not, but it is up to the Liberals what they do about that—it is likely that they will come back to the House with a great many more Bills to ask for limits to be increased because of the inflation to which they have contributed. But it is not my duty tonight or any other night to argue the Government's case.
      We do not see that the amendment does anything more than the amendment that the hon. Member for Truro discussed in Committee, and we shall not be supporting him on this occasion.
      Question put, That the amendment be made:—
      The House divided: Ayes 28, Noes 171.

      Division No. 90.]

      AYES

      [6.59 p.m.

      Bottomley, Peter

      Fookes, Miss Janet

      Grylls, Michael

      Clark, Alan (Plymouth, Sutton)

      Glyn, Dr Alan

      Henderson, Douglas

      Cooke, Robert (Bristol W)

      Gow, Ian (Eastbourne)

      Hodgson, Robin

      Fisher, Sir Nigel

      Grimond, Rt Hon J.

      Howells, Geraint (Cardigan)

      Knight, Mrs Jill

      Rathbone, Tim

      Wainwright, Richard (Colne V)

      Lawrence, Ivan

      Rees-Davies, W. R.

      Wakeham, John

      Marshall, Michael (Arundel)

      Stainton, Keith

      Mates, Michael

      Stanbrook, Ivor

      TELLERS FOR THE AYES:

      Miscampbell, Norman

      Thompson, George

      Mr. David Penhaligon and

      Nelson, Anthony

      Thorpe, Rt Hon Jeremy (N Devon)

      Mr. A. J. Beith.

      Onslow, Cranley

      Trotter, Neville

      NOES

      Allaun, Frank

      Grant, John (Islington C)

      Parker, John

      Armstrong, Ernest

      Grocott, Bruce

      Parry, Robert

      Ashley, Jack

      Harper, Joseph

      Phipps, Dr Colin

      Ashton, Joe

      Harrison, Walter (Wakefield)

      Radice, Giles

      Atkinson, Norman

      Hattersley, Rt Hon Roy

      Richardson, Miss Jo

      Bagier, Gordon A. T.

      Hoyle, Doug (Nelson)

      Roberts, Gwilym (Cannock)

      Barnett, Rt Hon Joel (Heywood)

      Huckfield, Les

      Roderick, Caerwyn

      Bates, Alf

      Hughes, Rt Hon C. (Anglesey)

      Rodgers, George (Chorley)

      Benn, Rt Hon Anthony Wedgwood

      Hughes, Robert (Aberdeen N)

      Rodgers, Rt Hon William (Stockton)

      Bennett, Andrew (Stockport N)

      Hughes, Roy (Newport)

      Rooker, J. W.

      Bishop, E. S.

      Hunter, Adam

      Rose, Paul B.

      Blenkinsop, Arthur

      Irvine, Rt Hon Sir A. (Edge Hill)

      Ross, Rt Hon W. (Kilmarnock)

      Boardman, H.

      Jackson, Colin (Brighouse)

      Ryman, John

      Bray, Dr Jeremy

      Jackson, Miss Margaret (Lincoln)

      Sandelson, Neville

      Brown, Ronald (Hackney S)

      Janner, Greville

      Sedgemore, Brian

      Buchan, Norman

      Jeger, Mrs Lena

      Selby, Harry

      Buchanan, Richard

      Johnson, James (Hull West)

      Shaw, Arnold (Ilford South)

      Butler, Mrs Joyce (Wood Green)

      Jones, Alec (Rhondda)

      Silkin, Rt Hon S. C. (Dulwich)

      Callaghan, Jim (Middleton & P)

      Jones, Dan (Burnley)

      Silverman, Julius

      Canavan, Dennis

      Kaufman, Gerald

      Skinner, Dennis

      Carter, Ray

      Kerr, Russell

      Small, William

      Carter-Jones, Lewis

      Kinnock, Neil

      Smith, John (N Lanarkshire)

      Clemitson, Ivor

      Lambie, David

      Spearing, Nigel

      Cocks, Rt Hon Michael

      Lamborn, Harry

      Spriggs, Leslie

      Cohen, Stanley

      Lamond, James

      Stallard, A. W.

      Coleman, Donald

      Latham, Arthur (Paddington)

      Stewart, Rt Hon M. (Fulham)

      Cowans, Harry

      Leadbitter, Ted

      Stoddart, David

      Cox, Thomas (Tooting)

      Lee, John

      Stott, Roger

      Crawshaw, Richard

      Lester, Miss Joan (Eton & Slough)

      Summerskill, Hon Dr Shirley

      Crowther, Stan (Rotherham)

      Lewis, Ron (Carlisle)

      Taylor, Mrs Ann (Bolton W)

      Cryer, Bob

      Lipton, Marcus

      Thomas, Ron (Bristol NW)

      Davidson, Arthur

      Loyden, Eddie

      Thorne, Stan (Preston South)

      Deakins, Eric

      Lyon, Alexander (York)

      Tierney, Sydney

      Dean, Joseph (Leeds West)

      Lyons, Edward (Bradford W)

      Tinn, James

      Dempsey, James

      McCartney, Hugh

      Tuck, Raphael

      Doig, Peter

      McDonald, Dr Oonagh

      Varley, Rt Hon Eric G.

      Dormand, J. D.

      McElhone, Frank

      Wainwright, Edwin (Dearne V)

      Duffy, A. E. P.

      Maclennan, Robert

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

      Dunnett, Jack

      McMillan, Tom (Glasgow C)

      Walker, Harold (Doncaster)

      Eadie, Alex

      Madden, Max

      Walker, Terry (Kingswood)

      Edge, Geoff

      Magee, Bryan

      Ward, Michael

      Ellis, John (Brigg & Scun)

      Mahon, Simon

      Watkins, David

      Ennis, David

      Marks, Kenneth

      Watkinson, John

      Evans, Ioan (Aberdare)

      Marshall, Dr Edmund (Goole)

      Weetch, Ken

      Ewing, Harry (Stirling)

      Marshall, Jim (Leicester S)

      White, Frank R. (Bury)

      Faulds, Andrew

      Maynard, Miss Joan

      Whitlock, William

      Fernyhough, Rt Hon E.

      Mendelson, John

      Williams, Rt Hon Alan (Swansea W)

      Flannery, Martin

      Molloy, William

      Williams, Sir Thomas (Warrington)

      Fletcher, Ted (Darlington)

      Moonman, Eric

      Wilson, Alexander (Hamilton)

      Foot, Rt Hon Michael

      Morris, Charles R. (Openshaw)

      Wilson, Rt Hon Sir Harold (Huyton)

      Forrester, John

      Moyle, Roland

      Wise, Mrs Audrey

      Fowler, Gerald (The Wrekin)

      Oakes, Gordon

      Woodall, Alec

      Freeson, Reginald

      Ogden, Eric

      Woof, Robert

      Garrett, W. E. (Wallsend)

      Orbach, Maurice

      Wrigglesworth, Ian

      George, Bruce

      Orme, Rt Hon Stanley

      Golding, John

      Ovenden, John

      TELLERS FOR THE NOES:

      Gould, Bryan

      Palmer, Arthur

      Mr. James Hamilton and

      Gourlay, Harry

      Park, George

      Mr. Peter Snape.

      Graham, Ted

      Question accordingly negatived.
      Mr. Geoffrey Dodsworth: I beg to move Amendment No. 6, in page 1, line 20, leave out from "section" to end of line 24 and insert:
      "And before any guarantee is given, an order made by statutory instrument showing the extent, character of and amount of the guarantee shall be laid before and approved by the House of Commons".
      Mr. Deputy Speaker: With this we may take Amendment No. 7, in page 1, line 20, leave out from "section" to end of line 24 and insert:
      "and any of the following matters shall be subject to an order made by statutory instrument, a draft of which has been laid before and approved by the House of Commons:

      (a) guarantees concerning services relating to the location and storage of radioactive materials;

      981

      (b) guarantees concerning services relating to the importance of waste materials.".

      Mr. Dodsworth: It is necessary to outline first the purpose of subsection (3) of Clause 1, which provides that a statement of the expenditure and character of guarantees, which were the source of discussion on the previous amendment, should be laid before the House. It is the purpose of the amendment to provide the House with more accurate and definitive control over the actions taking place, and perhaps putting in more precise form the responsibilities of the House.
      We had the opportunity in Standing Committee to discuss the problems which arise in the form of democratic and parliamentary control in relation to matters of this particularly complicated and difficult nature. We had already recognised that this was a matter which had very strong—and, indeed, on some occasions overriding—environmental considerations. The social considerations, which might affect future generations, place a very special obligation on the House of Commons in particular. It is really that matter of parliamentary control which has caused me to put this amendment before the House.
      Subsection (3) states that:
      "a statement showing the extent and character of the guarantee, and the circumstances in which it came to be given",
      shall be placed before the House. The object of my amendment is to seek approval before that event and not after it. I recognise that that is changing the emphasis and putting the decision-making process outside ministerial action but inside this House of Commons, in the Chamber itself.
      We must look at some of the current evidence of what has happened on reprocessing contracts so far. Our current experience shows that, on work that has taken place up to now, losses have not yet been fully determined. The source of that information lies in the last accounts of British Nuclear Fuels Limited.
      Members of the Standing Committee will be familiar with some of these matters, and I may be forgiven if I reiterate a little about them. On page 17 of the fifth annual report and accounts of British Nuclear Fuels Limited, note
      982
      1(b), referring to the trading profits, says that
      "Certain reprocessing contracts entered into in previous years which have now become unprofitable are in course of renegotiation. Pending the outcome of these negotiations it is not possible to determine whether any provision needs to be made for losses which may arise in future years."
      Those are quite ominous words.
      On page 11 those doubts are re-emphasised. The auditors underline their concern and consideration. It is a very reputable firm of auditors, Coopers and Lybrand. The report, which is signed by the auditors, says in note 3:
      "For the reasons given in note 1(b) no provision has been made in these accounts in respect of any future losses which might arise on certain reprocessing contracts which are in the course of renegotiation."
      That seems to me to be a matter which should be drawn to the attention of all of us so that we may see what is happening in this case.
      Indeed, that was my concern when I put questions to the Minister asking what were the underlying facts behind those statements of doubt and inability to decide the amount of losses arising on reprocessing. I was told that these were matters of the day-to-day running of British Nuclear Fuels Limited, and I was asked to write to that authority. I did so.
      7.15 p.m.
      Here we see illustrated the problems of parliamentary control to which my amendment refers, because in his reply, the Chairman of British Nuclear Fuels Limited said:
      "As you will see from the letter, Government decisions do in fact impinge on two of your questions, but I will nevertheless do what I can to answer them."
      Therefore, although we are told in parliamentary terms that this is a matter of day-to-day running of this quasi-nationalised institution, we find that the chairman is saying that this is a matter on which Government decisions impinge. It is for that reason that I am concerned that matters of this nature should come before the House.
      If we go further into the explanation of the reprocessing losses which have been taking place up to now, we find in that very letter that the Chairman of British Nuclear Fuels Limited said that he could not in the present uncertain situation

      983
      give an estimate of future losses. He added:
      "We had hoped to renegotiate arrangements which would minimise or eliminate loss, but the announced intention to hold a public inquiry into the new plant for reprocessing oxide fuel, coming as it does a year after the Government's approval for further overseas reprocessing business, could make a substantial loss unavoidable."
      We see there a political and public action which is entirely proper, and which starts to bedevil some of the commercial aspects of the company. We have a parliamentary duty to involve ourselves in those detailed matters.
      On page 12 of the annual report and accounts there are references to long-term storage problems. This once again illustrates the difficulties that we have in maintaining the proper sort of control, because note 4 on page 12, dealing with accounting policies, says that
      "An amount is set aside each year for the estimated cost of the long-term storage of the Group's waste products. The total amount retained is reviewed annually based on the latest technical assessment but this is a long-term project and the computation of the estimated costs is necessarily imprecise."
      I agree with that absolutely. It is the imprecision, the uncertainty and the fact that we are looking into the future which make me feel that we have to be very careful in our review and our method of control of this matter.
      We know, for example, from the recent history that there have been some very uncertain problems on the question of pay. In that same annual report and accounts the chairman's review mentions the special pay problems and the difficulties reflected in them. Recently the Secretary of State paid literally a flying visit to try to take some emergency action. In those circumstances, it seems clear to me that political considerations are dominant and that Parliament has a duty to satisfy itself on the policies as to the usage of the funds and not only on the question of appropriation.
      The Under-Secretary of State was very kind to all members of the Standing Committee and wrote to us explaining some of the difficulties which he felt arose in the consideration of an amendment of this nature. With his approval, I shall refer to some of the matters contained in that letter. I felt that the Minister's approach was both helpful and thoughtful, seeking
      984
      to ascertain whether we could find a method of control over this activity.
      The Under-Secretary of State's first point was that this was probably an unnecessary duplication of some of the financial controls which already exist under the terms of the Bill. That may be so, but I have tried to indicate that there is a special situation here. The Under-Secretary added that
      "it would be illogical to have more stringent controls over the giving of guarantees than over the provision of finance direct."
      I do not wish to dilate at length on the fact that a guarantee is as good as the money. It is an obligation of this House and of Parliament to ensure that guarantees are not freely or thoughtlessly given, or given in an uncontrolled fashion. A guarantee is the word of the Government and its bond, and we have just as much a duty to safeguard the issuing of those guarantees as we have a duty to safeguard the issuing of funds.
      After all, in the very form of the Bill we must recognise the special nature and circumstances. The Bill says that a statement showing the extent and character of the guarantees, and the circumstances in which they came to be given, shall be laid before the House. That is too late a stage, and it is not enough. We need an opportunity for the House to put a point of view before the ministerial decision is taken.
      Mr. Skeet: Is not my hon. Friend's best argument the fact that this is precisely what the Government are doing with the Japanese contract? We know the extent of the guarantee of the contract for a thermal-oxide plant to be built for operation in the early 1980s. We know that the guarantee covers specific commitments to be negotiated with the Japanese utilities. My hon. Friend is asking for prior notification and examination by the House and in doing so he is following precisely what is being done in the Japanese negotiations.
      Mr. Dodsworth: I am obliged to my hon. Friend. In Committee the Under-Secretary of State referred to the fact that we had an affirmative procedure at an earlier stage in order to provide just such opportunity for debate as I am now seeking. I must make it clear that I am not anti-nuclear energy. I am, however, concerned that we should discharge our obligation to the public in the course of

      985
      setting up the future of our nuclear industry, and I am seeking to do so in a positive and constructive way.
      I was concerned about a statement in the Minister's letter —which was offered in a helpful and friendly spirit—when he referred to the question of guarantees of advance payments. He said that the difficulty was that a guarantee might not be available "even if the Secretary of State had expressed his support for the venture and his willingness to give a guarantee". I do not think that the Secretary of State should be allowed to give a guarantee until we have had discussions on it. That is the object of this exercise. The amendment would clearly lay down that we should have to have an order made by Statutory Instrument showing the extent and amount of the guarantee. That Statutory Instrument would have to be laid before and approved by the House.
      I understand and accept the line taken by the Minister in his letter, when he said:
      "It would complicate and delay the process of giving a guarantee and (if taken as a precedent and adopted more widely) would be likely to put a severe burden on Parliamentary time."
      But I have exactly that object in view. It is my understanding and belief that Parliament has lost its financial teeth, and it is time it got them back again. It is time that we got a grip on the financial affairs of the nation. I am offering the House the opportunity, through this amendment, of taking that grip in this matter.
      Mr. Gray: My hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) moved the amendment skilfully, as he did a similar one in Committee. This is not an official Opposition Front Bench amendment, but we are sympathetic towards it.
      I was disappointed in the letter which the Under-Secretary of State sent to all hon. Members who served on the Standing Committee. We had considerable discussion of this matter one morning in Committee, and to the Opposition it appeared that the Government Benches were rather thinly populated. In his reply to that debate the Minister began by not being particularly helpful to my hon. Friend, but his attitude changed considerably when his Whip whispered in his
      986
      ear. By the time he was finishing his reply, the hon. Gentleman was indicating to my hon. Friend that, although he could give no promise, he would look at my hon. Friend's proposal sympathetically.
      Earlier in the debate the Minister said:
      "if individual approvals were to be required, there would seem to be no point in having an overall limit."
      Later, however, he said:
      "I am prepared, because this is a vital principle, to take the matter back and examine it and to come forward with views on it. I say that without any promise, but I give the hon. Gentleman a guarantee—since we are talking about guarantees—that I shall examine his proposition in great detail."—[Official Report, Standing Committee A, 3rd March 1977; c. 103.]
      I was, therefore, disappointed by the hon. Gentleman's letter to my hon. Friend advising him that, although the Minister and his advisers had considered the matter,
      "The normal practice in controlling guarantee powers is that followed in the Bill as now drafted.… This practice has been followed by successive Governments…".
      That really is not a very good answer. We all know that in this House Ministers rest on the actions of previous Governments, and anything that is a precedent is used over and over again.
      My hon. Friend has tonight made a very good case for further parliamentary scrutiny. When we are talking of reprocessing plants we are talking of a very new activity, and it is difficult to be certain just what the cost involved may be. There is also difficulty in determining exactly what is the ministerial responsibility and what is the day-to-day responsibility of British Nuclear Fuels. All that my hon. Friend is trying to do is ensure that Parliament has complete scrutiny over the sums of money involved. He himself explained that he is not antinuclear. I feel the same way. With the limited knowledge which a layman can have, and from the information given to one, one can only reiterate that British Nuclear Fuels has a very proud record of safety. That, however, is no excuse for not monitoring with the greatest skill the amounts of money voted by this House.
      We shall listen carefully to what the Minister has to say before we decide whether to support my hon. Friend in

      987
      the Lobby, just as he himself will have to decide whether he wishes to press his amendment to a Division. It would be wrong for us to decide before we hear what the Minister has to say. I hope that he has been more persuaded by our remarks than he was in Committee and that, despite what he said in his letter, he will decide to overrule his previous view. My hon. Friend has given him a case that he can usefully consider.
      Mr. George Thompson: I did not have the privilege, or perhaps the burden, of serving on the Standing Committee, so I have heard only this debate on the subject. The hon. Member for Hertfordshire, South-West (Mr. Dodsworth) has made a very good case. Guarantees of the magnitude we are talking about ought to be subject to the positive control of the House.
      The amendments also concern the disposal of wastes. The Minister knows of my deep interest, both personal and as a constituency Member, in this matter. I believe that firm control of these guarantees by the House would be a guarantee to the people, who are worried about the disposal of these wastes, that control would rest with this House at the financial as well as at other levels. The public are concerned about these matters and, quite properly, rely on the House to subject them to close scrutiny on their behalf. From what the hon. Member has said, I am in favour of his proposition as being a solution to the problem.
      7.30 p.m.
      Mr. Eadie: I am in great difficulty. I do not quarrel in any way with the hon. Member for Hertfordshire, South-West (Mr. Dodsworth). Indeed, I have great admiration for his advocacy. He was a powerful advocate in Committee and he is a powerful advocate here today. I should have to do well in order to emulate him. But I cannot win, because I wrote not only to the hon. Gentleman but to all members of the Committee to acquaint them with the facts. It was not a question of my naturally wanting to be hostile, because that is not my make-up. People sometimes have common points of view, and I believe in argument, discussion and debate to try to resolve the issues.
      988
      I told the Committee and the hon. Gentleman, which I think I was entitled to do because of the hon. Gentleman's advocacy for his amendment, that I would give it close consideration. I have done that, and I regret to inform the House that I have concluded that the Government cannot accept the amendment. I owe it to the House to try to explain why. I regret that I shall have to go over some of the grounds and some of the arguments that were used in Committee, but I think that it is appropriate to place my comments on record.
      The amendment is unacceptable in principle. The practice in controlling guarantee powers is that followed in the Bill—to set up an overall limit, to require Treasury consent to individual guarantees and to require returns to Parliament to show how that power has been used. I hope that the hon. Member for Galloway (Mr. Thompson) is listening. I saw him smiling when he was pressing the case concerning the power of Parliament. He is doing his best to get out of this Parliament. I know why he was smiling. I say that as an aside, but I know he is suggesting that he wants accountability to Parliament. I hope that the hon. Gentleman is listening to this. He was entitled to raise the matter, and I am sorry that he could not be with us on the Committee.
      This practice has been followed in the past. The hon. Member for Ross and Cromarty (Mr. Gray) mentioned it when I said that it had been "followed by successive Governments". He made the point that when the present Opposition were the Government they laid down a similar procedure in the Gas Act 1972. To go further and require parliamentary approval for each exercise of the guarantee would unnecessarily complicate and delay that process.
      The hon. Member for Hertfordshire, South-West understands this probably better than anyone else present in the House. If it were taken as a precedent, it would be likely to put a severe burden on parliamentary time. It would also be illogical in the context of guarantees for loans to BNFL and TRCL. The arrangements under the 1971 Act and the Bill would allow the companies' financial requirements to be met in two ways, either by loans from the private sector,

      989
      which the Secretary of State might guarantee, or directly from public funds by share purchase or through the National Loans Fund. These two latter methods of financing are not subject to a control of the kind proposed, and it would be illogical to have more stringent control over guarantees than over the provision of finance direct.
      The amendment's application to guarantees for advance payments could prejudice BNFL's commercial interests. If the company wanted to negotiate business in an area where guaranteed advance payments were needed, it would be unable to have any assurance that such a guarantee would be available if negotiations were otherwise successful and it the Secretary of State agreed that a guarantee would be given. This would inevitably lessen the interest of a company and customer in embarking upon the complex negotiations involved.
      Mr. Skeet: Guarantees arise under Clause 1(1) and Clause 1(2) and, as the Minister said, there may be an extremely broad coverage of guarantees under Clause 1(2). My hon. Friend the Member for Hertfordshire, South-West (Mr. Dodsworth) is arguing that there should be prior approval by Parliament, and the Minister is saying that the commercial relations of BNFL will be prejudiced, as in the case of the Japanese contract. How has BNFL been prejudiced in any way? Other factors have supervened. It is not a question of guarantees. If this procedure had been followed with prior notification, that would have been satisfactory for the company.
      Mr. Eadie: The hon. Gentleman is trying to assume that he is making a clever point, but there is the question of commercial aspects in negotiations. By drawing in the Japanese contract as an argument in favour of the amendment, the hon. Gentleman is doing his hon. Friend a great disservice. His hon. Friend's advocacy was not related to whether they were Japanese contracts or anything else. The point of his argument was that there should be Parliamentary accountability. The hon. Member for Bedford (Mr. Skeet) has done his hon. Friend a great disservice by his intervention.
      The amendment would unnecessarily complicate the giving of guarantees. It
      990
      would make for an illogical situation with regard to the provision of finance for the two companies, and it might prejudice BNFL's commercial interest. For those reasons the Government cannot accept the amendment, and I hope that the hon. Gentleman will withdraw it.
      The main objection to Amendment No. 7 is one of principle. The practice in controlling guarantee powers, which has been followed by Administrations from both parties, is that followed in the Bill —that is, to set an overall limit, to require Treasury consent to each exercise of the power, and to require returns to Parliament. To go further and require specific approval for the exercise of the power, whether in every case or for a class of cases, would complicate and delay the process of guarantees. This could prejudice the company's commercial interests. Uncertainty whether a guarantee would be available would, to say the least, discourage both company and customer in the complex negotiations involved in setting up the kind of contract that would involve guarantees.
      The amendment would have unwelcome side effects. Although I think that the hon. Gentleman has reprocessing contracts mainly in mind, the amendment as drafted would restrict guarantees arising in connection with the general financing of BNFL and TRCL under Clause 1(1). That financing would relate to the general external finance requirement arising from the companies' total activities. Such activities could well include some of the items mentioned, in which case an order would be required. That would not only complicate the financing arrangements but would be illogical. Guarantees are an alternative to direct financing by the Government, and the latter method is not subject to any restriction of this kind.
      Finally, because of the deletion of the existing words in the subsection, guarantees which did not involve services of the kind mentioned would not need to be reported to the House at all. I hope that the House will reject the amendment.
      Mr. Dodsworth: In view of what the Minister has said, I should be happy to withdraw Amendment No. 7. I must, however, express my extreme disappointment over the whole of the rest of the content of his observations on Amendment No. 6. I do not feel that he has

      991
      in any way answered the purport of the case put forward for Amendment No. 7.
      Mr. Deputy Speaker: Order. I must point out to the hon. Gentleman that technically it is only Amendment No. 6 which is before the House.
      Mr. Dodsworth: I understand, Mr. Deputy Speaker, and I apologise to you for my inept phrasing. I accept the burden of the Minister's observations on Amendment No. 7. On Amendment No. 6, however, the point of view expressed by the Minister is unacceptable. It is not a fair observation to make on a narrowly-drawn affirmative procedure, which is what this is. It is a sharply-defined procedure—I use the Minister's words. It is the specific nature of the industry that is of consequence. In those circumstances, it does not seem that we have any reason to withdraw the amendment.
      Mr. Eadie: I am sorry that I gave way to the hon. Gentleman. I felt that he had made two important points, and I wanted to attempt to reply to them. Whether I should have satisfied him with my reply is not for me to say, but I regret his remarks, although I understand how he feels.
      The hon. Gentleman talked about existing unprofitable contracts. I have to inform him that the existing contracts contained provision for escalation costs which were not in the event sufficient. That difficulty will not arise in the contracts that we now envisage. The new contracts will be on a full cost-plus, risk-free basis—I mentioned this in Committee—that will ensure that the company maintains a good return.
      The hon. Gentleman then raised the question of the opportunity to discuss BNFL's finances, and he made some play of this. He suggested that there was insufficient opportunity to discuss BNFL's investment and expenditure. I remind him that the whole range of BNFL's activities was discussed in a useful debate, which a number of those who were on the Standing Committee will recall, on 28th
      July 1976. The debate was on an affirmative proposal to increase the limit of payment to BNFL under the Atomic Authority Act 1971. The Bill now before the House provides a further opportunity for debate as and when increases are made in future under the new limit. The company's accounts are available to the House every year and the Opposition can, if they so desire, find time to discuss them. That is their prerogative, and no Opposition should be deprived of that right.
      I hope the House will accept that I have given the best possible explanations on the points that have been raised, and that it will oppose the amendment if the hon. Gentleman does not withdraw it.
      Mr. Dodsworth: I regret that I do not find the Minister's explanations satisfactory. I do not feel that it is right to talk about the burden of additional parliamentary work and additional legislation when we are dealing with one specific, narrowly-defined matter that is of particularly onerous concern for the future, both environmentally and socially. I do not think that the case has been answered by the Minister.
      It might have been helpful if subsection (3) had reflected the Department's and the Minister's acknowledgement of the seriousness of this issue, but it says that a statement has to be laid before the House after the event. My suggestion is that that should be done before the event.
      Future contracts might well be on a cost-plus basis, but my experience of contracts of this nature is sufficient for me to ask that the terms be defined first. I need to know those and what the cost will be before I can decide whether there will be effective control from the point of view of the House. I hope that my hon. Friends will support me in pressing the amendment to a Division.
      Question put, That the amendment be made:—
      The House divided: Ayes 40, Noes 145.

      Division No. 91.]

      AYES

      [7.45 p.m.

      Bain, Mrs Margaret

      Clarke, Kenneth (Rushcliffe)

      Gardner, Edward (S. Fylde)

      Beith, A. J.

      Cockcroft, John

      Grimond, Rt Hon J.

      Boscawen, Hon Robert

      Fairgrieve, Russell

      Hampson, Dr Keith

      Bottomley, Peter

      Fisher, Sir Nigel

      Hicks, Robert

      Buck, Antony

      Fookes, Miss Janet

      Hodgson, Robin

      Budgen, Nick

      Fox, Marcus

      Howells, Geraint (Cardigan)

      Knight, Mrs Jill

      Penhaligon, David

      Thompson, George

      Lawrence, Ivan

      Rathbone, Tim

      Trotter, Neville

      Macfarlane, Neil

      Ross, Stephen (Isle of Wight)

      Viggers, Peter

      Morris, Michael (Northampton S)

      Sainsbury, Tim

      Wainwright, Richard (Colne V)

      Nelson, Anthony

      Shersby, Michael

      Newton, Tony

      Skeet, T. H. H.

      TELLERS FOR THE AYES:

      Nott, John

      Smith Cyril (Rochdale)

      Mr Geoffrey Dodsworth and

      Page, Rt Hon R. Graham (Crosby)

      Stanbrook, Ivor

      Dr Alan Glyn.

      Pardoe, John

      Steel, Rt Hon David

      NOES

      Allaun, Frank

      Golding, John

      Richardson, Miss Jo

      Armstrong, Ernest

      Grocott, Bruce

      Roberts, Gwilym (Cannock)

      Ashton, Joe

      Harrison, Walter (Wakefield)

      Roderick, Caerwyn

      Atkinson, Norman

      Hoyle, Doug (Nelson)

      Rodgers, George (Chorley)

      Bagier, Gordon A. T.

      Huckfield, Les

      Rodgers, Rt Hon William (Stockton)

      Barnett, Rt Hon Joel (Heywood)

      Hughes, Rt Hon C. (Anglesey)

      Rooker, J. W.

      Bates, Alf

      Hughes, Roy (Newport)

      Rose, Paul B.

      Benn, Rt Hon Anthony Wedgwood

      Hunter, Adam

      Ross, Rt Hon W. (Kilmarnock)

      Bennett, Andrew (Stockport N)

      Irvine, Rt Hon Sir A. (Edge Hill)

      Ryman, John

      Bishop, E. S.

      Jackson, Miss Margaret (Lincoln)

      Sandelson, Neville

      Blenkinsop, Arthur

      Janner, Grevllie

      Sedgemore, Brian

      Boardman, H.

      Johnson, James (Hull West)

      Selby, Harry

      Bray, Dr Jeremy

      Jones, Alec (Rhondda)

      Shaw, Arnold (Ilford South)

      Buchanan, Richard

      Kerr, Russell

      Silverman, Julius

      Butler, Mrs Joyce (Wood Green)

      Kinnock, Neil

      Skinner, Dennis

      Callaghan, Jim (Middleton & P)

      Lamond, James

      Small, William

      Canavan, Dennis

      Latham, Arthur (Paddington)

      Smith, John (N Lanarkshire)

      Clemitson, Ivor

      Leadbitter, Ted

      Snape, Peter

      Cocks, Rt Hon Michael

      Lee, John

      Spearing, Nigel

      Cohen, Stanley

      Lestor, Miss Joan (Eton & Slough)

      Spriggs, Leslie

      Coleman, Donald

      Lewis, Ron (Carlisle)

      Stallard, A. W.

      Cook, Robin F. (Edin C)

      Lipton, Marcus

      Stewart, Rt Hon M. (Fulham)

      Cowans, Harry

      Loyden, Eddie

      Stoddart, David

      Cox, Thomas (Tooting)

      Lyon, Alexander (York)

      Summerskill, Hon Dr Shirley

      Crawshaw, Richard

      Lyons, Edward (Bradford W)

      Thomas, Ron (Bristol NW)

      Crowther, Stan (Rotherham)

      McCartney, Hugh

      Thorne, Stan (Preston South)

      Cryer, Bob

      McDonald, Dr Oonagh

      Tierney, Sydney

      Davidson, Arthur

      MacFarquhar, Roderick

      Tim, James

      Deakins, Eric

      Maclennan, Robert

      Varley, Rt Hon Eric G.

      Dean, Joseph (Leeds West)

      McMillan, Tom (Glasgow C)

      Wainwright, Edwin (Dearne V)

      Dempsey, James

      Madden, Max

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

      Doig, Peter

      Magee, Bryan

      Walker, Harold (Doncaster)

      Dormand, J. D.

      Mahon, Simon

      Walker, Terry (Kingswood)

      Duffy, A. E. P.

      Marks, Kenneth

      Watkins, David

      Dunnett, Jack

      Marshall, Dr Edmund (Goole)

      Watkinson, John

      Eadie, Alex

      Maynard, Miss Joan

      White, Frank R. (Bury)

      Edge, Geoff

      Mendelson, John

      Whitehead, Phillip

      Ellis, John (Brigg & Stun)

      Miller, Dr M. S. (E Kilbride)

      Whitlock, William

      Ennals, David

      Morris, Charles R. (Openshaw)

      Williams, Rt Hon Alan (Swansea W)

      Evans, Ioan (Aberdare)

      Moyle, Roland

      Williams, Sir Thomas (Warrington)

      Fernyhough, Rt Hon E.

      Oakes, Gordon

      Wilson, Alexander (Hamilton)

      Flannery, Martin

      Ogden, Eric

      Wise, Mrs Audrey

      Fletcher, Ted (Darlington)

      Orme, Rt Hon Stanley

      Woodall, Alec

      Foot, Rt Hon Michael

      Ovenden, John

      Woof, Robert

      Ford, Ben

      Park, George

      Wriggles worth, Ian

      Forrester, John

      Parker, John

      Fowler, Gerald (The Wrekin)

      Parry, Robert

      TELLERS FOR THE NOES:

      Freeson, Reginald

      Pendry, Tom

      Mr Joseph Harper and

      Garrett, W. E. (Wallsend)

      Phipps, Dr Colin

      Mr Ted Graham.

      George, Bruce

      Radice, Giles

      Question accordingly negatived.
      7.55 p.m.
      Mr. Eadie: I beg to move, That the Bill be now read the Third time.
      The Bill has given rise to a very full discussion of nuclear issues. At this stage the most helpful course would be for me to remind the House of the content and purpose of the Bill. So far as BNFL is concerned, the Bill provides the basis for financing the company's large investment programme, which, I emphasise, relates to providing facilities required for United Kingdom nuclear pro-
      994
      grammes already approved and does not imply any commitment to a new major nuclear expansion.
      The Bill provides for further capital in two ways. First, it increases the limits on Government capital payments to £300 million, which sum may be increased to £500 million by order. Secondly, it allows the Secretary of State to guarantee loans raised by BNFL, such guarantees counting against the new limits in the same way as does direct Government investment. The Bill also allows the Government to guarantee advance

      995
      payments made to BNFL under service contracts. The immediate importance of this power is in relation to the contract which BNFL hopes to conclude with overseas utilities for the reprocessing of irradiated fuel.
      In this connection, I might deal with a point raised by the hon. Member for Carshalton (Mr. Forman) in Committee about safeguards. He proposed that the Euratom Treaty should be amended to allow nuclear suppliers' group safeguards to be implemented. There is no proposal at present to negotiate a new formal agreement between supplier Governments. I gave the hon. Member an assurance in Committee that I would draw this point to the attention of my colleagues in the Foreign and Commonwealth Office before the next Nuclear Supplies Group meeting. I have done this.
      The hon. Member also inquired about the rate of profit under the company's proposed overseas reprocessing contracts. The actual rate of profit under the contracts is commercially confidential. I am afraid, therefore, that I cannot disclose its amount or confirm the figure that the hon. Member mentioned. I can, however, assure the House that the Government regard the proposed return as very good.
      Though the provisions have not so far received great attention, the Bill makes similar provision for the Radiochemical Centre Limited. The present upper limit on Government capital payments is raised from £7 million to £15 million. Private borrowings by the company may be guaranteed, and, again, sums guaranteed count against the limit.
      Finally, the Bill would allow the Secretary of State to incur expenditure on acquiring shares in the National Nuclear Corporation Limited. This power is needed to tidy up an illogical situation which, while not causing difficulty at present, might do so in the future.
      Having emphasised those three points, I hope that the House will see fit to give the Bill a Third Reading.
      7.59 p.m.
      Mr. Gray: The Bill is being given a Third Reading in a situation of unreality. The Chamber is empty; hon. Members have other things on their minds. The events of next Wednesday undoubtedly
      996
      have a bearing on the attendance tonight, but that should not deter us from giving the Bill a Third Reading with good grace. Naturally, we were disappointed that some of our proposals to improve the Bill were not accepted by the Government, but we had the opportunity on Second Reading and in Committee of discussing the energy question in more detail than it has been dealt with in the House for some time.
      The Bill is a narrow measure. The restrictions of a Third Reading debate prevent us from elaborating on some points, but I think it only right that I should repeat that, although the Bill is small, it deals with many complicated arrangements. Therefore, we are grateful to the Secretary of State for the helpful brief which he gave us in Committee at the beginning of our deliberations.
      The raising of the financial limits and the permissions which the Government require to give loan guarantees are dealt with in Clause 1. The Government did not include the recommendation of the Flowers Commission in the Bill, and we were rather sorry about that, but the Under-Secretary of State in Committee gave some very good assurances that the Government were considering this matter very carefully. No doubt we can expect legislation on that subject in due course.
      We criticised to a certain extent Clause 2, which deals with the financial limits. We still feel that the limits are excessive; they are greater than is absolutely necessary. In Committee my hon. Friend the Member for Bedford (Mr. Skeet), in an excellent and well-researched speech, made a very good case for the limits not being at their present level but being more in accordance with the amendment which we tabled.
      Principally, the points which my hon. Friend made were that the purpose for which the £300 million was required was not very clear because the earned profits of the industry would meet the requirement. The same applied to the thermal oxide reprocessing plant in respect of which £330 million was required, but this will be customer-funded. My hon. Friend, with his calculations, had reduced the figure about which we were talking to about £415 million spent over 10

      997
      years. However, the Government have taken the precaution of setting fairly high limits, which should be very useful for them in future.
      Clause 3 was not debated in Committee, and that was perhaps regrettable. We had the opportunity of debating it and perhaps we should have spent more time on it. The remainder of the Bill had a fairly good going over in Committee, and it is leaving Parliament in as reasonable a state as we could expect. I am sorry that the Government were not able to accept some of our amendments, but we welcome the Bill and we are happy to give it a Third Reading.
      8.4 p.m.
      Mr. Skeet: I accept that the Bill makes a contribution to the general debate, but there are one or two observations that I should make.
      The commitment to existing domestic nuclear power stations is one of the reasons why we must have a Bill of this nature, and it is against this background that it must be examined, but there is no escaping the fact that the programme outlines essential work which will ultimately result in producing an acceptable rate of return on the investment provided and will considerably extend the scope and flexibility of the company's operations.
      The difference between the Government and many hon. Members on these Benches is not that substantial funds are required for the programme but that provision should be made for extensive borrowing from the National Loans Fund and not from the market. If the latter course were adopted rather than the former, the borrowing limits would not have to be extended to anything like £300 million, extendable to £500 million as stated in the Bill. In fact, at the upper limit the figure represents a sevenfold advance on the existing order.
      The Secretary of State said in the House on 8th February, as reported at column 1258 of the Official Report, that of the £1,500 million required for the 10-year programme only about £230 million would be required from external sources. The Under-Secretary said in Committee:
      "As the Committee is aware from the briefing made available to it, BNFL's exter-
      998
      nal borrowing requirement over the next two years is covered by borrowing from the private sector subject to the provision of a guarantee under powers to be taken in this Bill".—[Official Report, Standing Committee A, 3rd March 1977; c. 65.]
      It is rather extraordinary that funds will not be taken from the market, although it must be recollected that if these are subject to the guarantee they will count against the borrowing limit. Enterprises in various parts of the world are undertaking exactly the same work as has been indicated here. They do not have the aid of the guarantee and they are capable of going to the market. I see no reason why a similar approach should not be made in this case. Moreover, it was intended from the start that the company should be a mixed enterprise undertaking and, hence, would operate as closely to commercial principles as possible. It is worth observing that funds derived via Section 8 of the Industry Act 1972, as amended by Schedule 4 to the Industry Act 1975, and voted by Parliament do not count against the limits imposed.
      The argument on the borrowing limits comes to this. The present borrowing limit of £75 million is too small. Even though £50 million in total has yet to be taken up, a maximum of £300 million to £500 million is excessive, bearing in mind the present national economic stringency and the fact that there are many alternative sources of finance available to the company. Governments frequently talk despairingly about the ravages of inflation, which they themselves create, and then proceed to proffer it as a reason for further provision being made.
      Another scapegoat is changing technology. Tens of millions of pounds may be charged to this account, but there is nothing like over-provision for cultivating administrative extravagance. It is solid commercial sense that BNFL should carry the greater part of its financial burdens, and there are many who think that it is in a position to do so. After all, it is a profitable company.
      The House should note these observations. While domestic orders produce 60 per cent. of BNFL's business, on a cost-plus basis, the company has a captive market in that 13 per cent. of the electricity sector is nuclear, and if the new programme goes ahead the percentage will be even higher. The company has secured

      999
      valuable contracts for reprocessing oxide fuel elements, notably from the Swedes, European utilities and, it is hoped, the Japanese. I confidently believe that the Japanese contract will be secured, despite the inept handling of the situation by the Government. The reprocessing is administered through a third holding in the United Reprocessors GmbH, a multinational company with roots in the European Community market, and is beginning to prove commercially formidable abroad.
      BNFL, through its third interest in URENCO, has achieved a share in enrichment contracts totalling £700 million for delivery in the 1980s. This also is a multinational company associating British, Dutch and Germans and it promises to be strongly competitive with its Community rivals in France. The sale of Uranium 238 has proved profitable, with export business envisaged by the Department of about £45 million up to 1985. Services are rendered in converting uranium into uranium hexafluoride. In 1975 –76 the company secured orders to supply 14,000 tonnes between 1977 and 1986 to customers in the United States, Japan, Italy and the Federal Republic.
      It is worthy of observation that under Clause 1(2) it may be that customer-funded business in the United Kingdom will be extended to the provision of uranium hexafluoride. This was the Minister's suggestion, and it may come to fruition at a later date.
      I pause here to indicate one anxiety that I have. I thought after having put down an amendment that the limitations on customer-funded contracts would be limited to reprocessing of oxide fuels and also to enrichment if the case should arise in future. But apparently, according to the Minister, this is an open-ended facility, and this may be secured in any other thing that BNFL might have in view. That is taking it too far, and, while there is a limit on the extent of the guarantees that may be committed by the Government, what should be covered should be laid down more specifically in the Bill.
      Of course, Clause 1(2) makes provision for the Japanese contract, which, if secured, will provide the company with earnings of £500 million. On this matter the Government have been particularly inept. The possibility of the contract being secured was foreshadowed
      1000
      many months ago, but delays have allowed the French to step in. Now, an unseemly contest is being conducted between the Department of the Environment, based on conservation arguments and planning permission, and the Department of Energy, with little drive from the latter to reach finality.
      The result of all this national bickering is that the programme has been put out of schedule, the Japanese are dissatisfied and the construction of the oxide facilities has had to await the outcome of what could be a substantial public inquiry. Ministers would seem reluctant to talk about the contemporary picture.
      Perhaps the Minister will clarify the following points. Are the Japenese utilities prepared to await the outcome of the Section 282 inquiry without in the meantime seeking or making alternative provision? That is a simple point. I hope the Minister is prepared to say that the Japanese utilities will wait until the inquiry has been completed. Are the French prepared to act as joint partners in the United Reprocessors GmbH and to stick to a half interest in the tonnage available and not take the lot?
      I must repeat the point which I put to the Minister upstairs and to which I have not yet had an answer. Will an immediate grant of planning permission for storage points, which are necessary to meet the Japanese programme—be made so that construction of these ponds may be undertaken, and will this be done ahead of or during the course of the public inquiry on the thermal oxide plant'? If the Minister will give answers to these three points, I for one will be perfectly satisfied that things are going ahead as planned.
      I wish to put some general observations. While I consider this to be a necessary Bill in providing the necessary funds on limits, I am not certain that we have the necessary safeguards. I am making this point in connection with the public and not the people who have looked into the matter carefully. The Secretary of State must bridge the broad credibility gap between the public and the physicist and give the public at least the feeling that the great issues which are now being debated about the plutonium economy and nuclear waste disposal are, and would seem to be, both thoroughly taken care of and completely

      1001
      researched. I have no doubt about this being done, but I hope that the right step is being taken in that direction.
      During the course of the Committee, we put forward certain amendments which would have implemented Sir Brian Flowers' recommendations. Instead, we have had an indication of a further slice of Bennery in the shape of a management and supervisory board associating the State, the trade unions and research and environmental representatives to manage a 1300-MW demonstration fast breeder reactor. I would call this a Heath Robinson contraption which is patently defective as the supervisory board will have limited capacity, limited expertise and limited independence either to control or to persuade the very competent management team.
      I put this to the Secretary of State and I hope that he will follow some of our recommendations. After he has completed his consultations over Flowers, I hope he can bridge the gap between the physicist and the public. I hope he will put himself in the public's position and realise that while nuclear stations possess a risk, and while reprocessing facilities are reasonably sound, the public have doubts which must be dispelled, and it is up to the Government to dispel them. Meanwhile, the Bill is before the House and it should certainly receive a Third Reading.
      8.16 p.m.
      Mr. Eadie: With the leave of the House, I should like briefly to reply. I am grateful for the way in which the hon. Member for Ross and Cromarty (Mr. Gray) approached the Third Reading. When the hon. Gentleman said that hon. Members are thinking of other things, I was minded that this is the first day of spring, but I do not think that the hon. Gentleman meant that.
      I am grateful to the hon. Gentleman for acknowledging the fact that a brief was provided in Committee, because this is a very technical Bill and we provided a brief in order that the Committee could have a good debate. I believe that it was a very good and thoughtful debate. Indeed, many hon. Members would profit greatly from reading that Committee stage.
      1002
      The hon. Gentleman mentioned the Flowers Report. I still give the assurance that I gave in Committee. We can hardly meet the assurances that the hon. Gentleman seeks, because we argued this in Committee and in the ordinary traditional way we voted when we disagreed.
      The hon. Member for Bedford (Mr. Skeet) made a thoughtful contribution. He always says that he is in favour of the Bill and of nuclear power, but I get the impression that he is not prepared to will the means in this respect. For some particular reason, the hon. Gentleman has at times been ultra-critical of BNFL, but that is the job and responsibility of the Opposition. I cannot accept what the hon. Gentleman said about the inept handling of the Bill by my right hon. Friend. I am sure that many of the hon. Gentleman's hon. Friends would disagree with him.
      I think that having a public inquiry into this aspect of the Bill will be welcomed by many people in the sense that it will to some extent take away the uncertainty. I do not think the hon. Gentleman will carry the whole House with him in his views. Those are his views, however, and he is entitled to have them.
      Mr. Skeet: What is true is that the Department of Energy gave consent to the contract with the Japanese and that a year later the matter was referred to planning inquiry by another Department, the Department of the Environment.
      Mr. Eadie: We can accept responsibility for the Department of Energy, but the hon. Gentleman cannot expect us to accept responsibility for the Department of the Environment. That is what democracy is all about. I do not understand why the hon. Gentleman is protesting about the processes of democracy. He may protest about some aspects of the nuclear process, but I do not think he can protest about the processes of democracy.
      Mr. Hooley: The hon. Gentleman is being unfair, because between the decision to give the go-ahead and the decision on the planning inquiry we had publication of the enormously important Flowers Report, which gave other reasons for not simply going ahead.
      Mr. Eadie: I am always grateful for comments from my hon. Friends. The hon. Member for Bedford asked about

      1003
      the inquiry, I am surprised that the hon. Gentleman raised this again, because we had this out in Committee. I gave a very positive answer to that question. I told the Committee that the Japanese had understood the position entirely. That is on the record.
      With regard to the French attitude, I gave the hon. Gentleman a specific answer to that. With regard to his third question about predicting the outcome of the inquiry, no one, of course, can predict the outcome of the inquiry. That is why the inquiry is of interest in many people's minds, and that is why many people will be paying attention to what the outcome of the inquiry is.
      I think I have answered the main points in the debate. I hope that the House will give the Bill a Third Reading.
      Mr. Skeet: Before the Minister sits down—
      Mr. Eadie: I have already sat down.
      Mr. Skeet: The Minister says that he has sat down. Neverthless, I hope he will rise to his feet to answer my last question. Prior to the conclusion of the inquiry, will he permit BNFL to go ahead with the building of the ponds? These are essential for the collection of the spent elements coming from Japan under the prospective contract.
      Mr. Eadie: I dealt with this aspect of the matter in Committee; indeed, it was dealt with on Second Reading. I ask the hon. Member for Bedford to read the reports of the proceedings in Committee and the Second Reading debate. He will find the answer to his question there.
      Question put, That the Bill be now read the Third time:—
      The House divided: Ayes 140, Noes 11.

