Sitting of 22 March 1977

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  AUSTRALIA AND NEW ZEALAND BANKING GROUP BILL
  Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
  DEFENCE

    Portland Naval Base
    Mr. Brothertonasked the Secretary of State for Defence if he will visit Portland naval base.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. A. E. P. Duffy): There are no plans at present for my right hon. Friend to visit Portland naval base.
    Mr. Brotherton: Will the Minister find time to visit Portland and explain to the many short-service naval pilots and observers stationed there what the Government's policy is regarding the payment of their gratuities when their engagements expire? If the Government do not honour this pledge, will the Minister do the honourable thing and resign, and vote with the Opposition tomorrow?
    Mr. Duffy: My right hon. Friend will be making a statement on this matter during the course of the debate on the Defence Estimates following Question Time, and I think the hon. Gentleman will then get a reply to his supplementary question.

    Royal Navy (Recruitment)
    Mr. Banksasked the Secretary of State for Defence if he will state the budgeted figure for expenditure on adver-
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    tising for recruitment to the Royal Navy in the current year.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. James Wellbeloved): About £874,000 will be spent in the current financial year. This figure includes advertising for the Royal Marines, the Women's Royal Naval Service and Queen Alexandra's Royal Naval Nursing Service. All but a very small proportion of this expenditure is borne on the votes of the Central Office of Information.
    Mr. Banks: I thank the Minister for that reply. Does he agree that it is unethical and blatantly dishonest to advertise contracts of service on which, in the case of gratuities for Royal Navy pilots, the Government are prepared to welsh? Is it not disgraceful that for so long the Secretary of State has remained silent and refused to refute these suggestions?
    Mr. Wellbeloved: I am sorry that the hon. Gentleman used such extravagant language when my hon. Friend the Under-Secretary of State for the Navy has just told the House that if my right hon. Friend catches Mr. Speaker's eye he will be making a statement in the course of the debate this afternoon. There has not been, and will not be, any question of this Government welshing on any undertakings.
    Mr. Gwilym Roberts: Will my hon. Friend make certain that none of the television advertising for the Navy or any of the other Armed Forces conveys, either directly or indirectly, the impression that jobs in industry, which are vital to national recovery, are in any way monotonous or humdrum?
    Mr. Wellbeloved: I do not believe that our advertising conveys that impression. What we are seeking to do in our advertising for recruitment to the Armed Forces is to demonstrate and make clear to young men and women that if they do join the Armed Forces of the Crown they will be entering upon an honourable and exciting career.

    Nimrod Airborne Early Warning System
    Mr. Churchillasked the Secretary of State for Defence how much money has