      Division No. 92]

      AYES

      [8.21 p.m.

      Allaun, Frank

      Graham, Ted

      Phipps, Dr Colin

      Armstrong, Ernest

      Harrison, Walter (Wakefield)

      Radice, Giles

      Ashton, Joe

      Heffer, Eric S.

      Richardson, Miss. Jo

      Atkinson, Norman

      Hodgson, Robin

      Roderick, Caerwyn

      Bagier, Gordon A. T.

      Hoyle, Doug (Nelson)

      Rodgers, George (Chorley)

      Barnett, Rt Hon Joel (Heywood)

      Huckfield, Les

      Rodgers, Rt Hon William (Stockton)

      Bates, Alf

      Hughes, Rt Hon C. (Anglesey)

      Rooker, J. W.

      Benn, Rt Hon Anthony Wedgwood

      Hughes, Roy (Newport)

      Roper, John

      Bennett, Andrew (Stockport N)

      Hunter, Adam

      Rose, Paul B.

      Bishop, E. S.

      Irvine, Rt Hon Sir A. (Edge Hill)

      Ross, Rt Hon W. (Kilmarnock)

      Blenkinsop, Arthur

      Jackson, Miss Margaret (Lincoln)

      Rowlands, Ted

      Boardman, H.

      Janner, Greville

      Ryman, John

      Booth, Rt Hon Albert

      Johnson, James (Hull West)

      Sandelson, Neville

      Bray, Dr Jeremy

      Jones, Alec (Rhondda)

      Sedgemore, Brian

      Buchanan, Richard

      Kerr, Russell

      Selby, Harry

      Butler, Mrs Joyce (Wood Green)

      Kinnock, Neil

      Silverman, Julius

      Callaghan, Jim (Middleton & P)

      Lamond, James

      Skinner, Dennis

      Canavan, Dennis

      Langford-Holt, Sir John

      Small, William

      Cocks, Rt Hon Michael

      Latham, Arthur (Paddington)

      Smith, John (N Lanarkshire)

      Cohen, Stanley

      Leadbitter, Ted

      Spearing, Nigel

      Coleman, Donald

      Lee, John

      Spriggs, Leslie

      Cook, Robin F. (Edin C)

      Lestor, Miss Joan (Eton & Slough)

      Stallard, A. W.

      Cowans, Harry

      Lewis, Ron (Carlisle)

      Stanbrook, Ivor

      Cox, Thomas (Tooting)

      Lipton, Marcus

      Stewart, Rt Hon M. (Fulham)

      Crawshaw, Richard

      Loyden, Eddie

      Stoddart, David

      Crowther, Stan (Rotherham)

      Lyon, Alexander (York)

      Summerskill, Hon Dr Shirley

      Cryer, Bob

      Lyons, Edward (Bradford W)

      Taylor, Mrs Ann (Bolton W)

      Davidson, Arthur

      McCartney, Hugh

      Thomas, Ron (Bristol NW)

      Deakins, Eric

      McDonald. Dr Oonagh

      Thorne, Stan (Preston South)

      Dean, Joseph (Leeds West)

      MacFarquhar, Roderick

      Tierney, Sydney

      Dempsey, James

      Maclennan, Robert

      Tinn, James

      Doig, Peter

      Madden, Max

      Varley, Rt Hon Eric G.

      Dormand, J. D.

      Magee, Bryan

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

      Douglas-Mann, Bruce

      Mahon, Simon

      Walker, Harold (Doncaster)

      Dunnett, Jack

      Marks, Kenneth

      Walker, Terry (Kingswood)

      Eadie, Alex

      Marshall, Dr Edmund (Goole)

      White, Frank R. (Bury)

      Edge, Geoff

      Maynard, Miss Joan

      Whitehead, Phillip

      Ellis, John (Brigg & Scun)

      Miller, Dr M. S. (E Kilbride)

      Whitlock, William

      Evans, Ioan (Aberdare)

      Morris, Charles R. (Openshaw)

      Williams, Rt Hon Alan (Swansea W)

      Fernyhough, Rt Hon E.

      Moyle, Roland

      Wilson, Alexander (Hamilton)

      Flannery, Martin

      Murray, Rt Hon Ronald King

      Wise, Mrs Audrey

      Fletcher, Ted (Darlington)

      Oakes, Gordon

      Woodall, Alec

      Foot, Rt Hon Michael

      Ogden, Eric

      Woof, Robert

      Forrester, John

      Orme, Rt Hon Stanley

      Wrigglesworth, Ian

      Fowler, Gerald (The Wrekin)

      Ovenden, John

      Garrett, W. E. (Wallsend)

      Park, George

      TELLERS FOR THE AYES:

      George, Bruce

      Parker, John

      Mr. Joseph Harper and

      Golding, John

      Parry, Robert

      Mr. Peter Snape.

      NOES

      Bain, Mrs Margaret

      Ross, Stephen (Isle of Wight)

      Wainwright, Richard (Colne V)

      Freud, Clement

      Smith, Cyril (Rochdale)

      Grimond, Rt Hon J.

      Steel, Rt Hon David

      TELLERS FOR THE NOES:

      Howells, Geraint (Cardigan)

      Stewart, Rt Hon Donald

      Mr. David Penhaligon and

      Pardoe, John

      Thompson, George

      Mr. A. J. Beith.

      Question accordingly agreed to.

      Bill read the Third time and passed.

EUROPEAN COMMUNITY (COKING COAL)
8.32 p.m.
The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): I beg to move,
That this House takes note of Commission Document No. R/2639/76 and of the comments in the Fourth Report of the Select Committee on European Legislation, &c. but is mindful that the proposal is only one of several aimed at providing long term security of Community energy supplies which as a whole are likely to be beneficial.
This is a very timely debate, and although it is specifically about the European Coal and Steel Community coking coal scheme, this is very relevant to the steel industry, and therefore it may be helpful if I broaden our discussions to other matters of EEC energy policy. The Scrutiny Committee has expressed an interest in EEC energy policy, coal burn and coal stocking, and also the House is very interested in JET.
Next week, on 29th March, the Energy Council meets in the morning and the Research Council in the evening of the same day. As I shall be in the chair for the Energy Council, this debate provides an opportunity for me to outline the Government's approach.
Of course, JET is not in any case on the agenda, because that subject is for the Research Council to deal with, and the Minister of State, Department of Industry will be chairing that meeting. However I shall take the opportunity to tell the House that the Government are taking very vigorous action to canvass the cause of Culham, because we believe that there is a very strong case for it, and naturally we hope that we can persuade Ministers of the Research Council to share that view.
Before I come to the particular proposals that we are discussing I shall say something about the development of EEC energy policy.
Mr. Tom King: The Secretary of State has introduced a subject that is not strictly within the coking coal situation—that of JET and Culham. We do not quarrel with that. What is the time scale, as the Government see it, in relation to contracts of employment already in existence for personnel at
1008
Culham? A decision on the time scale is imperative.
Mr. Benn: I fully understand the hon. Gentleman's intervention. In referring to that matter I was only trying to complete a range of the issues that are of concern and interest to the House. We are anxious to make rapid progress. The Commissioner recently made a statement suggesting that this matter should be settled urgently, and I agree with him. However, I cannot answer the hon. Gentleman's question specifically, except to say that we hope that we shall obtain an early decision.
I hope that it will be convenient now to deal with our approach to energy policy as a whole. There is no doubt that for the whole Community, as for the United Kingdom, a successful approach to energy policy is necessary, given the dependence of the Community as a whole on world fuels. Little progress has been made in the past and part of the explanation may lie in the fact that the approach was centralised, whereas these issues are extremely important for member States and their interests do not always correspond.
Therefore, I have tried a consultative approach in making two tours to capitals—one in the autumn of 1975 and, secondly, as President of the Council of Energy Ministers in January of this year, when I sought an understanding of the position of Ministers on matters that were coming up for decision. I urged that we should try to make progress on the building block principle of finding the points that are agreed, seeking informality in our manner of dealing with these matters, primacy of ministerial control, and a measure of realism in our approach.
We now have an agreed work programme. I suggested to my colleagues, following my recent tour of various capitals, that we should consider a more open policy of discussion within the Community on a matter that concerns everybody—namely, the conservation of energy, on which papers have been submitted by the French and on which there is great interest world wide.
My argument is one with which the House will be familiar in domestic energy terms—namely, that we cannot achieve a successful policy without a full programme of consultation and without

1009
public opinion being aware of the choices. Since nobody is arguing for federal control of energy resources belonging to member states, our best chance of harmonising our interests lies in the methods I have described.
The view expressed by all the Ministers whom I have met recently is that we should make an early approach to the Carter Administration in the United States. I hope to see the United States Secretary of State when he comes to London shortly, and in two weeks' time, when I visit Washington, I shall see Mr. Schlesinger, who has been given responsibility for establishing a Department of Energy in the United States.
As for Britain's position on Community energy policy, let me emphasise that we are the largest energy producers in the Community. I have given the figures to the House on other occasions, but I shall now refer to them briefly. A figure of 27 per cent. of all investment in energy in the Community is British, 33 per cent. of all investment in coal is British, 51 per cent. of all investment in oil is British, and we have unrivalled experience in operating nuclear power stations. Any British Minister is bound to be taken seriously at the Energy Council, as indeed British Ministers are.
We have an interest in seeing that our position as the major producer is given due respect and regard. We have an interest in the investment and the protection of that investment. Quite clearly, we have an interest in sharing the cost of research and development, in as much as that can be achieved. JET is one example of that.
The specific interests are well known to those who follow these matters. The first is the minimum support price, and we have urged our case strongly in the Council of Ministers. Although the matter has not yet been agreed, I have pointed out to my colleagues in Brussels that, with our heavy investment in oil and in coal, a support price is a necessary and reasonable objective of Community energy policy.
We also have a great interest in opening up our market for coal in the Community. The Community is a historic market for British coal and we should like to see it reopened and developed. Therefore, we have an interest in the imports of coal
1010
that are making it difficult for the Community to develop greater independence in coal production and use. We are interested in stimulation of the coal bum and in the conversion of power stations to coal burning. In the interim we are interested in a proper coal stocking scheme. We are also concerned—and this is of international interest—in the development of a conservation programme, since there is a massive gain to be made here for every country in the Community and elsewhere.
Every member State with which I have had discussions has expressed an interest in the Euratom loan scheme that was proposed a year ago, but not then agreed as part of the package and on which we have a reservation, as on coking coal itself. The formation of a policy has been slow, although we reached agreement in December on emergency sharing provisions in the event of an oil shortage.
We are now looking for proposals to reduce our dependence on imports and to stimulate indigenous fuels. We are awaiting proposals from the Commission on stock provisions, on provisions for stimulating coal burn, and on the protection of investment—and I should include MSP—but none of these is ready for the Council meeting next week.
I now turn to the coking coal proposal that is the reason for tonight's debate, but I hope that the sketch that I have given of the Government's approach will make it easier for the House to understand what I have to say about coking coal.
At present the ECSC provision for coking coal is based on a scheme that allows protection subsidies on coking coal against American and Australian prices and a sales subsidy when there is a transfer of coking coal across the borders. Almost all of this benefits the Germans. It is worth about £20 million a year and is paid for by a production levy and by some contribution from ECSC funds.
There is no requirement that the British Government should pay anything towards the scheme, but the British Steel Corporation is levied under the scheme. That levy at present goes to the British Government under the arrangements that were made in 1973 and it does not go across the exchanges to Brussels.

1011
Because the scheme was thought likely to be temporary, it was intended that the rate of support would lessen during 1977 and finish by the end of December 1978, but it has now been found necessary to continue the support. The Commission proposal that we are now discussing is that the scheme should be extended to 1985, that the annual tonnage covered should be raised from 15 million to 18 million and—this is of great concern and a matter on which the BSC has made representations—that the United Kingdom contribution at present paid mainly by the BSC, with smaller amounts from Ford and GKN, should be diverted to Brussels. That would mean that £2 million would be transferred across the exchanges through the Treasury to the Commission.
Mr. John Ellis: Since it is suggested that the tonnage should be raised from 15 million to 18 million, will not the £2 million be updated by that amount?
Mr. Benn: That is a marginal matter. It is important that while in 1975 it was agreed that the British contribution would be paid to the Government by the BSC, it is now proposed that it should be diverted to the Community.
Mr. Julius Silverman: Will not the Federal Republic be almost the sole recipient and beneficiary of this arrangement?
Mr. Benn: I said a few moments ago that the Germans were the main beneficiaries under the coking coal scheme. It was agreed that the tapering off, which was to begin in January 1977, would be stopped and that we should have a little more time to consider the proposals.
The attitude of the United Kingdom is that there is no great significance for us in the extension to 1985, although the extension alone would mean that the BSC, Ford, GKN and others would continue to pay money into the Treasury. The BSC has expressed a vigorous view on this and it is contained in an annex to the Scrutiny Committee's report. That is why it has urged us to look critically at any extension of the scheme.
The increase of the annual tonnage with the payment of £2 million to Brussels, to come to the point of my hon.
1012
Friend the Member for Birmingham, Erdington (Mr. Silverman), is a serious matter for us. The BSC does not benefit much from the scheme and the proposals would add a burden across the exchanges.
Since our situation is still as it was in 1973, we see no reason to change the existing arrangements. However, there are factors which have to be taken into account, and that is why I went a little broadly in my opening statements.
If we are to consider Community energy policy—and, although I have no experience of other councils, the position may be similar there—there is an element of bargaining or package dealing. We are concerned about certain other matters that would be of specific benefit to us. One is stocking aid for coal, where it is necessary that the coal industry should be able to stock coal pending development of its markets and the recovery of Western economies.
Secondy, and of equal long-term importance, it is necessary to take advantage of any provisions for Community support for conversion to coal-burning capacity. Thirdly, and even more important, at least in the short term, we need some import licensing arrangements to allow us to monitor cheap coal imports into the Community.
We know that these proposals are up for consideration and we hope that the Energy Council will find it possible to reach an agreed line. It will not be possible for progress to be made on all these matters next week, though I hope that we shall make progress at the second Energy Council meeting that I shall be chairing in June.
I invite the House to understand that my attitude towards the coking coal arrangements that will come up for discussion next week is conditioned by general reaction to the possible development of other schemes which would be to the benefit of the United Kingdom. That is the spirit in which I intend to approach the Council meeting on 29th March.
There is bound to be an element of give and take in all these matters and I very much hope that there will be good will in the spirit that I have tried to establish and in the harmonisation of approach between this country and other member

1013
States and that there will be a constructive attitude to the needs of the United Kingdom in the development of policies. Subject to anything that is said in the debate, I hope that the House will endorse that general approach.
8.50 p.m.
Mr. John H. Osborn: I welcome the fact that the Secretary of State will be presiding over the Energy Ministers' meeting next week and that he has chosen the debate on this motion, particularly Document R/2639/76, to look at this problem in a wider context.
I have been asked to speak for the Opposition as a member of the Energy and Research Committee of the European Parliament. I assure the right hon. Gentleman that he was welcome at that Committee's meeting when he came to Brussels. I hope that his example will be followed by other Ministers. Of course, we have had former Conservative Ministers talking to committees of the European Parliament about the problems that they face. Therefore, I speak not only for the Opposition, but as a member of a Committee that has been dealing with these issues in the European Parliament.
To a certain extent I must and intend to speak from a Community point of view, as the right hon. Gentleman did, and to look at the problem in the wider context. Of course, I might also look at the matter from a steel point of view, as I represent a division of Sheffield. But the Sheffield blast furnaces are rapidly vanishing to coastal regions where most coking coal is used.
There have been debates on energy policy and recently on a minimum price for oil on the Giraud Report in the Assembly of the European Parliament. No doubt the Minister has studied that report.
We have before us a document dated 4th November. I shall concentrate on the narrower side first and then respond on some of the issues that right hon. Gentleman has put to us.
This debate is of value. I praise the work of the Scrutiny Committee. I hold the view that the scrutiny of European legislation is second to none in this House and country though certain Mem-
1014
bers from other member States may slightly disagree with me. The work of the Scrutiny Committee has brought home to me the fact that some aspects of this problem were not considered by the Energy Committee of the European Parliament because it did not have the full benefit of the wisdom of the British Steel Corporation last year.
Although the scheme that we have been operating for some time makes sense to the Community, I accept the view expressed by the Minister and the BSC that it is of no advantage to Britain, the time scale is interesting. On 11th November the Commission asked the European Parliament for its views. On 25th November M. Krieg was appointed as rapporteur, or draftsman. On 30th November the Energy and Research Committee, which the Minister visited, gave the proposals a favourable passage. I was present at that meeting
When we looked at the proposal, several points were brought up. We referred to the implementation of energy guidelines drawn up by the European Council in December 1975 and to Community guidelines, which stressed the need for a system of aid for coal and coke. The Parliament had requested the Commission to ensure that the current subsidy schemes, which had proved successful in the Community, should be extended. Therefore, as a Member of that Parliament learning of these doubts now I appreciate the value of the Scrutiny Committee.
In the report a difference was made between two types of aid: production aids at an annual rate per coalfield and aids for the sale of coal. The difference has been stressed subsequently by the British Steel Corporation.
Amendments were made to a number of articles in the report by M. Krieg and the matter was referred to the Council and to the European Parliament forthwith. That open dialogue and consultation with the European Parliament by the Council and Commission is improving and is to be welcomed.
The Committee on Budgets—the noble Lord Bruce of Donington was acting chairman—pointed out that the estimated cost of the proposal before us would be reflected in an increase in the special fund for inter-Community sales aid from

1015
30 mua to 36 mua, which is probably to what the Secretary of State referred. But the Budget Committee of the European Parliament approved this as well. This went through the European Parliament on 17th December. We should all support the idea that we should look at this again and decide on an overall perspective what is the best way of handling it.
I return to the subject of sales aids, which the BSC does not like. As the Secretary of State pointed out, these are the difference between the subsidised costs of Community coal at pits and the cost of imported coal at steel works distant from Community pits, and this mainly involves across-frontier sales. This applies particularly to steel works in Holland, France and Italy. Outside sources of supply include United States and Australian coal.
There is no green pound for these calculations. Payments are made in units of account. As the pound has declined, the BSC has told me that the burden on the BSC has been that much more severe. The Secretary of State has already referred to the agreement made at the time of British entry into the EEC whereby, because the NCB sells and the BSC buys no coking coal on the Continent, it was agreed that on entry the United Kingdom should be part of a scheme for production aid purposes that would effectively exclude sales aid. This was agreed when we entered the Common Market. There is no contribution from the Government to Community sales aid funds, and the BSC levy contribution is paid not to the Community fund but to the Government. It was understood that the BSC levy should be recycled to the BSC. It has now ceased, on the insistence of the Commission, which creates some urgency.
Mr. Silverman: It would be wrong to say that it has now ceased. It will cease if the new legislation comes into operation.
Mr. Osborn: No. I understand that it has ceased already. Perhaps the Secretary of State can confirm this. That was the information that I was given. Perhaps he can clarify whether it will cease.
Conditions in this country are almost totally different from those on the Continent. I agree that we should be subsidising the German Government and
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other Community steelmakers. Therefore, this should be looked at again. With coking coal Britain has an advantage in being almost entirely self-sufficient, although 1·3 million tons was imported last year, of which the major proportion came from the United States and Poland. An examination of the payments indicates that Community countries other than Britain would pay 16½ million units of account and receive 27 million units of account, so the other Community countries do considerably better than we do.
Mr. John Ellis: The hon. Member for Sheffield, Hallam (Mr. Osborn) prefaced his remarks by saying that he would be supporting the case in favour of steel, but everything that he has said has been against the steel point of view. He said that the Opposition would support it.
Mr. Osborn: The Opposition are supporting the Secretary of State's line, because he is renegotiating the proposals that have gone through. The Secretary of State knows perfectly well that, once a measure has gone through the European Parliament, it is then looked at by the Council of Ministers.
Had the British Steel Corporation gone to the European Parliament and explained the point of view put to the Secretary of State for Energy when the matter first arose, and had the Corporation given Members of the European Parliament from this country the information that it has given the Select Committee in the last few weeks, this matter would have been looked at more closely then.
The problem is how better to make use of the dual mandate and ensure that European Members from the British Parliament balance national, or even local, interests against Community interests.
The British Steel Corporation and the other industrial groups may realise that they do not necessarily have to go to the Commission only and may think that they can go to our Ministers instead. So they feel that they do not have to go to the Economic and Social Committee with their views, but there are, however, 36 Members of this House and of the other place who are able to represent their views in the European Parliament. Had those groups represented this point

1017
more forcefully to us at the time, we would have discussed the matter with the German and French Members.
But, as the Minister pointed out, coal for coking presents problems, and the BSC is very anxious to widen its sources of supply of coking coal from this country so as to ensure adequate supplies. The developments by the British Steel Corporation, such as that at Normandy Park steelworks at Scunthorpe, using Phurnacite-type fuel, should be pursued.
The Minister says that he will look at this matter again in the Council of Ministers. I hope that he will send it back to the Commission and that the Commission will put revised proposals both to the Ministers and to the European Parliament, and that after that debate the members of the Committee will take a fresh look at the situation.
In his wider appreciation the Minister pointed out that we are as dependent on the oil-producing countries as we were three and a half years ago. He referred to the importance of the nuclear programme, a subject which was debated earlier this evening. There have been cut-backs. The aim was to have had a 200 GW programme. It is now possibly 85 GW and this could ultimately be a programme of 130 or 140 GW. That means that we must look to conservation and to geothermal and solar energy. Alternative energy sources must be considered. My colleague Senator No é from the Italian Parliament has carried out a report on solar energy. Conservation has been considered by the Commission.
If the Secretary of State can accelerate harmonisation so that we achieve common standards I should welcome that. Mr. Springorum, the German Chairman of the Energy and Research Committee, produced on 10th June guidelines for a Community coal policy. I presume that the Minister has received this. Mr. Springorum wanted to stabilise the market for hard coal and deplored that hard coal production was falling in the Community. We are faced with that problem in this country. He wanted aid for coal to be made obligatory, not optional. That report and the report by Mr. Burgbacher on stockpiling are most important.
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The Minister called for us to make the best use of our energy resources. The Community document has been discussed and will be the subject of a report by Lord Bessborough, who is a member of the Energy Committee, on the funds being made available to provide inducements to the Community's electricity producers to put in operation some 300 GW of coal-fired production by the early 1980s. Lord Bessborough is dealing with the question of 30 per cent. grants spread over a shorter period. These are all part of the measures concerned with the use of coal.
The Secretary of State has been President of the Energy Research Committee of the European Parliament. It is therefore important that hon. Members should have his views. I am grateful that he has put them forward. The right hon. Gentleman referred to JET. That subject hag been before the Committee. The Commission reached a decision a year ago. I welcome that the Minister toured the capitals in the autumn of 1975 and again this January to see what were the requirements of the various members. Perhaps there is other work that we could study, such as the use of tidal energy and the use of hydrogen as an energy carrier. I welcome the Secretary of State's forthcoming talks with Mr. Schlesinger, because, through the International Energy Agency, it is essential that, at a high level as well as elsewhere, we should know what both the Americans and the Canadians are doing and that they should know what we and the Community are doing.
The right hon. Gentleman has rightly stressed how much of Britain's energy supplies come from its own resources. He has discussed the importance of the minimum support price for oil. There have been differing views about that. Mine were made clear in the debate in the European Parliament—the rapporteur was a M. Giraud. They are that to a certain extent the minimum price support is irrelevant provided we are in world surplus.
My hon. Friends have differing views on the matter, but in the Energy Committee of the European Parliament we have tended to take the view I have expressed, because whatever investment has gone into Continental Shelf oil must not be undermined by commercial practices,

1019
whether from established oil-producing countries or, perhaps, some of the member countries of the EEC which would benefit from the purchase of cheap oil at the expense of our investment. This is a complex issue.
This debate is of value and an experience because it highlights the importance of the Scrutiny Committee and of the importance for industrial groups, whether nationalised industries or in the private sector, to be able to make their views known to the 36 British Members of the European Parliament in good time. I hope that the Secretary of State will now take steps to ensure that that happens.
9.8 p.m.
Mr. Julius Silverman: In the absence of the right hon. Member for Bournemouth, West (Sir J. Eden), who is Chairman of the Scrutiny Committee, I, as acting Vice-Chairman, have been asked to raise this matter and explain the Committee's point of view and why we published the paragraph we did.
The hon. Member for Sheffield, Hallam (Mr. Osborn), whom I thank on behalf of the Scrutiny Committee for his kind words about our work, has tended to broaden this into a general debate on energy, particularly energy conservation. The Committee has submitted to the House, apart from this instrument, four other documents for debate—one instrument and three consultative documents—which will allow the House to debate the issue of energy and energy conservation in the EEC in a much wider context than this debate. The Committee was concerned in its deliberations solely with this instrument, however.
The major evidence that we received, apart from the evidence of the Department, was a communication from the British Steel Corporation, and I think that it is proper that I should read it, because it sets out the Corporation's view perfectly clearly, and if it is true, as the Minister says, that this must be considered as a sort of package with other energy matters and it is necessary for the Government to make concessions on the matter, at any rate the Committee thinks that the Government should realise how serious this point is and what is being given away in exchange for what we are getting for it. The document from the
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BSC puts the case and the history clearly. It says:
"The Energy Ministers of the Community are meeting in Brussels on Tuesday 21 December to consider proposals for a number of decisions in the Energy field, including an extension and modification of the current ECSC coking coal subsidy scheme. If any of the various proposals in respect of the scheme now before the Council of Ministers were to be adopted the financial consequences for the British Steel Corporation would be serious.
The Corporation has no objection to that part of the scheme which authorises Governments to subsidise production of coking coal."
That presumably means that it has no objection to the present situation being extended.
"Our concern is with the second part of the scheme which provides for a Community fund, financed partly by Governments, but mainly by a levy on steelmakers, from which sales subsidies are paid on coking coal delivered across frontiers to steelworks distant from the pits.
The origin of this scheme long pre-dates UK entry into the Community; it was conceived at a time, before the oil and energy crisis, when some system of Community sales aids may have been desirable in order to make Community coking coal competitive with the much cheaper imported coal.
In the new circumstances following OPEC and its aftermath, the scheme may still serve a purpose in helping to maintain Community coking coal production at the desired level. But what is absolutely clear is that in no real sense has the system of sales aids any relevance to the conditions which prevail in the UK.
The NCB sells no coking coal in the Community; whilst the BSC purchases almost the whole of its requirements from NCB."
I interrupt that to say that I think the total amount of our coal imports is just over 2 million tons, of which only a part is coking coal and practically none of this comes from the Community; it comes from third countries.
"Basically, therefore, conditions in the UK make it unlikely that this country will ever benefit from the Fund; and, as in the past, the principal beneficiary can only be the Ruhr coal industry, and indirectly the German Treasury.
The special position of the UK in fact was fully recognised in 1973 when the scheme in its present form was negotiated in the Council of Ministers. Under an arrangement effectively removing the UK from the scheme, the British Government was exempt from making any contribution itself to the common subsidy Fund: BSC was required to pay a levy on coking coal consumption on the same basis as other Community steel producers; but it was agreed that the money should be paid not into the Community Fund, but into a special account

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in this country, and the proceeds were made over to HMG. The 1973 agreement in the Council of Ministers said nothing about the disposal of the money accruing to the Government, but it was understood by all concerned, including the Community steel producers, that the logic of a special UK arrangements required HMG not to pocket the money but to recycle it back to BSC. HMG acted accordingly and arranged for the money to be returned to the Corporation via the NCB.
Unfortunately, however, this recycling arrangement has now come under attack from officials in the Commission who deny that it was ever the intention that the money should be refunded to BSC. They maintain that this puts the Corporation at an unfair cost advantage vis- à-vis its competitors, and that the recycling constitutes therefore a Government subsidy contrary to the Treaty of Paris. They insist that in future the BSC must be treated no differently from other producers in respect of this levy.
The various proopsals for extension of the coking coal subsidy scheme now before the Council include one from the Commission which would put an end to the UK special arrangement in its entirety. But the proposal which seems to command most support is that put forward by the German Government. They are naturally keen to renew the scheme, and are prepared to continue to give the British Government a special position; but not however the BSC. Under this proposal the British Government would continue to be exempt from making the contribution to the Fund; BSC would continue to pay the levy into a special account in the UK; HMG would be free to use the money for any purpose except because of the Commission's objections, for recycling to the Corporation.
If the Corpoation has to subsidise anyone, clearly it is better that its own Government should be the beneficiary rather than the German coal industry, but any scheme which is set up to subsidise the Community coal industry and whose result in the United Kingdom is to require British Steel Corporation to subsidise its Government must be inherently absurd and requires radical review. The absurdity could perhaps be tolerated if the price of Community solidarity were to be small. But the amount involved is substantial —the levy on coking coal consumption by British Steel Corporation amounting to about £2 million a year, on top of the steel production levy which currently costs the British Steel Corporation £7 million a year."
That makes £9 million in all.
The letter continues:
"In our present financial difficulties we cannot support an additional cost of this magnitude. We are strongly of the view that any extension of the scheme should be on the basis of: —

(a) full United Kingdom exemption from the sales aid aspect of the scheme, the Minister exercising his right of veto under Article 95 of the Paris Treaty if necessary;

1022

(b) failing this, a clear understanding by all concerned, including the Commission, that in one way or another Her Majesty's Government must be allowed to channel money back to the Corporation",

which, of course, is the present situation.
That forthright and clear letter, which sets out the position both historically and economically, is based on three points: first, that the proposed scheme is unfair for the British Steel Corporation; secondly, that the United Kingdom is in an entirely different position from the rest of the Community and the position there is irrelevant to the situation in the United Kingdom; thirdly, that it would seriously erode the competitive position of the British steel industry in an extremely difficult situation. Those are the views of the Corporation, and those were the views that the Scrutiny Committee had on board in making its presentation to this House, in recommending this matter for debate, and in publishing the paragraph that it did.
We as a Committee appreciate that here and there the Minister may have to negotiate, that there may have to be give and take, and that, in substance, a large part of Community legislation is legislation by negotiation. Nevertheless, it seems to me that, whatever advantages the Minister may get from other fields of energy association, this matter should be dealt with separately.
Incidentally, I say in passing that I wonder whether this is a matter of energy. In substance, coking coal is not used as a source of energy in the steel industry, but is an essential raw material in the manufacture of steel, and possibly it comes outside the question of the energy arrangements. It is something different, which is probably why the Committee dealt with it separately.
I have no doubt that during the 12 months that are available for reflection and before further negotiations the Minister will pay due attention to the serious views put forth by the British Steel Corporation and by the Scrutiny Committee.
9.19 p.m.
Mr. Michael Marshall: I welcome the debate and, indeed, the suggestion by the Secretary of State and my hon. Friend the Member for Sheffield, Hallam (Mr. Osborn) that this subject needs to be considered in a wider context. I pay

1023
tribute to the Scrutiny Committee for its work, and, like the hon. Member for Birmingham, Erdington (Mr. Silverman), I wonder why this matter should be looked at in an energy context as opposed to an industry one. That is a matter that I should like to consider in some detail. I think that this wider view is important.
I realise why the British Steel Corporation should seek to get the best possible deal that it can for itself. It would be failing in its duty if it did not do so, but the Secretary of State, as he goes into a period of negotiation, will, I hope, take a wider view of this subject. As one who, as a member of the Select Committee on Nationalised Industries, has just returned from talks with the Commission and with the Belgian and German steel industries, I felt it right to give some views which from my standpoint seem clear both as to the Commission's attitude and as to that of other European steelmakers in looking at the future of coking coal both for the British Steel Corporation and for the European steel industry as a whole.
The Secretary of State struck the right note when talking about the factors which have to be taken into account. Paragraph 3(1) of the document contains the words:
"As regards coking coal, this involves firm, long-term commitments on the part of the iron and steel industry."
This is the context in which we should look at this subject and it was the theme of the hon. Member for Erdington. This is the point at which we should try to look for a moment in a wider context. I hope that in replying the Secretary of State will pay some attention to my questions.
In passing, I declare an interest as one who started his life working in the coke ovens. This is a privilege which, I believe, is shared only by the hon. Member for Redcar (Mr. Tinn), who is a Government Whip. The whole future of the coking coal industry depends on the way in which the British Steel Corporation operates its coke ovens and the way in which it will operate those ovens in future in relation to other European developments. The first new feature we face is what I detect to be the increasing rationalisation of production facilities within Europe.
It is noticeable, as one travels around, that there are out-of-date coke ovens in
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operation in various European plants. By the same token, and this is the way to look at these matters in context, whatever the immediate short-term argument may be about the British Steel Corporation and the levy, we must not forget that in the past three years the BSC has been able to draw £246 million in loans from the Commission on favourable terms with guarantees as to the foreign exchange situation through the Treasury. That sum of money has provided a substantial underpinning for construction of new coke ovens, which we welcome. These are part and parcel of the balance which we must strike.
If we look at the way in which the Community is moving towards product specialisation, it is important to decide where Britain will stand as a coking coal producer over the coming years. There are various other factors which will bear upon this. First, if we look at the situation as it stands, it is true that we depend almost entirely on imports of coking coal. We must do so until we get round the problem of the high ash content of our own domestic supplies. That situation is also true for other European steel manufacturers who produce coking coal. It is my contention that there will be opportunities in the future, certainly within the period envisaged in the agreement, for this country to be an exporter of coking coal. If we ignore the fact that we are an island with coastal works, we are ignoring one of the major advantages open to us within the Community.
I would have liked to hear more of some of these broader issues. I accept that the Secretary of State has departmental responsibilities. I am rather concerned about what the input of the Department of Industry is. On the technological level—having touched on finance and marketing—this country now has a direct stake in the direct reduction process. At Hunterston we are going ahead with ideas which will substantially reduce our offtake of the normally produced pig-iron and eliminate the use of coking coal. To that extent there is a definite interest in this country in the opportunities to sell and export coking coal, which is possible. On the other hand, technically we must also be aware that we may find, over the years, that our views on these matters change, depending on the Hunterston experience.

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I have put three problems which seem to be particularly relevant to the British Steel Corporation and to the country in terms of finance, marketing and technology. I have two specific questions. First, what is the input of the Department of Industry in the three areas I have mentioned?
It is right to return to a theme which some of us have developed on a number of occasions concerning our worries about the way in which, in matters affecting the BSC, the Department does not take a positive rôle but seems to follow on the coat tails of the Corporation. I understand fully why the Corporation should wish to fight for its corner, but I look for a clear, far-sighted and, above all, overall view from the Department on where Britain's best interests may lie. Therefore, I should be interested to know what the Department is putting forward in these matters and to what extent its views will be reflected in the Secretary of State's conversations.
Secondly, I should like to hear what the BSC thinks, because if it is to be part of a greater rationalisation of production facilities, if it is to be part of a product specialisation, I wish to know in what areas it expects to thrive and whether it supports my contention that there are opportunities for it to be an exporter of coke.
What worries us above all is the feeling that we deal with these matters in a rather sterile fashion. We consider the documents and proposals which come before us in the sense that they exist and, therefore, we have to do something about them. I ask the House to think about them in a fundamental way, because unless we consider them on a longer-term basis we shall miss opportunities to take a broader view, which is what this matter is all about.
9.26 p.m.
Mr. John Ellis: Kind words, which I echo, have been said about the Scrutiny Committee, but there is one point which I should like to bring to its attention.
Scunthorpe is a steel producer. Being interested in this subject I went to the Vote Office, where I was able to obtain certain documents. The key to the matter was the letter to which my hon. Friend
1026
the Member for Birmingham, Erdington (Mr. Silverman) referred, but it was not available in the Vote Office. I had to go to great trouble to discover that the letter from the British Steel Corporation, which is salient to this subject, was available and, in fact, had been deposited in the Library. I ask my hon. Friend the Member for Erdington to ensure that the Select Committee takes note of that point so that it may ensure that hon. Members may more easily find useful documents which are referred to in its reports.
Complimentary remarks have been made about the Select Committee, and it is right that we should say something complimentary about the British Steel Corporation. Its letter is a key to the subject that we are discussing. The fact that it wrote to the Select Committee is perhaps primarily why the letter came to the notice of the House. It was not the private sector—although it will be equally affected—but the Corporation which wrote the letter.
The inadequacies of the Common Market have once again been demonstrated. Those in the Steel Community in Europe were faced with the problem that, because some countries do not have coal or a coke-producing potential, or because in the case of other countries the commodity had to be transported long distances, in order to deal with the question of imports from outside the Common Market a fund had to be devised to provide a subsidy. When we joined the Common Market we were approached to take part in the scheme. We said that it would be of no benefit to us because we did not obtain coke or coking coal from long distances.
A compromise was therefore arrived at, with Government support, and an account was opened with the Treasury. I understand that our levy was about £2 million a year. Every year, religiously, the British Steel Corporation and the private sector paid this £2 million levy and deposited it in the account with the Treasury, and every year the Treasury said "We will give it back to you." That is a ludicrous situation. The whole matter arose as was said in the letter from British Steel:
"Unfortunately, however, this recycling arrangement"—
that is the polite way of putting it—
"has now come under attack from the officials in the Commission who deny that it was ever

1027
the intention that the money should be refunded to BSC."
What is proposed now is that a scheme which envisaged 15 million tons of coking coal should be updated to 18 million tons, so that our contribution shall be made larger and we shall now pay into the fund on a scheme in which we have no interest and from which we have no benefit. But, for the time being, we shall keep the account going and deposit with the Government this £2 million. The only restriction is that we do not give it back to the BSC. The Government get some advantage from it, and that is better than having it go elsewhere into foreign countries.
During his speech, the hon. Member for Sheffield, Hallam (Mr. Osborn) said that he represented a steel constituency and was looking at this matter from the point of view of steel. I, too, look at this from the point of view of steel, because that is my job in this House. I understand my right hon. Friend's position. He has to negotiate and to make the best he can of the situation. If there are advantages in stocking coal or making subsidies available to coal-fired power stations, he must do the best he can. However, the hon. Member for Hallam criticised this arrangement in detail and then revealed that he would support it. From my point of view, this is not acceptable. I feel that it should be opposed.
One of the arguments that we can use in the Common Market, because this is a matter which arises in Europe itself, is that there should be fair competition and that the most efficient should do better. It may suit Europe as a whole to say "We have this problem with our steel industry where we are dragging in coking coal from a long way off." This is the natural advantage that we have. This whole idea goes against the principles of the Common Market itself. It is arranging a subsidy for coking coal which is to the benefit of certain sections in Europe, namely, the European producers, rather than to the benefit of ourselves. I think, therefore, that we ought to fight this proposition on that ground as well.
It seems to be crazy to set up a fund, to levy the BSC £2 million, to place it in an account in the Treasury, and then give it back again to the BSC. That is ludicrous and stupid. But, on the whole, the BSC is still getting the benefit of it.
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However, I shall object strongly if we are to lose this amount of money for steel. It is my job in this House to be concerned for the good of the nation as a whole, but it is also my job to look after my own corner. If we are getting advantages for the nation in certain other areas and in certain other industries, the Minister should take note of them. When he conducts his renegotiations, however, I hope he will make it clear that when this matter was debated in the House certain of us vouchsafed our objections in principle and in detail.
Having looked at the BSC's position in detail and in principle, I feel that it is right for my right hon. Friend to say to Europe "We are a special category. In the interests of the Common Market, you are distorting free trade. What is in it for British Steel?" It is right that we should get an amelioration, equal to the amount we are putting in, to the benefit of British Steel in particular.
If this kind of money were available, I would certainly think that it could be used in the interests of my constituency in particular, and of the nation in general, by investing in a new blast capacity for more iron at Scunthorpe, which we need to go with the excellent steel-making facilities that we already have.
9.36 p.m.
Mr. Frank Hooley: I do not know whether it is a coincidence, but there was a report in The Times the other day about coking coal finds in Australia. It reads:
"British and European steelmakers are to benefit from a new source of high-quality coking coal in Australia which is to be developed by a consortium which includes the national Coal Board.
Queensland has awarded an exploration licence to a subsidiary of Overseas Coal Development which could lead to about 200 million tons of high quality coking coal being made available to Europe's steelmakers."
In these discussions we have been concentrating our minds on various financial fiddles so beloved of the Common Market—we pay this and someone gets it back, or someone pays that and it goes into this fund, and eventually it cycles all the way round. I understand that coking coal is a scarce and extremely valuable resource in Europe. It is not infinite and there is not as much of it as we should like. I am therefore

1029
wondering whether we ought to look at the problem of adequate supplies in a rather wider context than Europe. It would certainly appear that the National Coal Board is doing that and, I am glad to say, it is taking a very active interest in the large deposits that have apparently been discovered in Australia.
In this matter, as in so many others, it is quite foolish to talk as though Europe existed as an energy island. It does not. No discussion of energy problems can be confined to the context of Western Europe. Even a country as powerful and rich as the United States is not an energy island to itself. Western Europe certainly does not enjoy the various energy resources that the United States enjoys.
Therefore, we ought to hear something from the Secretary of State about the best balance—in physical and not in monetary terms—between the use of our coking coal resources by Europe and ourselves and the resources of this important raw material to which we may reasonably have access in Australia and possibly other countries. It may well be that the best interest of Western Europe is not to subsidise the production of this raw material and use it up in a decade, or a decade and a half. It may well be more sensible to obtain some of it much more cheaply from a friendly country, such as Australia, and to balance the use of indigenous resources against the importation of this raw material from elsewhere.
I am not sufficiently expert on coking coal or steel-making as to give a personal judgment on this matter, but I think that when we discuss energy we should discuss it in a world and not in a purely West European context.
The other interesting point was made by the hon. Member for Arundel (Mr. Marshall), who pointed out that there are experiments going on for direct reduction steel-making which do not involve the use of coke at all. I do not know how far these experiments have gone, or whether they point to a totally new way of producing pig iron.
Mr. Michael Marshall: Would the hon. Member care to accept that those of us who visited the Korf works found that the Russians have ordered 16 plants with 400,000 tonnes capacity to work on one
1030
site with a total output of more than 5 million tonnes? This will equal the large integrated steelworks and traditional blast furnaces. We are going into an area in which large plants are being used in a practical sense and this may alter our thinking in the time scale of this agreement.
Mr. Hooley: That is a very fair point. This clearly has a bearing on policy in relation to the exploitation of European sources and the possible future import of coking coal. We should examine this problem not just from the point of view of fiddling about with million-pound subsidies here and there, but consider instead how important it is to use up or not use up the physical resources of this important raw material.
The Secretary of State said in his brief opening remarks that he wanted to use this opportunity to broaden the debate into the general discussion of energy problems, and since that is apparently in order I wonder whether he would tell us his views on the development of the nuclear argument in terms of Western European energy supplies in the light of the quite serious social disruptions that occurred recently in West Germany. There have been violent protests against the siting of nuclear power stations. These have occurred wherever the federal authorities have wanted to put nuclear power stations. Some Lander Governments have passed legislation or regulations actually forbidding the utilities from going ahead with the siting or location of nuclear power stations at particular points.
Dr. M. S. Miller: Is my hon. Friend aware that there were similar demonstrations in France a couple of years ago?
Mr. Hooley: Yes, I am aware of that, but they were not quite of the scale or ferocity of those in West Germany in recent months.
I do not know whether there is evidence that public opinion and feeling on the siting of nuclear power stations is leading to a general reappraisal of energy questions in Western Europe. But certainly it would be very odd if the meeting that my right hon. Friend is chairing next week did not include some comments by the Federal Republic about the growing

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social strains that a big programme of nuclear power stations would undoubtedly put on the societies of Western Europe. I am not saying that we are reaching crisis point—far from it. However, there are straws in the wind.
Then there are the related international problems. There have been diplomatic tensions between the United States and Germany about the contract with Brazil and between the United States and France about the contract with Pakistan. Clearly, this development will play a part in the international discussions on energy policy.
At the beginning of the debate the Secretary of State did not say much about non-conventional sources of power in the European context. France is the only West European country actively to experiment with tidal power, yet this country has almost unique potential in that field in the Severn Estuary, and possibly elsewhere. Also, the American Administration is becoming more and more interested in solar power and wind power and I wonder whether this interest is reflected in any way in the evaluation of power sources by the EEC. Is it thinking in these terms? If so, perhaps it could do so with a little more vigour, drive and imagination and retreat a bit from the state of passionate attachment for nuclear power which followed the oil crisis.
My right hon. Friend referred to the JET programme. I must confess that as a layman I am a little cynical whether that will ever eventuate. Equally, as a layman, I regard it as an important scientific and engineering undertaking. It will be disastrous if we continue to dither over this matter in Western Europe because of a silly quarrel over whether the project should go to Northern Italy or Culham. All my reading on the subject leads me to believe that the expertise concentrated at Culham gives that area a far greater claim on the project. I hope that my right hon. Friend will press the claim.
This is not a general debate on energy matters in the conventional sense, and I shall not explore other aspects of the problem. I was glad that my right hon. Friend the Secretary of State for Energy extended the debate from the technical consideration of coking coal. I hope that at the end of this debate he will
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find it possible to say a little more about some of the other matters that have been mentioned.
9.47 p.m.
Mr. Peter Hardy: I shall not follow the remarks made by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) too closely, although he struck a chord in my mind when he mentioned coal discoveries in Australia. No doubt those discoveries received a great deal of attention in the British Press. Too often substantial and valuable discoveries of coal in and around Britain have been dealt with in a muted fashion. We have been modest about the tremendous discoveries of coal obtained in Britain in recent years. My hon. Friend was right to say that we should look upon ourselves not as an energy island but as part of the wider world. Therefore, we should not take too modest a view of our potential.
The hon. Member for Arundel (Mr. Marshall) tried to take the wider view and, interestingly, began his remarks by suggesting that he had begun his life in a coke oven. The odd whiff of sulphur can still be discerned since the hon. Gentleman now occupies a place on the Conservative Benches. He is certainly one hon. Gentleman on that side of the House who knows something about steel and coal, since he had an association with South Yorkshire before he decided to seek the more salubrious pastures of Arundel. I am glad that he has not forgotten us. I welcome his views and his thoughtful questions to the Minister.
It is interesting to note that the hon. Member for Sheffield, Hallam (Mr. Osborn) is not now with us, but I heard his speech with interest. I only wish that when I opposed him in an election in 1966 I had striven a little harder, so that I could have joined my hon. Friend the Member for Heeley rather earlier on the Labour Benches. However, I wish to congratulate the hon. Gentleman since it is the first time I have seen him at the Dispatch Box.
I am in the fortunate position of having in my constituency both steel and coal interests. I was interested to hear the remarks of my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis), who has worked very hard to master the needs and problems of his area. I hope

1033
that he will see the extension of iron-making which his constituency needs. Some of the pits in my constituency produce coking coal. Therefore, I welcome the European commitment to provide long-term support for coking coal.
The one anxiety about the document that is before us relates to the situation in West Germany. West Germany exports a great deal of coal to other member States. I am not sure whether all the coal that it exports—whether it is regarded as coking coal or semi-coking coal—is used for purposes for which coking or semi-coking coal ought to be used, but West Germany certainly exports a great deal and makes a lot out of it. West Germany is able to export that fuel because it imports large quantities of coal for steam-raising purposes from Poland, a little from South Africa and perhaps some from America and elsewhere.
West Germany produces a lot less than we do but exports and imports more. To some extent it is in the same position as we may be in with offshore oil by the 1980s. Our oil is valuable and ought not to be used for more base purposes. We should make a profit by exporting some of our good oil and importing, in its place, some oil at a much lower price. We could therefore make a profit, and I see no objection to that.
The Germans have been applying that policy to coal for a considerable time. I hope that as the National Coal Board gains in confidence as a result of the Government's policies—and the Government have certainly contributed to growing confidence in the industry—it will be able to enter into commitments and to seek markets to an extent to which it has not been able to do so before.
In so far as the Community's arrangements make that possible and encourage it, that policy should be pursued. If the European arrangements do not encourage it, I suggest that they should, since we have hundreds of years of reserves of coal, far more than anyone else in the Community. I know that the Minister is seeking to ensure that Europeans are aware of British potential.
I congratulate the Secretary of State on his approach tonight in seeking to widen the debate. I know that some
1034
Opposition Members took a cynical view of the Minister's attempt to broaden the energy debate when the National Energy Conference was held near the House a few months ago. It is right that the open debate that the Minister is seeking should be open not only in Great Britain but within Europe and in the wider context that the hon. Member for Arundel and my hon. Friend the Member for Heeley advocated.
I hope that we can raise our sights a little beyond the subject of coking coal to 1985. If we can do so, Europe and Britain will be widely and well served. We have the potential and the capacity to promote the interests of Britain and the coal industry by seeking to embellish and embroider the narrow point discussed in the document.
I congratulate the Secretary of State on his approach. The opportunities that are open to Britain are quite considerable, and benefits are available not only for Britain, but on a much wider basis. As a result of "Plan for Coal", during the last three years we have had a capacity and an embryonic confidence that can serve Britain and Europe well.
9.54 p.m.
Mr. Benn: With the leave of the House and yourself, Mr. Speaker, I shall briefly speak again. This has been a useful debate. One thing that has emerged is that one can start on what may appear to be a narrow matter, but immediately a whole range of interests can be brought in—I refer to industrial interests, not to a large number of hon. Members.
I congratulate the Scrutiny Committee on having done better than the European Assembly in identifying what is really involved in the matter. It certainly confirms my policy, to which my hon. Friend the Member for Bother Valley (Mr. Hardy) referred, of opening everything up so that nothing goes through on the nod without the subject and its implications being discussed.
The hon. Member for Sheffield, Hallam (Mr. Osborn) asked what had happened to the money. The recycling of the money from the Treasury to the BSC has stopped because of objections from the Commission. The contributions paid to the Treasury would go across the exchanges to the Commission only in the event of

1035
the new scheme, which has not been fully worked out, coming into existence.
My hon. Friend the Member for Birmingham, Erdington (Mr. Silverman) spoke on behalf of the Scrutiny Committee and rightly read the BSC letter in full. Without his Committee, the BSC case would not have come before the House. The criticism of the BSC that my hon. Friend reflected when he read the letter is important.
The hon. Member for Arundel (Mr. Marshall) asked some questions with which I can deal quite quickly. There is full consultation with the Department of Industry on wider problems of co-ordination. It is no secret that there is a Cabinet committee on energy. This must have been widely assumed by the House. All relevant Ministers are on the committee and its work covers a wide range of ministerial interests. As a former Secretary of State for Industry, I have seen the committee's work from both sides and I can assure the hon. Member for Arundel that the interests of the BSC are fully reflected there.
Mr. Michael Marshall: Some of us are looking to the right hon. Gentleman with his experience to do a useful job in the short time that remains before the end of this Government's term of office. Is the idea of product specialisation—the method by which one European steel manufacturer makes one product and another a different product—considered in the committee, and does it also look at the possibility of exporting coking coal?
Mr. Benn: I agree that the two and a half years that remain to the Government is a short time for consideration of the matters to which the hon. Gentleman refers. In saying that there is consultation and co-ordination in Whitehall I must not purport to speak for my right hon. Friend the Secretary of State for Industry on steel policy within the Community, although I was involved in that at one time.
I am sorry that my hon. Friend the Member for Brigg and Scunthorpe (Mr. Ellis) did not find it easy to get hold of the BSC letter. It was made available to me as a Minister and was put in the Library. In the last Bill considered by the House this evening I noticed the provision
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for Ministers to make available to hon. Members copies of certain briefs. I cannot promise to do that on every occasion, but I see no reason why Back Bench Members should have difficulty in getting access to documents. I shall look at this point to see whether the House can be better informed.
Mr. John Ellis: It would have been helpful if the BSC letter had been appended to the report and put in the Vote Office. The Committee does not always send its documents to the Library.
Mr. Benn: This is a matter for the Scrutiny Committee. I find it difficult to keep abreast of all documents without the assistance of my Department, and I see no reason why a Minister should have at his disposal information that ought to be at the disposal of all hon. Members. If I can help in this matter, I shall.
My hon. Friend the Member for Brigg and Scunthorpe also asked me to see that his views and criticisms, which were very much the criticisms of the BSC, were expressed in the Community. I shall do better than that for him. I shall see that copies of the Hansard report of this debate are made available to other Ministers in the Community so that they can be aware of the interest shown in the debate.
My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) raised wide-ranging issues about the best balance of advantage. It is difficult to answer him because in the Community legislation has been worked out by bargaining and this form of legislation is not familiar to the House—at least, not until recent events. I shall not go into these matters, because tact all round may be advisable.
It is very unusual for hon. Members, brought up in the tradition of examining every case on its merits, to find that the Community operates in quite a different way. It is not for me to range as broadly as my hon. Friend, but he raised the problem of nuclear energy in the Community. There is no doubt that when I went on my tour of capitals other Ministers expressed considerable anxiety about—
It being Ten o'clock, the debate stood adjourned.

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

EUROPEAN COMMUNITY (COKING COAL)
Question again proposed.
Mr. Benn: My view is that the Community could and should discuss problems which are common to every member State. There is great anxiety about how to handle the nuclear question. I read the papers, as do all hon. Members, and I note the events in other countries. We have tried to do things differently with regard to nuclear policy. We have not in any way lost by having discussions which, by their openness, have defused anxiety.
Dr. M. S. Miller: Does my right hon. Friend agree that, despite those anxieties, before the other exotic methods described by my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) come into play there will be a period in which it will be essential for nuclear energy to be used?
Mr. Benn: I have never denied the rôle of nuclear energy. Over many years I have been responsible for nuclear policy —I think from 1966—and have played some part in it. I think that nuclear power, the new realisation of its possible impact on civil liberties and the question of the fast breeder, which is separate from the thermal system, are proper matters for discussion. They should not be reduced to a conflict in the streets without proper examination by those concerned. I make no apology for doing that. On the whole, our handling of this difficult question will be the better for it.
Mention has been made of non-conventional methods of energy and benign sources. Solar energy and geothermal methods are being considered. Indeed, the Severn barrage is due for proper examination in view of the possibilities there.
My hon. Friend the Member for Rother Valley concluded his speech with some kind references to me. My hon Friend's twin interests in steel and coal are interests which any British Minister is
1038
bound to have in mind when he goes to the Energy Council.
I have made it absolutely clear tonight —I want no one to be in any doubt—that the extension of the coking coal scheme, together with these other proposals which are being aired, the way in which they will be financed and the transfer of money across the exchanges, poses real difficulties for the British Government. I hope that the House will allow me to go forward with at any rate a broad scope of British interests in mind to see what may best be achieved at the council meeting.
10.3 p.m.
Mr. Tom King: Briefly, I think that what this debate has brought out is the tribute paid by the Secretary of State to the Scrutiny Committee for its work. The right hon. Gentleman criticised the work of the European Parliament as being less effective in this respect.
The point made by the hon. Member for Brigg and Scunthorpe (Mr. Ellis)—that without the requisite information he had difficulty in being fully informed on the attitude of the British Steel Corporation—is a weakness and problem for the European Parliament. The Secretary of State said that he was overwhelmed with paper and found it difficult to get all the right documents. I should have thought that it was possible for him to respond to his hon. Friend's proposal that the correspondence from the BSC should have been attached to the document. That would have been most helpful. That was not a very demanding request. Such information would have added to the quality of the debate.
Mr. Benn: I think that that is a matter for the Scrutiny Committee. I did not want to appear to be arguing about what it should do. If there is thought to be inadequate information available when a matter comes up for discussion, I should certainly wish to fill that gap. Incidentally, the hon. Member for Sheffield, Hallam (Mr. Osborn) said that it was difficult for the European Assembly to get access to the documents. I was using that as an argument for greater openness within the Community. I think that we in this House are getting more information.
Mr. King: We may be arguing about no real disagreement in this respect. As has been stated, the effectiveness of our

1039
representatives in the European Parliament was undoubtedly reduced by the fact that they were not aware of the BSC's attitude, which was obviously very significant.
The least attractive aspect of the debate is the "What is in it for us?" attitude which can easily occur on European matters. We are dealing with a possible subsidy and payment across the exchanges of perhaps £2 million a year. My hon. Friend the Member for Arundel (Mr. Marshall) pointed out that a very substantial sum is coming from Europe to underpin the BSC's capital investment programme by £246 million. That is a very substantial figure.
I welcome the new approach of the Secretary of State in not jumping on each individual issue but recognising that if he is to discharge his responsibilities, not merely as Chairman of the Council of Ministers but as the United Kingdom representative, there is an obligation in this instance to recognise the need for an element of give and take in these issues.
I find the scheme somewhat weird. The original scheme was particularly weird in the sense that it was a straight transfer out and transfer back again. There must be ground for wondering whether the steel industry should be involved at all and whether this is not a straight subsidy to coking coal production that should be treated as such.
I was also interested to hear the Secretary of State say that, because of the remarks made by one of his hon. Friends, he would ensure that copies of Hansard containing tonight's debate would be circulated to the Council of Ministers. As soon as the Secretary of State began his speech, I had already earmarked it for circulation in the Council of Ministers. I thought that the right hon. Gentleman was marking out his negotiating position. Even if his hon. Friend had never opened his mouth, I think that the Secretary of State would have ensured that copies of Hansard were on their way to Europe as soon as they came from the printers.
We also welcome the new communautaire spirit of the Secretary of State, on which I have remarked before. Presumably this is an attempt to turn himself into a great European Chairman of the Council of Ministers. We shall be
1040
very interested to see what will happen in the very limited time available to him. We realise the state of desperation that the Government are in when we see that the Secretary of State had to go all the way to Somerset to appeal for unity in the Labour Party. We realise the extent of the distress which his party is in.
Mr. Benn: I remind the hon. Gentleman that the South-West of England is the only region where 50 per cent. of the Labour Members of Parliament are in the Government. That is the highest percentage in the whole country.
Mr. King: I recognise that, but if the right hon. Gentleman did his homework he would know that the South-West is also surprisingly well represented on the Opposition Front Bench.
While on the subject of the Secretary of State's communautaire approach, may I say that his last speech but one was made in my constituency, in Bridgwater, when he presented a medal to the Labour agent. He said in his speech that he was delighted to be there because it meant that he would not be attending a meeting of Community Energy Ministers, and that if that meant that he was holding up the Community's energy policy he thought that he and the recipient of the medal would be equally pleased. We can contrast that with his present enthusiasm for pushing forward Community energy policy.
Question put and agreed to.
Resolved,
That this House takes note of Commission Document No. R/2639/76 and of the comments in the Fourth Report of the Select Committee on European Legislation, &c. but is mindful that the proposal is only one of several aimed at providing long term security of Community energy supplies which as a whole are likely to be beneficial.

REPRESENTATION OF THE PEOPLE BILL
Considered in Committee; reported, without amendment.
Motion made, and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
Bill accordingly read the Third time and passed.

PETITION

  Disabled Persons (Mobility Allowance)
  Mr. Douglas Henderson: I beg to submit a petition, Mr. Deputy Speaker, signed by 2,205 of my constituents and submitted in the name of Miss June Finnie of 6, Union Grove, Fraserburgh. Miss Finnie is disabled and has gone to considerable trouble in arranging to collect these signatures. Their significance will become apparent when I mention the purpose of the petition.
  That purpose is to draw the attention of the Secretary of State for Social Services to the policy on mobility allowance for the disabled. The petitioners are greatly concerned that the present policy
  removes the assurance of continued independent mobility from those severely disabled persons now driving invalid tricycles, and condemns many new applicants for mobility assistance to be housebound as a result of the inadequate level of the mobility allowance.
  The petitioners therefore call upon the Secretary of State to promote policies which will carry out the following purposes: first, to guarantee immediately
  the right of continued independent mobility to current invalid tricycle drivers when the supply of tricycles is exhausted;
  Second, to restore immediately
  the option of a suitably adapted car or invalid tricycle to new applicants for mobility assistance under the powers granted to the Secretary of State.
  Thirdly, it urges him actively to
  promote projects to design and produce specialised vehicles which will enable an increasing number of severely disabled people to enjoy independent mobility.
  Further, the petitioners pray that the House shall
  take all the necessary steps to promote a total policy on mobility which will ensure that choice is available to the severely disabled between a mobility allowance set at a level which will enable purchase and maintenance of appliances that they need and the issue of a specialised vehicle.
  The petition concludes in the customary way with the words
  And your petitioners, as in duty bound, will ever pray.
  To lie upon the Table.

HEALTH SERVICES (NORTH-WEST REGION)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]
10.14 p.m.
Mr. Cyril Smith: I seek to raise in this short debate the needs of the National Health Service in the North-West. I do so on the basis that it is necessary to make sure that the Government are aware of the needs of the Health Service in the North-West, and are deeply conscious of and ever mindful of them. I want to ensure that the Government are fully aware that hon. Members on both sides of the House who represent the North-West will be ever vigilant in ensuring that the region receives its proper share of the available cake.
I use the word "proper" quite deliberately, because I believe that it is necessary to have regard to need as well as to population, to history as well as to the future, and to actual conditions as well as to statistics. It would appear to be clear in terms of the 1977–78 revenue allocations that the Minister has understood our special needs. I want to place on record my appreciation of that fact. But I warn the Minister that North-West Members take this merely as a declaration of long-term interest and intent and not as an end in itself. Even though we have had the highest percentage increase over the present year of any region in the country, we are still at the bottom of the league table, and we need, certainly for the whole of the foreseeable future, to maintain that fairer distribution, based on the real need which the Government have at last recognised.
I know that the Minister has already seen something of the hospitals in the North-West and I hope, should be in office long enough, that he will come and see us again to see our deprivation, to realise how beneficial the implementation of the Resources Allocation Working Party Report, "Sharing Resources for Health in England", will be to the region, and to appreciate how essential it is that that report and its recommendations should be implemented. The report talks of deprived regions and clearly demonstrates that the North-West is one of them. But I believe—and this is one of

1043
my reasons for securing this debate—that the facts should be brought out in the open and put on parliamentary record.
My constituency is one of the towns in that part of the country which, whilst having undeniable attractions—for example, Rochdale, has me as its Member—owe much of their urban development to the Industrial Revolution. To date, Rochdale still bears the scars of that period, and the heritage affects many buildings, including hospitals. The people of my constituency, and certainly their predecessors, bear the scars and wounds of the Industrial Revolution and have thus contributed to the economic wealth of the country far out of proportion to their number. We now want some of that cake returned to us.
Our hospitals, whilst doing a wonderful job, need vast sums of money spent on them. Better still, we could do with new ones to replace many of them. In 1974 the Strategic Plan for the North-West, prepared by the North-West Region Economic Planning Council, concluded:
"The general quality of life in the Region as a whole as measured by pollution, housing, health and education, appears to be distinctly poor and often inferior to that of any other English Region …it is clearly in need of considerably more effort if it is not to be left further behind other Regions."
If one lives in the North-West one's expected life span is two years shorter than the average for England and Wales. One is more at risk of certain diseases throughout the whole of one's life. The death rate from coronary heart disease per 1,000 men between the ages of 45 and 64 is 4·92 in England and Wales, but only one of the 18 districts in the North-West Region has as low as that figure and the rest have figures significantly higher.
The death rates for diseases of the circulatory system or the respiratory system, for cancer, accidents, poisonings and even violence are all significantly higher in the North-West than the average for England and Wales.
Against that background one might have thought and, indeed, expected that the region would have had a larger proportion of the resources available allocated to it, but until this year that has not been the case. For years we have been the poor relation. Forty per cent. of our hospitals were built before 1900.
1044
Indeed, 8·5 per cent. of them were built before 1850. Only 18·2 per cent. have been built since 1948. To do all the replacing of inadequate buildings that is necessary we should need about £400 million, and, even acknowledging, as I do, that much needs to be done in the country as a whole, it is stated in the working party report that the shortfall in the North-West even equitably to distribute the total national stock of hospitals is £75 million.
Even statistics of that kind in no way paint the real picture of inadequate sanitary facilities, of cold and draughty building, of lack of space needed for new equipment, of appalling waiting conditions for out-patients, and of cluttered corridors. These are factors and features of many of our North-Western hospitals. As I say, those features are not painted by cold statistics, and yet the conditions are well known to staff and patients.
These conditions make it difficult to attract staff. My own area, Rochdale, has, I understand, advertised three times for anaethetists and radiologists without response. I am told that in Salford it is two and a half weeks since a patient could be admitted from the medical emergency list. We are worse off in the North-West than in the country as a whole for laboratory technicians, occupational therapists, pharmacists, and physiotherapists. At present there are 57 consultant posts in the North-West Region which have been approved by the DHSS but which it has proved impossible to fill. In answer to one of my recent parliamentary Questions the Minister agreed that the North-West had a smaller number of general practitioners per 100,000 population than any other region; 44·7 is the average for the country but we have only 42.
The Resources Allocation Working Party postulated target allocations for each region in relation to revenue allocations for 1976–77. That chart assumes a figure of 100 per cent. for target allocations. The North-West region is below that at 80 per cent., again the lowest of any region. Five regions, including four metropolitan regions, are already above 100 per cent.; indeed, two have reached almost 120 per cent. That proves that patients in this region have been forced to accept lower standards of care, and that is what hon. Members from the

1045
North-West have been saying for many years, long before I arrived here.
It for all those reasons, and time forbids my saying more, that I make this strong plea for continued priority allocation to the North-West. Although the North-West may be further from London than some of those whose bleatings about this matter have become known to us recently, I assure the Minister that we feel just as strongly about these matters.
I am not asking for favoured treatment for the North-West, but for fair treatment. For 30 years the Health Service has been unfair to the North-West in terms of allocation of resources. I am aware of the plea in some quarters for a recognition of the so-called centres of excellence. I do not object to such centres, but I cannot see why they should be so heavily weighted in London or to London. There should be a more equitable distribution throughout the country and the cost should be met from the overall financial allocation to each region based on the working party's formula. I hope that the Minister will resist any pressure to give extra money to London at the expense of the regions, on centres of excellence grounds or other grounds.
I realise and recognise that past wrongs cannot be put right overnight. What worries and concerns me is the possible development of the attitude that, because of a particular shortage of resources at this time, we must hasten slowly to redress past unfair balances. That I reject entirely. Now is the time to act. I am grateful that the Minister has done so this year, but let him or any of his successors, whoever they may be, whenever they come to power, clearly understand that this redressing must continue. Nothing less will satisfy us and nothing less will be fair.
Whether or not they are short, resources should be most carefully directed to the areas of greatest need. For the Health Service the areas of greatest need are in the North-West. I hope that that will not be forgotten or overlooked by this or any other Government.
10.25 p.m.
Mr. James Lamond: I congratulate the hon. Member for Rochdale (Mr. Smith) on his initiative in rais-
1046
ing this matter in an Adjournment debate, because it is a source of concern to Members who represent North-West constituencies, as can be seen from the attendance in the Chamber. Although the Chamber is not overcrowded, there are more Members present than is normal for an Adjournment debate. I see present my hon. Friend the Member for Middleton and Prestwich (Mr. Callaghan), my hon. Friend the Member for Stockport, North (Mr. Bennett) and the hon. Member for Colne Valley (Mr. Wainwright), who I am sure considers himself to be in this region for National Health Service purposes.
I worked in the Health Service in another part of the country for 16 years before I came to this House. I was astonished and dismayed when I saw the facilities that were available for my constituents in Oldham, and I have since discovered that that is true of almost the whole of the region.
I suggest to my hon. Friend the Minister of State that he considers throwing his weight behind the plea that we have made that this whole matter be thoroughly aired in the Standing Committee on Regional Affairs. When we were invited by the Chief Whip to suggest subjects for discussion, that is one that the Labour Group put forward. There are many hon. Members who wish to put points additional to those made by the hon. Member for Rochdale, and I hope that my hon. Friend will bear this in mind when he is approached about the possibility of having such a debate.
10.26 p.m.
The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): As my hon. Friend the Member for Oldham, East (Mr. Lamond) said, this is a well-attended Adjournment debate. There was a similar well-attended Adjournment debate when we discussed the application of the Resource Allocation Working Party's Report to London. I think that I was able on that occasion to explain the situation to hon. Members, and I hope that tonight I shall be equally successful in respect of the North-West. I hope to reassure all my hon. Friends and those who have raised this subject that the National Health Service needs of the North-West Region have been and will continue to be carefully and even

1047
generously considered within the constraints of the prevailing economic situation.
I agree with the hon. Member for Rochdale (Mr Smith). My right hon. Friend and I fully recognise that the North Western Regional Health Authority is deprived and under-provided compared with other regions in England. In the basic matter of physical resources the North-West Region is at a disadvantage in having a large number of old hospitals in poor condition. A recent national survey in England and Wales of hospital property showed that 56 per cent. of hospitals in the old Manchester Region were built between 1850 and 1918, whereas the national average is just over 41 per cent. Matters were not improved when the one new hospital built during recent years, at Crewe, in the old Manchester Region was transferred to Mersey Region following reorganisation in April 1974.
In addition, figures produced in the 1975 annual report of the North-Western Regional Health Authority show that the region is clearly not one of the healthiest places in the country in which to live. Its population has a higher proportion of those age groups which place the greatest demands on the health services—the under 15s and over 65s. The general mortality rate is higher in the North-West than in England and Wales. The 1974 figures show 13·3 deaths per 1,000 population in the North-West as against an average of 11·9 in England and Wales.
The region still has an unacceptably high rate of infant and perinatal mortality—that is, still-births and deaths under one week—and further data derived from the Registrar General's Statistical Review show that the North-West has a greater proportion of sufferers from bronchitis and cardiovascular disease than in the country as a whole.
To add to these problems, the region is also poorly served in terms of numbers by professional, medical, paramedical and other staff in health-related professions—that is, dentists, chiropodists, physiotherapists, occupational therapists, audiologists and general practitioners. At October 1975 the average patient list size of general practitioners in the North-West was 2,459, against an average of 2,365 for England as a whole. Given this rather sombre picture, the obvious ques-
1048
tion is why, if this is the extent of the problem, something has not been done about it before. I cannot say why nothing has been done before, but what I can say is what is now being done to improve matters under this Government.
Successive Governments have faced the problem of eliminating inequalities in health care provision, in the North-West Region and elsewhere, against the background of rising demand and limited resources. In 1971 the Department introduced the Crossman formula, when the Department was headed by the late Richard Crossman. By this formula the relative need of regions for revenue funds for hospital services on the basis of population, beds and cases, was judged. This confirmed an already well-known fact, and the Manchester Region was assessed as being needy, although not by any means the most needy region.
In 1976 we developed a more sophisticated technique in that we received the report of the Resource Allocation Working Party, to which the hon. Gentleman has referred, dealing with the allocation of health resources among the various areas and regions of England. The working party was made up of representatives of health authorities and the Department, and had been set up to advise Ministers on the principles and methods for allocating capital and revenue resources to National Health Service authorities on as objective and fair a basis as possible and according to the health care needs of their populations. Here again the Committee recognised the principle of fairness. The hon. Gentleman was keen to argue that principle. He said that he would argue the case of fairness in deference to favoured terms for the North-West. I have a feeling that he could well have argued a case for discrimination in favour of the North-West without deserting sound ground.
The result of this report was that my right hon. Friend confirmed on 21st December last the Government's long-term commitment to a fairer allocation of money between different regions. He also said that, having considered the views of the National Health Service authorities and other interested bodies consulted in the report, he had accepted the recommendations of the working party as a basis for distributing resources for 1977–78.

1049
What this means is that we have a much more sophisticated instrument for judging how resources should be distributed around the country. The principal innovation in the criteria proposed for judging the health care needs of populations compared with the previous formula is the introduction of standardised mortality ratios for diseases as a proxy indicator of relative health care needs.
Mr. John Roper: My hon. Friend has referred to the fact that in terms of the long-term needs of the North-West he will be moving to a fairer allocation. For my constituents and those of my hon. Friends present tonight, some of whom are likely to die sooner in the North-West than people in any other region, long-term is not soon enough. We are anxious to see something in the immediate future to make sure that there is a fairer deal for the North-West.
Mr. Moyle: I quite understand my hon. Friend's impatience. He will realise that we are living in a time when the economic climate is such that the new funds coming into the Health Service are not substantial. It is fair to say that other people in the rest of the country are also entitled to their health services. The record of this Government in this matter is better than any of their predecessors.
I was coming to a rough English translation of the formula I have given from the Resource Allocation Working Party which involves the use of death rates, roughly speaking, as an indicator of the health needs of an area, weighted for age and sex. The application of these mortality ratios to the population of the North-West health region shows it to be in greater need of health care than hitherto indicated.
The result of that is that the region will continue to receive one of the highest rates of real terms additions. There is no doubt, and there is no point in trying to dodge the issue, that the equalisation will take time. What is not realised is the need for careful planning to effect the necessary rationalisation of services in the deprived areas without putting important activities and institutions at risk elsewhere. We cannot achieve equalisation overnight, particularly in a situation
1050
of low growth nationally. Such a step would involve taking millions of pounds from the richer regions, and if it were done too quickly it would damage patient services, jeopardise the national medical student programme and destroy centres of medical excellence.
All this might be done without achieving a commensurate properly planned build-up of services in the relatively deprived regions such as the North-Western to receive and utilise the extra resources. The policy at this stage, therefore, is primarily concerned intra-regionally with the disbursement of new money coming into the Health Service.
The Secretary of State has recently notified allocations to regional health authorities and, as the hon. Member will know from my Answer on 8th March, the North-Western Region received an increase in its revenue allocation of approximately 3·2 per cent. in real terms, and that is more than twice the national average.
In deciding allocations for 1977–78 my right honourable Friend has taken a middle course between the desire to move as quickly as possible to a fairer distribution of resources among health regions and the need for some room for manoeuvre in the relatively well endowed regions. These latter regions, like other regions, are having to meet the needs of an ageing population—the national number of people over 65 increases by about 1 per cent. a year—but, above all, they have to continue the major redeployment of hospital services needed to release resources for other uses, particularly the build-up of the community health services in the inner city areas.
These regions need more time for manoeuvre, but it should be recognised that growth of a fraction of 1 per cent.—which is what the Thames regions have received this year—really represents an absolute cut in a region's ability to meet the growing demand that arises from demographic change. We are dealing with matters as quickly as we can.
The middle course I have adopted in no way conflicts with the recommendations of the working party: RAWP has not been "put on ice", neither have its recommendations been diluted, and I have fully adopted the working party's recommendations for revenue allocations for this coming financial year. I hope

1051
that this statement will give the honourable Member the reassurance he and others in the North-West may have been seeking. It is not generally understood that the working party did not recommend the actual level of allocations for 1977–78 or future years. Its recommendations are largely directed at establishing a target allocation towards which at all levels of the Health Service authorities' actual allocations should gradually be moved.
The extent to which movement is possible in any one year depends on a variety of factors. It is essentially a judgmental process and takes into account the additional resources available, local circumstances, and factors which at the moment cannot be objectively quantified in the formulae for resource distribution as recommended by the Resource Allocation Working Party.
Another new feature in the revised arrangements for the allocation of revenue funds is the institution of a separate identified allowance styled as the "service increment for teaching"—or SIFT. This is designed to meet the additional cost to the NHS of the provision of clinical teaching facilities for the training of medical and dental undergraduate students. There is an increasing number of these institutions in areas outside London. Therefore, this concept is of use to them.
This allowance will be a significant protection in the allocation of the North-Western Region which has a rapidly increasing number of medical students. I understand, in fact, that the University of Manchester has now one of the largest medical schools in Europe. I recently accepted the invitation of the vice-chancellor of the university to visit the medical school in the near future.
The North-Western RHA has a plan for the development of health services in its region over the next 10 to 15 years. Its plan indicates where the present shortages in provision lie and sets out certain basic aims and ways to improve the situation. Already some steps have been taken. Two new major hospitals, one a teaching hospital, are now being built—one at Preston and one at Salford. Similar advances have been made in providing health centres in the region. At 31st December 1975 there were 67 such centres in the region, an average of 1·67 per 100,000 total population against an average of 1·36 per 100,000 total popula-
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tion in the country as a whole. Training facilities for staff are also being improved with the hope that staff who train in the region will settle and practise there. That is a general experience that we have discovered.
In addition to the undergraduate medical schools, the region also has a dental school in Manchester, and dental training is an important function of that teaching area. Training for the rehabilitation professions is provided in Salford teaching area and a new degree course for speech therapists is now in existence at Manchester University.
In the North-West divided into health areas services are managed at area level and within areas and districts. We cannot discuss the services in the North-West just in terms of the levels of allocations to the regional health authority. The services within the region are patchy, just as in other regions. Redressing these inequalities among areas and districts are decisions for the regional health authorities themselves. It is now up to them to go ahead and do so.
Guidance on how best this might be done has been issued by my right hon. Friend, but I do not expect to see great amounts of revenue moneys next year switched between areas and districts, although I hope that some limited movement will be possible. There is clearly a maximum rate at which resources can sensibly be increased or diminished without damage to important services and without insupportable organisational strain. This does not mean that economies and rationalisation will not take place. They may, but they will not in the main relate to the redistribution of resources between areas under the Resource Allocation Working Party's formula.
The object of this whole exercise is to see the national resources of this national service evenly distributed so that we have a truly national service and that the population in the North-West has the same opportunity for access to health care as those in the so-called rich regions in the South-East.
My hon. Friend the Member for Oldham, East suggested that this might be a suitable topic for discussion in the Regional Affairs Committee. That is obviously not a matter on which I can take a decision, but I am sure that the attention of the Leader of the House will

1053
be drawn to my hon. Friend's suggestion and it is to be hoped that we shall be able to have such a debate. I would certainly co-operate in any arrangement.
I have spent a great deal of my relatively short time at the Department of Health and Social Security looking at events in the North-West. I have been there about half-a-dozen times and I have
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a couple more visits lined up to look at the problem. I can assure hon. Gentlemen that I am pursuing this problem against a background of trying to inform myself as fast as possible of the actual technical problems in the region.
Question put and agreed to.
Adjourned accordingly at seventeen minutes to Eleven o'clock.

ENERGY
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  National Coal Board (Queensland Investment)
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AGRICULTURE, FISHERIES AND FOOD
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NORTHERN IRELAND
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OVERSEAS DEVELOPMENT
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PRICES AND CONSUMER PROTECTION
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ENVIRONMENT
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NATIONAL FINANCE
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SOCIAL SERVICES
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FOREIGN AND COMMONWEALTH AFFAIRS
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LAW OFFICERS' DEPARTMENT
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  EXCLUSIVE BRETHREN
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DEFENCE
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SCOTLAND
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WALES
  Soil (Mineral Deficiency)
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  "Conservative Monthly News"
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EMPLOYMENT
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  Trust Houses Forte Ltd.
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  Job Release Scheme
  Job Release Scheme
  Construction Workers (Continental Employment)
  Construction Workers (Continental Employment)

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

TRIBUTES TO THE LATE VISCOUNT COBHAM
The LORD PRIVY SEAL (Lord Peart): My Lords, the sudden death of the noble Viscount, Lord Cobham, is a shock to his many friends in the House and I should like to take this opportunity of paying tribute to his memory. We have lost a most congenial friend, an entertaining speaker, and a notable sportsman. The people of New Zealand in particular have lost a devoted servant.
Charles Cobham was a man of widespread talents. He shone at cricket in which he maintained the family tradition by captaining Worcestershire in the 1930s, and he was vice-captain of the MCC touring team to New Zealand in 1935. After the war he became President of the MCC, and kept a watchful eye on the wellbeing of English cricket from his house in the shadow of Lords Cricket Ground. This, together with his interest in golf and the Outward Bound Movement, which I am glad to say was associated with my Cumbria, was one of the qualities which led to his being chosen as chairman of a major Select Committee of this House on the subject of Sport and Leisure in 1972.
He played a leading part in the affairs of his home county, Worcestershire, which he loved deeply, and before his father's death in 1949 he was for a short time Conservative candidate for Dudley and Stourbridge.
But his main achievement was as Governor-General of New Zealand from 1957–62. He was the first civilian to hold the post after a long line of Service officers and he fully justified his appointment by proving to be one of the most popular Governor-Generals the country has ever had. He took a keen personal
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interest in the country's affairs and enlivened all his actions with his sparkling wit and good humour.
After his return to this country he became a Knight of the Garter and from 1967–72 was Lord Steward of Her Majesty's Household. On retirement from this post, he was then able to take part in the work of this House and to cheer us with his great charm and elegant turn of phrase. His death is a cause for great sadness and I am sure that the whole House will want to join me in expressing our deepest sympathy with his widow and children.
Lord CARRINGTON: My Lords, I should like to associate those who sit on this side of the House with the most appropriate tribute paid by the Leader of the House to Lord Cobham, and I do so with particular sadness because he was a personal friend and colleague. As the Leader of the House has reminded your Lordships, he was a man of many parts: a sportsman—cricket, Worcestershire and Vice-Captain of England; a scholar—and he was a considerable scholar; a soldier; a businessman; a Parliamentarian—he was once a Parliamentary candidate; an administrator, Governor-General and courtier.
My Lords, those of us who knew him know that everything he did he did with vigour and gusto and enthusiasm, and whether it was cricket or an after dinner speech he took an infinity of trouble. Your Lordships will remember his chairmanship of the Select Committee on Sport and Leisure. My noble friend Lord Strathcona and Mount Royal was a member of that Committee and he has told me how good Lord Cobham was in that position.
I was fortunate enough to stay with him on two occasions when he was Governor-General of New Zealand. There may be some people who think it is easy to be a Governor-General; I do not think it is. He certainly was an outstanding Governor-General. Everywhere he went he made his mark. I think I am right in saying—I do not think it is apocryphal—that when the MCC visited New Zealand he arranged for the Governor-General's team to play them, and he offered a crate of champagne for the batsman who made the quickest 50. And he won the crate of

235
champagne! That cannot have done him very much harm! I know at first hand that wherever he went in New Zealand he was admired and held in great affection. He certainly was one of the most public-spirited people I have ever met, but perhaps even more than that he was funny and fun to be with. He was greatly loved by all who knew him and we send our sympathy to Lady Cobham and his children.
Lord BYERS: My Lords, we on these Benches would certainly endorse everything that has been said by the two noble Lords who have just spoken. The House is deeply saddened at the sudden death of the noble Viscount, Lord Cobham, after a most distinguished life of public service. I got to know him fairly well when I served under his chairmanship on the Select Committee for Sport and Leisure and on occasions had to take his place as chairman when he suffered from continuing illness during that period. I can attest to the fact that he was a remarkably good chairman, with a deep knowledge of the subjects we found we had to examine. Added to that, his wit and humour and his courtesy with witnesses made him a perfect chairman. The House has lost a good friend and a very efficient colleague. We send our deepest sympathy to his widow and his children.