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    been invested, to date, in the Nimrod airborne early warning project.
    The Secretary of State for Defence (Mr. Frederick Mulley): About £14 million.
    Mr. Churchill: Is the Secretary of State aware that as the only member of an alliance with a rival—I must say a very good rival—to the Boeing AWACS in a very advanced state of development, Britain has been patient long enough? Will the Secretary of State give a categorical undertaking to the House and to the industry, which has so many jobs at stake, that in the event of no decision being taken in Brussels later this week at the ministerial meeting the British Government will go full steam ahead and back Nimrod?
    Mr. Mulley: I am obliged to the hon. Gentleman, speaking, as I am sure he does, on behalf of the Conservative Party. I shall, of course, convey that view to my ministerial colleagues. I shall not at this juncture speculate on the outcome of Friday's meeting, but clearly, having stressed the urgency of the matter in December, I shall want if at all possible to reach a final decision on Friday. I shall be referring to this matter later in today's debate.
    Mr. Flannery: Is my right hon. Friend aware that Yorkshire Labour MPs recently met a deputation of workers from the aircraft factory at Brough on this subject? There is a deep feeling that undue deference should not be shown to the Americans on this issue and that we should back this aircraft, as has been said from the Opposition Benches, because it is thought throughout the trade that it is better and that it will preserve jobs.
    Mr. Mulley: I am much obliged to my hon. Friend. My ministerial colleagues and I have met about 30 deputations and we have clearly got the message of the importance attached to this project by the aircraft industry.
    Mr. Arnold: Why is the right hon. Gentleman now prepared to reveal figures about this project when a month ago he was saying that security considerations prevented his doing any such thing?
    Mr. Mulley: The only figures that we have been able to give are very rough estimates, because the negotiations in
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    NATO about the final determination of shares are still not concluded. As regards the industry, both the companies and ourselves are in a difficulty in terms of disclosing figures in advance of what may be a contractual negotiation. Obviously we cannot begin this negotiation until a decision is taken to proceed.
    Mr. Arnoldasked the Secretary of State for Defence whether he has now reached a decision with regard to the purchase of an airborne early warning Nimrod.
    Mr. Mulley: No. But I very much hope that NATO Defence Ministers will reach a decision when we meet later this week. Meanwhile, work on Nimrod is continuing.
    Mr. Arnold: Is it not the case that the Nimrod system is broadly comparable to the proposed Boeing AWACS? Why does the Secretary of State pretend otherwise?
    Mr. Mulley: It is not the case that the two systems are comparable, because they were designed for different military requirements. The AWACS was designed to meet the needs of the congested land and air space in Central Europe, and the Nimrod, which was in competition but which, unfortunately, was not chosen by NATO, was designed and will fulfil the requirements of the Eastern Atlantic, the Channel and the United Kingdom air defence region.
    Mr. MacFarquhar: Will my right hon. Friend inform the House of the results of the latest negotiations on AWACS between the Germans and the Americans? Is there any possibility of the French Armee de l'Air entering the AWACS scheme in place of the Germans if the latter pull out?
    Mr. Mulley: The decision will have to be a collective NATO one, and the purpose of the meeting is to discover the answers to all these questions. I would like to have the answers before I go to the meeting, but at the moment I do not have them.
    Mr. Dykes: Does the Secretary of State agree that in many characteristics the Nimrod is superior to the American alternative? Senior Army officers as well as representatives of NATO forces have privately as well as semi-publicly expressed that view. Why, then, are the

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    Government so self-effacing about this matter? This is literally the last opportunity for the United Kingdom to assert itself in respect of a first-rate military aircraft.
    Mr. Mulley: The choice, if it is on a national basis, will, for our purposes, be the Nimrod. Equally, it is clear that the Alliance has considered and rejected Nimrod as a capability for the whole of the NATO area. There is absolutely no chance, in my view—much as I would like there to be and much as I shall try to achieve it—of the Nimrod's being adopted for the Alliance generally.

    Employment
    Mr. Blakerasked the Secretary of State for Defence what is his estimate at the latest available date of the loss of jobs and job opportunities which has occurred since 1st March 1974 as a result of the Government's defence cuts.
    The Minister of State, Ministry of Defence (Dr. John Gilbert): I refer the hon. Member to the reply that I gave to the hon. Member for Tynemouth (Mr. Trotter) on 17th March.
    Mr. Blaker: Is not it clear from answers that the hon. Gentleman has given in the House recently that the number of jobs and job opportunities lost and expected to be lost as a result of the Government's first four rounds of cuts will be 218,000 by 1979? Will he now give an estimate of the number of jobs and job opportunities expected to be lost as a result of the cuts announced last December? Is not it clear that these defence cuts are a significant cause of unemployment?
    Dr. Gilbert: The hon. Gentleman has arrived at his figure of 218,000 by adding together Service personnel, directly affected civilians and those in the defence industries. I accept his figure entirely. I cannot yet give our estimate of the consequence of the last round of cuts because we have not decided where the second year's cuts will fall.
    Mr. Ioan Evans: In calculating the loss of jobs and job opportunities, have the Government taken into account the fact that we spend a higher proportion of our gross national product on defence than do our competitors, such as Japan and West Germany?
    Dr. Gilbert: My hon. Friend is right. We spend a higher proportion of our GNP on defence than does any member of the North Atlantic Treaty Organisation, other than the United States and Greece, and certain economic penalties are attached to that fact.
    Mr. Goodhart: As the Department is trying to reduce the real earnings of industrial civil servants employed by the Army by 25 per cent. in the coming year, is it not plain that the number of jobs lost will exceed 250,000 very soon?
    Dr. Gilbert: The hon. Gentleman defeats me. I have not the faintest idea from where he gets his figure.
    Mr. James Lamond: Is my hon. Friend aware that the Ministry of Defence awarded a contract for the building of a destroyer—HMS "Cardiff"—to Vickers, in Barrow-in-Furness because that firm said that it wanted to maintain employment in the area, but later had to remove the ship from that yard and place it elsewhere because the firm could not maintain its labour force at the level necessary to complete the contract?
    Dr. Gilbert: There were difficulties with the contract and, unfortunately, it had to be moved to another yard. There was a complex of reasons for that decision. It related to employment in certain trades as much as anything else, as I recall.
    Mr. Churchill: Bearing in mind that the Minister has confirmed already that 120,000 jobs and job opportunities have been lost in the Services and the defence industries, and that a further 100,000 jobs are to be destroyed deliberately by this Government between now and 1979, what consultations about this latest job destruction programme have the Government had with the trade unions?
    Dr. Gilbert: The hon. Gentleman must be under some misapprehension. The purpose of the defence programme is not to create jobs; it is to defend the country.

    Expenditure
    Mr. Viggersasked the Secretary of State for Defence whether he will clarify the official statement that cuts in defence expenditure will be in the tail of the defence forces rather than the teeth by further defining the terms tail and teeth.
    Mr. Mulley: I assume that the hon. Member has in mind my statement on 28th February that I was looking for savings to slim the tail and not blunt the teeth. My aim is to minimise the effects of the cuts on the front line by concentrating savings as far as possible on support and administrative services.
    Mr. Viggers: Is not this nonsense about "tail" and "teeth" a deliberate smokescreen to cover the damage done to our defence forces by the defence cuts? Is it not also an insult to those who have devoted their working lives to supporting the Services to say that they should be cut rather than the front line?
    Mr. Mulley: I hope that no one feels any sense of injustice or insult by the use of the terms "teeth" and "tail", which have been current in military phraseology for many years. It is absolutely true that both aspects are important, but, as I shall hope to show in my speech later today and as the White Paper indicates, the current cuts for next year are concentrated on support and not on front line formations.

    BAOR (Armoured Divisions)
    Mr. Trotterasked the Secretary of State for Defence what is to be the personnel strength of the armoured divisions in BAOR in peacetime and after mobilisation.
    The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): In peace time, about 8,500 and up to 14,000 after mobilisation including Regulars, reservists, TAVR and battle casualty replacement.
    Mr. Trotter: Can the Minister say whether any changes have been made in the barrack accommodation as a result of this reorganisation of the Army in Germany, bearing in mind the previous situation, in which the troops were in the wrong locations, having regard to the need to defend the frontier with East Germany?
    Mr. Brown: Barrack accommodation is another question, but clearly this has been taken into account in the reorganisation.
    Mr. Fernyhough: Can my hon. Friend say whether any conclusion has yet been
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    reached with the Germans over the matter of support costs for the British Army of the Rhine?
    Mr. Brown: Negotiations are still taking place.

    Gratuities
    Miss Fookesasked the Secretary of State for Defence if he will reaffirm the obligation of Her Majesty's Government to pay gratuities on retirement to those who enlisted on short-service commissions.
    Mr. Liptonasked the Secretary of State for Defence whether he has now completed his review of the tax-free gratuities promised to certain officers in the Royal Navy and the Royal Air Force when they signed on.
    Dr. Gilbert: My right hon. Friend the Secretary of State will be making a full statement in the course of the defence debate later this afternoon.
    Miss Fookes: As the purpose of asking a Question is to get an answer, why cannot I have an answer now? Surely this is most important.
    Dr. Gilbert: As will become apparent from my right hon. Friend's remarks later today, this is an extremely complex matter. A statement now would take far longer than hon. Members would want to see taken out of Question Time. I can assure the hon. Lady that at no time was there any question of Ministers wishing to welsh on their obligations under the scheme.
    Mr. Lipton: What is the reason for this side-stepping and duck-shoving? Do we have to sit and listen to all the twaddle in the speech that is to be made by the Secretary of State before we can get an answer to a simple question? All that the Minister has to say is "Yes" or "No". He can cut out all the legalistic quibble. I, for one, do not want to listen to the Secretary of State for Defence making his speech.
    Dr. Gilbert: I should have thought that my hon. Friend would have deduced by now that the answer is "Yes" and was always intended to be "Yes". It always was "Yes". Many ill-informed and in some cases malicious articles that