WATER CONSERVATION
2.43 p.m.
The Earl of KINNOULL: 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, in view of last year's drought, what steps have been taken to conserve the winter rainfall and what additional new reservoirs are planned.
Baroness STEDMAN: My Lords, compensation water release has been reduced under drought order powers in a few cases to help with reservoir filling; otherwise the steps taken have been those normally taken by water authorities in winter. Authorities are actively pursuing the establishment of reservoirs at Carsington, at Broad Oak, at Colliford and at
236
Roadford. But grant of powers to construct these is subject to the outcome of normal statutory procedures.
The Earl of KINNOULL: My Lords, I thank the noble Baroness for that reply. Could she say whether at present the stocks in the reservoirs, and indeed the underground reserves, are fully recovered from last year's drought? Could she also say what is the increasing demand by industry, and indeed by the population, on water supply? Is there any evidence that our climate is changing?
Baroness STEDMAN: My Lords, taking the last point first, we have as yet no substantive evidence that our climate is changing. We believe that our underground water supplies are adequate, and that they have recovered. With regard to reservoirs, many of them are overflowing, many of them filled and many of them well on the way to being filled. Our position is considerably better than it was at this time last year.
Lord WAKEFIELD of KENDAL: My Lords, could the noble Baroness say what steps are being taken to increase the underground storage of water rather than storage of water on the surface?
Baroness STEDMAN: No, my Lords; not without notice of the question. I can tell the noble Lord that we have new reservoirs under construction, but that is not quite what he was asking. I will make inquiries and, if the noble Lord will allow me, I will write to him.
The Earl of KINNOULL: My Lords, in view of the reported comment by the National Water Authority that building a new reservoir takes 10 to 15 years, may I ask whether the Government are looking into the question of the planning facilities of the Water Council? Could she say also what capital expenditure has taken place over the last six months, or what has been planned over the last 12 months, by the authorities?
Baroness STEDMAN: My Lords, it takes several years to plan and construct a major new reservoir. Much of the rainwater has to flow to the sea in waste. Last year's conditions were quite exceptional, but we do not think that they were so exceptional as to justify a shift

237
in our present policy on reservoirs. We have new reservoirs which are supplying water for the first time. We have other reservoirs under construction. I am not able to give the noble Earl the details of the capital costs. I can only tell him the additional expenditure that last year's drought cost the water authorities. I will look into it, and if we have the information readily available I will let the noble Earl have it.
Lord NUGENT of GUILDFORD: My Lords, I wonder whether the noble Baroness is aware that her well-balanced answers give a fair picture? But is she also aware that, in making its future plans, the water industry wishes to strike a fair balance between providing sufficient supplies of water and not drawing excessively on the capital resources of the nation? In the meantime, in the light of this winter's rainfall, the water industry is very conscious of its gratitude to the Almighty.
Baroness STEDMAN: My Lords, I am very grateful to the noble Lord, with his much deeper knowledge of the water industry, and of the Almighty presumably, as well. Obviously, we cannot plan, and it would be unwise to plan, for the maximum demand in the exceptional circumstances which arose last year. I am sure the water authorities are doing their best, and we are reasonably confident that we can meet any demand this summer.
Lord PAGET of NORTHAMPTON: My Lords, could not Mr. Howell, who was so successful in turning on the rain in the drought, be asked whether he could turn it off? We are flooded.
Lord STANLEY of ALDERLEY: My Lords, I wonder whether the noble Baroness could tell me whether the Government are still keen to encourage farmer-built reservoirs with the 40 per cent. grant they kindly brought in earlier this year. If that is still the Government's intention, I wonder whether the noble Baroness would, with her usual charm, be so kind as to write to the water authorities to ask them to take a more tolerant and helpful attitude in this matter, particularly over on-site reservoirs which are often very much cheaper than off-site? Would she ask them to bear in mind that, as the tax-payer is paying 40 per cent. Of
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the cost, it does matter, and they should give it considerable thought.
Baroness STEDMAN: My Lords, as I said earlier, I do not have the details of the capital costs and other grants we are making. I certainly hope that such steps as can be taken will be taken, and I will certainly bring the point raised by the noble Lord to the attention of my right honourable friend.

BIOLOGICAL MATERIAL: MRE SALES
2.48 p.m.
Lord HALE: 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 the advertisement in the magazine Nature by the Microbial Products Section, Microbiological Research Establishment, Porton, was fully authorised by the Government; and whether it is now Government policy to sell bacteria and toxic products on commercial terms.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, advertisements in Nature by the Microbiological Research Establishment, Porton, were fully authorised. It has been the policy of succeeding Governments over many years to sell, on commercial terms, and under arrangements which have proved perfectly safe, biological materials for use in civil scientific research.
Lord HALE: My Lords, is it not a fact that in the official statement it was conceded that the item staphylococcal entero toxins had definite toxic possibilities, and that reference was made to animal viruses without going on to say that one of the items was monkey cells prepared for viral DNA extraction—and those three letters are of some significance? In view of the unique potential of this gifted institution for protecting large areas from disease—Lassa disease, Marburg disease—is it not a little unfortunate that we are trying to get a few pence back

239
by exporting monkey cells to, say, Uganda; or does the Foreign Office give advice on destinations?
Lord GORONWY-ROBERTS: My Lords, I think I can allay the noble Lord's apprehensions on this matter. For those few products which are not completely harmless, safety is fully ensured by a combination of three factors: knowing the customer, whether the customer is in this country or in another country, regulating the quantity supplied and ensuring safe transmission. Those three precautions are, of course, part of the very stringent international regulations which govern the transfer of such substances, to which this country adheres very carefully.
Lord PLATT: My Lords, will the Minister kindly explain some of the points that he has just made? If this is done only under the strictest of precautions, why are they necessary if the material is harmless? Under what rules or regulations do the Government control this?— because I understand from the first Answer that they do. Does not the mere fact of advertising suggest that these materials are available to anyone who cares to purchase them?
Lord GORONWY-ROBERTS: My Lords, no; I do not think so. The fact of advertising arises from a development and is consonant with the decision, of which noble Lords will be aware, to confine the MRE to civil research. The precautions that I have described of course apply across the board but, to quote myself, it is for those relatively few products, one or two of which my noble friend mentioned, which are not completely harmless that the precautions are particularly applied. It is right that we should apply them across the board in this kind of situation. They are necessary in regard to only some of these substances.
Lord HALE: My Lords, from his own experience is not the noble Lord personally aware of the special problems of microbiological investigation in the tropics? Has he not received reports from the Volta area of special problems? Is not this institution uniquely equipped—and I use the word "uniquely" precisely—to deal with Lassa fever and Marburg disease
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and other tropical diseases? Does it not also have potential power to provide a European Economic Community team for dealing with toxic disasters such as the one at Seveso? Is it not the fact that the institution is frightened of the Policy Distributions Council and of its future in view of the hiving off of the mass production of poisons—genocidal poisons —under the euphemistic description of "defence"? Could not the noble Lord ensure that this unique institution, with its immense potential, is put to the best possible use?
Lord GORONWY-ROBERTS: My Lords, yes of course it will be constantly and continually the intention and duty of Her Majesty's Government to ensure that the most complete control and safety precautions are taken over this class of research. I have sought to say with some precision to the House this afternoon that in relation to the matters raised in this Question there is no reasonable cause for apprehension. As to the remarks my noble friend made about the quality of the research conducted in the two institutions at Porton Down, I particularly agree with what he said about the immense possibilities for progressive and constructive uses of a great deal of the information which this excellent team acquires in the course of its researches.

CONSUMERS AND THE NATIONALISED INDUSTRIES
2.55 p.m.
Baroness BURTON of COVENTRY: 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 it is their intention to make a considered Statement on the recommendations contained in the report of the National Consumer Council entitled Consumers and the Nationalised Industries and, if so, when this is expected.
Lord GRAM: My Lords, the Government will make a full Statement when their consideration of the report, and of the related report of the National Economic Development Office on the nationalised

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industries and the study of industrial democracy in the nationalised industries, is complete.
Baroness BURTON of COVENTRY: My Lords, that does not get us any further, but I did not really expect it to. Bearing in mind the Minister's very real interest in this matter, will he try behind the scenes to push this matter forward? Is he aware that today there is considerable anxiety about the position of consumers in relation to the nationalised industries? Perhaps it might be possible to do something about that position without waiting for the Statement to which he refers.
Lord ORAM: My Lords, I certainly share my noble friend's interest in this matter of consumer protection generally, and I shall certainly do anything that I can to help consideration of this report and the related ones. In her opening sentence my noble friend indicated that she was a little pessimistic about progress. I urge her to consider that quite a number of organisations are currently commenting on the report. This is necessarily a process which takes time. As I emphasised in my Answer, this is a question of co-ordinating consideration of this particular report with the other related reports.

INFLATION ACCOUNTING
2.57 p.m.
Lord CULLEN of ASHBOURNE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are in favour of inflation accounting, and if so, whether they propose to adopt it in the nationalised industries.
Lord ORAM: My Lords, the Exposure Draft of a Current Cost Accounting standard produced by the Morpeth Committee was published on 30th November last year. On the same day the Government reaffirmed their support for the system of Current Cost Accounting and their desire that this should become the basis for the preparation of company accounts as soon as practicable. The Government also
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agreed that the system should apply to nationalised industries and public trading bodies, subject to any necessary adjustment to meet their special circumstances.
After the end of its consultative period on 31st May, the Morpeth Committee will consider, in the light of views expressed, whether changes will need to be made in the Draft Standard.
Lord CULLEN of ASHBOURNE: My Lords, I thank the noble Lord for that reply. Will he agree that an article in The Sunday Times on 13th March made it clear that nine of the largest firms of chartered accountants had very varying views about this matter and said that a great deal more study was needed? Secondly, will he agree that to adopt this system for nationalised industries, with the obvious result that higher prices would ensue, particularly in the case of electricity, would be unfortunate until we get the rate of inflation down to the single figure that we are all so eagerly awaiting?
Lord ORAM: My Lords, it is true that considerable interest is being shown in this proposal by the organisations to which the noble Lord referred and by many others. It is these expressions of opinion that the Morpeth Committee will be considering. On the question of the application of this system in the nationalised industries during a period of rising prices, subject to the advice that they will receive, the Government are of the view that this proposed system will give a more realistic financial picture and will help both the private sector and the nationalised sector to reach better commercial decisions. I ask the noble Lord to bear this side of the picture in mind as well as the aspects to which he drew attention.
Lord AVEBURY: My Lords, would not the alterations in the accounts of both the nationalised industries and private companies to take into account the effects of inflation, cause an increase in the amount of fees charged by auditors which would then have to be passed on to consumers? Would it not be better if we could eliminate inflation?
Lord ORAM: My Lords, I think that a number of bridges have to be crossed before the auditors raise their fees. I do

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not think that there would be any automatic raising of fees as a result of this. I agree that it is a point that needs looking at.
Lord ORR-EWING: My Lords, would the noble Lord agree that it is desirable to introduce some inflation accounting to take a more realistic view of profits? Is he aware that there is considerable controversy about Exposure Draft No. 18, and that if this was applied, particularly in the heavy capital goods industries, many firms making slender profits would be making substantial losses under the present scheme? Would it not be wise, therefore, to wait until there is more general agreement about a system and particularly, as said by previous noble Lords, until the inflation rate is reduced remarkably and markedly below the 16 per cent. now prevailing?
Lord ORAM: My Lords, I accept what the noble Lord said about the consideration of capital intensive industries, and that is something which we shall have to weigh up. Historic cost accounts, the existing system, have become dangerously misleading, and this problem has to be tackled, and the timing of it of course is one of the things that the Government will have to consider. We have made up our minds about the principle of it.
Lord HAWKE: My Lords, until a proper method of inflation accounting is agreed upon, would it not be best if firms were encouraged to put a note to their accounts stating the cost of replacing their assets? Would not that be a reasonable interim substitute for the real thing?
Lord ORAM: My Lords, I will take note of what the noble Lord said, and I am sure that that will be put before the Morpeth Committee.

REDUNDANT MINEWORKERS AND CONCESSIONARY COAL (PAYMENTS SCHEMES) (AMENDMENT) ORDER 1977
3.2 p.m.
Lord STRABOLGI Lord STRABOLGI rose to move, That the draft Redundant Mineworkers
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and Concessionary Coal (Payments Schemes) (Amendment) Order 1977, laid before the House on 2nd March, be approved. The noble Lord said: My Lords, the origins of the Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1977 lie in the Coal Industry Act 1967, where power to make redundancy payment schemes was first provided. Subsequently the power was extended by the Coal Industry Acts of 1971 and 1973 and by various orders, the latest of which the Coal Industry (Redundancy Payments Schemes) (Extension) Order 1976, takes the powers up to March 1978. The Coal Industry Bill 1977 at present before another place seeks to extend these powers further, but in considering this draft order we are concerned only, I suggest, with the existing scheme up to 26th March 1978.
The current Scheme is contained in the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order 1973 as amended by the 1975 and 1976 Amendment Orders. Under this, for the first three years of redundancy the man receives 95 per cent. of his previous take-home pay—that is after tax and other deductions. This payment is made up of two elements, "basic benefit" and unemployment benefit. During the first year of redundancy the man receives unemployment benefit in the normal way from the Department of Health and Social Security; for the next two years he gets the equivalent of unemployment benefit from the Scheme. It is obvious from this that whenever the level of unemployment benefit changes it is necessary to change the basic benefit accordingly so that in total the man continues to receive the same amount as before. So having regard to the increase in unemployment benefit which took place in November last year, it is necessary to change the basic benefit. The "basic benefit" to which men are entitled at each level of gross income is shown in the table of benefits at Appendix 4 of the Scheme Order.
The new table of benefit is annexed to the draft order now under consideration and this will apply from 6th April. Noble Lords will note that this follows the pattern of the 1975 and 1976 Amendment Orders where the table of benefit was amended for similar reasons. In addition

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to this necessary adjustment of basic benefit, the Government are proposing three improvements. The first is to increase the maximum amount of pre-redundancy earnings which can be taken into account in calculating the corresponding basic benefit. Since 1975 this has been £70 per week so that any redundant man who had been earning more than that received basic benefit as if he were earning only £70 per week. In order to take some account of the increase in the general level of earnings that has taken place, the maximum is being increased to £80 per week and noble Lords will find that the table in the Schedule to the draft order now goes up to that figure.
The second improvement is this. As I have said, for the first three years men receive basic benefit plus unemployment benefit or an equivalent sum. At the end of three years basic benefit ceases, but men continue to receive from the Scheme a sum equivalent to unemployment benefit until they reach the age of 65. In addition, they receive their mineworkers' pension paid prematurely. Article 6(1) of the Scheme allows certain State benefits to be deducted from the basic benefit which is payable subject to a minimum of £3. The draft order raises this minimum from £3 to £5·23 which is the present level of the mineworkers pension, so that a man's income will not be lower during the first three years of benefit than it will be subsequent to that period.
The third change is to Article 8(3) of the Scheme and concerns the level of pension which may be retained by members of the Staff Superannuation Scheme in the period after the first three years of benefit. Officials and weekly paid industrial staff are members of the Staff Superannuation Scheme and most of them would receive a pension which is higher than the mineworkers pension since it is earnings related, whereas it will be some years before the earnings-related element in the new Mineworkers Pension Scheme which was established in 1975 begins to work through. Under the present redundancy scheme the amount of any pension over £5 per week from the Staff Superannuation Scheme is offset against the redundancy payments. We are now proposing to raise this limit to £8 having regard to inflation and to the fact that the
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mineworkers pension, which is received without offset, is now £523. In addition to these three improvements there is an amendment contained in Article 3(b)(iii) of the order to update the method of calculating the benefit to he paid to a man who is re-employed in the industry, and is then made redundant a second time. All these changes will apply from 6th April.
While useful and, I understand, very acceptable to the unions and the men concerned, these are, I suggest, amendments of detail, and the draft order, I should like to stress, makes no fundamental changes in the arrangements which have operated smoothly and successfully for many years since their introduction through the Coal Industry Act 1967, which was extended and brought up to date by the Conservative Government in their 1973 Coal Industry Act to give assistance to miners who lose their jobs. I hope it will have your Lordships' approval, and I beg to move.
Moved, That the draft Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment) Order 1977, laid before the House on 2nd March, be approved.—(Lord Strabolgi.)
3.10 p.m.
Viscount LONG: My Lords, we on this side are grateful to the noble Lord, Lord Strabolgi, for the information he has given about the order. I am glad to note that this matter has again been reviewed and is continuing to be reviewed, because since 1967, when the then Labour Government introduced the scheme, we have welcomed it, and indeed when we were in power we reviewed it. It is of course a most horrible and difficult job in the coal mining industry, and all of us have always had the greatest sympathy for those who do this work. We can therefore understand the reason for these severe and strong pensions which, as I say, we reviewed, and which have been reviewed again this year.
I would not wish to criticise the scheme in any way. As one listened to the noble Lord one might think that the figures of wages were large, but in fact they are not. The miner today can be without a job because his mine has been closed down. He may find himself redundant and it is

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bound to take time before he can be rehoused or rehabilitated in another mine. Bearing this mind, I have four questions to put to Lord Strabolgi and I hope he will be able to give some information on them. First, how many in the coal mining industry today are unemployed? Secondly, from what fund does this money come? Knowing that the Government have to subscribe at times to the National Coal Board, I believe there is a separate fund to deal with this. Thirdly, what is the cost of this scheme to the NCB? The answer to that question might help us realise how difficult the NCB is finding it to obtain money to go ahead with new mines. Fourthly, can the noble Lord elaborate a little on what the total effect of early retirement is likely to be? We are glad to see that the pension has risen from £3 to £5 and that we in Parliament are continuing to look after the miner.
Lord STRABOLGI: My Lords, I am grateful to the noble Viscount, Lord Long, for the welcome he gave to the order, and wish to associate myself with what he said about the work done by miners, often in very difficult and exhausting conditions, and of their great importance to the economy. Lord Long asked a number of questions and I will do my best to answer them. He asked, first, how many men have been entering the scheme through redundancy. It might be best if I gave him the figures for the last four or five years. From 1972 to 1973 there were 6,300; from 1973 to 1974 the number went up to 16,000, chiefly through the closures of exhausted pits; in 1974–75 it went down to 4,000; and in 1975–76, the last period for which figures are available, it was 6,100.
The noble Lord then asked from what fund the amounts were paid. The costs of the scheme are met from the Consolidated Fund through the Department of Energy Vote; the cost does not fall on the National Coal Board. Each week the NCB informs the Department how much money is to be paid out, the Treasury deposits this amount in a special giro account and the NCB makes out cheques on that account which are sent to the individual beneficiaries who cash them at their local post offices. Thus, the money does not in any way go through the Board's accounts. The Government
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pay the Board an agency fee for managing the scheme. Lord Long then asked the costs of it. For the weekly benefit, in 1975–76 the cost was nearly £13 million and in 1976–77 it was nearly £15 million. For the early pensions, the figure was £3 million for 1975–76 and £3,300,000 for 1976–77.
The noble Viscount also asked about the effects of early retirement at 62. This of course will conic into effect on 1st August —this has been agreed—if allowed by the pay policy, but I should like to stress that early retirement will have no basic effect on the structure of the Redundancy Payments Scheme. The reason of course is that early retirement payments, although calculated on the same basis as redundancy payments, will be paid by the NCB and not by the Redundancy Scheme in the rather complicated way I have explained. Early retirement should also reduce the numbers who may be declared redundant. I hope that that answers the noble Viscount's questions, which he properly raised, and I am grateful to him for his remarks.
Lord DAVIES of LEEK: My Lords, I feel it right that somebody from this side should welcome my noble friend's announcement and the comments of the noble Viscount, Lord Long. Lord Long spoke of the 1973 Act which was introduced by the then Conservative Government. That made some quite important changes. In the few seconds I wish to take up of your Lordships' time to pay tribute to those who work in the coal mining industry, I want to point out the vital contribution to our energy requirements they make, and for this reason we need to recruit miners to the industry. There is no doubt that whatever progress we may make with other sources of energy, coal will be of paramount importance, so far as the scientists can see, for at least another century. If we do not give youth the opportunity of good conditions in mining—remembering that after pitting their strength against nature underground they face the possibility of pneumconiosis, emphyzema and other diseases—we will not get the recruitment we want. Nor must we forget that in Britain our miners work far longer underground than any others in Europe.
On Question, Motion agreed to.

TRANSPORT BOARDS (ADJUSTMENT OF PAYMENTS) ORDER 1977
3.19 p.m.
Baroness STEDMAN Baroness STEDMAN rose to move, That the draft Transport Boards (Adjustment of Payments) Order 1977, laid before the House on 3rd March, be approved. The noble Baroness said: My Lords, the draft order before your Lordships concerns payments in lieu of ratesmade by the three transport boards; namely, British Rail, London Transport and British Waterways. In common with most other public utilities, the operational property of these boards is not subject to rates in the normal way. It has proved more convenient to provide for the calculation and payment of rates by means of a formula.
Section 32 of and Schedule 5 to the General Rate Act 1967 provide for a contribution in lieu of rates to be paid by each transport board to the Secretary of State, who then distributes this money to rating authorities. The total amount that each board has to pay varies from year to year and is determined by three factors. The first is a prescribed figure called the "standard amount"; the second, the average rate poundage in England and Wales in the preceding year; and third, the activity or traffic of the board in each year. The standard amounts are roughly analagous to rateable values and it is these figures that the draft order before your Lordships seeks to increase. The figures were last changed at the time of the general revaluation in 1973 but this was solely to take account of the drop in rate poundages that follows such a revaluation. The present change does not follow from a revaluation but from a general review of the working of all these formulae. This review, largely completed by the end of 1975, covered the transport boards and a number of other public utilities. Several orders introducing changes as a result of this review came before your Lordships' House last year.
An order changing the formula for the transport industries was also to have been made last year; it would have introduced a system for these boards similar to those which apply to the gas and electricity industries. A national rateable value would have been calculated for each
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board and this would then have been apportioned to individual rating areas according to the activity of each board in each area. The rating authorities would then have charged rates in the normal way on these apportioned rateable values. The order was to have been made under Section 19 of the Local Government Act 1974, but we were advised that the powers in that section were not adequate to make the changes proposed.
We have, therefore, now made orders— the one before your Lordships only in draft at this stage—within the scope of present powers to produce a similar effect to the proposals made following the review. As a result of the review, rateable values for each of the three boards were decided upon in the light of material submitted by the boards, the local authority associations and advice from the valuation office of the Inland Revenue. The figures are £20 million for British Rail, £7½ million for London Transport, and £220,000 for the Waterways Board. There are no existing rateable values with which these figures can be directly compared, but the present standard amounts are roughly equivalent to rateable values of £9·4 million for British Rail, £3·3 million for London Transport, and £200,000 for British Waterways.
The original standard amounts were set at a time when industry as a whole enjoyed a 75 per cent. derating. It is anomalous that the railways alone should continue to receive that derating, and the figures I have quoted earlier do not provide for it. But, on the other hand, we considered that the track and associated structures should not be rated, and the figures reflect an allowance for the de-rating of the track, and take into account other changes in the boards' properties since the original standard amounts were set. The draft order before your Lordships raises the standard amounts to levels which are calculated to produce a total contribution from each board in 1977–1978 equal to the rates that would have been paid if the proposed rateable values had been created. The actual contribution may be subject to slight variation because of recent changes in the boards' traffic, but the amounts payable will be about £14·4 million for British Rail, £2·5 million for London Transport, and £160,000 for the British Waterways Board.
Noble Lords may have seen that another order has been laid giving effect to the proposed changes in distributing the contribution. Rating authorities will now receive amounts that are proportional to the activity of each board in their area. That order does not require an Affirmative Resolution and is therefore not before us today. But these two orders, taken together, reproduce very closely the effect of the changes which were proposed following the review. We regard them, however, as interim measures only until our powers are adequate to lay down a suitable formula for rateable values. My right honourable friend has consulted each of the Transport Boards and the associations of the local authorities concerned. I beg to move that the draft order be approved.
Moved, That the draft Transport Boards (Adjustment of Payments) Order 1977, laid before the House on 3rd March, be approved.—(Baroness Stedman.)
3.25 p.m.
Lord MOWBRAY and STOURTON: My Lords, I am very grateful to the noble Baroness for introducing this order. Having said that, I am slightly aghast at the way in which her Department has left her to announce a major change under the innocent mask of a simple order. She has today announced that, under this simple order, railway track is to be totally derated. I must protest. Under this rating and valuation order, as we have it, there is nothing at all about this change and I think that, even though the noble Baroness has announced in her very explanatory commentary on the order that this is so, it is wrong that we on these Benches, those in other Parties and other interested persons on her own Benches should learn of such a fact only from the noble Baroness's explanation. The last valuation was done in 1967 and, on the face of it, anyone looking at the order would believe that it was framed on the same basis. Yet we have all the mileage of track removed from the valuation order. I feel that it is fair to protest that there should have seen a little more explanation before this was done. Parliament is accustomed to being "bounced", but we do not like being "bounced" too much.
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Having said that, I thank the noble Baroness for explaining the factors involved. The basis of this is probably understandable. Roads are not valued for rates and the argument runs, Why should railways be? I am not arguing this point but merely that of more explanation—government by more honest means ahead of time. I had been going to ask this question because I thought that this change was coming up but, outside devious questioning, we should not have known this. I do not believe I can say very much more. This is a normal order. One is slightly appalled at the rateable values having to go up so much, but this is part of the price we all have to pay for inflation. Whether the Government of the noble Baroness is doing better than I should like to think my friends would be doing is, I suggest, highly problematical, but I nevertheless accept that, in the general context, the Government are doing what is necessary. Having made my protest about the secrecy of the order in covering the point to which I referred, we shall accept the order.
Baroness STEDMAN: My Lords, I am sorry that the noble Lord feels that we have been less than honest in the way in which we have presented the order. I thought I had explained that up to this point of time the railways were subject to 75 per cent, derating and he himself has offered the explanation for it, in that the railways are in competition with road haulage. Roads are not rated and it therefore seemed fair, in the light of the consultations that we had had, that railway track should also be derated. I hope the noble Lord will accept that this was done in all good faith. It has been done with the agreement of all those bodies we have consulted and I hope that, in spite of the noble Lord's minor protest, the House will accept the order.
On Question, Motion agreed to.

FAMILY INCOME SUPPLEMENTS (COMPUTATION) REGULATIONS 1977
3.29 p.m.
Lord WELLS-PESTELL: My Lords, I beg to move that the draft Family Income

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Supplements (Computation) Regulations 1977, a copy of which was laid before this House on 3rd March, be approved. As your Lordships will know, family income supplement is a benefit for working families bringing up children on low incomes. The benefit is payable if the family's total gross weekly income, which at present includes family allowances and child interim benefit, is less than an amount determined by Parliament and known as the "prescribed amount".
The prescribed amount comprises a basic amount for a family with one child —and the same basic amount whether there are one or two parents—and this basic amount increases in equal steps for each additional child in larger families. At present the basic prescribed amount is £39 per week and the step is £4·50 per week per child. This means that the prescribed amount for a family with two children is £43·50; that is £39 plus £4·50, and for three children £48; namely, £39, with the two amounts of £4·50, and so it goes on according to the number of children in the family. The amount of benefit payable is half the difference between the family's total income and the prescribed amount appropriate to the size of the family. When the calculation has been made, the amount is then rounded up to the next 10p. There is a maximum payment of £8·50 per week for a family with one child, and if there is more than one child, there is added to the £8·50 the sum of 50p per week per child.
My Lords, I have spent a little time explaining the arithmetic of this for two reasons. The first is that, although the principles have been the same since family income supplement was introduced by the Conservative Government in 1971, there still seems to be doubt about them in some quarters. At this stage it would be fair to say that there are a number of well-informed (in the ordinary way) people in this field who sometimes find it difficult to understand the working of the family income supplement; and I am not pretending that it is easy to understand. The second reason is that, as I shall explain to your Lordships, some of the details have had to be altered to take account of the introduction of child benefit in two weeks' time. For example, there will be the disregard of child benefit, and
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secondly, reducing the step in the prescribed amount from £4·50 to £3·50, which I shall touch on shortly.
One other preliminary point which I should mention is that families receiving family income supplement are automatically entitled to a range of other means-tested benefits on what we call a passport basis. These other means-tested benefits include free school meals and free milk and vitamins. So any family who are in receipt of family income supplement get a whole range of other benefits automatically. I mentioned free school meals, free milk and vitamins. There is also remission of prescription, dental and optical charges, refund of hospital fares, legal aid and advice, and receipt of family income supplement is also one of the conditions of eligibility for the electricity discount scheme. Therefore the family income supplement has to be seen against a fairly wide background of additional benefits.
At the beginning of April, child benefit begins to be paid at the rate of £1 for the first child and £1·50 for each other child. Child tax allowances will be reduced by 70p per week for the first child and 87½p per week for each other child. As you know, the new child benefit will replace family allowances. It will also replace the child interim benefit which has been paid over the past year for the first child in one-parent families; and so these one-parent families will get an extra 50p on top of their £l. It is also true that since the introduction of the child interim benefit for one-parent families, they have in fact been getting that extra 50p since April of last year. As the new terms come into force in April, so that they should not be at a disadvantage, they will get the £1·50 for the first child.
Ideally, families on means tested benefit should break even when child benefits are introduced, since we do not wish to reduce the overall level of support which these selective benefits give to the poorest families. But in reviewing family income supplement—and this applies throughout the whole complex of means tested benefits—our aim has been to ensure, so far as practicable, that the improvement in universal benefit, brought about by the introduction of child benefits, does not leave those already dependent on means-tested benefits worse off at the changeover point.

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We fully accept—and I should like to repeat this—the principle that improvements in universal benefits should reduce dependence on means testing. I feel sure that noble Lords will acknowledge that we on this side of the House are firmly and expressly committed to that principle. Indeed, we believe that it is embodied in the very concept of the child benefit scheme. But reconciling these two aims—that is, reducing reliance on means testing, and protecting poor families from losing out—can produce practical problems which vary with the way in which means tested benefits are assessed.
I should like to give your Lordships an illustration of that. It is true that the last Government, who introduced the family income supplement, wanted the supplement to be a simple scheme, easily administered. We believe that it is a simple scheme; it is easily administered; but as with so many other things there are a number of problems. When I said a moment or two ago that it varies in the way in which the means tested benefits are assessed I had in mind, for example, that rent and rate rebates are assessed on a gross income basis, whereas free milk and vitamins are assessed on a net income basis. So there are different kinds of assessment, which in a sense complicates the problem and perhaps leads sometimes to a little difficulty.
Family income supplement is at the heart of this complex because, as I said earlier, it is a passport to so many other benefits which I mentioned a few moments ago. The solution we have adopted is to disregard child benefits completely as income for the purpose of family income supplement. This is affected by Regulation 2(1) of the Family Income Supplements (General) Amendment Regulations 1977, which were made on 1st March and laid before your Lordships' House on the 7th of this month. In isolation the complete disregard of child benefits would significantly increase the amount of family income supplement payable. But to increase reliance on means testing to that extent would be contrary to the principle I have just described. In our view the answer lies in reducing the prescribed amounts.
Regulation 2 of the computation regulations, which are now before your Lordships, provides for a reduction in
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the step by £1, from £4·50 to £3·50. A good deal has been said, both in another place and outside both Houses of Parliament, as to the effect of some of these measures. This deals, I think, with the core of the problem. Taking the overall situation for families receiving family income supplement together with housing benefits, free school meals and free milk and vitamins, I believe we have got as near as it is possible to get to the break-even point. There are in fact only two groups who could lose, and then by only a few pence per week. I say, "only two groups". Even this is regrettable, but it is very difficult, as I say, to introduce a scheme that does not leave somebody out. There are, on the best estimate we can make, about 5,000 families receiving rent and rate rebates who could lose about 3p a week; that is all. The other group is so small that it is not possible to make a reliable estimate of their number; there are a few families receiving free school meals by direct claim. These families could lose up to 7p per week.
Your Lordships will have noticed that these regulations also provide for the basic prescribed amount to be uprated from the 19th July next. For the past three years family income supplement has been uprated in July, whereas the main social security uprating has always been in the November. It would be sensible to achieve a common uprating date for all benefits, and we propose to do just that by making the uprating for which these regulations provide an interim one, pending the main uprating in November. However, to protect families from losing family income supplement because they may have received a pay increase in line with the pay guidelines, it is necessary to increase the prescribed amount within a year of the last uprating. An essential feature of this year's proposals, therefore, is that the July uprating is designed to preserve the status quo for existing beneficiaries. The increase of £2·50 in the basic prescribed amount—that is, it will go up from £39 per week to £41·50—is therefore sufficient to protect any family from losing family income supplement if they have had a pay rise since last August. This is the effect of Regulation 4 of these computation regulations.
I think the only other point I need mention about these regulations is that,

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under Regulation 3, the maximum payments which will apply from the 5th April remain the same as they are at present; namely, £8·50 per week for a one-child family, plus an extra 50p per week for each other child in larger families. Perhaps I have spent a longer time than is necessary on these regulations, but in view of their complexity I felt it was necessary to include a certain amount of detailed information. With that, my Lords, I beg to move.
Moved, That the draft Family Income Supplements (Computation) Regulations 1977, laid before the House on 3rd March, be approved.—(Lord Wells-Pestell.)
3.45 p.m.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Wells-Pestell, for explaining so carefully, and with a profusion of detail, the reasons for bringing forward this order. I was very glad that the noble Lord brought out snags of the scheme, and the way in which the present regulations are going to cover the eventualities as foreseen. There are three questions I should like to ask the noble Lord, of which I have given him notice. First, what is the threshold on entry into the scheme? Secondly, what is the likely cost of the order to the Exchequer? Thirdly, has the noble Lord any figures of take-up, and could he compare the take-up of this scheme with the present situation?
Lord BANKS: My Lords, I, too, should like to thank the noble Lord, Lord Wells-Pestell, for his very thorough explanation of this exceedingly complicated matter. We on these Benches have very considerable reservations about the family income supplement scheme. We all know the relationship of means-tested benefits to the poverty trap, and we know, too, that the take-up of the benefit, to which the noble Lord, Lord Sandys, has just referred, is not as good as we should like. I do not propose now, at this point, to attempt to cover the interesting details that were set out for us by the noble Lord, Lord Wells-Pestell, but I should like to welcome the principle that the means-testing should be gradually eliminated by the development of the child benefit scheme. In fact, it is through a development from that, which is the sort of embryo of a tax credit scheme, that
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one would hope to see means-testing over the whole field of social security ultimately very considerably reduced. I welcome the fact, as the noble Lord explained, that there is to be an uprating to cover, as he pointed out, any pay rise since August last. So, because we support that principle and welcome that increase, we support these complicated regulations.
3.48 p.m.
Lord WELLS-PESTELL: My Lords, I am grateful to both noble Lords for what they have said with regard to this matter. I know that both noble Lords recognise that this is a very complex and difficult matter in which to arrange a series of benefits which are always going to come out (shall I say?) on the positive side; but, as I tried to explain, those who are likely to suffer are infinitesimal in number, but if you happen to be one of them it is nevertheless an extra piece of suffering.
My Lords, the threshold of entry is about £22 per week. That is for a husband, wife and one child. I have not been able to ascertain, even roughly, what the cost will be when the new scheme is introduced in April; nor have I been able to ascertain as yet the cost of the scheme when it comes in on the 19th July. This has yet to be worked out, so I cannot promise to let the noble Lord know by tomorrow; but what I will do, when the figures are available, is to write to him accordingly, and he may well feel that it would be perfectly proper for me to send a copy to the noble Lord, Lord Banks. I cannot give the noble Lord the figure of the number of people who are entitled to claim FIS. I do not know the figure; but what I do know is that at the present moment there are about 80,000 persons in receipt of family income supplement. After April this year that figure, we anticipate, will go up to 82,000; and after 19th July we expect it to go up to 84,000. What percentage that is of the total number of people who will be entitled to claim, I cannot say. If that is a figure that I can obtain then I will let both noble Lords know.
Viscount HANWORTH: My Lords, bearing in mind the very bad take-up of some of the benefits, which has been estimated in some cases as being as low as

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30 per cent., does the noble Lord really feel that the complications of the new measures are justified, bearing in mind the number of civil servants required? Moreover, does he also agree that means testing is not a black-and-white affair; that our taxation, for example, is one form of means testing; that even the benefits made for married women or the provisions made for people who are married is, in another shape, a means testing? Is it wise to use this extremely emotive word? Is it wise to raise principles on a matter which is not black or white?
Lord WELLS-PESTELL: My Lords, there is a very simple answer to what the noble Lord has just said. In the absence of any other scheme that could be administered as simply as this, we have no alternative. I think that Members on both sides of the House would say without any qualification at all that society has a responsibility to do something for those who are less fortunately placed in the community. Very often, the difference between us is one of degree and emphasis. We see that there is a good deal of merit in the family incomes supplement. It can be done at present only by some form of means testing. We have made it clear that, on this side, we do not like means testing; there is a growing opinion against it. This is what we have to apply at the moment. In the absence of some other scheme that would be equally simple and easily administered, we shall have to carry on with the scheme until such time as we can devise a better one.
On Question, Motion agreed to.

WEIGHTS AND MEASURES ACT 1963 (HONEY) ORDER 1977
3.53 p.m.
Lord ORAM Lord ORAM rose to move, That the draft Weights and Measures Act 1963 (Honey) Order 1977, laid before the House on 24th February, be approved. The noble Lord said: My Lords, I beg to move that the Weights and Measures Act 1963 (Honey) Order 1977, be approved. The order arises from our obligations to implement the terms of the EEC Honey Directive adopted in July 1974 and made under Articles 43 and 100 of the Treaty
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of Rome. We are, accordingly, required to bring our law into line with the Directive. The main compositional and labelling provisions have already been implemented by the Ministry of Agriculture, Fisheries and Food in their 1976 Honey Regulations made in November 1976, which become fully effective on 1st May, 1977. The order now before the House dealing with subsidiary weights and measures provisions contained in the Directive is timed to coincide with this date. Regulations concerned with origin marking provisions also contained in the Directive are also under preparation in my Department.
The EEC Commission is being advised of the proposed order. Comprehensive weights and measures legislation concerning prepacked honey already exists in the 1963 Weights and Measures Act and the necessary powers are available to make the minor changes necessary to bring it into line with the Directive. It was not, therefore, necessary to invoke powers under the European Communities Act 1972. The provisions have been kept to the minimum which are needed to comply. They entail extending weight marking on containers to packs of comb and chunk honey not currently required, ending the unnecessary exemption from this requirement for very small packs and introducing provisions to allow weight marking for non-retail packs of 10 kg. or more to be given in an accompanying document if desired.
The requirement for weight marking to be in metric units, also included in the Directive, is covered by the terms of the dual marking provisions of the 1975 Weights and Measures (Marking of Goods and Abbreviations of Units) Regulations which state that quantities on prepacks should be in both metric and imperial units. The Directive does not cover loose sales of honey over the counter; but we have considered it necessary to preserve the current safeguard by continuing our requirement for honey likely to be sold in this way to be weighted out for the customer.
Noble Lords will, I am sure, agree that these measures are unexceptional and unlikely to have any tangible effect on retail prices. This view was shared by a wide spectrum of opinion among

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industry, consumers, enforcement authorities and the distributive trade which, as required, under the 1963 Act was sought before the order was laid.
Before commending the order for your Lordships' approval, I should touch on the subject of prescribed quantities. These are covered by the order only in the interests of perpetuating the present position as related to imperial sizes. The derogation written into the Directive makes allowance for this until the end of 1978 by which time it is required that a Community-wide solution for metric prescribed quantities should be adopted. This solution, which will be a general one embracing honey, jams, marmalade, syrup, treacle, et cetera, is now being actively considered among proposals for a Directive on Ranges of Nominal Quantities Permitted for Certain Pre-Packaged Products currently before the EEC Council. A further order will then be necessary to introduce them in this country. I beg to move.
Moved, That the draft Weights and Measures Act 1963 (Honey) Order 1977, laid before the House on 24th February, be approved.—(Lord Oram.)
Lord TREFGARNE: My Lords, the House will be grateful to the noble Lord, Lord Oram, for introducing his Motion this afternoon. I have no serious comment to make on the order before the House, but there are three small observations which I should like to make and I hope that the noble Lord will be able to clarify them. We have heard what he said about the future intentions, as we understand them, of the European Community with regard to the labelling of containers in metric and imperial quantities. He explained how the requirement to label in what is, primarily, at this stage imperial measure will be replaced in due course by the requirement to label primarily in metric measure when the Directive comes into force in 1978. I am therefore a little surprised that the Government have chosen at this stage to perpetuate the prime marking of these labels in imperial measures; because I should have thought that the intention of the Commission was now clear enough for us to be able to lay down the requirements for metric measure and avoid having to change in two years' time.
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However, the Government have chosen not to do that. So be it.
The second point relates to the marking of the larger, 10 kg., containers which are sold only for wholesale purposes. I wonder whether the Government appreciate that there is an increasing tendency for these large containers, by one means or another, to come on to the retail market. With inflation as it exists, people with large families or even small commercial undertakings, sometimes buy these larger packs from cash and carry establishments, and the like. I wonder whether those people are adequately protected by the requirement only to provide an invoice or something similar with the quantity on it, and not mark the large containers.
With orders such as this, which are increasingly coming before the consuming public, would it be possible or practical in the future to write them in rather more comprehensible language? I have to confess that I am not particularly used to studying these matters in detail, but this order gave me an unpleasant three-quarters of an hour while I waded through the language and tried to marry up the Explanatory Note which to me made it worse, not simpler. Could the noble Lord consider in future writing orders such as this in more understandable language which may help us in Parliament but which, above all, would help the consumers as increasingly they have to rely on these documents for their guidance? Having said that, my Lords, I think that we should approve the Motion and this order into law.
4.1 p.m.
Lord ORAM: My Lords, I will reply briefly to the three points made by the noble Lord, Lord Trefgarne. I think, if I may say so, his first point was a little wrong. Under this order, taken together with the 1975 Weights and Measures (Marking of Goods and Abbreviations of Units) Regulations, it will be necessary for packs of honey to be labelled both in metric and imperial units. The point the noble Lord was intending to make was regarding prescribed quantities expressed in metric terms. It is this that is now being settled within the EEC and upon which we cannot yet legislate until that decision is made. That decision

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covers not only honey but the list of commodities to which I have referred.
Lord TREFGARNE: My Lords, may I be allowed to clarify what I said? I was not clear and I apologise to the noble Lord for that. Under this order, honey must be packed in jars of I oz., 2 oz., 4 oz., 8 oz., 12 oz., 1lb., 1½lb. or a multiple of 1lb. I wonder whether it would have been wiser to provide for the jars to be principally in metric units, for example 250 grammes or 500 grammes, which is what will happen in due course anyway. I should have thought that the intention of the European Economic Community is clear enough now for us to have been able to take that step.
Lord ORAM: My Lords, as I understand it, the intention of the Community is not yet clear on precisely that point. Therefore it is not possible for us to do this. The only question is: should we have not waited until that decision had been reached and dealt with the two matters together? This order is already overdue and it was necessary to do as much as we could at this stage. There will be an additional order to take care of the noble Lord's point.
Regarding the reference to large packs becoming increasingly available through retail establishments, if they are sold by retailers they come under the requirements for marketing. The giving of the information in a separate document only applies—and the order makes this clear—to non-retail sales. The third point was a plea for simplicity which we are constantly hearing, echoing and about which we feel very sympathetic.
The noble Lord complained that he is new to these orders. I am comparatively new, and certainly a year ago when I was tackling this kind of order I felt exactly as he describes himself now. I can only assure the noble Lord that after a year's practice the orders begin to be a little more meaningful. I would not say they are absolutely clear, but I offer him some hope.
On Question, Motion agreed to.