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    appeared in the Press had no basis of fact whatever.
    Sir Ian Gilmour: There was no need for Question Time to be taken up on this matter. I wrote to the Secretary of State nearly three weeks ago saying how dishonourable the Government's apparent proposals were. Why have not I had an answer before now?
    Dr. Gilbert: If the right hon. Gentleman insists on using that sort of language without any knowledge of the facts, it is not surprising that he has to wait for an answer. As he will discover from my right hon. Friend's speech later today, many of the complications are produced by the coincidence of the commitment to pay gratuities and the legislation introduced by his own Government with respect to Armed Forces pensions. If he will be a little patient, I hope that he will be able, with the assistance of my right hon. Friend, to unravel the complexities.

    Royal Navy (Atlantic Air Cover)
    Mr. Maurice Macmillanasked the Secretary of State for Defence whether units of the Royal Navy will be able to operate safely in those parts of the Atlantic which are outside the range of effective aircover by the RAF when HMS "Ark Royal" is withdrawn.
    Mr. Duffy: We believe that our arrangements for defence of the Fleet against air attack after HMS "Ark Royal" is withdrawn from service will be satisfactory.
    Mr. Macmillan: Does not the hon. Gentleman realise that whereas we shall have no aircraft carriers the Soviet Union is building three, and has air bases in Southern Africa? Does he accept that this means that it will be impossible to defend the sea routes carrying essential raw materials using British ships, British aircraft and British forces without relying on our allies?
    Mr. Duffy: No. Though I understand the right hon. Gentleman's contention, I cannot accept his underlying argument. The Phantom and Buccaneer aircraft of HMS "Ark Royal" will continue to be employed in a maritime rôle from ashore. Moreover, land-based aircraft can operate in the former sea areas of NATO through
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    which all the supply and reinforcement shipping from North America must pass. Apart from land-based aircraft, we are introducing a number of very effective air defence systems into the Fleet.
    Mr. Alan Lee Williams: Will the Minister confirm that organic air defence is no longer essential, because of modern developments?
    Mr. Duffy: Yes, my hon. Friend is quite right. Our concept of defence provides us with aircraft to attack or disrupt missile launching vehicles—the Sea Dart for medium-range defence, the Sea Wolf for shorter-range defence and the Sea Harrier which adds a complementary quick reaction capability.
    Any warlike operation in the NATO area would be integrated with the NATO forces. Therefore, apart from RAF land-based aircraft and our own organic defences RN ships would receive aircraft support from other nations, which might well include United States shipborne aircraft.
    Mr. Churchill: Will the Minister cease being so complacent about this matter? Is he not aware that the single most significant new factor in this situation has been the deployment at bases in the Crimea and the South-West of the Soviet Union of 100 supersonic Backfire bombers? These pose a great threat to the territorial land mass of Western Europe and particularly to the shipping routes which are vital to us. Is he satisfied that we should be assisting the extension of the range of the Backfire bomber with Lucas and Plessey contracts?
    Mr. Duffy: The hon. Member mistakes complacency for informed knowledge of the Fleet's capability and deep confidence in its ability to deploy that capability.