EEC: 23rd REPORT ON FARM PRICES
4.6 p.m.
Lord RAGLAN Lord RAGLAN rose to move, That this House takes note of the Twenty-third Report from the European Communities Committee on the EEC Farm Prices Review. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. I should like to say, first, how appreciative I am that my noble friend the Leader of the House has managed to attend this debate. I know that he has had to tear himself away from a busy Committee and has had to hurry in order to be here, and I appreciate it very much. I should like to thank those who have helped to produce this report with such speed. I hope that the way that we had to cope with the review this year will not recur. I would remind your Lordships that the way in which the prices review is undertaken in the EEC, unlike with the old British system, gives Parliament and the public the opportunity to comment on the proposed level of prices before they are agreed. This is a great advance. Since we are given this opportunity, it is essential that we should be given enough time for study and comment. This year, because Commissioner Gundelach took over from Commissioner Lardinois only recently, in December, and Mr. Gundelach had but a short time to put forward the type of package to which he felt able to put his name, it has all been done in too much of a hurry. There seems to me to be a case at another time for transferring responsibility from one Commissioner to another much sooner before the beginning of the agricultural year in order to give the new incumbent time to settle down and produce his proposals in good time.
As it was, your Sub-Committee obtained a copy of the proposals, had them translated from French, considered them, drafted the report, commented on the draft, redrafted it, edited it and had it printed all in the space of a month—which is short for these things—just in time to get it debated today before the Agricultural Ministers' meeting at the week-end. We regret that this hurry has prevented us from doing as good a job as we think we should have done. My thanks, as always, go to my kind, tolerant

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and companionable Sub-Committee, and to our two specialist advisers, Mr. Simon Harris and Professor Josling, the Sub-Committee Clerk and the Select Committee Clerk. They have all worked hard, sometimes at great inconvenience to themselves.
It will not have escaped your Lordships' attention that there is much anxiety being displayed about the present agricultural surpluses. Much of this anxiety is genuine; that is, it is not motivated purely by opposition to our membership of the EEC. The Sub-Committee share that anxiety. We are making more fuss in this country than they are on the Continent about the surpluses, and that is because we in this country are strangers to surpluses of food. After devising very elaborate protections for our farmers in order for them to produce as much as seems politically feasible at home, we have been used to picking and choosing from abroad to make up our deficiency.
However, on the Continent they are used to surpluses, and their ingenuity has long been directed to trying to control them. Far from their consumers being used to grumbling about too much food being produced, their Governments are used to being blamed by the farmers for not buying all the produce. I remember that once when General de Gaulle had his way blocked by a heap of artichokes, or something similar, he is said to have exclaimed:
"They blame me, but they should blame le bon Dleu, who has given them such abundance"
National Governments in the EEC, having gratefully ceded their responsibility for handling surpluses to the Commission, have now turned to playing the game of getting as much as they can out of the CAP cake; and the Commission, in endeavouring to get agreement among them, finds itself having to give away more than it should. It has been given the responsibility but not the necessary authority concomitant with it. In other words, it is not the fault of the Commission, as I see it, that there are surpluses which are becoming so embarrassing: it is the fault of a system which allows, if it does not encourage, national Governments to behave without a sense of overall responsibility. They can then use the Commission as a whipping boy at home, whereupon the Commission, goaded into
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trying extraordinary remedies to cure the surpluses, listens to extraordinary ideas from the various special interests concerned. Lately they have come up with the idea of a tax on margarine to encourage the eating of butter, a tax on isomerose to reduce its competitiveness with sugar and a tax on petro-chemical-derived alcohol to help drain the wine lake—although none of those measures would scarcely dent the existing surpluses.
All those surpluses are structural and, in my view, the Commission have to be encouraged and then allowed to set about reducing them, but naturally with as much humanity as possible. I say that because there is a very big social problem here, which has to be recognised and appreciated. I might say that my right honourable friend the Minister of Agriculture said as much when he referred to this matter in his speech in the other place last Wednesday. We do not have structural surpluses of food in this country but we have long had surpluses of industrial goods of one kind or another, and we have got nowhere near solving that one. Whether we are making too many telephone exchanges of the wrong sort, or steel that is too expensive to buy, or more people than necessary are engaged in making certain types of goods, we are familiar with that and we know only too well the traumas which are involved when people's jobs and ways of life are at stake.
In France, Italy and Germany there are just too many people on the land, producing just too much. Perhaps there are 25 million people in the EEC engaged in farm work. To resettle 10 per cent. of them means finding jobs for 2½ million people. It is a huge problem and it cannot be done quickly. We do not even know at the moment how to cope with our present unemployment. But the Commission have to start luring people from the land and, furthermore, they must be allowed to start doing that. The only way they can do it is by reducing the incentive to produce. To be fair to them, I think they are trying. In a period of high inflation—I do not know what the average is for the whole EEC—the overall 3 per cent. increase in price which is proposed is equivalent to a quite large reduction in real terms. The question is whether member countries, pleading their

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own special causes, will allow the Commission to hold this effective reduction in prices.
Where the Commission have not themselves been helpful to their own case—in fact they have done themselves a great disservice—is in publishing a list of what they call "world prices" on which they calculate their threshold prices. Their device is that in order to keep up the level of import levies they calculate them according to the price of whatever parcels of food may be on offer round the world at that moment. As those offers are usually for a relatively small amount of food which is having difficulty in finding a home, the price is frequently low. Some country just wants to get rid of a surplus, as the EEC wants to get rid of surplus butter, so it sells it at a cut rate, or tries to, to the Soviet Union—but nobody suggests that the rate at which butter has been sold to the Soviet Union is actually the world price of butter. What the Commission do not say, and what everybody who is familiar with the world market knows, is that should one go out to buy food on world markets in the quantities necessary to make up the deficiency in this country, that food would not be available at anything like the price at which it may be advertised at the moment. I will not now venture an opinion as to what basis the Commission should use to calculate threshold prices, but I would say that their present method is unrealistic and they know it; and if they go on with it they are deservedly going to invite very much more criticism from consumers than they have even at the moment.
Of all the surpluses, I suppose the most emotive is that of dairy products. I am greatly alarmed that, according to the latest news from Brussels, the Agricultural Ministers may be forced into relaxing the measures proposed by the Commission for reducing the dairy surplus which, in the view of your sub-committee, are in any event unlikely to be effective enough even if they are adopted as they are. Again, I hope that my right honourable friend the Minister will state in no uncertain way that the Commission must be encouraged, and then allowed, to do its job; otherwise the whole of the Common Agricultural Policy will be washed away in a sea of milk. The silliest thing to do,
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in view of all this surplus—a great deal of which, as our report suggests, is caused by inefficient marketing—would be to get us to abandon our Milk Marketing Boards. The combination of the boards, the Dairy Trade Federation and the Government has provided a stable foundation for an efficient and successful industry. The Commission should try to emulate what has been successful and not what has been shown to be unsuccessful.
The position with regard to cereals is not difficult, as it is with sugar and alcohol, and it is not prodigal, as it is with milk production. The Commission propose to abandon the intervention price for feed wheat. We are glad of that, but they are still insisting on introducing a reference price for wheat which is allegedly of bread-making quality—although nobody has yet discovered what that is, because it means different things in different areas and in any case there is no adequate test of quality except by baking it. We repeat our conclusions, to which we referred in a previous report, that by far the best way of dealing with the matter would be to let wheat which is judged to be of baking quality to command what premium it can in the market; otherwise we may have yet another surplus which nobody will quite know what to do with. Cereals have been discussed by the Ministers, but our sub-committee's intelligence service, on which we normally pride ourselves, has not yet told us what conclusions have been reached in the talks in Brussels so far. I wonder whether my noble friend, when he comes to reply, will be able to give us an indication of how things are going in the talks.
As for beef, we think it is essential that the slaughter premiums, which have for so long been such a tremendously successful feature of the United Kingdom Government's support, should continue and should be adopted by the Commission as a permanent part of the Common Agriculture Policy. I do not want to make much of the 37·8 million unit of account increase in FEOGA expenditure which, when one looks again, one finds is really 807 million units of account, because the 37·8 is really an increase over last year's forecast appropriation, and we already knew of that. But the Commission is naughty to present its figures in that way. It makes it look as if they have something to hide—which they have—

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and so we thought it well worth while drawing attention to what they wanted to hide.
Lastly, the implications for the United Kingdom of the package which is proposed are discussed in paragraph 28 onwards. The Ministry of Agriculture, Fisheries and Food estimate that the two transition steps, and the proposed adjustment in the rate for the Green Pound, would increase the gross receipts for agriculture by 9 per cent. and increase consumer prices by 4 per cent. Here, we left out an interesting figure for the good reason that we were not sure what it ought to be. The receipts for agriculture, 9 per cent., and the increases for consumers, 4 per cent., do not agree, because the food has to be transported, processed, packed and distributed, and the proportion of the cost of food which is taken by all these stages, which is known as the "food chain", is getting larger every year as people demand ever more sophisticated food products and better presentation of them. We think that the figure for the proportion taken by the food chain is between 35 per cent. and 50 per cent. overall, though it obviously varies, anyway, from product to product. But I hope that, if we have time, your subcommittee will be able to do some more investigation into this highly complicated subject, and that in due course we may be able to present a report on it.
Paragraph 31 warns that the effect of institutional price rises may be more real than apparent, and paragraph 33 states that these rises may take some time to work through. But, of course, nothing has such an effect on our food prices as the level of the Green Pound, without a discussion on which no discussion on EEC prices can possibly be complete, so intertwined are the Green Pound and prices. But my noble friend Lord Pritchard will have great pleasure in explaining to your Lordships in a moment all about the Green Pound, with his usual ease and lucidity. It must have been intuition which warned me off asking my sub-committee to deal with it. I made some excuse and later gave myself a hearty vote of congratulation for having done so, after I had attended one or two of my noble friend's committees.
I do not know whether it is quite proper for me to refer to a report to which your Lordships' attention has not been formally drawn, but I should like to make one point
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to finish up with. At the back of the Select Committee's Report on EEC Farm Prices and in its Green Money report are glossaries. There is necessarily some duplication between the two, but anyone, by just glancing at them, can see that the CAP is an amazingly involved and complicated creation, with a language of its own which has to be mastered before one can begin to understand it properly. Even after having been a member of the sub-committee for over two years, I still have not grasped it all and, indeed, our specialist advisers, who are steeped in it through day-to-day familiarity with it, sometimes disagree with each other over the meaning of something or other.
I only want to make the point that, just as I believe the noble Viscount, Lord Amory, will be able to tell us as a former Chancellor of the Exchequer, it is not possible to devise a taxation system which is at the same time both simple and fair, it may not by the same token be possible to devise a Common Agricultural Policy which is both simple and equitable to all Member States. But I suggest that it must be worth while, continually and consciously, trying to resist its increasing complication and, in fact, to make real efforts to simplify it. Otherwise, in a short while, nobody will be able to understand it at all. My Lords, I beg to move.
Moved, That this House takes note of the Twenty-third Report from the European Communities Committee on the EEC Farm Prices Review.—(Lord Raglan.)
4.24 p.m.
Lord PRITCHARD: My Lords, I beg to move that this House takes note of the Eighteenth Report of the Select Committee on the European Communities, which examined a number of EEC proposals relating to Green Money. The Committee recommended that the subject under scrutiny was of considerable importance and that it merited debate in your Lordships' House. However, they felt that, since the Green Money issue was inextricably bound up with the fixing of the level of EEC farm prices and since the farm price proposals for 1977/78 themselves contained proposals for Green Money changes, as my noble friend Lord Raglan has pointed out, which burden he has so generously laid upon my shoulders, then both reports should be

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debated together. That is not to say that noble Lords must address their minds to both, but merely that they may do so if they wish. At the end of the debate, I shall merely move my Motion formally, on the assumption that those wishing to speak to it will have already done so.
With the attendance of certain noble Lords and Sub-Committee D members, Sub-Committee A have held six meetings since December to consider and report on these proposals. We have had written and oral evidence from a number of sources—the Treasury, the Ministry of Agriculture, Fisheries and Food, the National Farmers' Union and the Consumers' Association. We had written evidence from the Dairy Trade Federation and, in addition, a number of other papers by the Federal Trust, the National Union of Agricultural and Allied Workers, the Labour Party and the Farmers Weekly were laid before the Committee. It was clear to us from the outset that this was a subject charged with political significance, on which it would be both undesirable as well as difficult for us to make any firm recommendations. Indeed, the attitude among those who gave evidence to us varied from strong support of the present Commission proposals to outright opposition. Your Committee therefore resolved to try to describe, in as dispassionate a way as possible, the Green Money system and the likely effects of the proposals under scrutiny. The result is the report which your Lordships now have before you.
Before I describe the Commission's proposals on Green Money and your Committee's reaction to them, perhaps it would be useful if I were to outline the Green Money system and what Green Money is. This is, of course, the nub of the remarks of my noble friend Lord Raglan, and the difficult part of what I have to say. I am deeply indebted to the noble Viscount, Lord Amory. At one of our Committee meetings, when I was battling with this problem as to how to express myself clearly, he suggested, "Well Chairman, if you really find it very difficult to explain something that you are not fully aware of, I suggest you begin with 'As every schoolboy knows'." I thought that that was a very good and helpful suggestion in that respect.
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In fact, I do not think it would be helpful to the House if I tried to go too deeply into the technical wording of the system which, in any event, is already set out in Section A of our report with far greater clarity than I could show, and certainly at very much greater length. Put very briefly, the Green Money system involves a set of exchange rates relating only to the food and agricultural sections of Member States. When market rates of exchange of Member States' currencies either appreciate or depreciate, the Green Money system cushions the effect which these movements would otherwise have on prices for both producers and consumers. Monetary compensation amounts, known as MCAs, are then applied with the object of offsetting the effect of divergence between the Green and the market exchange rates. Of course, the wider the divergence the greater is the volume of MCAs.
Among the several effects of this system on the United Kingdom, which we outlined in our report, I feel that I should draw your Lordships' attention to one in particular: the difficulties caused to Border trade between Ireland and the United Kingdom owing to Ireland having twice devalued their Irish Green Pound without any equivalent movement having taken place in the British Green Pound. This has opened up a significant differential between the sterling intervention prices in Ulster and in the Republic. It has created an incentive for smuggling livestock from Ulster into the Republic, resulting in the United Kingdom Government having to spend over £1 million a week through its Northern Ireland Meat Employment Subsidy Scheme in an effort to protect the Ulster meat processing industry from the effects of such smuggling.
Speaking generally, the EEC Commission find the present system unsatisfactory for a number of reasons, especially because the cost of this MCA system has become embarrassingly large and renders the size of the budget increasingly unpredictable. As noble Lords know, originally the system was intended to cushion minor fluctuations in the currencies of Member countries for short periods only, but in the case of Great Britain, for example, it has now risen to an indirect subsidy on our food prices of around £600 million per year. This

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is the effect of the MCAs paid on Continental exports of food to the United Kingdom in consequence of the near 40 per cent. disparity between the market rate of sterling—which, as your Lordships know, today is around 1·71 US dollars—and the Green rate, in which intra-Community payments are made, which was last fixed in October 1975 and has never been altered, when the pound was 2·37 US dollars, or 1·75 agricultural units of account.
The result is that the Commission have put forward the proposals which are the subject of our report. These proposals are described in detail in the report, so I shall not dwell on them, save to say to your Lordships that they fall into two main categories. One of them seeks to provide a long-term solution to the problem of the divergence between the market and the Green Pound rates by means of an automatic formula which would come into operation whenever the MCA percentage reached a certain level. This would, in effect, remove from the Council of Ministers, and hence from individual Member States, their discretion to accept or reject proposals for changes in Green rates.
The other proposal is for an immediate change in the value of the United Kingdom and Irish Green Pounds. Incidentally, I should like to draw the attention of noble Lords to the fact that the proposal for a 4·5 per cent. devaluation in the United Kingdom Green Pound has now been superseded by a proposal in the Farm Price Review that this devaluation whould now be 5·9 per cent.
What conclusion can we therefore reach? There is no easy solution to the Green Pound problem because of the seemingly intractable conflict between the principle of common agricultural prices on the one hand and the differing domestic policies of Member States on the other. Your Committee therefore finally felt that in the long term the present divergence between the Green rate and the market rate is untenable and runs counter to the whole concept of the Common Market, but that the speed, extent and timing of any adjustment must remain under the control of individual Member States through the Council of Ministers and should, if possible, be considered in the context of further
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reconsideration of the whole Common Agricultural Policy price levels generally.
4.35 p.m.
Lord SANDYS: My Lords, the House will indeed be grateful to both the noble Lord, Lord Raglan, and the noble Lord, Lord Pritchard, for drawing our attention to these important documents. I think it is true to say that the speed with which the Scrutiny Committee have been able to take the wrappers off these documents from Brussels and examine and publish them with their own comments, so that we can have a debate in your Lordships' House, is quite remarkable. It is almost entirely thanks to the very hard work of the Scrutiny Committee that these very difficult documents are in any way intelligible in their present form, because they are accompanied by a sheaf of Press releases which came out almost simultaneously.
I should like in particular to address my remarks to the EEC Farm Prices document. I should also like to comment briefly on the Green Money document, although my noble friend Lady Elles will comment in much greater depth upon it. There are days when I understand Green Money, but there are very many more when I do not. Today, I am about half way between the two, so I welcome the fact that my noble friend, who has such a close acquaintance with this commodity, will be giving our views with much greater clarity. I think that the document is of particular importance because it sets out the history and background of Green Money. Further, Appendix 2 furnishes us with a very important glossary of all the terms in use, a point to which the noble Lord, Lord Pritchard, referred.
These documents come as part of a string of documents from Brussels, and I regret to say that I must refer to one which was published last autumn. The dairy proposals were published as a scrutiny document on 30th September of last year. If I may weary your Lordships with its number, it is R/1734/76 and R/1742/76. The dairy proposals document lays special emphasis on the situation in Europe over milk. I must refer to page v where we read:
"It is the milk surplus which is the most expensive and the most intractable of the many problems faced by the CAP."

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Further, in the Green Money document we read on page 9:
"Much the largest single element in the agricultural part of the Community budget at the moment is the cost of financing the milk surplus."
It is quite evident that the milk situation, to which the noble Lord, Lord Raglan, referred in some detail, should come at the top of the list. Therefore I shall devote some of my remarks to this aspect of the price review.
In company with colleagues from another place, I felt that it was most timely to go to the headquarters of the Milk Marketing Board at Thames Ditton to find out precisely what that important body felt about the document to which I have just referred. It is quite evident from the background to the present proposals and, further, from the Press release from Brussels only last week when another place was debating these documents, that the Commission is very anxious to see the end of the Milk Marketing Board. If this occurred, nothing could be more unfortunate for this country in terms of food production and distribution. It is no small matter even to suggest that the board should be altered. We ought to remember very carefully the background to this, the oldest of the marketing boards, which was set up when I was quite a small boy, in 1933, when the dairy industry was on its last legs and the distribution system was in a similar situation.
The advent of the Milk Marketing Board, which has developed over the past 44 years, has been of the greatest significance for both the consumer and the producer. I do not think there is another country in the EEC, and as far as I know, certainly not in Western Europe, which has a daily doorstep delivery of milk. This is something which we should cherish in this country, not only for consumer reasons but also for social reasons. When I refer to the Milk Marketing Board I naturally include its counterparts in Scotland and those covering other parts of the United Kingdom. The Milk Marketing Boards fulfil a tremendously important role, and in the present circumstances we should do our utmost to support the Government's argument in regard to sustaining their continuance.
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I should like to refer to the innovations which are suggested in the document and I think it is important that we should be chary of accepting yet further innovations, bearing in mind that over the past years we have had to take on board the metric system of weights and measures, coupled with substantial innovations in the system of taxation. I come to the prices review document which was published on the 12th February, to which the noble Lord, Lord Raglan, referred. Here the Commission has proposed that the EEC farm prices should rise by approximately 3 per cent. When one couples this with the revaluation of Green Money, it adds up in sum approximately to a 15 per cent. increase over commodities, which is at least 5 per cent. below the 20 per cent. costs increase in the last 12 months. So the British farmer will by no means recover his costs if the views of the Commission are accepted. I think it should be commented upon at this stage that COPA calculated that an average increase of at least 7.4 per cent. is needed on prices if income is to keep pace. But they are referring to Europe as a whole and the British farmer has been rather unfortunately placed.
I return to the question of the small dairy farmer, both in this country and in Europe, because I believe he deserves an important place in our thoughts this afternoon. An excellent product is economically produced in this country and one must remember that the number of dairy farmers in 1960 was 123,000, and that over the last 17 years the number has been reduced to 56,000. It is a great tribute to the dairy industry that over the 17 years the production of milk has not only been sustained but has risen, and it is remarkable that the efficiency has risen with the herd size.
It is interesting to look across the Channel and see what the herd sizes are there. I think it is worth pausing a moment to consider this, because in this country we have an average herd size of 41 cows. Of course there is a large number of herds which are substantially more than 41 and a large number which are below that figure. But in Holland the figure is about 16, in Germany it is eight and in Italy, five. If one takes the average as being five in Italy it means that there are some cow herd sizes of three and even I two. So one must remember that one is

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dealing with a substantial number of very small dairy farmers. On this side of the House, as indeed on the other side of the House to a greater or lesser extent, noble Lords will appreciate the woes of the small family farm, but I think noble Lords opposite are less seized of the problems.
Lord PEART: Oh!
Lord SANDYS: My Lords, if the noble Lord the Leader of the House takes exception to that, I am delighted to hear that the noble Lord is willing to accept the situation. But it is true that while the British dairy industry has passed through a considerable structural alteration in 17 years, a reduction to half its numbers, its European counterpart has by no means reduced in numbers in proportion.
What is going to happen, my Lords? One certainly wishes that the small farmer, and particularly the family farm, shall continue as an entity throughout the EEC, but what one wishes to see, coupled with its continuance, is an increase in efficiency, the amalgamation of holdings and the alteration of levels of regional support. If the aims of the Commission are carried out, then looking at the present proposals I do not think very much will be achieved in this particular field. One must at the same time remember the needs of those who at present live in cities such as Naples who do not demand a daily doorstep delivery of milk. Perhaps in coming years we may be able to persuade them that this admirable product should have wider application.
Referring to the butter mountain, which was also referred to by the noble Lord, Lord Raglan, standing as it does at 260,000 tons (and the skimmed milk powder mountain stands at over 1·1 million tons), it gives enormous offence to everyone that the sale of this butter mountain at a rate of 17p per lb. should take place in the circumstances at present arranged. It is a serious criticism of the Common Agricultural Policy that it should do so, but as the noble Lord, Lord Raglan, rightly pointed out, we are strangers to surpluses of food. We have recently joined in the Common Market and perhaps we may he able to suggest remedies whereby these enormous and
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totally unnecessary surpluses may be put to better use.
The noble Lord referred to the ingenuity which is brought to bear by the Commission. In my view, that is a scarce commodity in present circumstances. Nevertheless, the Commission must also be aware that, should a surplus of this magnitude arise again, there will be a total revulsion against a second sale of this nature to a third country. A sale to a country outside the EEC in the Third World is a different matter altogether, but the sale to Soviet Russia on such particularly favourable terms has given great offence.
I should like to refer to what my right honourable friend the Leader of the Opposition said on the subject in a speech in Zurich on 14th March. She said this:
"It is the West, not the East, which sells off surpluses of grain and other foodstuffs to the planned economies and also gives them to countries of the Third World."
This is a highly political matter and one which we should bear in mind because the philosophy of surplus food has taxed the minds of the most skilful of your Lordships. I should refer to the work of the late Lord Boyd-Orr in this particular field, who spent many years examining the subject but reached no firm conclusion about a particular problem as intractable as this one.
I end with the matter of skimmed milk and this particular surplus. It is a matter which is a source of some pleasure that at least a positive suggestion has been made by the Commission for using this in a school milk programme; here at least is something which may be built upon. Nevertheless, I believe that 1·1 million tons of surplus milk is a matter of the greatest concern within the Community, and it must never be allowed to build up. The notion of using and recycling this milk for animal feeds appears to be one of the most uneconomical methods of using this important commodity. I had intended to quote the wise words of Lord Birkett, when he said he had never known a speech that was too short, but as I have been speaking for 16 minutes I feel this might be inappropriate.
4.52 p.m.
Lord MACKIE of BENSHIE: My Lords, I speak today as a member of Sub-Committee D, and I should like to start by saying that I have enjoyed greatly working under Lord Raglan's chairmanship, and greatly enjoyed working with the experts of the money committee, sub-Committee A on the occasions I was able to attend. I would say how very right it is that these two reports should be debated together, and how very right it was to split them; I think that Sub-Committee A did get a great deal of information about agriculture, and we certainly received a great deal of information about money and its workings with which we were not too familiar before. The two are wholly bound up together. There is no shadow of doubt that we are talking today about matters which affect the consumers in this country and the farmers and the producers of food, and the two are bound together, of course, by the prices received and paid by the two groups.
What I dislike about the present situation is that a great many people are getting mixed up. They are questioning the whole of the CAP; they are questioning its value. They are producing figures such as £600 million to £800 million which could be saved by buying our food in the free world market. I think this is a very unsophisticated and very dangerous approach in the present situation. We are also pointing out in this country the great advantages of deficiency payments as against intervention buying, but I wonder if we should do this entirely. We ourselves in the past have used both systems.
With potatoes, for example, we had a fall-back price which worked very well. Deficiency payments can lead to surpluses in exactly the same way, but when you get surpluses with deficiency payments you have a far greater problem, because you depress the price still further getting rid of them. I think it is very important, when we consider this, to look at intervention buying not as it is working now but as it should work, and consider where the real problem is. I will come to that at a later point, but I will say now that the real problem is that we are paying far too high prices to the farmers on the Continent. It sounds a selfish sort of thing to say, but I will explain it later.
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Before going on to that I would remind the House of some figures of world production of food. In a debate in another place Mr. Jay, that well-known anti-Marketeer joke, said that world food production was rising at a faster rate than the population. This was true in the period of the decade from 1960 to 1970. It is not true in this decade. World food production is falling behind the increase in population, particularly in the developing countries, and the FAO are extremely worried about it. It is also true to say that, as was said in the debate in the House of Commons, there have been improved harvests in Russia, India and other places this last year. But in 1973 the world reserves of grain were in the region of 140 million tons, mostly held in the United States. In 1975, the last true figure I have, there were only 40 million tons. This is not a situation we can look upon as being a 19th century situation where we were mining the fertility of the prairies all over the world in order to feed Great Britain.
If I can weary the House a little with figures from the Annual Review of Agriculture, the contribution to the gross domestic product in this country is £2,760 million from our own production. We import food, feed, and I am happy to say alcoholic beverages to the tune of £500 million and set against that we have exports of about £1,500 million. But it still means that the vast amount of our food and drink is imported, and both are equally important. It is a situation that we in this country should never forget. If I may bore your Lordships with some more figures—I must produce them since I looked them up—in milk products there is an interesting situation. The total production of butter and cheese in the EEC—I should like the noble Lord, Lord Sainsbury, to listen to this with particular care—is 4,700,000 tons. These are the main products sold across the trade frontiers. The whole production of Australasia—Australia and New Zealand —is 614,000 tons. The total exports of butter and cheese from both Australia and New Zealand are 278,000 tons. It is a lot of butter and cheese, but it is only 6 per cent. of our production in the EEC. So let the people who say that we can buy cheaply in world markets drop the production in the EEC by 6 per cent. and then see how cheaply these products can be bought.

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I make no apology for bringing out these figures because I think they are very important to our thinking in this country. With regard to cereals the position is even more serious. World production is 1,000 million tons. The United States produces a quarter of this amount, West Europe produces 122 million tons. The total world trade in cereals is 140 million tons, of which Western Europe takes 43 million tons, and Great Britain takes 10 million tons. Our own production is 13½ million tons. These are figures which cannot give rise to any form of complacency. The world production of grain needs to rise, to maintain the per capita production at its present level, by something in the region of 30 million tons a year, and that is the produce of a country twice the size of Scotland, all arable.
I think I must by now have made the case for the production of food by some efficient system in this country and in Europe. A number of people are at the present moment producing these figures of great savings by buying in world markets, but I do not think there is any doubt at all that if we were to put up by 10 per cent. our buying in the world market —not our whole production—we would put the prices up by very large amounts indeed, probably to just about, or even over, the EEC current prices. In this country we have a lot of experience in managing a controlled market in agriculture.
We have done it since the war, starting with Tom Williams, whose name has always blessed the Labour Party when it speaks to farmers. He began by keeping down the prices to farmers in return for giving them a guarantee. In order to produce farmers require a guaranteed market. They do not require high prices; they require stable prices. Over the past few years, if we had had stable milk prices in Europe and if that commodity had been properly promoted, we could certainly have sold a great deal more to the benefit of the public instead of selling so much sugar, as we do at present.
It is difficult to sell a great surplus of food by lowering the price. People can take only so much. It is silly to reduce the price of butter so that housewives buy it up and put it in their deep freezers. Long-term stability is of more value in the marketing of food than trying to
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dispose of surpluses and thus upsetting the whole market by dumping the particular commodity at a lower price. It is valuable to provide milk for schoolchildren and to allow the poorer sections of the community, for example, old-age pensioners, to buy it through a system of vouchers. In the main, a good deal is to be said for intervention buying. If we were selling just 1,000 tons of cheap butter to Russia in order to rid ourselves of an embarrassment no one would be crabbing quite so loudly as the noble Lord, Lord Sandys, says they are.
It is the size of the surplus that is wrong. We must tackle the reasons for that large surplus. We have heard a great deal about the small farmers in Europe. We have crofters in Scotland and small farmers in Wales. Many are very good farmers and are doing very well. There is no such thing as a small farmer. Many a small farmer can adapt his farming methods to the size of his farm and make a good job of it. This is mainly a social problem. In the debate in the House of Commons the Minister of Agriculture said that it should be regarded as a social problem by separate countries. That is right. It would be very much better if these matters were dealt with by the Governments concerned. If Brussels is to deal with the problems of the crofters in the Highlands, the small farmers in Wales and everything else, we shall receive even more paper than we are receiving at present. We must pitch prices at such a level as will control the surpluses. At the same time the prices must always follow the market—at the end of the day we cannot get past the market. In the long run we can only reduce the price if people produce too much. We in this country found that when the price was coming down and milk was not so profitable farmers kept an extra cow or two and production rose when the price fell.
The most important commodity in the price package is milk, and it is in that area that the Commission has some good and sensible ideas. I have no time for the co-responsibility levy. It is a method of reducing the price. If it is increased by 3 per cent. and decreased by 2·5 per cent., it is a piece of nonsense and a way to get round political opposition. I suppose that if it does that, there is a place for it, but it is not very sensible. It would not be

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fair to the farmers in this country, who are already paying for a great deal of promotion through the excellent efforts of the Milk Marketing Board.
The tax on vegetable oils is absolute nonsense and one that we should oppose by every means in our power. We should also look very carefully at the detail of banning investment aids. Anything that will make milk production more efficient in a number of countries should be examined closely and there should not be a total ban. The provision of school milk is good. I turn to the restriction on dairy names. I have long felt that there is a certain justice in not allowing anything made out of vegetable oils to be called ice-cream. I have no doubt that there will be much trouble over it. In fairness, this could well be examined. The non-delivery premia, and the proposal for limiting the support for skim milk are sensible.
All this boils down to giving farmers on the Continent some inducement to leave the production of milk as well as making it rather less profitable. In evidence Sir Henry Plumb agreed that the price of milk on the Continent was too high. The difference between the real value of the Green Pound and what the farmer is paid here is, in the case of Germany over 40 per cent., and in the EEC as a whole 35 per cent. It may be a curious thing for a farmer to say, but farmers in this country deserve more money and the farmers on the Continent deserve less. There is a certain logic in that when one takes into account the difference in the valuation. At present milk production is increasing in this country and at a lower price. The ultimate objective of the EEC is to have the goods produced wherever they can best be produced. There is little doubt therefore that milk should be produced in Denmark, Holland and Great Britain, and that our case for producing it is far stronger than those of the very inefficient producers in large parts of the Continent.
I make a plea as regards Green Money. I appreciate that it is a difficult problem and that any Government have to take into account the rate of inflation and the rise in the cost of living. However, we really cannot go on like this. As the Minister well knows, the situation in the
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pig market is ridiculous. We are paying our producers about £3·50 a pig to make up for a ridiculous calculation which allows the Danes, who pay more for their grain to feed their pigs, to sell to this country at a price which makes it impossible for our farmers to make a profit out of pig farming. We are just as good as the Danes; in many cases we are better. Our technology has improved. Yet it is impossible for a competent pig farmer in this country to make a profit without a subsidy because of the system of subsidising the Danes through MCAs. It may be ACAs, but no doubt noble Lords can refer to the glossary.
If we do not harmonise the Green Money, the values and prices over the whole of the EEC within a certain period, we would be better out of the EEC. If we do not take advantage of the system, it is no good having this enormously complicated paperwork which goes on all over the place and which takes up the time of a large number of civil servants. There must be harmony in prices, and eventually we must go for the original objectives of the EEC. I have spoken for seventeen minutes. I commend the report to the House.
5.10 p.m.
Lord COLLISON: My Lords, I too should like to thank the noble Lords, Lord Raglan and Lord Pritchard, for introducing their respective reports, and say once more that it is a delight to work under the noble Lord, Lord Raglan. It is a very enjoyable job to do and one that I greatly appreciate. I should also like to endorse what has been said about the work done by the people on the staff who produce these reports in difficult circumstances. I am sure your Lordships would agree that the reports, as they stand, are extremely well done, well written, and entirely comprehensible. That goes too for the specialists who advised us, again in a difficult and in a short-term situation.
Before I say what I want to say about the report—and I am going to concentrate on Committee D Report, the Twenty-third Report—I want to indicate that I thoroughly agree with the noble Lord, Lord Sandys, in his remarks about the Milk Marketing Board, and indeed about the other boards. It is frightening

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to learn that doubts are being cast upon the legality of the Milk Marketing Board. I do not know how far this has gone or how deeply one should be concerned, but certainly it is true that the Milk Marketing Board, and our other marketing boards, provide for both the producer and the consumer in this country a very efficient system indeed which leads to the stable prices which have just been referred to by the noble Lord, Lord Mackie. Here again I agree with him, and I agreed with much else that he said but not quite all.
As I say, I am going to concentrate on the Twenty-third Report and going to confess at the outset that I feel some unease about the situation as it has developed and is developing. I hate reading speeches, but I thought on this occasion that I ought to put some words down on paper. Having read what I put down I rather shocked myself in the sense that it appeared to me that I was being unduly critical. I do not intend that, and what I say is meant to be entirely constructive and not destructive. There are one or two suggestions that have been made of which I can heartily approve. For example, the school milk programme. This is a means whereby we could reduce the surplus. I have felt all along that when it comes to skimmed milk it would be a good and useful thing, and a humane thing, to supply this commodity where it is needed, particularly in times of famine and maybe as part of our aid to developing countries programme. On the other issues that have been proposed, I agreed with and welcomed the continuation of the brucellosis eradication proposal. On the others I have certain reservations which I shall mention as I go along.
It is important that one should realise what the overall packet means in terms of increased prices to the consumer. The Ministry of Agriculture and Food estimate that the effect of the Commission's package, including the two remaining additional steps which will have to be taken, will be to raise retail food prices by about 4 per cent. which is equivalent to about 1 per cent. on RPI or something less than 1 per cent. Here I agree with the noble Lord, Lord Raglan, that there are other considerations which have to be taken into account. There is the cost of packaging, transport and retailing. Therefore, we really do not
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know what the exact figure is. Here again I agree that it would be useful for an exercise to be done to indicate the degree of these additional costs.
That 4 per cent. increase relates to a 23 per cent. rise in food prices in the United Kingdom between 1976 and 1977. Seen in that light the results of the overall package on the consumer are not perhaps so terribly frightening. I emphasise this at the outset because I have a considerable concern about the growing public attitude which is being shown. We are hearing severe criticism, for instance, about the sale of surplus butter to Russia. Some people may base their reaction to this on the fact that it is Russia, and there is a political bias there. But I believe that if surplus butter, the butter mountain, is sought to be reduced by selling at reduced prices to any developed country you will get the same reaction.
It is a reaction which can be well understood. Here we have the butter mountain, we have the wine lake, we have the beef mountain, and people believe that all these commodities are there and should be issued to the consumer, maybe ignoring the effect that this would have on prices and the farmers' income. But there it is; these commodities are there and people feel that they should be made available to them. I do not believe that they would be so very much concerned about the price issue. It is the fact that they see this commodity, this butter, being sold abroad, and immediately there is this enormous emotive reaction, which can he easily understood. I understand it, and in a sense I do not blame them.
One also has to remember that inflation is still running at about 15 per cent., and it is doing this at a time when the situation of the lower paid people in this country and those on small fixed incomes when they retire, income-wise, is extremely strained. Again, it is important that the misunderstanding—and there have been misunderstandings; some of them unfortunately perpetrated by the Press, maybe out of a not complete understanding or knowledge of what the Common Market is all about or its procedures—be cleared up. We should try to give a very careful explanation but, more important than that, people have to see that the Government do not supinely accept the

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decisions or proposals which are put out, which emanate from Brussels, and the people must see that the Government consider these and are prepared to debate them, and maybe to fight them if necessary.
It is in this light that I should like to comment upon the proposals outlined in the Twenty-third Report. Because I have said what I have said, it means that I am looking at this in terms of policy issues. The proposals are a continuation of the overall CAP objectives; that is, to protect and encourage the producers, although one does see, and I think approves of the fact that this year more regard has been given to the need to contain inflationary pressures.
As an erstwhile representative of farm workers, who of course depend upon the success of agriculture in this country for their conditions, I obviously must approve of measures to see that the industry, and those in it, get a proper return for their contribution to the economy at large. I also recognise that we are now members of a wider Community, comprising nations which have different agricultural situations, and therefore different agricultural problems from our own. We have to recognise this and go along with some of the proposals which are made by the Commission, by the Common Market countries, which are sought to be resolved not only in the light of what we need but in the light of what these other countries need, too.
Here I am going to disagree with the noble Lord, Lord Mackie. For myself—and this is a sort of pipe-dream now, I suppose—I must say that it appears that the old support system, which we developed emanating from the Tom Williams proposals—and I do not say that because I sit on this side of the House—supporting agriculture in this country via the Annual Price Review and all the considerations that went into it, was a better method for us than the method of intervention used by the Common Market.
Possibly CAP is in danger of breaking down; for example, in paragraph 36 of our report we say:
"Measures to make processing, marketing and farm structure more efficient occupy far less attention than that given to the support of farm price levels. This shows up in the budgetary imbalance, where expenditure on guaranteeing
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institutional prices, particularly in the dairy sector, is already too high and is increasing further. In the view of the Committee, the renewed growth of the guarantee section of FEOGA threatens to swamp the whole EEC budget and to retard the development of other policies such as the social policy, the regional fund and joint expenditure on research."
That means that if CAP is in danger of collapsing, that endangers Common Market policy overall. One understands what the intervention policy is aimed to achieve—to take produce off the market to maintain prices—but it has resulted in mountains of beef, butter and wine and methods are being sought to deal with and reduce those surpluses.
The dilemma becomes very apparent. It became clear to us in Committee through the evidence we took: on the one hand the consumers' representatives took the view that the increased prices resulting from the two remaining transitional steps were too much to bear anyway, notwithstanding what would happen if the Green Pound were revalued, and, on the other, we had evidence from the NFU who complained that the 5·9 per cent. to 6 per cent. increase in the Green Pound revaulation was not enough. This kind of dilemma arises because of the intervention policy, simply because we have these surpluses; in my view we must take very seriously the consequences of not modifying the policy in a way which will resolve the dilemmas in which we and everybody else find ourselves.
For example, there are those who take opposing views on the proposal to tax the production of isoglucose; the NFU welcomes it as a protection for the sugar producers while others feel that such a proposal is wrong. The final paragraph of the report on this subject indicates that while we understood the objective, there was something rather unhappy about a situation in which a tax is put on—as it is proposed in respect of vegetable oils and ethylalcohol made from other than natural oil products—and one must say to the public, "Here is a development which could produce a cheaper commodity either for direct or indirect use, but you cannot have it because we want to protect the industry concerned".
I am not making any comment about this, but I think it proper that there should be a reasonable balance between, as it were, isoglucose, on one hand, and sugar, on

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the other, so that if there is to be competition they should be able to compete on an equal basis, without simply just ruling one out altogether as apparently might happen as a result of this new proposal. We are therefore faced time and again with unfortunate dilemmas arising from these policies.
Lord DAVIES of LEEK: My Lords, may I ask my noble friend whether he has any figures on this subject? He will be aware that there is a £48 million investment in these subsidies, but I do not think there has been any discussion about the effect of all this on jobs. For example, what will be the result of dropping the pig subsidy? I believe there has been no discussion of that, although it will cost us £50 million a year and 3,000 jobs.
Lord COLLISON: My Lords, the only figure I can give my noble friend—this is in terms of isoglucose—is the estimate I have seen of it possibly amounting to between 4 per cent. and 8 per cent. of the total sugar requirement. I read in The Times last week—I think this is what my noble friend is referring to—of a proposition to create a new factory (indeed, a new industry) and while I have forgotten the name of the proprietor, I believe he said that if this latest proposal went through he would make a loss from the start.
I conclude as I began. I do not want to give the impression that I am being nothing but destructive. Noble Lords know me to be a keen supporter of the Common Market over the widest front. Some of the opponents of the Common Market—those who did not want us to go in, who have never accepted that we are in and who do not appreciate that, now that we are in, we must play ball—observe with glee the reaction of the housewife. Not only in England but on the Continent the Commissioners met representatives of housewives who complained about high prices. Opponents of the Common Market hail this with glee and I dislike that; it is a matter of sadness to me that the opportunity could exist for the Common Market to be criticised.
My remarks tonight have been made with the intention of being helpful, constructive and certainly not destructive, supporting, as I do, the Common Market and wishing it and the future of the CAP well. Nevertheless, I agree with the noble Lord,
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Lord Sandys, that we, with our experience and sophistication, have something to give and perhaps something to give towards the realignment of CAP policy. I appreciate that a return to the old Toni Williams system is a pipe-dream. We are in the Common Market and obviously we must have a different policy, a policy to suit not only us but the people on the Continent. However, let us, through our Government, use our influence there to streamline, improve and help to get away from the constant dilemmas with which we are being faced.
5.28 p.m.
Lord TRANMIRE: My Lords, I found myself in considerable sympathy with the noble Lord, Lord Collison, in expressing his unease at certain aspects of the present situation, but first I wish to congratulate my noble friend Lord Pritchard on not only his very able chairmanship of Sub-Committee A but also on his very clear explanation of the Green Money situation. With a Green Money system operating between such wide limits as at present, I feel that it is illusory to talk of a Common Agricultural Policy. When a German farmer is receiving for his product 49 per cent. more than his British counterpart is receiving for the same product, quite clearly the Common Market becomes a nonsense, and an unjust nonsense, in that the British farmer is paying for his taxed inputs just as much as the German farmer.
That leads me to look at the whole situation, where it is quite remarkable that in all the White Papers published by successive Governments on the Common Market, there was no mention of the Green Money problem, nor indeed was there any in the numerous documents brought out by the National Farmers' Union. Their policy can best be epitomised in paragraph 13 of British Agriculture and the Common Market, which the National Farmers' Union brought out in 1971. They said:
"Through the adoption of the common agricultural policy and in particular the application of community preference, imports from the Commonwealth and other non-member countries will tend to be reduced in favour of greater supplies from United Kingdom farmers and from other farmers inside the Ten."
That was before the Ten became the Nine. Certainly, Commonwealth imports have

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declined very considerably within the period in question but, to compare the position in 1969 with that this year and taking cereals in general, cereals from the Commonwealth declined by 450,000 tonnes, from the United Kingdom by 200,000 tonnes and from the Common Market we brought in 2,500,000 tonnes more. Therefore, the British farmer has not been the gainer.
Taking the position in sugar, imports from the Commonwealth—the Caribbean and Mauritius—have declined by 800,000 tonnes. In Britain, sugar production went down in the period 1969–1976 by 160,000 tonnes; in the Common Market, it went up by some 322,000 tonnes. We have heard a lot of talk about the butter mountain and the wine lake, but something much bigger is coming up the great EEC alps; that is, the sugar mountain, which looks like being up to a surplus of 3 million tonnes in a very short time.
This makes one wonder what will be the effect on our policy—which I think we all agree—of getting greater agricultural expansion. This was embodied in the White Paper which the Government, to general acclaim, brought out last year, Food from our own Resources. That envisaged a 2½ per cent. increase in production per year in these years. This was slightly more than the average increase in production in the previous decade.
What has happened? The latest anunal review White Paper, published very recently, shows that there has been a decline in nearly all our crops and livestock products since the White Paper was published. Why has that happened? What has happened is that the Green Money system has prevented that expansion coming about in British agriculture. The object of that expansion was to improve our balance of payments. I read at the week end that Mr. Wynne Godley had worked out that the common agriculture policy and the green money system were costing this country £600 million a year in balance of payments. Whether or not that is right, I do not know but, after all, Mr. Wynne Godley is a fairly reputable economist who is not given to extravagant statements. All I know is that, if one looks at the visible trade balance of the country, one sees that, whereas in 1969 we had a £72 million deficit with the Common
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Market countries, in 1971 we had a £183 million deficit and in 1975 that deficit had grown to £2,352 million. In the last year which we have just completed, it was a deficit of £2,222 million.
I believe that a great part of our troubles comes from this very large deficit, bearing in mind that our food and drink bill from the Common Market in the year 1976 is just about £2,200 million—very nearly identical with the whole of the deficit.
Of course, this has in effect on the whole of our cost of living. One of the reasons for this large increase of 69½ per cent. in the cost of living in the past three years, has been the weakness of sterling. I am very glad that the noble Lord the Leader of the House is to reply to this debate and I ask him in that reply to try to give us a breakdown of that increase of 69½ per cent. in the cost of living. In the White Paper on entry to the Common Market we were told that the cost of living would increase as a result of the Common Agricultural Policy by a half penny in the pound each year. It does not seem quite to account for the 69½ per cent. increase over three years and I should therefore like a breakdown showing how much of the increase in the cost of living is due to the weakness of sterling which is caused by the adverse balance of payments and the public sector borrowing requirement and how much to the Common Agricultural Policy with the levies on imports for nonmember countries and the high level of the common agricultural policy prices.
I believe that these two reports lead us to a rethink on the whole of the Green Money situation and of the demand for a revision of the Common Agricultural Policy. In paragraph 30 of our report, we make a suggestion that the Government should look at a change in the agricultural unit of account and should base it instead on a basket of currencies, as the Select Committee previously recommended and just as it is with the European unit of account.
As I understand it—and I hope that the noble Lord the Leader of the House will correct me if I am wrong—the agricultural system is based on the system that is linked with the deutschemark and the "snake", so it does benefit West

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Germany, the Low Countries and Luxembourg and puts Britain, France, Italy and Ireland at a disadvantage. Denmark, of course, benefits with the "snake" countries. If this were changed to a basket of currencies as we suggest, one would find that there would be an advantage to Britain and to the British farmer and a disadvantage to the German farmer and that the level of prices throughout the community would be lower. This is a suggestion that comes from the Select Committee and I believe that it requires a considered reply from the Government.
When we come to the Common Agricultural Policy, I must say that I have great sympathy with the noble Lord, Lord Collison, and that I am in disagreement with the noble Lord, Lord Mackie. The noble Lord, Lord Mackie, did not appear to distinguish between a surplus that comes from over-production and one that comes from the fact that prices become so high that the consumer is not able to buy. I am quite ready to work a guarantee and efficiency system and occasionally run into surplus if I have too much enthusiasm in agricultural production, but what worries me under the Common Agricultural Policy is that the price level has been fixed so high that the low income groups cannot get the food they require at reasonable prices. In the dim past, when I was working in the agricultural field in the other place, I worked out the system of guaranteed prices and deficiency payments that was eventually adopted and successfully put into operation by Mr. Tom Williams (as he then was), and so I have the greatest sympathy for a system of guaranteed prices and deficiency payments—
Lord MACKIE of BENSHIE: My Lords, if I may intervene for a moment I should like to put my point of view. What I said was that if there was over-production the price paid to farmers was too high and that guaranteed prices, or intervention prices, must in some degree follow the market.
Lord TRANMIRE: My Lords, I took down what the noble Lord, Lord Mackie of Benshie, said, but I do not know whether the revised version was very much different from the authorised version. He said that he thought that one got a surplus in both
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cases and that it did not matter which way one had it. That is what I understood him to say, but I am perfectly happy if he wishes to retract that; and if I find that he is in agreement with me that the old guaranteed payment system is better, I hope that he will convert our partners in the EEC to that view.
It always seems to me that to prevent the consumer from being able to take the advantage of lower world prices is a very cruel policy for the lower income groups, and I would hope that at this stage Britain could strike a bargain with our partners in the EEC. After all, we could say that we would agree to the proposals they have made on Green Money provided that they would allow us to import, without the high levy, a sufficient quantity of food from non-Member countries at prices which would be low for the lower income groups. I cannot think that the system in the Common Market of building up huge surpluses because prices are too high, then trading them away to the Yugoslavs, the Russians and the Bulgars at cheap bargain prices is fair to people of this country. I believe that we must have a new policy on this matter.
If we were to have the policy that I am suggesting, of getting food cheaper for certain lower income groups on the world market, it would not alter world prices because there would not be a sufficient demand for it. But it would mean that the farmers would get an extra £300 million a year, and there could then be achieved the expansion under the agricultural expansion programme that all sides of this House desire. That programme could then become a meaningful possibility. But so long as there is a system of Green Money which is weighted against the British farmer, and so long as there is a system of making prices so high that the consumer cannot afford to buy the food, I am afraid that expansion of British agriculture becomes a very dim possibility.
5.44 p.m.
Lord GORDON-WALKER: My Lords, like the noble Lord, Lord Tranmire, I will also talk about the Green Pound. I will cover some of the ground that he has covered and then come to sonic of his points as we go along. The British consumers have certainly benefited from

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the Green Pound, though not, as the noble Lord, Lord Tranmire, pointed out, the British farmers; this is one of our problems. But be that as it may, we had nothing whatever to do with the setting up of the system of Green Money. It is not sufficiently recognised, as we talk so much about the Green Pound and so on, that the Green Money was introduced before we became a member of the Common Market, and it was due to the devaluation of the French franc and the up-valuation of the deutschemark. Its aim was exactly the same as it has always remained, though in this case to prevent the flow of agricultural production from France into Germany. It was a method of protecting the German farmer at that time. The purpose of the introduction of Green Money by the Commission was to save the Common Agricultural Policy, but I agree with the noble Lord, Lord Tranmire, that it undermined the Common Agricultural Policy or, perhaps, the whole Common Market. It is in grave danger of doing that.
The real purpose of the Economic Community is to provide for the free flow of goods of all kinds—agricultural, industrial—through the whole realm of the Community. But in fact the outcome of Green Money has been the creation of an elaborate structure of what are, in effect, frontier tariffs, and in some ways the new system is worse than it was before the Community was created, because at least in those days the customs officials worked normally with known tariffs that would be long-lasting. Nowadays, however, the poor customs officials may have been told every week that there has been some shift in the relative value of currencies and therefore a shift in the export levies and export subsidies. They have to cope, as they did not in the past, with an absolute mass of paper that is circulated from the Community. If people here and in the Community realised more fully how far Green Money has restored tariff barriers in the Community, after they were abolished, we should have a rather better understanding of all these related problems.
The Commission is very angry with us about the Green Pound. But one must remember that the Commission was wholly, solely responsible for the invention
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of Green Money. We were not responsible; it was the Commission that invented it. The Commission has now repented of its ways and has put forward proposals, which the noble Lord, Lord Pritchard, has told us about, to phase out Green Money. It seems to me very doubtful whether that can in fact be brought off whatever the Commission wants. Perhaps as part of a much bigger package it could be brought off, but as an isolated act I cannot see that the phasing out of Green Money will work. Too many vested interests have grown around it.
It is not only countries like Britain that have gained; a country such as Germany, for example, has gained a great deal from its point of view. Its politically very important farmers have got higher prices than they would otherwise have got, and these very same farmers get subsidies for exporting their food to us and other people. Germany does not want to get rid of the Green Pound; at least, Germany's farmers do not. Its farmers are politically very important and in the long run what the farmers in Germany feel very strongly about Governments, and indeed Oppositions, are very apt to agree with.
Most other countries in the Common Market benefit one way or another, although there is one (I have forgotten which) which is in the neutral position. As the noble Lord, Lord Pritchard, pointed out, the Commission has also proposed, in effect, that the Council of Ministers should be set aside in this field and that there should be automatic consequences from reports by the Commissioners. Here again I think it is extremely doubtful whether they can bring this off. It would take from Member Governments the final control of shifting the rates of Green Money one way or the other. Not only is it unlikely to happen, because Governments will not let it happen, but I think that Governments should not let it happen. It is not for people like the Commission to settle great political matters of this kind; it is for representatives of elected Governments to do so.
In any case, I think it would be an error, a mistake, to make a sharp reduction and abatement of Green Money as an isolated act, as the Commission proposes. I think there are two main reasons for this.

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The first is that, as my noble friend Lord Raglan and the noble Lord, Lord Pritchard, said, Green Money is inseparable from the CAP, and you therefore cannot deal with it in isolation from the CAP; it would upset the whole apple-cart. It was only because common agricultural prices were so high and consequent over-production so heavy that Green Money was in fact invented in the first place and has been sustained since. The second reason is a very different one, but I think it is the more important. It is that the maintenance of Green Money gives us the only effective lever to get a more sensible Common Agricultural Policy. Already because of the high cost of the Green Pound and other Green Money, there are some signs that a more favourable attitude is arising in the Commission towards lowering Common Agricultural Policy prices. Indeed, it has begun a bit, although it has a long way to go.
I agree with those who have said that what the European Community needs is a move towards our system of deficiency payments, which, as my noble friend Lord Collison said, had very great advantages, the chief of which was that it avoided the creation of great mountains, surpluses, lakes and so on—and that is, after all, the greatest need facing Europe. But I think that those who, like Lord Tranmire, advocate this system for Europe must recognise that it is much easier to work such a system if, like us, you import half your food than if, like other Common Market countries, you produce nearly all your own food. It is very much easier if you have a large import element, whether it is coming from the Community now or whether it is coming from overseas as before. Nevertheless, it seems to me that there is an obligation on people like the Commission, who want to get rid of Green Money, to work out some compromise plan for lowering agricultural prices by some form of subsidy or supplementary subsidy to producers —perhaps not to adopt our whole system of the past but to supplement their system by such a system as that.
I think, therefore, the best and the only tolerable way of getting rid of Green Money is as a part of the reform of the Common Agricultural Policy, not as an act by itself, in isolation. In the meanwhile, grave as are the effects of Green Money—there is no doubt about it—
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it still remains as the only effective lever to secure reform of the Common Agricultural Policy, and we should not let go of that lever until we have a real momentum, at any rate, towards reform of the Common Agricultural Policy. It is the only means to bring the Commission to propose ways of eliminating Green Money as part of a plan to eliminate some of the major dilemmas, as my noble friend called them—and some of them are major absurdities—of the Common Agricultural Policy,
5.54 p.m.
Lord COBBOLD: My Lords, a considerable number of member of the Committee have already spoken, and therefore I am afraid I am bound to be somewhat repetitive, but I shall try to concentrate a little on some of the rather longer-term issues which are mentioned in the report. If I may say so, I entirely agree with the noble Lord, Lord Mackie, who I think has now gone, that it was extremely useful having the members of Sub-Committee D sitting together with the members of Sub-Committee A.
So far as short-term decisions are concerned, the Committee felt that they could do little more than set out the very complicated problem as clearly as they could. Attention has already been drawn to the implications for agricultural producers and consumers, and also for the general pricing policies, both of the United Kingdom and of other Member States. Both the arguments put forward by agricultural interests and those put forward by consumer interests obviously have great weight, and there is the overriding importance of not adding to inflationary pressures at this moment. The noble Lord, Lord Tranmire, referred to the possible use of the "basket" in place of the joint float currencies as the basis for the unit of account. This is a highly technical matter which I shall not try to explain to the House at this moment, but we did try to explain it in some detail in paragraph 30 of the report, and it is a suggestion which seemed to us to deserve very serious consideration.
In forthcoming negotiations Her Majesty's Government have the choice between acceptance, in whole or in part, of the Commission's proposals or of striving to maintain, again in whole or in part, the flexibility given by the Green

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Money system and, more particularly, by the present level of the green pound. It became increasingly evident to the Committee, as has been said many times today, that to deal with the green money proposals in isolation from general discussions about CAP prices and domestic price policies would make no sense, so that beyond expressing a general feeling that some compromise should emerge on the Green Money proposals in the context of further discussions on CAP price levels generally our Committee did not feel able to suggest that the balance of advantage in these negotiations lay in one direction or another.
Turning, my Lords, to the longer term, the Committee felt it right to call attention to some broader implications. As the noble Lord, Lord Pritchard, said, the present system of green money and monetary compensation amounts was intended to deal with minor exchange fluctuations (as the noble Lord who preceded me said, it was invented before we came in, so it is a mistake to talk of the invention of the green pound; it is the invention of the green money) and to help to prevent such minor fluctuations over short periods from interfering with common price policies. In the event, the system has been overtaken by much wider exchange movements over much longer periods than was anticipated. It is obvious that, as things have developed, there is in fact no common price policy. One is bound to ask oneself whether, in these circumstances, the whole Common Agricultural Policy, together with the green money system, does not need a basic review.
My Lords, if continued indefinitely on anything like its present scale the divergence between green rates and market exchange rates could create quite unpredictable complications. In its present form, the Green Money system is inconsistent with the concept of the Common Market and also with the long-term aims of economic and monetary union; and it must be questionable whether the Community budget could for long bear the heavy burden of these MCA payments without curtailing Community expenditure in other areas. Again, the system highlights the problem of balancing national interests with those of the Community as a whole; there is a
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clear conflict between the principle of a common European price level for the major agricultural products and the different interests of Member States in their domestic policies. The Committee emphasise the importance of viewing the Green Money question in the light of these broader and longer-term issues.
The committee recognise, I repeat, that the Green Money question is inextricably tied up with CAP policy and general price policy in Member States. It therefore has political implications for each national Government. As your Lordships will have noted from the report, the Committee conclude that, while some formula of adjustment needs to be worked out in due course, the speed and extent of adjustment must be subject to the final control of Member States through the Council of Ministers. I am sure, my Lords, that the noble Lord, Lord Pritchard, will join with me in expressing the gratitude of Sub-Committee A to our special adviser, to the clerk and to his staff. This has been a rather complicated exercise which has involved a great deal of research and a great deal of checking and rechecking.
6 p.m.
Lord MOTTISTONE: My Lords, I must start by declaring an interest as the Director of the Cake and Biscuit Alliance, a trade association which deals with the manufacture of cake and biscuits. I know that my noble friends on Sub-Committee D will be getting bored with my constant repetition of this. I must also say how grateful I have been to the noble Lord, Lord Raglan, our chairman, and to other members of the Sub-Committee for being such good colleagues to work with and for helping me to learn a great deal about this somewhat complex subject. I should also like to say what a pleasure it was to attend one or two meetings of Sub-Committee A with their great wisdom on these more detailed financial matters.
It seems to me that there is little that one can say additionally to what has already been said about the question of Green Money. I felt, if anything, that my sympathies lay more closely on this subject with the noble Lord, Lord Gordon-Walker; and I would endorse practically all that he said. An example

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of how the Green Money imbalance, whatever the reasons for it, can be troublesome to us, is that we have rumours at the moment which endorse the sort of things that the noble Lord, Lord Pritchard, was saying about the outcome of the present difference between our Green Pound value and that of Ireland. We hear from across the water that there is a threat for MCAs to be applied to biscuits and associated products. Whether it comes about or not, this has been suggested; and one hopes that the Government in their negotiations might be able to ward off its worst effects. The fact is that MCAs have not previously been applied to finished products. It is normally the raw materials to which they apply. The suggestion has been brought about by what seems to be the desperation of the Irish at finding out that they are worse off because their Green Pound has been devalued and ours has not. Presumably, one would say the answer to this problem is for us to follow the Irish; but I do not think that that is entirely fair or right, for our problems are different from theirs.
It seems to me that all the remarks made earlier about the need to make the system simpler so as to avoid these sort of situations arising are reinforced by this particular threat which seems to be hanging over us at the moment. I took the precaution of telling the office of the noble Lord the Leader of the House that I was going to talk about this, and it would be helpful if we could be given some reassurance on this particular issue when the noble Lord comes to reply.
The other outcome—and I am confining myself to the small matters which the more learned Members of these two Committees are not covering—is the result of a new draft regulation which was issued at the end of February this year (and would otherwise, I think, have been the subject of paragraph 14 of the report of Sub-Committee D) to the effect that the marketing of milk products, if the regulation comes in force, will not be able to be carried out for those products which use the title "cream" or "milk" or "butter" or anything similar which do not have this commodity within the product. Some noble Lords may have seen an article in The Times a couple of days ago called "Exit the cream cracker"—the cream cracker being a biscuit which
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has not got cream in it and which, in some respects, is not even a cracker. This sort of title may appear frivolous to noble Lords. I noted that the noble Lord, Lord Mackie of Benshie, with many of whose remarks I agreed, took a side swipe at ice-cream. I am sorry to hear that; but the number of people who take a side swipe at ice-cream is intriguing, although they are prepared to go along with the argument which I shall shortly develop for other products. This is something that I have heard outside the House as well as inside it; and perhaps it is rather like the disappointment of discovering that Father Christmas is not real. Some of us when small discovered that ice-cream was not really cream. This was a terrible disappointment from which many people never recovered.
The fact is that there are many products which use the word "cream" which are not made of cream. A linguistic expert who got in touch with me was able to give me examples of the 15th and 16th century use of the word "cream" when it was not meaning the product of a cow. He also quoted the word "mincemeat", which was referred to in the Middle Ages but which does not have meat in it. There are many other products where we use our language flexibly to convey some impression without either wishing to deceive or actually doing so; because people get to know that a creamy surface means what we understand it to mean, but when translated into French or German these more rigorous languages cannot accept the variation of the use of the word. It is therefore, in part, a linguistic problem. I was sorry to see that the writer of the third leader in The Times, whom one would have thought was fond of words, was not prepared to take that, and thought that it might he a good solution to the problem.
It so happens that this subject came up some 18 months ago, as many of my colleagues in Sub-Committee D pointed out to me. The 8th Report of the Select Committee, which was printed on 10th December 1975, at paragraph 13 says:
"The alleged purpose of the Commission's proposal is to reduce the skimmed milk powder mountain and to prevent its arising again. The Committee have heard no evidence to suggest that this proposal, of itself, would encourage the use of any skimmed milk powder already accumulated; nor do they believe it proven that the

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adoption of the proposal would achieve any significant gain in the consumption of milk products over their competitors."
I suggest that this very sound opinion, reached some 18 months ago, sums up the whole matter and puts it in its right perspective. This particular effort on the part of what almost seems a rather desperate Commission to try to get out from under their enormous pile of skimmed milk seems to be quite unreasonable and something which should be resisted. It is the more frightening because it is a regulation. As your Lordships know, a regulation is not one that has to be reproduced at our own discretion in our own legislation, but one which must be enforced. Rumour has it that it is to come into force in September, which does not give much time for any changes. There are other factors such as cost; but I will not bore your Lordships more on the subject.
It seems to me that there are two points which perhaps might come out of this debate. One is the very (I thought) wise remark by the Minister in another place during the course of a debate the other day which was mentioned, I think by the noble Lord, Lord Mackie of Benshie—although it may have been raised by another noble Lord; and, if so, I hope he will forgive me —that the CAP is not suitable for dealing with the national problems of small farmers; that it should be dealt with under a national social policy. It seems to me that is a very wise statement and a very wise way in which the Common Agricultural Policy could direct itself. It is, I think, reflected in the concluding remarks of paragraph 36 of the 23rd Report of Sub-Committee D. I will not repeat the whole of it, but the middle paragraph says:
"Measures to make processing, marketing and farm structure more efficient occupy far less attention than that given to the support of farm price levels."
That whole thought, it seems to me, is the one which needs to be encouraged; and the Commission themselves perhaps could be encouraged to be a little less rigid in their approach to problems and undertake to modify their views rather more strongly than at present appears to be the case. I commend the 23rd Report to your Lordships.
6.10 p.m.
Lord VERNON: My Lords, I speak in this debate as a farmer, as a member of
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Sub-Committee D, and as a member of Lord Pritchard's Committee, which he kindly invited me to join. When I say "as a farmer", it would be more accurate to say that I am a recent farmer. One of the reasons I decided to start a farm of my own was that I read the Government's White Paper Food From Our Own Resources, I agreed with the policy enunciated that we should as a nation tend to become more self-sufficient in foodstuffs, and I wanted to play some small part in putting that policy into effect. Of course, like all farmers I am also a consumer, and it is obvious to me that, in considering the question of Green Money and farm prices, a proper balance has to be struck between different interests.
It is very hard for the British consumer to accept conditions in the EEC. Unlike his European counterpart, he is not accustomed to spending such a high proportion of his income on the needs of his stomach and the adjustment for him is very painful. But anyone who thinks that the halcyon days of cheap food are going to return is living in Cloud-Cuckoo Land. World prices fluctuate notoriously, and although at the present time the advertised world prices for many foodstuffs are cheaper than the prices in the Common Market, they have not always been so, (as we know in the case of sugar) and they will not necessarily be so in the future. Moreover, it has been made clear to our Committee, as the noble Lord, Lord Raglan, pointed out, that if the United Kingdom was in the market as a buyer on a substantial scale, the prices at which we could obtain these foods on the world market would be very much higher than the so-called world prices advertised. I think that is a trap into which the Cambridge economists and others—and I think I must include my noble friend Lord Tranmire here—sometimes tend to fall.
I turn now to the specific proposals of the Commission regarding the Green Pound and farm prices for the present year. The Commission may have made mistakes in the past and they may still be making mistakes; I believe they are making a mistake as regards the butter sales which have been referred to in the debate. But, generally speaking, I welcome both these proposals as being realistic attempts to solve two intractable problems. One has to remember that the Commission has the daunting and well-nigh impossible task of

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satisfying not only the British farmer and the British consumer, but the farmers and consumers in eight other European countries with differing economies and differing standards of living. We may regard a 3 per cent. rise in institutional prices as too high in view of the need to reduce the surpluses, but that is certainly not what the Germans or the Benelux farmers think of it, since with the revaluation of their Green currencies they will be getting no price increase at all in real terms at a time of rapidly rising costs.
In considering the Green Money proposal, there is a tendency to emphasise the immediate effects of any devaluation on the consumer rather than the longer-term advantages of reducing the growing disparity between the Green and the market exchange rates, and the need to improve agricultural output in the United Kingdom on the lines proposed in the White Paper. The immediate effect of devaluation will, as we know, be to put up the price to the British farmer and to make the cost of food in the shops more expensive. But when we signed the Treaty we knew that the cost of food was going to rise, and that was one of the main points which was made so powerfully by the opponents of our being members of the Community.
We also knew that the Common Agricultural Policy was founded on the principle of fair competition between the farmers in the different countries. That is something which is totally lacking at the present time. The Green currencies were envisaged by the Commission before we actually joined, as a temporary expedient to even out distortions in the CAP at a time of rapid national currency fluctuations. It was never intended that they should become a permanent feature, and were they to become a permanent feature, certainly on the present scale, it would undoubtedly wreck the CAP. It would wreck it because there is no fair competition when a German farmer gets 45 per cent.—or whatever the percentage is—more for his produce than the British farmer, and also because the other EEC countries will not be prepared indefinitely to subsidise British food to the tune of some £500 million a year.
The demise of the CAP is what its opponents want and have always wanted. But it is not what I want. It is not what those who envisage a closer economic
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monetary and ultimate political union between the Nine want; nor, I venture to say, is it what the British people voted for in the referendum. No one is suggesting that the Green Pound should be devalued by the full 36 per cent. That would clearly not be practical. What is proposed is that the existing powers of national Governments to control the level of their Green rates should be surrendered to the Commission who would gradually reduce the disparity between the Green and the market rates by means of a semiautomatic formula which is set out in the report. The monetary compensation amounts will not be abolished, but they will be reduced to manageable proportions. Opinion in our committee was divided on the merits of this proposal.
There is of course a natural reluctance on the part of national Governments to surrender any powers, especially when such powers can act as a bargaining point in negotiations. But I am clear in my own mind that something on the lines proposed by the Commission is highly desirable if the CAP is to survive. So long as the Council of Ministers retains the power of veto on the level of Green rates, decisions will inevitably be taken on the grounds of short-term national and political expediency. That, in my view, is bad for the Community as a whole, and bad also in the long run for the individual country concerned. So I hope that the Government will give perhaps a little more sympathetic consideration to this proposal than they have done hitherto.
Where I think the Commission should do some fairly drastic fresh thinking—and here I agree with my noble friend Lord Tranmire—is not on the principle of automatic adjustment, because I think they are right about that, but on their apparent intention to continue the existing system under which the level of MCAs is determined in relation to the disparity of national currencies from those of the joint float or "snake" countries—that is, the wealthier countries. That matter is referred to in paragraph 30 of the report, and it would appear to me to be much fairer to those countries who are not in the "snake" if the agricultural unit of account could be devalued to a level based on a more representative basket of all the Community currencies, as with the European unit of account employed

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in the European Coal and Steel Community. That would no doubt create difficulties for the "snake" countries and would probably lead to counter demands; but it would make it easier for us and for some of the other less well-off countries to accept the principle of automatic adjustment, because the basket itself would float and the degree of adjustment would be correspondingly less.
I propose now to extricate myself from the thorny thicket of Green Money before I am tripped up by some noble Lord. That would not be a difficult thing to do, because I am not an economist and I find the whole subject incredibly complex.
A noble Lord: Hear, hear!
Lord VERNON: I will turn very briefly, my Lords, to the farm prices proposals, and especially the dairy package, which is really the crux of the surplus problem. I personally have doubts about various aspects of the package. I have doubts about the co-responsibility levy because, as the noble Lord, Lord Mackie, has said, we are already paying such a levy towards the cost of the Milk Marketing Board and under the proposal we should then have to pay twice. I have doubts about the ban on investment aids in the dairy sector, because I do not see how that is going to reduce the amount of milk which is produced. I have doubts about the non-delivery premia because of the social and economic consequences of pushing out of business the small farmer with 20 or 30 cows, who makes such a valuable contribution to rural life at the present time. Also, I am very doubtful about the Community's intention to abolish the Milk Marketing Board, although I realise that is not included in the package at present.
Nevertheless, when all is said and done, I think we should refrain from being too critical of the Commission. We spend our time castigating them for creating these huge surpluses, but here at last they have made what I believe to be a genuine attempt to reduce surpluses, and especially the milk surplus—an effort which, in the opinion of our expert advisers (and I would differ on this from the noble Lord, Lord Raglan), would have a considerable
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effect. I think they are right and that we shall see a fairly dramatic reduction. If we do not, then of course stronger measures will have to be taken and the larger milk farmer will have to be hit, not just the smaller one.
In this country the effect of the package is difficult to estimate. It depends so much on the Government's attitude towards Green Pound devaluation. Through the Commission's overall proposals, which the Minister regards as over generous, the British farmer is to receive a 15 per cent. increase in price, when it is admitted that his costs have gone up by 20 per cent. That, of course, includes the 6 per cent. Green Pound devaluation. In these circumstances, it is very difficult to see how the expansion envisaged in the White Paper can take place. Indeed, production may fall. Without expansion we shall continue to import huge quantities of food which could otherwise be grown at home. That will adversely affect the balance-of-payments, which in turn will hit the market value of the pound, which in turn will hit the British consumer; so I sometimes wonder whether those who so ardently oppose an increase in farm prices are not cutting off their noses to spite their faces. The Ministry evidence on that point was quite clear: all the experience to date has shown that only if the price was right would the farmer be prepared to take the risks involved in expanding production.
The British consumer has taken a frightful hammering in the past year and he is likely to suffer further blows in the coming year, not only because of Common Market prices but because of world prices. We have before us at this moment the examples of coffee and tea. One of the things that tends to be forgotten in the farm price tug-of-war is that the population of the world in the year 2000 will be not 3,700 million, as it is today, but 7,000 million. I am not talking of wild guesses made by demographers, who sometimes make mistakes; I am talking about facts, because the mothers who are going to give birth to those children have already been born. My Lords, when I reflect on the effect those 3,500 million additional mouths will have on world food prices, I never cease to think what a wise decision was taken by the British people when they endorsed so unequivocally the Government's signature of the Treaty of Rome.

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The EEC countries are largely self-sufficient in temperate foodstuffs. We may have to pay more in the short term but we are at least ensured of security of supply. To a major importing country such as ours, the value of that security is incalculable.
6.30 p.m.
Lord BRIMELOW: My Lords, the noble Lord, Lord Vernon, has spoken most persuasively and I am in agreement with most of what he said. If I do not follow him in detail, it is in part because I wish to avoid repetition, but also because I should like to follow up one remark made by the noble Lord, Lord Cobbold. He asked if these monetary compensation payments, made in the execution of the Green Money policy, are to continue to increase, will that not entail a reduction in expenditure from the Community budget for other purposes? We are on notice from the President of the Commission, Mr. Jenkins, that far from increasing the monetary compensation payments, he wishes to reduce them and to increase payments from the budget of the Community for other purposes, notably with a view to increasing the degree of economic union in the Community. I doubt, speaking purely personally, whether he will succeed in that, but he has given us, in his speech of 8th February in the European Parliament, formal notice of his intention.
The noble Lord, Lord Vernon, spoke of the thicket of Green Money. There was a time when people thought that the Community was set on a smooth and broad highway leading to economic union, and when, in 1969, the system of Green Money was invented it was regarded as an alleviation for a small, insignificant stumble which had occurred on that broad highway. But the highway has petered out, and we are indeed in a thicket and each individual government is trying to pick its way through that thicket in its own way. The paths which we are following are now divergent, and it is that divergence which is already threatening the unity of the Community, and the threat may be increased if the Community is enlarged.
It is perhaps worth recalling what Mr. Jenkins had to say on that subject on 8th February. He said that failure to
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make progress towards economic integration and the risk of slipping back were, in his opinion,
"… by far the gravest danger facing the Community at the present time."
Making no mention whatsoever of monetary union, he asserted that to abandon the goal of economic union merely because the road towards it was difficult would be an abdication of responsibility. He warned that if we failed to move towards greater economic integration, we should sooner or later move back; and that if we moved back it would not be in the economic sphere alone.
Subsequently, on 17th March, Mr. Jenkins spoke to the Political Committee of the European Parliament and was questioned about the attitude of the Commission to the enlargement of the Community. The gist of his reply was that the Commission accepted the enlargement now being considered as a political imperative; but that it was essential to be clear about the consequences. He did not go into further detail on that subject, and the whole subject, being delicate, is handled with a certain reticence in all the Member countries of the Community. I will, none the less, venture to make a few personal comments, because I think that this question of divergence is of fundamental importance.
In any economy, the rate of growth depends upon the scale and efficiency of investment. The wealthier a country is, the greater the amount of resources available for investment for each percentage point of the national income allocated to growth. This means that if all the Member States of the EEC were to devote the same percentage of their national income to investment, and to do so with equal efficiency, the gap between the richer and the poorer members in absolute terms though not of course proportionately, would tend to widen. For the gap to be narrowed, the poorer Member States would have to pursue consistent long-term policies of investing a higher percentage of their national income than the richer States, and to do so with at least comparable efficiency. Yet it is in the poorer countries that the pressure to increase consumption tends to be strongest, and where the factors that bear adversely on the efficiency of investment tend to be the most numerous.

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If these difficulties cannot be overcome, convergence within the EEC would presuppose a transfer of investment resources from the richer members to the poorer. But is it likely that such transfers of resources will be on the scale necessary to make convergence possible? And even if they were to be made, would they be used, and used efficiently, to that end? Hitherto, loans within the Community have chiefly been used to cope with balance of payments problems, rather than to bring about convergence. In his address of 8th February, Mr. Jenkins said that the Commission would devise a general policy to concentrate its present and future financial resources on the central problem of economic divergence, but he added that the funds currently available for this were "extremely small".
The conclusion I draw from this is that the difficulties which at present impede progress towards convergence will not be easily or quickly overcome; that they will be increased in the event of enlargement, and that for some time to come the prospect is one of increasing divergence. It is divergence, my Lords, which has led to the growth of the sums paid in monetary compensation under the system of Green currencies. The more these sums have grown, the greater the distortions which have been introduced into the pattern of agriculture within the Community, and the greater the departures from the concept of a common market in farm produce. These points have been well illustrated by previous speakers in this debate.
If economic divergence within the Community continues to increase, if it were to be still further increased by the enlargement of the Community, if the present rules governing the management of the Green currencies and the payment of monetary compensation amounts remain unchanged, then the distortions in the pattern of agriculture within the Community will grow and be consolidated, and the burden on the Community's budget will increase until at some point it becomes intolerable. The more determined the Commission is to switch funds to deal with the problem of divergence the sooner that point will be reached. From the point of view of the Community, the Commission has acted sensibly, and by no means prematurely, in proposing change.
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From the point of view of this country, however, the Commission's proposals regarding the future management of the Green currencies are a mixed bag. As regards our balance of payments and the relief of inflationary pressures, this country is the principal beneficiary of the present state of affairs. Our farmers, on the other hand, as noble Lords have pointed out, have several legitimate causes of complaint. In these circumstances, I fully agree with the statement in paragraph 25 of the Select Committee's report that:
"… the striking of a national balance of advantage will be a fundamentally political decision for each member government".
I hope that nothing said in this debate will make more difficult for Her Majesty's Government the playing of their hand in the negotiations which they now face.
It is against this background that one has to assess the specific arguments so far advanced in this debate in favour of higher incomes for United Kingdom farmers, or for protection against highly subsidised imports of Danish pigmeat, or in favour of keeping down the prices paid by consumers, or in favour of retaining the benefit to our balance of payments which we derive from the present rules. These and all the other aspects of the problem are matters on which balances have to be struck, first in this country by the Government and secondly in the Community by the process of negotiation. It is legitimate, of course, for the spokesmen of every interest to state their respective cases, but the final decision on the proposals for change now put forward by the Commission will be a bargain struck in inter-governmental negotiation. For better or for worse, the Community as we know it has been shaped by negotiation and the striking of bargains, and I have no wish to make any difficulties for Her Majesty's Government by anything I may say in this debate.
To those who have always had doubts about the concept of progress towards full economic and monetary union, the present trend towards divergence, and the prospect of still further divergence if the Community is enlarged, may be a source of satisfaction. To those who have subscribed to the concepts and aspirations which found expression in the Treaty of Rome, the anxiety expressed by Mr. Jenkins on 8th February may seem well

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founded. If it is accepted as a political imperative that the doors of the Community should be open to all democratic European States which may apply, the loosening of the economic structure of the Community which has already occurred as a result of economic divergence is likely to have far-reaching consequences. It may be that this loosening is already facilitating the expansion of the Community at the cost of a creeping and still unacknowledged change in its nature.
If this evolution in the nature of the Community which is, in fact, already taking place, although so little is said about it, has eventually to be publicly and officially acknowledged, we may find that the institutions of the Community have to modify some of the assumptions, aims and principles on which their activity has hitherto been based. It would certainly be no light task to amend the relevant provisions of the Treaty of Rome. It might be easier to reach a consensus on the modification of the aims and modes of operation of the institutions, including even the Common Agricultural Policy and the Green currencies which have been subject to much criticism but which have also received some defence in the debate today.
Palliatives in themselves are unlikely to prove satisfactory. The history of the Green currencies and of the monetary compensation amounts to which they have given rise shows how easily palliatives of this kind can create forces tending to deepen and perpetuate the divergencies which they were intended to alleviate and to undermine the principles which they were devised to sustain. These are, in my opinion, bigger issues than the outcome of the forthcoming negotiations on farm prices and the management of Green currencies and monetary compensation amounts. But the very size of the sums now being paid by way of compensation under the system of Green currencies points to the magnitude which the underlying problems of divergence have already acquired.
A debate on Green money is not the place to go into these problems, but I thought it only right that some mention should be made in this debate of their existence and of their importance for the future development of the Community, particularly if, as seems probable, its proposed enlargement comes about.
Lord O'HAGAN: My Lords, before the noble Lord sits down may I ask him a question. I respect enormously the noble Lord's expertise and I am not trying to play games with him. I do not wish to detain your Lordships for more than a second, but would not the noble Lord recognise that his speech could be easily described as "Powellite"—full of logic, gloom and despair?
Several noble Lords: No!
Lord O'HAGAN: My Lords, does not the noble Lord feel that as well as giving us an extended analysis of all the difficulties incumbent upon it, he should add a constructive suggestion about the way out of the thicket of Green money—not perhaps now but at some other time? Is it not a little negative merely to look at what is wrong?
Lord BRIMELOW: My Lords, I thank the noble Lord for his question. I think that the problems inherent in the enlargement of the Community are so complex that they will be clearly stated only in the process of negotiation. It is largely because of uncertainty as to the way these problems will emerge that nobody yet feels able to discuss them in detail. It is, however, clear that the problems as we know them today will be complex and numerous and that they will be hard to reconcile with the Common Agricultural Policy or with the Green currencies. I said at the end of my speech that I did not think that this was the occasion to go deeply into them, but that I did think it would be wrong to let this debate go by without pointing to the existence of these underlying and very deep and difficult problems. I was, in effect, following up a remark of the noble Lord, Lord Cobbold, who said that he wished to draw attention to the larger issues. I was not intendng in any way to prejudice the handling of those larger issues by Her Majesty's Government either in the immediate negotiations on farm prices and the Green currencies or in the longer-term negotiations on those subjects, or the handling of the issues which are bound to arise in connection with the enlargement of the Community. As for the suggestion that my speech was Powellite, may I just say that I am not a partisan of Mr. Enoch Powell.
6.50 p.m.
Viscount AMORY: My Lords, I hope the noble Lord, Lord Brimelow, will forgive me if I do not venture to follow him directly in the most interesting and thoughtful reflections he has given us. I will simply say that at the moment I cannot recall any similarity between his speech and those that I seem to remember having heard in past years from the right honourable gentleman, Mr. Enoch Powell.
I am sure your Lordships will agree that Green Money is a horribly complicated subject. The noble Lord, Lord Gordon-Walker, and I were recalling at lunch, today an observation made by Dr. Johnson when, unusually for him, he went to a concert. He hated music and at the end of an orchestral piece somebody turned to him and said, "A very difficult piece, Dr. Johnson, is it not?" He received the answer, "Very difficult indeed, sir; would God it had been impossible". Some of your Lordships may feel that is not irrelevant to what we are discussing.
The noble Lord, Lord Pritchard, and the noble Lord, Lord Cobbold, have given such able expositions that I should feel an imposter if I tried to persuade your Lordships that I could speak with anything approaching their knowledge and authority on this matter. My noble friend Lord Sandys spoke about milk, and I entirely agree with him that the record of improved productivity on the part of our milk producers over the past 17 years is enormously to be commended. I am sorry that he started with that particular year, because I think that that year when I gave up being Minister of Agriculture was the year when apparently this dramatic improvement appears to have started.
I entirely agree with him, too, in what he said about the Milk Marketing Board; it was one of the greatest triumphs of the agricultural instruments that were devised and it would be an absolute tragedy if anything were to happen there. Milk is a very difficult product. When I was at the Ministry of Agriculture I recall attending a farmers' meeting. I daresay the noble Lord the Leader of the House may recall something similar. At that time we had reduced the price of milk by a penny and a farmer most indignantly said to me, "Minister, you don't seem to realise what will happen now that you have reduced the price by a penny. I shall go out and
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buy more cows to keep up my turnover and I shall produce even more milk." I said, "I do realise how difficult these things are and that indeed might be the result. What would you have done if I had increased the milk by twopence a gallon?" "Oh, Minister, then by God, I should have gone out and shown you what I could produce." You get it either way!
In recapitulation I shall do no more than pose five simple questions and suggest answers to them with telegraphic brevity. I hope your Lordships will not feel that this approach savours too much of a simple guide to the Green Money for the common man or first year O-level students. The first question I should like to pose is: what is Green Money? I suggest the answer, as the noble Lord, Lord Pritchard, has mentioned, is in paragraph 2 of the Committee's report:
"… a set of exchange rates which relate only to the food and agriculture sectors… which is used for converting all community institutional prices… set in units of account into the national currency."
That sums up that point.
The second question might be: why is a system such as Green Money required? I suggest that the answer to that is to be found in paragraph 3 of the Committee's report. It is to the effect that if there were no Green Money rates, since prices are fixed Community-wide, some nations' farmers would get more and some less, dependent upon whether their particular national currency had depreciated or appreciated. That would conflict with the Community's aim that trade should be conducted on an equal basis throughout the Community, as the noble Lord, Lord Cobbold, has said. When it was started—and here again this point was made by the noble Lord, Lord Pritchard—it was hoped that a special exchange rate might be a temporary necessity. Unfortunately, the differences between the Green Money rates have greatly increased and now in some cases are embarrassingly great.
I think the third question may be: what are monetary compensatory amounts? Here again the answer is in paragraph 2 of the report which says that MCAs are applied at national frontiers to offset the differences between market exchange rates and agricultural

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exchange rates; that is, Green Money rates. They may take the form of a subsidy on imports and a tax on exports, or vice versa, according to whether the Member State in question has a currency which has depreciated or appreciated, and the value of individual MCAs are revised frequently in the light of changes in market exchange rates. It is admittedly a very complicated system.
The fourth question might be: what, in a nutshell, are the current EEC proposals? I mentioned just now that the present differentials had become embarrassingly large in some cases, and because of that the total bill for MCAs in the EEC budget has become a heavy one, and its size for budgetary purposes unpredictable. The Commission is therefore anxious to see the scale of current arrangements come down so that Green Money rates are nearer to the market exchange rates.
It is an undoubted political embarrassment that, if the differences were extinguished, some nations' farmers would get large increases and others would get substantial decreases. So long as market exchange rates fluctuate violently, it is very difficult for the Community to realise its aims of common agricultural prices. The current Community proposals envisage formulae for adjustments which appear to be due, which could be applied automatically at an administrative level. The noble Lords, Lord Pritchard and Lord Cobbold, and my noble friend Lord Vernon referred to that. It seems to me that the attractions of automatic adjustments according to agreed formulae are obvious from the administrative point of view. As, however, adjustments are seldom likely to be free from political difficulties in Member States, it is difficult to believe that Finance Ministers will not insist on such decisions being subject to the positive agreement of the Council of Ministers. At the same time, one feels that the more adjustments that can be carried out by the Green formulae, the better for the system. I thought my noble friend Lord Vernon put that difficulty very clearly.
The last question might be: why are Green Money value adjustments apt to be embarrassing for individual national governments? I suggest two or three
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answers: first, because changes may increase the price of food and perhaps in some cases raise domestic farmers' prices excessively, thereby adding to EEC surpluses, or alternatively reduce farmers' returns, damaging them. Secondly, either way, changes may interfere with an individual nation's discretion to pursue domestic anti-inflation policies. In the case of the United Kingdom, any downward revision of the Green Pound will put up the price of food and increase the return to producers. While higher returns across the board will improve our balance of payments, it may of course add to the European surplus. Having admitted so much, I must declare my own view that a carefully worked out system of encouraging a higher aggregate of home food production would be very much to the benefit of our national economy.
I entirely understand Her Majesty's Government's reluctance to see food prices rise; they are in any case likely to rise because of the tapering off of the abatement concession given to us when we joined the Market, and the rise in CAP prices to cover inflation in the Annual Price Review. It is an embarrassing moment to be asked to accept a third rise. On the other hand, I cannot think that the maintenance of the present situation which is relatively very beneficial to the United Kingdom, can reasonably be sustained for ever. I believe that the direction in which we ought to be using our strongest endeavours with our European partners is in persuading them that some of the CAP prices are unreasonably high, leading to ridiculous surpluses, notably in butter and sugar. The current CAP system calls for a revision.
I agree with the noble Lord, Lord Collison, my noble friend Lord Tranmire, and the noble Lord, Lord Gordon-Walker, in saying that our own system of deficiency payments and other price supports is really sounder than the CAP method, though I equally agree that it would be a very difficult method for the Community to apply in their circumstances. Meanwhile, it looks as if we must learn to live with some kind of Green Money until something simpler and more efficient has been worked out. The Green Money system is running into trouble because of the wide differences which have been referred to; but I agree with those noble Lords who have asserted

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that the CAP is really getting into a mess in one or two cases and must be revised to eliminate some of the surpluses which have developed and which are earning it a poor reputation.
7.2 p.m.
Baroness ELLES: My Lords, we have been debating this evening a matter which is of immediate and practical concern to everybody in the country, but primarily the consumer: proposals which relate to the prices of food and methods of regulating these prices within the CAP. I very much share the concern of the noble Lord, Lord Collison, who I thought very movingly put the problem. He realises there is a problem, as we all do, and it is one which is undoubtedly being misunderstood by the consumer in this country. The problem, as we have heard today, is an extremely complex and difficult one. In fact every noble Lord who has spoken has contributed in some measure to advancing the debate a step further in trying to clarify an almost impossible position.
To begin with, I should certainly like to add my expression of gratitude to the noble Lord, Lord Raglan, and the noble Lord, Lord Pritchard, for having so clearly introduced this intricate subject, and would also add my gratitude to those who produced the report. The evidence contained in it, I thought, was of extreme value. Those civil servants who answered the questions at the Sub-Committees did so, I thought, with great skill and honesty, and clarity. Undoubtedly, in their expositions they helped us to understand some of the complexities, not only of the problems themselves but of the decisions which the Government have to take. I thought they took a very fair position and stated the case extremely fairly. May I also say how glad I am that so many members of the Sub-Committee have taken the trouble to be here in your Lordships' House today and to take part in this debate. It has undoubtedly, as I have said, helped us to understand the very many difficult questions which arise on the question of Green Money and the Farm Price Review.
My Lords, my noble friend Lord Sandys covered the question of farm prices with his usual clarity, knowledge
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and experience. I will try to stick to the problem of Green Money, though, of course, it cannot be taken entirely in isolation. I would at this stage declare an interest, as I have done before, in that I have a small farm, not in this country but in another Community country. When I hear of the small farm being attacked, I feel very strongly about the plight of my neighbours who might have to lose their two or three cows, on which, of course, they rely for a good many of the products and assets of their not just small farms but very small farms, of something like six hectares or 15 acres.
It is not just a question of cutting down milk production by eliminating cows, because, of course, the small farmers themselves benefit from the sale of veal; they benefit from organic fertiliser, which is now practically impossible to buy. They would not know what to do with their hay when they have cut it in their vineyards; they would have to burn it. They would have a very deep feeling of having to throw away something they have always found valuable. These sound very feeble reasons in your Lordships' House, and particularly in this country where we have very large farms; but you will understand the concern of the small farmer who has lived in this way for perhaps hundreds of years in these districts, for instance, in the hills where I happen to be, in Tuscany. They have a way of life and a psychology and a social structure which would be radically changed by the elimination of some part of their existing system. So, while seeing that it is perfectly logical and reasonable that milk production should be cut down, it is not something that can be done automatically and immediately, but something which must be faded out over at least a decade so that future generations will deal with the problem in a new way. I particularly make this plea to your Lordships because these are questions which we discuss daily on our farms, and they are of great worry and concern to the people involved.
With regard to the Green Money, the Community is having to manipulate a mechanism which was introduced in very different conditions—this point has been made by several noble Lords—and to deal with specific circumstances. The truth of the matter is that no one envisaged

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in 1973, when we joined the European Community, that three years later the United Kingdom would be in the position of having a failing economy, with a pound which has fallen by 30 per cent. over the last year, and inflation running at something like 21 per cent. as was said in another place the other day, food prices have increased by 81½ per cent. from 1974.
So, although I do not wish to make any political points, I wish to point out that we are considering the problem of Green Money in relation to what has happened in our own country, and this is one of the major difficulties that has arisen. Not only does the adjustment of the mechanism of Green Money and MCAs affect every Member State and take into account the conflict—which I do not think is irreconcilable—between the interests of the farmer and the consumer, but also it influences the special position of the United Kingdom, affecting as it does a sizeable percentage of the agricultural budget of the European Economic Community.
Whatever can be said against the CAP—and I think all Members of your Lordships' House will agree that there are very many things wrong with it and that it needs looking at very closely—to date the Green Pound has served as a shield to the consumer in this country, and particularly in certain products imported from other Member States. The Secretary of State for Prices and Consumer Affairs admitted on 14th March that food prices are determined by the value of the pound sterling, not the Green Pound. I think this is a point that perhaps has not been made enough of during this evening's debate. I know that one noble Lord pointed out the difference in price of some other commodities which are not covered by the CAP, such as coffee. While these have been affected by world shortages, the decline in the value of the pound has also been a major factor and one of our difficulties. To my mind, not only has the CAP provided a shield for certain food products; it has also provided security and stability of supply.
My noble friend Lord Tranmire is an expert in the agricultural field and I should hate to take issue with him when he said that Green Money was not mentioned as a problem when we joined the Community. He was of course quite
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right because it became a problem only because of the enormous differential in the market rate of the currency and the consequent divergence between the real value of the pound sterling and Green Money. If it had not been for Green Money we should be paying at least 30 per cent. more for our food imports from the European Community. Even if we did go to outside markets, we should have to contend with the results of the increasing rate of inflation.
I would add one question to those which my noble friend Lord Tranmire put to the noble Lord, Lord Peart. If there had not been Green Money over the past 18 months, could the noble Lord tell us what the increase in the price of food would have been from 1974 to date? Would it still have been only 81·5 per cent. or would it have been higher? I do not expect an immediate answer, but perhaps the noble Lord could send a written answer at some stage.
The other question which has been raised by many noble Lords is that of surpluses. I was particularly grateful to the noble Lord, Lord Mackie of Benshie, for the figures that he produced on production outside the EEC, and the effect there would be on world prices if suddenly the United Kingdom became a purchaser of certain commodities outside the European Community. It should be said that most people would prefer to live in an area where there is plenty rather than in an area of shortage. The figures show that there is a very narrow margin between a deficiency and a surplus. When we calculate a surplus spread over a quarter of a billion people, which is what the Community is doing, the butter surplus adds up to about 2 lb. to 3 lb. of butter per head. It can be called a mountain; it can be called anything. But the fact is that spread over 250 million people the butter surplus amounts to an absolutely derisory amount.
Perhaps we should also remember that of the 200,000 tons which are in store, 120,000 tons are imported from New Zealand. It is right that we should have done so; it was agreed on our accession to the Community. Like any other institution the Community has its faults, but rather than attack it the whole time we should recognise that no country in the Community has objected to our continuing

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to import butter from New Zealand and to our fulfilling obligations to our Commonwealth friends. That point should be emphasised rather more when we are discussing questions of surplus.
Apart from the fact that it is an advantage to live in an area of surplus rather than one of deficiency, let us remember what happens when there is a shortage. I do not know whether noble Lords will remember, but I certainly remember when I had to do my shopping during a sugar shortage—a shortage that was not due to imports or exports but to industrial difficulties in a particular firm. There was absolute panic throughout the supermarkets, which was no doubt unnecessary. However, the popular effect was one of drama and great worry; people rushing from store to store trying to accumulate as much sugar as they could for fear of not getting any more. One has only to draw attention to that kind of shortage to realise the benefits of living within a surplus area.
Frequently the same members of our country who attack the CAP and the European Community also say that we must do more for the Third World. No one in your Lordships' House would disagree that every possible assistance must be given in particular to developing countries and even more so to those developing countries where there is a shortage of food. If there were no food surplus in the Community, we should not be able to give those countries the enormous amount of food aid that we do. One has only to look at the figures in the report produced by the Commission to appreciate that over 450,000 tons of skimmed milk powder and over 200,000 tons of butter oil can be sent to developing countries which otherwise would be very undernourished. These quantities may not sound very important in the context of the overall problem of the CAP, but they are immensely important to those who receive them and they contribute to alleviating hardship and suffering. Therefore, when we consider surpluses we must consider them in these particular contexts.
Even if the Green Pound was devalued at the proposed rate, which I think is now 5·9 per cent., the increase in food prices would certainly be marginal in relation to price rises in other industries.
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We have only to think of the increase of 10 per cent. in the price of gas to realise that everything is increasing in price. If the Green Pound was devalued, there might be the compensating factor that agricultural funds could be diverted from MCAs to assist in restructuring farms and other much-needed expenditure. The noble Lord, Lord Brimelow, even widened this particular argument—very wisely, if I may say so—when he referred to the determined hope of Mr. Jenkins that the Community's budget should be used for matters other than MCAs and that the amount spent on MCAs should be reduced.
What of the farmers who are producing? They certainly did not envisage a pegging of the Green Pound, thus affecting the return on production, while having to pay increasing costs for feeding stuffs, transport, insurance and so on, amounting to about a 20 per cent. increase in costs over the past year. If farmers do not receive a fair reward for their labours, production will not increase but will decline. Coupled with that decline one cannot but envisage a further increase in unemployment, this time affecting agricultural workers who, as we all know, are among the lowest paid workers of the working community in this country. They would certainly not benefit if farmers were not compensated for the increase in costs and were not encouraged to produce more.
Under the transitional arrangements it had been estimated that the price levels for agricultural products would reach parity by 1977, but the maintenance of an unrealistic Green Pound imposes restraints on farm prices which may well have the effect of depressing United Kingdom food production and so, in effect, worsen the balance-of-payments position of this country. In their White Paper, Food from our own Resources the Government had projected increased production but if there is no investment, incentive or, indeed, guarantee that what is produced will be bought, there will be no increase. As I understand the figures, the projection which was contemplated is about 30 per cent. down so far. As in any other major industry, productivity cannot be increased immediatily—it certainly takes time—and even in the agricultural community it would be about

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two or three years before this productivity could be increased. The Government must be prepared to take a more realistic view of their position and accept some measure of devaluation for the Green Pound, otherwise the food industry will be put in danger. Encouragement for the farmers would in the long run mean less dependence on imports, either from European community countries or from outside.
This evening we are also having to consider the position of Ireland, which cannot be overlooked as the Irish Government are about to devalue their Green Pound by about 8 per cent. The existing divergence between the currencies of the Irish Republic and the United Kingdom will be greater than ever if we do not follow suit at least to the amount that has been proposed by the Commission. All the dangers of across-the-Border activities between the Irish Republic and Northern Ireland will be enhanced rather than diminished. This, I am sure all not he Lords would agree, is very undesirable in the circumstances.
We also have to take into account that the Government are already providing something like £1 million per week to sustain the meat industry in Northern Ireland, and presumably if there was devaluation of the Green Pound this amount of assistance could be reduced, as well as the hope that the cross-Border activities would also decline. I wonder whether the noble Lord the Leader of the House could give some indication of what would have to be paid to Northern Ireland meat producers if devaluation of the Green Pound was implemented, and whether we would be able then to reduce this £1 million weekly payment.
However, the Commission's proposals of a devaluation by 5·9 per cent. would still leave a gap of about 26 per cent. between the Green Pound and the market rate. But it should be made quite clear that for countries where currencies have appreciated and reflect a strong economy, the effect of the proposed change would mean a reduction in price levels. So the basic concern of the Commission must be to balance the fair reward for farmers, as well as encouraging them to continue production, in the hope, expectation, and guarantee of a fair reward, and on the other hand to ensure that food prices
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remain as stable as possible for the consumer. We quite see that these two positions are extremely difficult to reconcile, taking into account the very wide divergencies of currencies that exist in the Community.
In fact, it would be true to say that the CAP would not be in such a mess if all our currencies were not in such a mess, but since they are it would be very much more realistic if we tried now to adapt CAP to the new circumstances rather than try to adapt our own circumstances to the CAP. In fact, this is no longer possible in the light of present events. The noble Lord, Lord Brimelow, touched on the very real problem of entry of third countries into the Community, when this problem will be even further increased. Without going into detail, it is certainly clear that countries with perhaps weaker economies than even our own will create even more problems in this regard.
The contemplation that the Green Pound rate should be left to the Commission is certainly, in our opinion, untenable at this stage of the development of the Community. This is something that could possibly be attained when we have economic and monetary union, when it is no longer a political decision that is needed but merely some regulatory adjustment. Certainly during the transition period and during the periods to come when we have not reached economic and monetary union, or at any rate a closer balance between the economies of the Community, we believe that this decision must be left to the Council of Ministers rather than to the Commission. I should like to thank all those on my side of the House who took part in this debate, and all those who have at least tried to help me understand the Green Pound slightly better. However, I know that when we go and do our shopping tomorrow the prices will not have been affected all that much.
7.23 p.m.
Lord PEART: My Lords, may I say, first, to the noble Baroness, Lady Elles, that I agree so much with what she said about the people who initiated this debate. I want to pay tribute to my noble friend Lord Raglan, and to the noble Lord, Lord Pritchard, for the work they have done on this Committee. The

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two documents constitute an excellent report. Anyone who does not know the complications of the Green Pound should take it home and read those documents. Even then, they may not get the answers. I agree with another former Minister who spoke, the noble Viscount, Lord Amory, that it is not an easy subject; it is very bewildering and difficult. The system existed before we joined the Community. It is not of our creation, and some day it will have to be modified. Many noble Lords who have spoken so well on this matter, including the noble Lord, Lord Gordon-Walker, support that line. Therefore, we are grateful to the two noble Lords for creating this debate and taking the initiative in it.
I must reply to a number of points, and for many of them I will not have time this evening, or I should be here for another hour. However, I shall write to all noble Lords on matters that have been raised if I have not answered their particular points. It is not a question of dodging; it is purely a question of time. This has been an extremely interesting debate. I always feel a little nostalgic when joining in in a debate of this kind. It is an important debate because major decisions have to be taken in Europe, and inevitably there are going to be changes. Mention was made of the new Commissioner Gundelach. I have once referred to him previously in this Chamber. I believe that he is a very competent commissioner, an honourable man, and I have every confidence in him. He succeeded Pierre Lardinois, who I respected, and who I think is to attend a luncheon tomorrow in this city. However, there are problems. I have listened very carefully, and I think I must deal with some of the major aspects of the Commission's price proposals. I thank everyone for what they have said, and for the tributes they have paid to our noble friends.
The Commission's package is inevitably a complex and detailed one. It always is, as anyone who has been involved in negotiations on price reviews in Europe will know. The Commission's package covers both prices and related measures. Noble Lords have commented on a large number of points in the proposals. We have also discussed the agri-monetary measures, and I shall do my best to
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answer some of these points quickly. Before I do so, however, I should like to make some general remarks about the timetable for negotiations, the proposals, and the Government's attitude towards them.
The CAP price proposals have already been discussed in the Council, briefly on the 14th and 15th February, and more fully on the 14th and 15th March. A further Council has been arranged for the 25th to 27th March, and there will be a good deal to be discussed at that Council. My noble friend Lord Raglan asked me about progress in the negotiations. He was especially concerned about feed wheat, and matters affected by it. May I say to my noble friend that predictably there has been a divergence of views and there has been pressure from some Member States for increases higher than the 3·1 per cent, average proposed by the Commission.
Opinions also differ on the proposal to stand by last year's decision to give the main support for wheat at the level of other feed grains. My right honourable friend the Minister has made clear the Government's views on these issues. It is too soon to predict the outcome of the discussions, but I shall keep in touch with my noble friend. The Council will not be looking at the proposed changes in the monetary arrangements until after the price package is settled. It is convenient, however, for the House to consider these at the same time, since many of the principles which apply are also relevant to the changes in Green currencies which have been proposed by the Commission as part of the price package. The Commission's proposals are based on the combination of an overall common price increase of about 3 per cent. on average, plus Green currency changes for all countries except Denmark. The Commission estimate that for the Community the cumulative effect of the common price increases, Green rate changes and the remaining transitional steps would amount to a weighted average increase of roughly 5 per cent.
For the United Kingdom the proposed devaluation of the Green Pound is of the order of 5·9 per cent. The Government estimate that the effect of the package as it stands would be about 4 per cent. on retail food prices—or rather less than

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1 per cent. on retail prices generally. As for the effect on producers, noble Lords will be aware that some market prices are already higher than institutional prices, and some products are scarcely affected by the package. The Government estimate that the effect of the proposals, plus the transitional steps on producers' gross receipts, would be to raise them by about 9 per cent.
I will now deal with the United Kingdom objectives towards the Common Agricultural Policy. The Government's approach to this year's price negotiations is consistent with our long-term objectives under the CAP. We want to make the CAP more responsive to the needs of the consumer. I agree here with those who have said that one should not go too far. After all, there is a producer interest. There must be a right balance and I am sure that the noble Viscount, Lord Amory, when he was Minister, argued that, as I did. In my view, that is the right approach. On the other hand, it is essential that we do not price commodities out of the market so that they are not consumed. That has happened on many occasions over many years; for example, when beef prices were too high the consumer resisted the price increase which occurred and there was a drop in consumption.
We must, therefore, strike a right balance. Therefore, as I have said, we want the CAP to be more responsive to the needs of the consumer. Naturally, at the same time we are dealing with the producers of food and they are an essential element in any package. We want to ensure a more efficient use of resources. At present, as the result of unduly high prices in some sectors, the EEC is diverting excesive resources into agriculture. This involves undue cost for the Community budget, particularly where there are surpluses. I agree with the noble Baroness, Lady Elles, in what she said about surpluses. I would be more worried if there were shortages. Lady Elles spoke about shortages of sugar. That happened when I had a responsibility. It occurred because of panic buying and it could have created problems.
However, I am thinking more of those parts of the world where people are affected by storms or catastrophes—Bangladesh is an example; parts of the world which are affected by war and
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other catastrophes. We must always recognise that we may have to help these people, as of course we have. I was glad that Lady Elles mentioned the considerable amount of aid that the Community has given to the developing world, because in this respect the Community has been very progressive. I was once a critic of the Community, but then I saw the reality of the situation and what was being done. For example, I think of the Lomé Convention, which helped the developing world in another way; I think of the access of the old Commonwealth countries into our own market—sugar and all the negotiations we had about that. Except in terms of sugar of course, which is produced for export, here is a Community, and a section of it, which has worked positively to help parts of the world which have suffered serious shortages of food and famine conditions. Let us not forget that.
A great problem will be how to use the surpluses sensibly. After all, America produces surpluses and sells them to the Soviet Union and other countries. Indeed, I cannot understand some of the squeals over certain countries in Europe buying food perfectly legitimately. It may be that the recent case of the disposal of butter at subsidised prices will have to be looked at. I find it somewhat ironical that we should be subsidising Soviet communism—that seems rather odd to me —but there may be good commercial reasons why we should sell to parts of Europe and other parts of the world. Why not? If Europe and the Common Market can be efficient and develop agriculture efficiently, why not do these things?
There is another problem here and the noble Lord, Lord Vernon, answered it clearly and sharply: we cannot go back to the halcyon days of cheap food. That is a fact and there is no question about it. We cannot go back and, in any event, why should we? Why should we exploit people in other parts of the world in various countries by paying low wages? Why should we exploit farmers and farm workers in this country? My noble friend Lord Collison would agree that we should not do that. They deserve proper remuneration, and that is what I say to those who talk so glibly about obtaining cheap food supplies from outside.

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In this connection, I had to negotiate prices with New Zealand. They were quite realistic and when I was negotiating the question of New Zealand dairy products in Europe I wanted them to export their dairy products to this country. We got a good deal for them, which was praised by the New Zealand Government. Again, we must give the New Zealand farmer a fair and reasonable price. So all the talk about cheap food must go. The sooner many people in this country realise that the better. We tend to be rather too sensitive about food. We are sensitive of course because it is essential, but consider the other commodities; look at the price increases in other fields. Food compares very favourably in many ways. I admit it is a sensitive matter—it always will be in all our societies—and often it will inspire political crises, as it has done, in many parts of the world, but we cannot go back to the days of cheap food and the sooner we realise that the better.
Of course we want to ensure that surpluses do not put a heavy burden on both the consumer and the Community budget. Therefore, in my view, milk must be a priority target. The Commission has recognised the need for decisions on support prices to contribute to the fight against inflation and the Government agree with the thinking which has led the Commission to propose a low general increase in common prices. They also sympathise with the intention of taking firm action on milk, especially through the price mechanism.
The Government also support the proposals for a reduction of the B quota on sugar, which will help to discourage overproduction, as well as the implementation of the changed cereals intervention arrangements. However, the Government would have liked to see a generally tougher approach to the prices package in the interest of price restraint and to make progress in dealing with the problem of surplus production. My right honourable friend has insisted that the proposed increases are too great, and as noble Lords know, he was not prepared to move from that position in the recent Council meeting.
However, noble Lords must recognise that we are alone in this view; no country other than the United Kingdom is seeking
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smaller price increases than the Commission propose. The House will be aware that COPA, the EEC producer organisation, wants an average increase of 7·4 per cent. and some Governments think that even that is not enough. The Commission's proposals for revaluation of Green currencies also caused some problems to other Member States. We must therefore expect a difficult negotiation on the package as a whole.
Many noble Lords have mentioned the milk proposals. The Government have consistently argued that if surplus milk production is to be overcome, there is no substitute for action to contain producer prices. The Government have therefore argued for a real reduction in the Community's intervention prices. We are prepared in this context to consider the co-responsibility levy, but there would be no point in that if it were simply offset by a price increase. My right honourable friend has made clear that he is prepared to judge the Commission's milk action programme on its merits and he accepts the need for some specific action to help dispose of existing surpluses, but this must be cost effective and, wherever possible, give priority to Community consumers. It must not be achieved by arbitrary interference in trade, whether by prohibitions on competing products, by levies on those products or by compelling traders to use dairy products.
My right honourable friend has made quite clear that he regards the proposed tax on oils and fats as completely unacceptable. I did so when they were proposed last year. On this there was general agreement between Government and Opposition. The Government are also unwilling to accept the proposal on the exclusive use of milk fats and proteins, even though this has now been presented by the Commission in a different form. The proposed ban on investment aids has now been eased. This was mentioned by one noble Lord who, I hope, will forgive me if I do not refer to him specifically. However, there are still some points of difficulty. As for the proposal for non-marketing premiums, the upper limit is still too high and the Government hope that there can be modifications in this. I should also mention two proposals in. the milk action programme which are welcome to us. They have been mentioned by noble Lords and are, I believe,

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accepted. These are the suggestions for aid for quicker eradication of brucellosis and tuberculosis and for subsidisation of school milk programmes.
I should like to turn briefly to some commodities. As regards beef, the noble Lord, Lord Mackie, mentioned this and tempted me to come into the field of arguing about deficiency payments and intervention as a method of support. As the noble Lord knows, we negotiated —and I did this first—a system of fixed premia, later altered to a variable system, which, in many ways, is like the old deficiency payments system. At the same time, I agreed to a limited amount of intervention. I believe that intervention by itself was not a good method of support, although, for certain commodities, we have intervention. Potatoes are one example. Potatoes are taken off the market and dumped or put into clamps, as the noble Lord knows, but I believe that even the deficiency payments system had defects sometimes. I can remember a Minister of Agriculture, Sir Christoper Soames, who had great difficulties because of surpluses created from our own grasslands. The Treasury had a formidable bill to face and there was a great outcry in the country. In the end, this led to a major inquiry into the meat industry, as noble Lords know.
So it has not always worked well. However, I still think that it would be better for the Community if it adopts our premium system with limited intervention. I believe that, one day, we shall win. I had thought that we might do so in this price review, but perhaps at the next price review they will come to face the reality and accept what I was suggesting.
Lord MACKIE of BENSHIE: My Lords, I wonder whether I may try again to explain what I said. It was that we should not condemn intervention altogether for the many faults and surpluses that arise. What was wrong was the high prices paid in intervention for certain of our products.
Lord PEART: I accept that, my Lords, but the noble Lord mentioned deficiency payments in glowing terms. All I am trying to make clear to the Liberal Party spokesman is that there must be a little realism and a sense of pragmatism about
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this. We cannot be doctrinal about agricultural policy. If we are, we are fools.
The Commission's proposal for beef is for a 3 per cent. increase in the guide price. The Government are pressing for maximum restraint on the common price because the present market situation in the Community does not justify any significant increase. I gather that the date which the Commission have proposed for the extension of the premium scheme is 31st July, following which I assume that it will be examined and a report on the EEC's internal beef support mechanisms, including premiums, produced. So I welcome the review and am confident that it will focus attention on the advantages of the premium system.
I was asked about pigmeat. In the pigmeat sector, the proposal is for an increase of 4 per cent. in the common basic price. Noble Lords will be aware of the acute difficulties which pigmeat producers in this country face at the present time and also of the steps that the Government have taken in order to alleviate them. It is essential that we should find a permanent Community solution to the problem of the calculation of monetary compensatory amounts in this field. This has always been a difficult sector. I can remember the difficulties which we had at home even with our normal Price Review negotiations. It is not easy, but the pig is an animal which produces so much good food that it is important that we should get our sums right.
I do not want to go into too much detail. I have spoken for just over 20 minutes and I should like to finish by dealing with agri-monetary questions. To comment on the points made in that sector, the question of Green currencies arises in today's debate in two separate ways. First, the Commission's proposals for changes in all Green currencies except for Denmark are a central part of the current price proposals. It is, after all, the Green currencies which, as noble Lords know and have said, determine what the common prices really mean when they are applied to each individual country.
The Commission's proposal for a devaluation of the Green Pound by 5·94 per

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cent. would raise agricultural support prices here by 6·32 per cent. The Government do not take a doctrinaire attitude to the Green Pound changes. They cannot. I changed the Green Pound four times when I was Minister of Agriculture and there will inevitably have to be some changes. I do not think that it can stand still, whatever the arguments about long-term review or the whole system. However, the Government's view is that the need for a Green Pound change has to be judged on its merits in terms of the overall national interest. On this occasion, we must judge the proposal in the contest of the Commission's package as a whole, and it is too early to give a precise view as to what may emerge.
Lord MACKIE of BENSHIE: My Lords, I am sorry to interrupt the noble Lord again, but a very important statement was made by his right honourable friend the Minister when he said, in column 418 of Hansard:
"These two transitional steps would, in my view, give a reasonable return to producers in our own country."
Lord PEART: My Lords, I was saying that this is something which has as yet to be finalised. I have given an example an I do not think that we can be doctrinal about this. We have to decide the overall balance. The noble Lord quite rightly quoted that passage, and there is a reference in the documents before us to the sort of balance we must think of and what is in our national interest. All I am saying is that we cannot be too doctrinal and I gave an example where, in the short period during which I was responsible, I changed four times.
The question of Green currencies also arises in our debate today because of the thorough nature of the report prepared by the Select Committee. I shall not go into that, however, because I feel that I must now close. I have not answered every question but I shall reply to all noble Lords. I have gone beyond my time, but I would only say this to the noble Lord, Lord Vernon, who, quite rightly, talked about Food from our own Resources. I still believe that this represents a good strategy for our country in the field of agriculture. If we achieve what is set out
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in the broad conclusions in the summary, where it says that,
"the net product of the agricultural industry should be capable of a continuing expansion of about 2½ per cent. a year on average",
I believe that this is the objective at which the Government and industry should aim, and that is why the industry must never be neglected. It is one of our most efficient industries, one of our greatest industries. It provides a great market for a great agricultural machinery industry and a great fertiliser industry. People must never forget that. This is not something which is peculiar to the farming community; it is a great interest and a national industry, and I believe that every noble Lord should support it. We must see that, out of whatever emerges, we enable our farmers and our farmworkers to produce food at reasonable prices for our consumers.
7.49 p.m.
Lord RAGLAN: My Lords, we have been here quite a long time and I should like just to make three broad points in summing-up. I thought I knew all about Green Money, having read our report, until my noble friend Lord Brimelow threw us with this matter of divergence of the economies. He posed a conundrum, because he pointed out the institutionalisation of divergences by the use of what are intended to be temporary palliatives which recognise the divergence and there fore make it easier to allow that divergence which otherwise might have been resisted. I think that is what he conveyed to me—that Green Money was a device which was invented to pretend that there had not been economic divergence. Now I cannot make up my mind whether it is a good or a bad thing. It seems to me that it is the exchange rates that have gone out of line. At least the Green Money is common to the Common Agricultural Policy; so I am back at square one.
The noble Lord, Lord Vernon, and the noble Baroness, Lady Elles, quite rightly spoke about shortages which I did not deal with in my speech. I thought of the Potato Marketing Board, which was created to prevent surpluses, and there has been a tremendous fuss almost every year about potatoes which have been dyed purple, and about how they are wasted and thrown away and so forth. Then whoever it is—perhaps the clerk of the

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weather—turns off the tap and there is a shortage of potatoes; and of course people criticise a shortage of potatoes much more than they criticise a surplus of potatoes. They say what a bad, mad thing the Potato Marketing Board is for allowing a shortage of such a simple thing as the common spud. So you cannot win. But I take the point of the noble Lord, Lord Vernon, that it is much safer to have a surplus than to risk a shortage.
I am sure that these reports are useful to your Lordships. I feel that one of the best things your Lordships' House does is to have these Scrutiny Committees. That point is reinforced by the fact that of the 14 speakers today, 10 have been members of the Select Committee or of the Sub-Committees, and but for their membership of these committees there is absolutely no doubt that noble Lords would not have been so well informed as they are. Furthermore, they are thoroughly well informed, and that must be good for everybody. It must be useful to the Government, it must be useful to Members of the European Parliament, and it must contribute to a better understanding of the Common Agricultural Policy. I thank my noble friend the Leader of the House for his comprehensive summing-up.
On Question, Motion agreed to.

EEC: 18th REPORT ON GREEN MONEY
Lord PRITCHARD Lord PRITCHARD rose to move, That this House takes note of the Eighteenth Report from the European Communities Committee on Green Money. The noble Lord said: My Lords, just before I move this Motion, may I follow my noble friend Lord Raglan in thanking very much those Members of the committee who have spoken today in such a constructive way. So far as the Green Pound Committee is concerned, I should like to thank my noble friend Lord Cobbold who has been of enormous help; he has put in a great deal of time. All that is good in the financial part of this report has sprung from his eminent brain, and all that is moderate has come from mine. My Lords, I beg to move.
Moved, That this House takes note of the Eighteenth Report from the European
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Communities Committee on Green Money. —(Lord Pritchard.)
On Question, Motion agreed to.

RHODESIA
7.53 p.m.
Lord ALPORT Lord ALPORT rose to ask Her Majesty's Government what progress has been made since the breakdown of the Geneva Conference in achieving a negotiated solution to the threat to the whole of Southern Africa posed by the present situation in Rhodesia. The noble Lord said: My Lords, this gives me an opportunity of reporting to your Lordships such conclusions as I have reached during a five weeks' tour of Southern and Eastern Africa, during which I had, as a private individual representing no one but myself, a particularly favourable opportunity of assessing, in the light of such previous experience as I have had, the trends and possibilities which exist there. I acknowledge with gratitude the help that I received from the Foreign and Commonwealth Office and from its extremely able representatives in five of the six countries I visited, many of whom were old colleagues of mine.
In this post-imperial era, so far, not in time, but in distance from the days when British influence was paramount in Africa, I felt a sense of pride at the manner in which Her Britannic Majesty's Ambassadors and High Commissioners are continuing to exercise an influence in the countries to which they are accredited, which so closely corresponds to the welfare of those countries concerned and to the interests of Great Britain itself. I was able to meet all whom I wished to meet. If I do not catalogue them, your Lordships will, I am sure, accept that they represented the Governments and the political Parties in most of the countries concerned; and in Rhodesia itself Government Ministers, the representatives of the European Opposition Parties, the executive committees of the Patriotic Front, the ANC and ZUPO, and many individuals of long experience of the politics and problems of that part of the world.
I set out to discover the answer to two questions: first, so far as Rhodesia is concerned, what is the time-scale for a

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peaceful settlement of the situation there? I started by thinking in terms of a year or more. As a result of my talks with a great many individuals, both black and white, it came down from three months to "less than a minute". What they were trying to say is that a new initiative is of paramount urgency if the poison which is spreading over the whole of the Southern part of Africa from the present situation in Rhodesia is not to corrode the hopes for stability and progress for black and white alike.
My second question was: if a new initiative is to be taken by the British Government, what form should it take? Let me, in this context, make two remarks. Mr. Young was quite right in saying that none of the Heads of State or political leaders he met believes that he can trust Britain—not in the moral sense, but simply in the sense that Britain would not conform to the particular policies and ideologies he represents. This goes for President Nyerere, Mr. Nkomo and Mr. Ian Smith. But the fact of the matter is that there is in Africa an almost desperate hope that a British initiative, an acceptance by this country of the responsibilities of statesmanship which history has bequeathed to us, will rescue them from the same disaster in Rhodesia which has accompanied the transfer of power by the Portugese in Angola and Mozambique. Secondly, they understand that if Britain is to take the lead, it must have the support of the super-Power of the West and from Africa itself.
Let me therefore, before I attempt to give my personal assessment of the form which any British initiative should take, give to your Lordships what are known as the relevant considerations to anyone who has even a wartime training in military logic. First, the guerrilla warfare, despite the loss of European lives, is unlikely to produce the unconditional surrender for which some—but not all—the front line Presidents hope. Its main impact on the present régime is the fact that the withdrawal of white manpower from the farming and business communities, in conjunction with sanctions, provides a very serious drain on the resources of the Rhodesian economy.
Although human life in Africa has supposedly a lower value than in Europe
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or America, the killings of Africans by the Rhodesian forces on the Mozambique or on the Botswana borders has involved the death of many innocent Africans whose only aim was to follow the paths across frontiers which from time immemorial had been open to them, or who have strayed out in curfew time to gather food from the fields. As your Lordships know, it has led to the death of missionaries who have devoted their lives to the welfare of their African congregations; of the wives and children of white families on the farms, which they have in many cases cut out of the bush; and of many young men—both black and white—who seek from different standpoints to serve causes in the rightness of which they profoundly believe.
The loss of life, my Lords, is tragic, but with every casualty—and this, to me, is more important—the bitterness is increased. The poison it produces spreads further into the body of Rhodesia itself, and seeps out over the borders into the neighbouring States, of which the most recent is Botswana. But let me emphasise this. There is still sufficient good will in Rhodesia today for the wounds of the present conflict to be healed if a political settlement can be reached this year. Those who believe that it can come only "at the muzzle of a gun" are the enemies of black and white alike, and are recognised as such.
The second relative consideration is this. While I do not believe that it is realistic to suppose that an internal settlement negotiated by Mr. Smith with any significant Africa Nationalist Party is possible, there is a strong and justifiable demand among the Africans that any régime which comes into being when a settlement is reached should be one of their own choice, and not imposed from without. Majority rule is now accepted. "Right", they say, "let the majority decide, and let them decide by a vote based on a referendum". And if there is to be a referendum, let it be internationally supervised by Britain and America, and possibly by representatives of the OAU. It is of course true, my Lords, that there is a tribal factor in the Rhodesian situation. The Mashona represent perhaps 80 per cent. of the African population, the Matabele less than 20 per cent. The ANC is primarily a Mashona Party with Matabele attachments; the Patriotic Front

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is a Matabele Party with Shono attachments. The front line Presidents, by throwing their influence behind the Patriotic Front, are seen in Rhodesia as trying to impose minority, not majority, rule on the Zimbabwe of the future. Why, so the argument goes, should they, however eminent they may be, seek to treat the Rhodesian Africans differently from the way in which they were treated at Independence by Britain or would allow their own people to be treated in any foreseeable future? That argument, my Lords, is in my view conclusive.
Thirdly, I was assured by a senior Minister in the Rhodesian Front Government that it would be possible to organise a referendum in a matter of days, or weeks at the most, using the Kenya system of identification by dye, which we have seen most recently was used in the Indian election, or by using the identification card. I understand that registration on a local basis already exists. Of course the campaign which preceded the referendum would involve security problems. There would be intimidation; there would be intervention by various guerrilla factions. There might be some abuses of the electoral procedures—which, after all, my Lords, is not unknown elsewhere. But the process of a referendum would enable the settlement of the Rhodesian problem to be achieved by the vote and not by "the muzzle of a gun".
Fourthly, my Lords, whatever may be thought by history of the rights or wrongs of the proposed Kissinger settlement and the subsequent Geneva Conference, it produced the acceptance by the Rhodesian Front Government of the reality of majority rule, not in a thousand years but in two. It does not matter now, my Lords, that the interpretation of majority rule was quite different in the minds of Mr. Smith and his advisers from what it was in those of the leaders of the Nationalist Parties or, indeed, from that of someone like myself. Nor is the situation changed by the new policy to eliminate some racial discrimination, which has caused a split in Mr. Smith's Party. His proposals are almost identical with those on which the late Sir Edgar Whitehead fought the 1962 election, when he was defeated by the defection of Mr. Smith under the leadership of the late Winston Field, with all the tragic consequences which have followed during
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the last 15 years. The fact is that what seemed a lot then—too much for many white Rhodesians to swallow—is too little now. The issues are not the relaxing of racial discrimination or the introduction of majority rule, but how soon and in what manner both are to be achieved with the minimum loss of life and damage to the whole structure of the Rhodesian economy.
I must emphasise to your Lordships three things. The front line Presidents, by throwing their influence behind a single Party, which from a tribal point of view in Rhodesia is a relatively small minority, have forfeited the confidence of the majority of Africans there. I know that there are many experienced observers who believe that if the outcome of a referendum were to place power in the hands of the Shona-based Party, the ANC, there would be a new and an even more destructive civil war. My Lords, I do not believe this. I think that the chances of trouble would be far greater if, as a result of external pressure, power was given to a tribal minority. But, my Lords, that is not the point. If those who believe that the ANC represents the vast majority of Africans in Rhodesia—and the Observer recently estimated them at 80 to 90 per cent.—are wrong, let the issue be decided by the people of Rhodesia themselves; not by the intervention of the front line Presidents or the guns of the guerrilla forces, but peacefully on the basis of one man, one vote.
Let me say here that in my talk with the representatives of the Patriotic Front there was evidence of the essential reasonableness of many of their views. Indeed, the proposals which Mr. Nkomo made to Mr. Smith some months ago for a qualitative franchise were such that it is difficult to understand why they were so abrasively rejected. All one can say is that so many opportunities of reaching a reasonable and realistic settlement of the Rhodesian problem have been lost that history must simply add one more to the debit side of Mr. Smith's political balance sheet.
Secondly, my Lords, despite the flow of Soviet and Chinese arms, of President Podgorny's present tour, of the Cuban mercenaries and of the flirtation of African leaders of various sorts with Marxist imperialism, Africa and Africans are not

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a fertile ground for Communism. Tanzania, as the prototype of what is called African Socialism, is widely regarded as a failure. The only significant export of Russian Communism to Africa are the guns with which one faction in Africa is enabled to kill other Africans. I exclude, I must confess, the Chinese, whose Tan-Zam railway was intended to be a direct contribution to African development but which, alas!, owing to the inadequacy of the Dar-es-Salaam port and the high cost of freight, has made little contribution to the bankrupt economy of Zambia. My Lords, the point I am making is this. In African eyes—and this goes for most Europeans and for most Africans—the future of Africa lies with traditional Africa and not with the Communist East. It would in my view be a great mistake to allow our distaste and fear of Communism to distort our policies or influence our actions in that part of the world.
Thirdly, in a country of present-day Africa, where the numerical strength of the whites is less than one-to-twenty of the blacks, there is no future for political power for that tiny minority, however strongly they may be entrenched in the economic life of the country or however great may be the contribution they have made to its development. A delegation of Rhodesian farmers has recently visited Kenya. I was told that they were greatly impressed by the way in which the Europeans in Kenya had been integrated into the Kenyan economy. Many, of course, have been bought out; but those who are prepared to identify themselves with the interests and progress of an African State can still play a recognised role and live a tolerable life in a community in which they may no longer dominate politically, but to the development of which their past efforts and their future energies make a wholly acceptable contribution.
Lastly, the establishment of a majority African Government would destroy the reason d'être of the guerrillas. It is perfectly true that some Africans in Rhodesia suspect that the recruitment of guerrillas from Matabeleland over the Botswana border—as, for example, the recent incident of the so-called "schoolchildren"—is an attempt to strengthen the military hand of one element in the
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Patriotic Front with the aim of preempting any other settlement. This is certainly possible. But a majority Government would have at its disposal the disciplined police and army forces in Rhodesia in which the Africans are in a majority, and would certainly have the support of a substantial element among the guerrillas. I do not think that we should overestimate the problem which the ending of guerrilla warfare might pose.
My Lords, in the light of these considerations, I offer the following proposals which I hope may be considered by those who, here and in Africa, have the power to dispose and to act in the context of the present time. I suggest that Her Majesty's Government should propose the appointment of an electoral commission to supervise the holding of a referendum. This commission should consist of a British representative to act as chairman; a United States representative and a representative appointed by the OAU. This referendum must, in my view, take place before the end of September and must be on the basis of one man, one vote. The guerrillas in Mozambique and Zambia should have the right to vote under appropriate arrangements. As a result of the referendum, an interim Government should be formed with a representation proportionate to the voting strengths of the various Parties.
Following the referendum, the electoral commission would become a high commission with the responsibilities that I outlined in my previous speech in your Lordships' House—to act as Head of State, to frame a Constitution with safeguards for minorities, to be responsible for law and order with the support of an "internal security" mission representing, in addition to the present security forces, expert advice from outside, but working through a Minister in the interim Government who would belong to the majority Party; and, lastly, to make arrangements for the election of a Head of State of independent Zimbabwe and for its first Parliament.
My Lords, I suggest that when the interim Government is formed sanctions should be lifted and the British and United States Governments should proceed to activate the 2,000 million dollar fund, which should be used not only in

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Rhodesia but also to compensate the peripheral States such as Botswana, which have suffered severely from the present troubles. I think that Africans in exile, along with the detainees, should be given an opportunity in Rhodesia, on return or release, of taking part in the referendum —provided that they give an undertaking to abide by the settlement which this process will produce. If some still wish to conquer at the muzzle of a gun, it will then be easy to assess their real value to the peaceful evolution of the Zimbabwe of the future.
When Mr. Richard did his second tour of Africa he tried to hammer home—so I was told on the very good authority of the South African Foreign Minister—three principles. They were: one, that there must be majority rule; two, that there must be a tolerable and secure future for the Rhodesian Europeans in Zimbabwe; and, three, that there must be an end to guerrilla warfare. In all the countries I visited I had reason to suppose—from South Africa Northwards—that those principles were accepted.
I have outlined a method by which these principles could be put into effect. I do not underestimate the difficulties or the power of the malign forces which would seek to prevent a peaceful and orderly solution of the Rhodesian problem. I have tried to think that problem through. Of course I have not thought of all the combinations and permutations which others may consider appropriate; but of the practicality and desirability of the general design, I have no doubt.
It will require the willingness of Her Majesty's Government to accept the responsibility which is historically ours; it will require the United States Administration to act up to the principles to which President Carter dedicated his country in his speech last week at the United Nations; it will require the Republic of South Africa to implement the policies to which Mr. Botha has recently referred in New York; it will require the realism to which Mr. Smith has, at last, apparently, been converted; and it will require the co-operation and moderation of African national Leaders —and I believe that that will be forthcoming, at any rate from some of them.
I can only say, my Lords, that having lived with the problems of this part of the
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world for most of my political lifetime, I still believe that there is a chance of a solution to the Rhodesian problem which could prevent the untold damage to a fine country and the suffering to its people of all races which today seem inevitable; and perhaps it might achieve something beyond that. Perhaps it might avoid, for the whole of Southern Africa, a fate which in the words of Mr. Vorster is "too awful for any of us to contemplate".
8.16 p.m.
Lord ELTON: My Lords, I should like to start by thanking my noble friend for raising this matter upon which he has a depth of experience greatly in excess of my own. It would be difficult to exaggerate the importance of the matter which he has raised or of the conversations that are, I hope, continuing covertly on the future of Rhodesia. As he has indicated, their outcome will be crucial to the future of the whole of South Africa. The example of Rhodesia cannot fail to exert an influence on the future of Namibia. The future of Namibia is intimately bound up with the future of South Africa. We have to face the sad and urgent fact that stagnation is no longer an alternative to progress. In the past, the status quo could perhaps have been preserved by inaction. Today, up and down that end of the continent it can only be preserved by riot police, by emergency regulations, by guns and, as my noble friend has pointed out, by casualties and a heavy drain on the economy of the countries concerned.
It must be our concern as a nation to make possible a just solution and to see, in so far as it is possible for us so to do, that it is arrived at with the minimum of violence, suffering and loss by the people to whom it applies. The longer a solution escapes us—and not merely us, my Lords, for we are by no means in sole control or in any shadow of control at all of this difficult situation—the longer it is delayed, the greater, I believe, will be the cost of attaining it. The pressures that are accumulating—not just in Rhodesia but in the boiler of Southern Africa as a whole—portend a terrible and costly explosion unless, somehow, the fires are drawn.
My Lords, if it is not easy to exaggerate the importance of the Rhodesian problem in its proper context, it is no easier to

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exaggerate its complexity. It is both concentric and tortuous—indeed, if Mr. Richard went out to Geneva and the African capitals like Mercury, as depicted by the statue in Piccadilly Circus, his struggle with the circumstances that he met there soon reminded us more of Laocöon, as depicted in the group at the Vatican. Within Rhodesia, to reduce it to its simplest terms, we have a confrontation between Smith and Muzorewa, with Sithole—with Muzorewa perhaps disposing of 70 per cent. of the support of black Rhodesians, and more, probably so, if he is joined by Sithole. Over the border, Mugabe and Nkomo mount a continuing assault of young expatriates bent on the violent overthrow of the Smith regime. Behind them, stand the five front line Presidents upon whose good will this assault in different degrees depends. Behind Smith stands Vorster upon whom he, likewise, depends to repel it. Beyond this tableau of confrontation and dependence loom, on the one hand, the Russians, anxious to build a Marxist bridge across the continent, and, on the other, the Americans, anxious alike for their own interests and, more unmistakably now under the new Administration, for a solution that is fair in terms of what we now call human rights and used to call common justice. The figures in this moving tableau stand upon a ground in some areas of which lie undisturbed mineral resources of very considerable interest to all the participating States and to some who are not even engaged.
Her Majesty's Government cannot divest themselves of the responsibility given to them by history, and in no way lessened by their abortive efforts at Geneva and their fruitless journeys thereafter, of moving about among those figures, of trying so to adjust the balance of interest and advantage that a settlement can he reached that is at least acceptable to enough of those concerned to make sure that it sticks, that can be seen to be just as well as viable, and which does not betray the interests of this country.
The task is not an easy one, and it occurs to me that, like any other difficult task, it is rendered a thousand times more difficult by being carried out in the dark, as my noble friend has already indicated. We are in the dark, my Lords, on one
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very fundamental matter: the opinion of the actual inhabitants of Rhodesia—the future Zimbabweans, if you care to call them such—as to what they want. And that, for the principal protagonists of democracy in the Western world since the 13th century, is a pretty extraordinary position for us to be in!
I know that I said earlier that Bishop Muzorewa and Mr. Sithole between them could probably count on 70 per cent. of the support of their compatriots. Certainly I believe this. I believe it because it has been stated to me forcefully by quite a large number of people who have been there, or who live there and who ought to know. But it has been stated as an opinion held on purely subjective evidence. Thus, I may believe it, but I do not know it and I may be wrong. Certainly Mr. Nkomo would challenge it, and he would challenge the opinion at least as forcefully as it has been advanced to me. But he cannot know either what the Zimbabweans think, and nobody can know because nobody has asked them. Some of us know what we think they want, and most of us know what we think they ought to want, but that is not good enough.
Nor do I think it will be good enough if we finish up by collaborating in a solution to which we have acceded simply as a reaction to diplomatic pressure or in the more or less intelligent pursuit of what we regard as our own self-interest. It happens here, as so often, that our self-interest and our moral obligation coincide. Our moral obligation is to help the Rhodesian people, both black and white, in whose history we cannot deny that we have played a major part, to arrive at a Constitution under which, if they are wise —and nobody can guarantee that—they can live in peace and freedom, both as a nation and as individuals. That will not be achieved by imposing on them a Constitution designed to satisfy either our own preconceptions or those of the Marxists. Nor, my Lords, will we do any service to justice or to ourselves if we adopt a solution simply because those who favour it have guns, and those who oppose it do not. It is the function of diplomacy to achieve justice without resort to war, or whatever Klausewitz may have said, and in this case justice must not be blind.

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Surely, the time has now come for the Government of this country, seeking what support they may need from others, to turn their mind to ascertaining who in reality the Zimbabweans want to decide their future for them? And ought they not, whatever the answer to that question is, to ensure that it is accepted and seen to be freely given, and to turn their minds also to having it validated by some external and independent observer? The noble Lord knows that I could well be more specific (my noble friend has indeed been so), but this is no time, and I speak from no place, to tie anybody's hands with detail.
I recognise the very great delicacy of the task that now confronts the Foreign Secretary. I wish him luck in it and I wish to remind him of the magnificent carving that adorns the ruins of ancient Zimbabwe. I have not been there but I have been in Rhodes House, for my father was for many years International Secretary of the Trust, and there I have seen it carved on every conceivable angle and cornice. It is a bird of an austere and almost entirely mysterious majesty. But if little is known of it, it is clearly not a bird of the night, and I want to put into the noble Lord's head the thought that if he wants to know what or who the inhabitants of that troubled country actually want, he will have to ask them and bring the broad light of day. Conversations with pressure groups, with opinion-formers, with vested interests, with Governments, with Heads of State and with interested parties are not enough.
Nor is it enough simply to take the path of least diplomatic resistance or of most diplomatic advantage. Still less, if we are to avert a disaster which will spread eventually down to the Cape, can we afford to do nothing. Let him then find a means of asking all the people what—or better, perhaps, who—they want, and let him see that the question is asked and the answer given in circumstances under which no one can afterwards doubt that it is given freely and that it is true. It may be a tall order, but it is something he cannot lightly dismiss.
I will not follow my noble friend into the complexities of the arrangements. That is not something, perhaps, which the Secretary of State should himself have in mind at the outset of his journey; but let
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him recall that any settlement that is imposed upon an unwilling people, regardless of the good will which it will get for this country from the incoming Government, will not get permanent good will. It is in our interest to have friendly States throughout Southern Africa, and it is in their interest to have our friendship and support. If we go merely for the easy option—even though we are weak at the moment in terms of military and economic force—we betray not only ourselves but the Zimbabweans of the future.
8.26 p.m.
Baroness GAITSKELL: My Lords, we are indeed fortunate in that the noble Lord, Lord Alport, has put this Question to the Government, for there can be few men as distinguished and with as much experience of African and Rhodesian politics. I will not only read his speech again, but I will keep it for reference. The noble Lord's Question is right on target. So long as no negotiated solution is achieved in Rhodesia, there is a constant threat to the whole of Southern Africa, and with every delay the situation can only get worse. So I hope that the Government will examine the noble Lord's speech and see what can be done in order to implement his suggestions.
Since in the United Nations every resolution starts with a condemnation of apartheid and includes armed struggle as a legitimate means to achieve human rights, this ties in with the Soviet practice of giving aid to African countries in the form of armaments. When it comes to making friends, decolonisation cannot compete with Soviet guns. Over a span of about 12 years I have noted the growing influence of the Russians on Third World countries. I have sometimes thought: How can we speed the decolonisation when we lose friends by doing so? In last Sunday's Observer newspaper, Colin Legum, in an outstanding article, traced the course of Soviet ambitions and Soviet strategy over land and sea round South Africa. He concluded—and I agree with him—that if the Western nations, especially Britain and the United States, fail to solve the problems of Rhodesia and Namibia quickly, the Russians will continue to be invited to play a large role in Southern Africa. Of course the South African Republic and the Rhodesians are only too well aware of this.

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But their obsession with the Communist menace does not in their minds have much to do with majority rule, and I think that the noble Lord, Lord Alport, gave a hint of this. It just hardens their attitude towards apartheid.
The attitude of Mr. Ian Smith, despite his twisting and turning, is somehow a little different. He has, after all, accepted majority rule in two years and he has won his Bill over land for blacks which drastically cuts the exclusively white areas of the country and opens white farming areas to all races. He did that without solid support from his black Members of Parliament, and so a major breakthrough towards removing racial discrimination has come about. Mr. Ian Smith still seems to me to be the man—and here I am not sure that the noble Lord, Lord Alport, would agree with me—to continue to negotiate with.
On the other hand, Mr. Vorster fills me with gloom. The idea of majority rule paralyses him and he seems to recoil from any idea of dismantling apartheid. Mr. Vorster's attitude, to me, spells armed conflict, and few journalists or observers speak of the outcome of armed conflict between blacks and whites as a victory for the whites—because the black people are fighting for their human rights and they outnumber the Europeans by five to one. I suppose that I am naive, but I find it very difficult to understand apartheid and those who believe in it. It seems to me that those who maintain it are bartering the lives of their children and their grandchildren for a mess of privilege. Mr. Vorster appears to me as an unrepentant prisoner of privilege; he seems to me to be a man without a vision of the future, an eyeless man who is blind to the moral issue of apartheid.
As for our own Government and the possibility of influencing events in Southern Africa, they cannot come up with any instant solutions, but the fact that Dr. Owen, the Foreign Secretary, is himself going to Africa is a measure of the importance and urgency he attaches to the problems involved. Anyone who acquires a knowledge of apartheid and racial discrimination quickly comes to the realisation that human rights are indivisible. Finally, my Lords, may I say
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that I hope, again, that the Government will take to heart the speech of the noble Lord, Lord Alport, and will act upon it.
8.33 p.m.
Lord PAGET of NORTHAMPTON: My Lords, I should like to seek to put the record straight a little. Firstly, as to the personalities, Mr. Nkomo represents the Matabele. His patron is President Kaunda. The Bishop and the parson represent the Mashona. Their patron is President Nyrere. The Mashona are a mixture of tribes shattered by the Zulu and pinned against the Zambezi and the Barotse. For generations, they were treated by the Matabele as game. They were the people upon whom the Matabele warrior blooded his spears. For two generations before the white man came, they could not sleep in their huts because the huts were fired that they might be speared when they came out; and so they went and slept in the bush. Robert Mugabe represents nobody in Rhodesia; he is said to speak for the guerrillas. The guerrillas are not Rhodesian; they are Makonde from Mozambique in the great majority and are recruited, armed and trained by Russia. Robert Mugabe is not a Makonde; he is not a guerrilla: he is a lawyer. He is in fact Russia's man, put forward to speak for the Russian interest in this battle.
Now let us look at the front line Presidents. President Kaunda is dictator of Zambia; his patron is America. Both his economy and law and order are at a very low ebb. Nyerere dictates Tanzania. The country is bankrupt and central Government has largely broken down. It is what in colonial days we used to describe as "less and less administered". His patron is China. Machel of Mozambique—well, there, semi-official assassinations are probably as numerous but less publicised than in Amin's domain. The state of the nation is chaos and the patron is Russia. Neto in Angola is not in a very different position. Seretse Khama in Botswana is an extremely decent man, trying to administer a small backward district. Those are the front line Presidents to whom we have handed over.
Now let us see what is the state of the play. In September we had the Kissinger terms. They provided for a mixed

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interim Government, for that Government to be replaced by a majority Government to be drawn from Rhodesians, and for a compensation fund to be provided to assure the Europeans if their positions were made untenable. On the 22nd September, Kissinger confirmed that Presidents Kaunda and Nyerere had consented and agreed the terms. Our own Statement on the subject, issued a day or two later said this:
"They"—
that is, the terms presented by Mr. Kissinger to Mr. Smith and accepted by Mr. Smith without detraction:
"reflected the thoughts of the Presidents of the African nations most directly concerned, who were consulted throughout by Dr. Kissinger and in the course of five special US/UK missions to Africa in recent months."
That is the Kissinger terms approved by us, consented to by the Presidents, cheered by all except Russia.
Then came the Patriotic Front. Mr. Nkomo, knowing that he was in a minority in Rhodesia, made a deal with the guerrillas—that is the Makonde. This was a Russian plan to "dish" the Mashona, because the Mashona looked to Nyerere and, indirectly, to China. That is what the Patriotic Front really is. It is certainly based on no trust at all. Nkomo, with the assistance of his patron, Kaunda, has been arming busily, recruiting the Matabele, kidnapping the Matabele and transporting them North to Zambia to be trained, in order to fight Mugabe and the Northerners when the time comes. That is the build-up there.
Then came the Geneva Conference; and let us say that was to implement the Kissinger plan. It was upon that basis that Mr. Smith was advised. At the time, I said to the Government and to your Lordships: "This is a hopeless and mischievous proposal. It is a hopeless and mischievous proposal because the Russians have decreed that it shall not work". As usual, I received a rebuke from the Government for my warning. I have been used to that over the last 11 years. For 11 years I have warned the Government, step by step, of the disasters which would happen, and on each occasion I have been rebuked. The conference did fail, and it made things a lot worse. Geneva made things
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a lot worse, because it degraded our position. We "ratted" on the Kissinger agreement and our "ratting" failed, because it brought no agreement, because Mugabe was briefed by the Russians not to agree. I told the Government that before it happened. At that meeting, we abandoned our case for majority rule in Rhodesia. We changed that to rule by the appointees of the five Presidents—in fact, the Russian guerrilla front. Mugabe had his instructions, and even our humiliation did not buy any kind of agreement.
Then came the Salisbury proposals. Even if they had not been a recipe for the suicide of Rhodesia, they must have been unacceptable, in view of the extent of discredit, as to balance and equanimity, which Mr. Richard had earned for himself. The whole thing was the disaster that I told the Government it would be. This is the background which we are up against. Against this, the noble Lord, Lord Alport, has proposals. His proposals are that we should now hand over to the Shona majority. That is what his election, whatever one calls it, comes to. It comes to handing over to the Shona majority. Is he still naïve enough to think that that is acceptable to the Russians? Does he still think that that would stop the guerrilla war? Does that make him think that the Makonde are not going to break in? Does he think that that is acceptable to the Matabele? It is really very great nonsense and, with very great respect, I must say this to the noble Lord: No man has been more disastrously wrong in Africa than he has been throughout his contact, and I do not think that any man has earned the same degree of mistrust as he has earned among those Africans who have the current misfortune of sharing his colour.
Several noble Lords: Shame!
Lord PAGET of NORTHAMPTON: My Lords, I now turn to the future. There is going to be a war. I can tell the Government as I have told unhappy truths about Rhodesia and Africa for many years. Peace is not an option. Peace as an option is long, long past. The question is: who will that war be between? On the present Russian plan, it will be between the Matabele and the Makonde. They will set upon the Shona and the Europeans. When they have been destroyed, the

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Makonde will fight the Matabele and the object will be that Rhodesia joins Mozamibque as part of the Communist area in Africa. That is the African plan, worked out quite ruthlessly and fearlessly.
The alternative is a deal within Rhodesia, under which Bishop Muzorewa would probably become Prime Minister and the Rhodesian Army—mostly black, but for the time being certainly white-led—would have a reasonable chance of defeating the Makonde invaders. That is the alternative. But it is an alternative that must be fought for by arms. There is no peaceful alternative here. We totally "kid" ourselves. We "kid" ourselves as much as many people "kidded" themselves in 1939 in imagining that there was a peaceful solution when none existed. Appeasement here will not work any more than it worked then.
Here is a position where a little toughness is required and I hope that, at very long last, Her Majesty's Government will think for a little where the interests not only of ourselves but of Africa really lie. They lie in an internal settlement in Rhodesia, and armed military support to that new Rhodesian Government, probably led by Bishop Muzorewa, to enable them to defend themselves from the Makonde/Frelimo forces, which are at present the best armed and the most able, and which are organised by Russia on their borders.
8.46 p.m.
Lord COLERAINE: My Lords, the noble Lord, Lord Paget of Northampton, is always a difficult man to follow, especially on this subject, about which his knowledge is so extensive and on which his sincerity is so self-evident. There was a great deal in what he said with which I agreed, and I have no doubt that the noble Lord, Lord Goronwy-Roberts, will deal faithfully with him on those points of agreement. But I must say that I strongly dissociate myself from his, as I thought, unwarranted attack upon my noble friend Lord Alport.
Several noble Lords: Hear, hear!
Lord COLERAINE: My Lords, over many years now my noble friend Lord
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Alport and I have spoken in these debates on Rhodesia. We have always disagreed, but gradually, I think, the gulf between us has narrowed, until today it is very nearly, though not quite, non-existent. I think that where I differed from my noble friend, and where I agreed particularly with the noble Lord, Lord Paget, was in his assessment of the Russian threat. I cannot quote my noble friend's exact words, but he said something to the effect that the Africans do not like the Russians, and we will find that they will throw off Russian Communism quite easily. There are quite a number of people in the world who do not like the Russians. I do not think the people of Poland like them particularly. I do not think the people of Czechoslovakia like them particularly. But they have not been able to throw them off, and I think we "kid" ourselves if we believe that by getting a settlement we have removed the Russian threat.
The Russians do not think in terms of quick returns. They do not want results as we always want them, by Tuesday fortnight at the outside. They have long-term objectives and they stick to them, and if for a moment they seem to recoil it is only in order to jump further in the future. My noble friend insists that a solution is urgent. As he said, the time scale has dropped from years to months, even to minutes, and I agree with him that a solution is urgent. However, the main point which sticks in my mind from his speech is his insistence that there must be a settlement in Rhodesia—in Zimbabwe, if we prefer the word—for the benefit of the people of Zimbabwe, of whatever tribe or colour, and for the benefit of nobody else.
Earlier this afternoon I had the opportunity of a word with my noble friend Lord Home of the Hirsel, and I asked whether I could quote him in support of the general argument that I am trying to put forward. My noble friend was perfectly agreeable that I should do so, but he asked me to make an apology to my noble friend in particular and to the House in general for his not being here this evening. Only an hour or two earlier he had arrived from California and I think that it would have been unreasonable to expect my noble friend to wait for this debate.

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I want to draw the attention of the House, for noble Lords may or may not have seen it, to an article by my noble friend Lord Home of the Hirsel in the Spectator of 26th February, 1977. The theme of the article is the one which has been stressed by nearly every speaker today: that this is a matter for the people of Zimbabwe, not for the front line Presidents. The particular passage that I should like to quote is as follows:
"The probability of a negotiated arrangement has been compromised by the collapse of the Kissinger enterprise, but there are two factors in the present Rhodesian scenario from which agreement could derive.
"The first is that Mr. Smith has not repudiated his statement that he would agree to majority rule in two years provided that the transition was orderly. He has in fact lately repeated the pledge. The second is that Bishop Muzorewa is a Rhodesian, is in Rhodesia,"—
although he is not now, I believe—
"and wishes to reach a settlement without the use of force. The lesson of the recent months would seem to be that outsiders should lay off and allow the different groups inside Rhodesia to work out a reconciliation".
For my own part, I believe that if it is to have any chance of lasting, any settlement we come to must be on the basis that outsiders should lay off. I do not think that I can recall any debate on Rhodesia—and Heaven knows! I have spoken in enough of them and listened to enough of them—in which there was in general such a measure of agreement between both sides of the House. I was particularly impressed by the speech of the noble Baroness, Lady Gaitskell. I do not hold any brief for Mr. Ian Smith and it is not my place to defend him, but I was very much heartened by the openness of mind which the noble Baroness showed in her references to him. I believe that the noble Baroness reflected an openness of mind on all sides of the House.
There is just one question—I have given him notice of it and I hope that he received it—which I should like to put to the noble Lord, Lord Goronwy-Roberts. Just what is the interest of the front line Presidents in Rhodesia? Is it that they want to establish Parliamentary government in Rhodesia? It can hardly be so, or they would have established it in their own countries. Is it that they are so concerned with individual freedom and the rights of man? It can hardly be that, or they would have paid more attention to
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individual freedom and the rights of man in their own countries. Is there any basis for the attitude of the front line Presidents except the basis of race? And why is it that racism, which is illegal in this country, should seem to be mandatory in Africa? I should like the noble Lord to turn his mind to that question and to give us an answer that makes sense. However, I think it is clear from every speech that has been made that, whatever the solution is, it must be for the benefit not of the front line Presidents or their territories; it must be a solution for the benefit of the people of Zimbabwe, irrespective, as I say, of tribe, race or colour. I hope that the Government, however long they last, will bear that point in mind.
8.57 p.m.
Lord BROCKWAY: My Lords, I want to do much more than thank the noble Lord, Lord Alport, for initiating our debate tonight. I want to thank him for his speech. I have been a little disappointed that in the debate which followed we have not recognised the importance of his speech. It was delivered after the noble Lord had seen representatives of the different nations in Southern Africa, the leaders of the African peoples and the leaders of the whites in Zimbabwe. I thought that he gave us a most objective and impartial picture of the results of that investigation.
The noble Lord concluded his speech by making proposals, the significance of which we have not yet realised. He will forgive me for saying that one will have to consider his proposals very carefully after we have read them in detail. However, the noble Lord's speech contained proposals for the settlement of the situation in Rhodesia which were more constructive and hopeful than any I have heard in previous debates in this House. Therefore, I want to pay my tribute to the noble Lord and to say how ridiculous were the attacks upon him which have been made by one speaker in the debate.
We are now in a very critical situation. I think that the noble Lord, Lord Alport, was correct when he said that it is a matter of months, not years, whether this dispute in Zimbabwe is to be solved by discussion and negotiated settlement or whether we are to be faced with a racial war in Southern Africa the consequences

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of which we can hardly begin to contemplate. That settlement is as important for the whites in Zimbabwe as it is for the blacks. If they have a fear of majority rule in Zimbabwe let them look to Zambia, where the white residents who have remained are happy and recognise the justice of the African Government which has followed.
Lord COLERAINE: My Lords, may I interrupt the noble Lord, who is always so very courteous? When he thinks of Zambia and the position of the white man there, has he considered the economic dislocation and the poverty which has descended upon the people of Zambia as a whole since independence?
Lord BROCKWAY: Yes, my Lords, I certainly have and that economic depression which is in Zambia today is largely the result of the heroic attitude of the Zambian Government in its opposition to minority rule in Zimbabwe, in carrying out the sanctions for which we have asked; and we all ought to pay tribute to the Zambian Government for having done that. But I am thinking not only of Zambia; I am thinking of Kenya, where the quite remarkable conciliation under African rule of the Europeans who were there, particularly in the White Highlands, ought to make the whites in Zimbabwe feel that if a settlement is reached by discussion and negotiation, they may have a future in Zimbabwe as there now is in Zambia and in Kenya.
I have a terrible feeling tonight that history will not forgive us, will not forgive the whites in Zimbabwe, will not forgive the blacks, if the present opportunity for a settlement is not grasped. I should have liked—but I refrain from doing so in detail—to reply to what the noble Lord, Lord Paget of Northampton, said about the Kissinger negotiations. I shall only refer him to the letter which appeared in The Times last Friday from Colin Legum, who probably knows as much about this subject as anyone in this country, which completely denied the suggestion that when the proposals were made by Mr. Kissinger to Mr. Ian Smith, those proposals involved an absolute agreement in which the United States of America and this country were involved.
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I am not surprised that that agreement was rejected by the African people of Zimbabwe. It would have left the armed forces, and responsibility for law and order, in white hands. We now have a situation in which our Foreign Secretary, Dr. Owen, is making an examination of the whole situation in Southern Africa. I wish him every fortune that he can have in that effort. I will only say this to him. I very much hope that in his discussions with Mr. Vorster in South Africa he will not sacrifice Namibia in the interests of a settlement in Zimbabwe. We are forgetting the issue there, and justice in Southern Africa is as important as the issue in Zimbabwe itself.
I want to recognise that if a settlement is to be reached it will mean adjustments on both sides, by the whites and by the blacks. If there is to be an interim Government before majority rule is realised, that interim Government must be recognised as representing a transition to majority rule. It would have to involve very much more than Mr. Ian Smith has now proposed to end discrimination in Zimbabwe and it would have to secure that the control of the armed forces and law and order were in hands that were acceptable to the majority in Rhodesia.
On the other side, there must be adjustments by the African leaders. They must in this situation find a basis of unity. If they are to influence the future of Zimbabwe the conflict between three African leaders, all claiming to speak for the Africans in Zimbabwe, must be ended; and, if we are to succeed in moving towards majority rule, a supreme effort must be made by that conciliation between African leaders. I say this, further, that if a settlement is to be reached by reason and negotiation which makes majority rule in Zimbabwe possible within the period of two years which has been laid down, then the whole influence of African leadership must be exerted against the continuation of guerrilla warfare in that territory.
Finally, my Lords, I want to make an appeal to our own Government. I want it to be much more decisive and challenging in its assertion of the right of the majority in Zimbabwe to control their nation. I should like to see them much more challenging on the issue of sanctions. They are sometimes being betrayed by interests in our own country; they are

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being betrayed in many countries of the world. I should like to see our Government taking a much more challenging attitude in the Sanctions Committee of the United Nations, denouncing those who are repudiating this international obligation.
There is one further point that I want to make. British subjects of Asian descent and non-white descent are now asked in Zimbabwe to join the military forces against the African guerrillas. A number of them are refusing to do so. A number of them are now seeking to come to this country. There are three cases now which are before the Home Office, and at Heathrow they are being refused admission to this country, though they desire to come here because they are refusing to become the conscripts of a Government which we regard as illegal. When this matter was raised by my noble friend Lord Avebury—and I pay tribute to his initiative—I proposed in this House that all individuals of this character should, at Heathrow, before they are sent back, he allowed to make an appeal to the Home Office. I regret to say that that suggestion was declined.
What I want to say to Her Majesty's Government is this: if they are really sincere in their desire to secure majority rule in Zimbabwe, then they have to show a challenge and a decision to a Government which is illegal, which is in defiance of our own Government, and they have to show sympathy and support to those in Zimbabwe itself who are declining to become the instruments of that illegality. I hope the Government will listen to that plea.
9.12 p.m.
Lord BARNBY: My Lords, in following the noble Lord, Lord Brockway, who takes such an interest in Africa and whose sincerity I always admire, he will not expect me to agree with not a little of what he has said, although he has, as usual, made interesting suggestions. I have just returned from seven weeks in Southern Africa where I spoke with not a few responsible individuals, both black and white, and so carried back an impression. For that reason tonight I could not forego the inclination to advance some reflections. I was looking forward to the Question and how it was going to be put by my
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noble friend Lord Alport, and I am not disappointed in his address, so thoughtfully presented. He has put forward some massive suggestions and has made what is without question a contribution of great value to all our thinking. But to anybody with logical reasoning and some knowledge of Africa we should ask the question, what does the Free World really want to see—Rhodesia succumbing to the influence of Marxist principles, as pressed all over Southern Africa, doubtless with the intention of dominating the whole of Southern Africa?
There can be no doubt that in Rhodesia there was grave resentment against the attempt of the British Government to impose an external solution, as doubtless there would have been in many other countries under similar circumstances. Many find it puzzling that the British Government attach such importance to the so-called five front line Presidents and accept their advice. As those Presidents are all subjected to Russian influence, that advice must be suspect.
An internal settlement would be much more acceptable to all Parties and peoples in Rhodesia. The Western Free World must have grounds for the widest possible opposition to the dangers of Communism and it should pursue all possible means to oppose Communism, regardless of emotional or ideological feelings. High on the list of priorities should be the removal of sanctions. Such an action would prove to be a great discouragement to the terrorists and would contribute to a reduction in the loss of life. Surely sincerity and humanity should press for such a step being taken. That should also be acceptable to the emergent States which have received hundreds of millions of pounds of taxpayers' money, none of which has gone to Rhodesia.
Let there be no misunderstanding. The present conflict in Africa is not black against white: it is Communism against non-Communism; it is constitutionalism and private enterprise against Communism. Tan Smith has accepted the removal of racial discrimination, the abolition of the Land Tenure Act and the accompanying revision of the Tribal Trust Land areas. This practically satisfies the demands of both the previous Conservative Government and this Government. I believe that those steps will be taken by

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the Rhodesian Government. I should like the Government to display more guts in mobilising world opinion to save Rhodesia from the dangers of Communism.
Let us make no mistake. Terrorism is paid for by Russia, by money or weaponry. This is a contribution which receives assistance from other sources, such as the Swedish Government, who have recently voted 800,000 dollars to the terrorist movement, and assisted by others, even British private as well as official sources. The House was told recently, by the noble Lord, Lord Home, with much wisdom, that while we could call off sanctions we could not stop terrorism. Be sure that Russia, in contributing support to terrorism, will not relax.
I hope that we shall hear from the noble Lord, Lord Goronwy-Roberts, tonight some drift of the Government policy towards logic and sanity, and also policy in getting assistance from the United States and other Free World sources to bring about this possible saving of Rhodesia from Communism and to bring about a peaceful settlement in that splendid country, the responsibility for which this Government continue to admit.
9.23 p.m.
The Lord Bishop of SALISBURY: My Lords, I venture to intervene for a brief moment because my knowledge of Southern Africa is only infinitesimal after 30 years. It is in fact 32 years since a South African proposed marriage to me and I accepted her, and ever since I have been visiting the country and also been in touch with my friends in Rhodesia. But on behalf of these Benches I want first to pay tribute to the noble Lord, Lord Alport. I believe it was a promising politician elsewhere who said that, "Jaw, jaw, was better than war, war". I should have thought that negotiation is absolutely essential, but, as the noble Lord pointed out, time is getting short.
Secondly, I believe that your Lordships will agree that there is a breakdown of trust. That is what has to be re-established between black and white. From my knowledge of those in education and my brother priests out there, all the advice I
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get is that this is what they are looking for; the re-establishment of trust by negotiation. I do not believe that it can be done by force of arms for reasons that the noble Lord, Lord Alport, told us. In the areas of defence, internal security and law and order, trust needs to be re-established.
How can it be done? At this late hour it is perhaps not pertinent for me to go into any suggestion of detail, but I wonder whether it could be done by a Commonwealth presence at the invitation of the Geneva delegation to the Secretary-General of the Commonwealth. It could be drawn from various countries, which I shall not enumerate now. It would be a Commonwealth presence but not a Commonwealth force. It would be on a small scale for training purposes—training in defence; training missions to retrain those at present in nationalist movements under arms to serve a new national army; field officers to monitor the deployment and role of forces in the field, police officers to supervise police forces responsible to the Crown and so on; a great programme of retraining.
I wonder whether a referendum could be monitored by such a Commonwealth force? I should have thought that Bishop Muzorewa's concept of a poll to ascertain the degree of support would only result in saying, "We would support different people", and, as Lord Alport said, there are bound to be irregularities; there are in countries in the West, as he reminded us. But I think that such an outside presence, monitoring and supervising a referendum, would be more likely to meet with universal approval.
There are people who have already committed themselves in one way or another away from their civilian lives—some of them are friends of mine—some of them are in exile and others are under arms. There will, I suggest, need to be a massive and prompt retraining programme for those people if they are to contribute constructively, as I believe many of them want to do, to the economic and social strength of the new nation. Many of the personnel needed for this retraining programme could, I suggest, be found from Commonwealth sources.
I would follow the noble Lord, Lord Brockway, by saying that we shall be able to digest all that Lord Alport has given us. With enormous restraint, I

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hold back from explaining to the noble Baroness, Lady Gaitskell, the warped theology of Mr. Vorster, on which I could give her three or four hours' instruction at any time she wishes. I restrain myself at this late hour merely to wondering whether, in his answer, the Minister would convey whether some such thoughts as these may be in his mind, though of course not in any way presuming to suggest the details; a Commonwealth presence to achieve negotiation and, with God's will, peace.
9.28 p.m.
Lord GORONWY-ROBERTS: My Lords, we are all extremely grateful to the noble Lord, Lord Alport, for the tone as well as the content of his wholly admirable speech tonight. It follows a similar speech in quality and message that he made some weeks ago when we last discussed this important matter. I was personally delighted to hear the tributes paid to him from all parts of the House, not only for his speech, which was constructive and high-minded, but also for his immense services to Africa and to the Commonwealth over a long and distinguished career.
I agree with the noble Lord, Lord Coleraine, that there is indeed a good deal of consensus in the House tonight as to what needs to be done or attempted to be done to secure a fair and durable solution of the Rhodesian and, therefore, of the Southern African problem. Her Majesty's Government, like their predecessors, are motivated by the belief that there must be a credible alternative to armed strength. As Lord Alport put it, the solution does not come from the mouth of a gun. If it does, it will not be a solution; it will be a recipe for continuing chaos and bloodshed in the future. If we fail to find it, as I have said before at this Box, not only Rhodesia but the whole of Southern Africa may be consigned to a racial and ideological conflagration, the outcome of which none of us could predict and one which might involve not only Rhodesia and Southern Africa but the whole of mankind, for we are dealing here with issues that are African in context but humane in their implication for good or ill.
That is why, despite repeated setbacks and disappointments, we are determined
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to pursue the quest for a peaceful settlement based on genuine majority rule; and that is why—and here I give one point of assurance to a number of speakers in this debate—we shall continue to work closely with the United States Administration as with other parties involved. That is also why my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs has decided to make Southern Africa the object of one of his very first trips abroad since assuming office.
There are some who have said from time to time, and especially since Mr. Ian Smith on 24th January rejected our proposals as a basis for future negotiation, that we should wash our hands of the whole affair. I was very glad that the noble Lord, Lord Elton, invited me to join him in reasserting a firm determination of this Government and, I believe, this country, whatever the Government in power, never to abandon our responsibility for Rhodesia—a responsibility for all its people. We would indeed refuse to be party to any bogus solution that might be patched together internally in Rhodesia and which went only part of the way to render justice to a section of the people concerned. We are not interested in a so-called solution that would merely serve to perpetuate an existing repression; nor, indeed—and here once more I agree with the noble Lord. Lord Coleraine—are we interested in a solution that might hand over Rhodesia and its peoples to a Marxist repression.
Our objective is genuine non-racial democracy, and it is not an ideal which is impossible of attainment. We have heard tonight, and some of us know personally, that in many parts of black Africa they are well on the way to achieving this ideal. We have heard references to multi-facial communities in Zambia, in Kenya and, one might add, in Botswana, and what can happen in those three countries—and there are others—can, I suggest, happen in Africa, as in other parts of the world, where that ideal has not yet been attained.
My noble friend Lord Brockway called for a positive, striking initiative by the United Kingdom. I wish to say to my noble friend that if it were left to the United Kingdom alone there would be a settlement today, but, as he said, we are not alone in this. This is the post-colonial situation—not a colonial situation,

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still less a pre-colonial one. We are in this with others. We accept responsibility, but we have to share it; and when my noble friend says that we should be more definite about sanctions I should like to know more about this. If every country in Eastern or Western Europe had been as assiduous and as honourable in the discharge of its obligations to the United Nations in the matter of sanctions, it is possible that the illegal régime would already have been brought down. It really is not enough constantly to accuse the United Kingdom—Britain—of shortcomings, deficiencies in this and in so many other matters, as if it all depended on us. This country has, as a colonial Power, as well as a post-colonial Power, much to be proud of, and I should like to see a little more appreciation of the role and mission of this country today, as in the past, in Africa, as in other parts of the world.
My noble friend Lady Gaitskell, in an excellent speech, quite rightly examined the possibility of whether the later initiatives of Mr. Ian Smith—what I described the other day as the latter day sainthood, for which we have been waiting for 11 years, and which, in a rather patchy way, is coming forward—might not be the basis for a solution. I would only say: by all means, if the intention genuinely is to move ahead expeditiously to majority rule. Like her, I should very much like to be able to welcome such a policy emanating even from the illegal régime, but, quite frankly, I do not think that we can be too hopeful of this at the moment.
In common with the United States and all our major allies, we believe that if a durable agreement is to be reached in Rhodesia it must be subscribed to by all the parties. It is not for Mr. Smith and his cronies to pick and choose with whom among the black Africans they are going to come to an agreement. Justice is indivisible in Rhodesia, as elsewhere. We are told that Mr. Smith is willing for anyone to put to the test their claims to represent the majority. I wish that that gentleman had been here to listen to the section of the speech of the noble Lord, Lord Alport, in which he described—I do not necessarily accept the proposal at this Box—a possible electoral method of doing this. This is the kind of thing
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that we should like to hear the illegal régime declare for, the kind of proposal that the noble Lord, Lord Alport, put before us. May I say, both as to what he had to say about the organisation of the interim Government via the High Commission, and the other three points he made on that score, and, indeed, on the electoral process so vital to assuring everybody that the real views of the Rhodesian peoples have been ascertained, I can assure him that Her Majesty's Government will examine very carefully indeed what he has proposed, and, indeed, his entire speech.
The right reverend Prelate the Bishop of Salisbury made a number of excellent suggestions. I must be very careful not to express too swiftly agreement with what he said, so he will not take me as stating Government policy just yet. There is a certain comparison between what I am about to do and what I am told St. Augustine proposed at one period in his career—"Not quite yet". But the proposals he has made have more than the germ of common sense and practical sense. I personally very much like the idea of a Commonwealth presence. We said on 24th January to Mr. Smith in the paper we put to him, as we did to the other protagonists in this argument, that we were ready to provide a British presence. Let us not be too rigid about what precise presence there should be. It could be a Commonwealth presence. By all means let us look at this. I am speaking merely for myself at the moment, but I very much like this idea. After all, the Commonwealth is an association of 36 countries of all colours, creeds and backgrounds—and of systems, too. Not all of them are Parliamentary democracies, as the noble Lord, Lord Coleraine, almost accused them of being—not all of them, not yet—but they are a microcosm of the world, a fund of suggestion and, so often, of co-operative action. The suggestions of the right reverend Prelate, as well as those of the noble Lord, Lord Alport, certainly merit very close consideration indeed.
My Lords, I am bound to say that I find myself more in agreement with the two noble Lords I have mentioned than with the noble Lord, Lord Barnby, very much though I always want to agree with him because he has a way of making it almost impossible for me not to agree

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with him. When he talks about Communism, I do not see it this way. I do not think you are going to prevent Communism in Africa by backing what I see to be the prime inducer of Communism into the Continent over the past 11 years. This is not one of my wild far Left ideas. No less an authority than the noble Lord, Lord Alport, in a speech last November, trenchantly and I thought conclusively showed this on a basis of fact and history. I could only say that, so far as I can see, if you want to prevent Africa going "Red" you need to remember that it is black. The antidote to Communism, to totalitarianism, is of course the prideful, constructive nationalism that so often animates the self-governing States of the British Commonwealth.
I hope that the noble Lord, Lord Barnby, will look at this again, for he knows Africa so well. Is this the right way to prevent external totalitarianism from getting a grip on Africa; indeed, to have a kind of totalitarianism tighten its grip on the vast majority of Africans? I am afraid that the attractions of Communism, or, as I call it, of external totalitarianism, are going to prove increasingly strong to Africans as their experience of homegrown Rhodesian totalitarianism, as far as they are concerned, proceeds. If we stand idly by and make no effort to induce a sense of realism among the members of the Rhodesian Front and their friends in this country, then they will proceed, blinkered, to the inevitable possibility of extended bloodshed and, possibly, to the last thing that they want to see happen in Rhodesia, the great black majority of 7 million driven to the point where they welcome the introduction of external totalitarian Communism.
The noble Lord, Lord Coleraine, put a question to me; and he put it with what I can only call House of Commons incisiveness. He had, in fact, anticipated it with what I can only call House of Lords courtesy, by letting me know beforehand that he was going to ask the question. He asked me what interests, other than that of race, had the front line Presidents in Zimbabwe. I would say that they had at least three. First, they are interested in an early solution of the economic uncertainty and loss which the present situation imposes upon them as much as upon Rhodesia. We had the example of
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Zambia from my noble friend Lord Brockway—and so true it is. That is one interest they have in an early solution in Rhodesia; the interest of economic progress. Secondly, they have an interest in political stability. Indeed, before we upbraid certain African States with not having achieved full British-type Parliamentary democracy, let us pay a little attention to that second need: that is, a firm basis of political stability, without which they cannot start to think of systems, still less of democratic stability. They wish to see an early solution so that they can count on political stability. Thirdly, they have an interest in Rhodesia —of course they have—in their fellow-feeling for them. It is not a racist feeling; it is a natural feeling. If you like, it is an anti-colonial feeling; a feeling that it is time that this type of system ceased on their borders as it has ceased within their borders, whatever the deficiencies of the latter.
Having said that, I agree that some African States, not all, have not yet attained British-type political democracy. Would my noble friend—as I like to call him—say that the South African Republic has attained a British type of political democracy? It would not be enough to say that they had done it for 4 million white people. That is not an answer. Have they done it for 14 million coloured and black people in the Republic? What is the interest of the South African Republic in Rhodesia? Is it to introduce political democracy? If so—and I echo the noble Lord in his second question—why have they not done it in the Republic?—because they have not. My Lords, we could go on arguing and debating in this way and perhaps losing the precious boon of constructive consensus which I entirely agree has been discernible and audible in this debate.
Lord COLERAINE: My Lords, the noble Lord is always so courteous that I feel some extra sense of diffidence in pressing him a little further. He tells us that the front line Presidents foment guerrilla warfare in Rhodesia because they want an early settlement. That is the one way to ensure that there is not an early settlement. They foment guerrilla warfare in Rhodesia, as the noble Lord says, to achieve stability. But surely that is not the way to achieve political stability. If we want a political settlement which is

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fair to everybody in Rhodesia, Her Majesty's Government must do what they can to call off the front line Presidents from baying at the heels of Rhodesians, both black and white.
Lord GORONWY-ROBERTS: My Lords, I think that the noble Lord has somewhat rephrased the question which I, in my inexpert way, thought that I had attempted to answer. Nevertheless, he now asks me about the front line Presidents and their relation to the guerrilla fighters. But I do not think that one can insist on anything in South Africa. There was no need to insist on front line Presidents or anybody else not supporting guerrilla fighters for a long time because there were no guerrilla fighters. They came about because in the course of the 11 years they found that otherwise there was absolutely no hope of budging the illegal régime. I have said from this Box that Her Majesty's Government do not in any way condone or support, materially or morally, guerrilla fighters or fighting. But we have to understand that after years of trying it the other way, at last the inevitable has happened: men have taken up arms and some African Presidents have supported them. My Lords, how do we get out of this?
The Marquess of SALISBURY: My Lords, did I understand the noble Lord correctly in saying that because the guerrillas and their supporters were unable to achieve what they wanted by peaceful means, they were entitled to resort to arms, and it was perfectly proper for the neighbouring States to support them?
Lord GORONWY-ROBERTS: My Lords, the noble Marquess has not quite paid his usual attention to what I was saying. I thought I was most explicit, once more. Her Majesty's Government neither condone nor support, morally or materially, guerrilla fighters or fighting. But we are bound to understand why, after vainly attempting for many years by peaceful means to extort from the illegal régime some measure of movement towards what I have heard called "democracy", men's patience snapped and they took up arms; and some African Presidents have blessed and supported guerrilla fighting. That is what I said. Those are the facts of
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life, and I was addressing myself to the question: what do we do now? How do we stop guerrilla fighting? The only way to stop guerrilla fighting is to remove the cause of it and to attain as quickly as possible—and here I join those who have stressed the urgency of the situation—an arrangement in Rhodesia which is seen to be fair to all sections and to be durable. When that is attained, what was the state of affairs in Rhodesia only a few years ago, before 1972—namely, an absence of guerrilla fighting—can then be logically re-attained. There has not always been guerrilla fighting in Rhodesia. For a long period there was nothing of the sort.
By addressing ourselves to the task in which my right honourable friend the Secretary of State will very shortly be engaged we shall create those conditions. It is indeed to the end of achieving a peaceful solution of the Rhodesian and South African problem, based on general majority rule, that he will be visiting Southern Africa during the Easter Recess. I repeat, the fact that he is finding time, at this early stage in his tenure of office, to make such a visit in order to acquaint himself at first hand with the problems and with some of the key figures concerned, is a measure of the importance that he, together with Her Majesty's Government, attaches to finding a solution. I am confident that we can make progress, given good will and trust on both sides; but without it even the most perfect schemes for transitional Government or an independent Government will come to naught. My Lords, I believe that this evening's debate has yielded two things: a fundamental consensus and a number of extremely useful and constructive ideas. It will be my duty to convey personally to the Secretary of State the spirit and content of the debate.

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