    Nimrod Aircraft (Fishery Protection)
    Mr. Michael McNair-Wilsonasked the Secretary of State for Defence what is the average cost per hour of using a Nimrod aircraft in the fisheries protection rôle, including crews' salaries, expenses and the cost of ground support facilities.
    Mr. Wellbeloved: Approximately £1,200 per hour at 1977 prices.
    Mr. McNair-Wilson: What further consideration has the Minister given to

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    using the Maritime Defender in this role? It would cost only £64 an hour to carry out this task, and all it would require is an avionic fit. At a time when public expenditure cuts are uppermost in everyone's mind, would it not be an ideal aircraft for this task?
    Mr. Wellbeloved: That remains to be seen. I have received a letter from the chairman of Fairey-Britten and the claims in that letter are now being examined by my Department. We are also examining other contenders that have been suggested to us. When we come to a final decision an announcement will be made.
    Mr. James Johnson: Will the Minister give his considered view about the use of airships in a fishery protection role? Will he consider a mini-zeppelin such as the R500, which is 85 feet long and is faster than a frigate, having 60 knots compared with 25? Also, it can hover, manoeuvre and is cheaper.
    Mr. Wellbeloved: We would be prepared to consider any proposals that could make a contribution to cost-saving in defence expenditure. On the preliminary consideration that I have given to the question of the use of airships by the Royal Air Force, I see no war rôle for them, and they would be a rather expensive operation for the RAF to maintain.
    Mrs. Winifred Ewing: Will the Minister comment on the advantages that the Nimrod has—although it is more expensive—in that it can scan such a large sector of sea and has such a long range? What information has he about the effect of the combination of air and sea protection since the Nimrod was introduced? If we cut the cost of fisheries protection we would not be able to counteract invasions of pirate fleets.
    Mr. Wellbeloved: The Department of Agriculture for Scotland and the Ministry of Agriculture in England and Wales are entirely satisfied, as customers, with the contribution made by the RAF in the manning and work of Nimrod. I am entirely satisfied that the aircraft is doing the job laid upon it by the customers.

    Anzio Camp, Cyprus
    Mr. Townsendasked the Secretary of State for Defence if he will make a statement on the conditions for British refugees in Anzio Camp, Cyprus.
    Mr. Wellbeloved: There are 285 displaced persons living in Anzio Camp, of whom 183 have British passports. No charges are paid by the occupants of the camp, which consists of huts and which has all main services. Free rations for those in need are provided by the Republican Government. I visited the camp last September and satisfied myself that conditions there compared favourably with other refugee camps in Cyprus.
    Mr. Townsend: Is the Minister aware that when I last visited Anzio Camp—and I have it on good authority that things have not changed the unemployment level was high and the monthly food ration was low? Will he take an interest in the plight of these dispirited and forgotten British refugees?
    Mr. Wellbeloved: Only 65 persons at the camp are without regular work and some of them are finding part-time employment. Certainly, I give an undertaking that I shall continue, as Minister responsible, to give personal attention to the parts of the situation that fall within the responsibility of the Ministry of Defence.

    Arms Sales
    Miss Joan Lestorasked the Secretary of State for Defence under what circumstances Her Majesty's Government refuse arms sales to other countries.
    Dr. Gilbert: When consideration of the political, security and financial factors involved lead to us to conclude that it is right to do so.
    Miss Lestor: Does the Minister agree that the Labour Government have demonstrated that commercial considerations in the supply of arms are secondary to the questions of human rights in the receiving countries—as has been the case with our policy on Chile and South Africa? Will he bear in mind President Carter's recent statement about commercial considerations and the supply of arms and consider putting pressure on our EEC partners in relation to the supply of arms particularly West Germany's supplying of nuclear power stations to Brazil, in view of conditions in that country?
    Dr. Gilbert: All I would say is that while I have a certain sympathy with my hon. Friend, these are questions for my right hon. Friend the Foreign Secretary.
    Mr. Amery: Will the Minister assure the House that there will be no restriction or embargo on the supply of arms to Zaire, which is currently suffering aggression from Soviet-dominated—[Interruption.]—or Cuban-Soviet-dominated Angola?
    Dr. Gilbert: I hope that I have followed the right hon. Gentleman's question. I repeat that as a Defence Minister my responsibility relates to the security requirements of this country with respect to arms sales. Matters of foreign policy are for my right hon. Friend the Foreign Secretary.
    Mr. Frank Allaun: I support the British Government's ban on arms sales to South Africa, but is that policy not being undermined by subsidiaries of British companies such as ICI, Plessey and Racial, which are selling direct to the South African Government? Whether or not it is the Minister's responsibility, will he raise the matter in the Cabinet and seek to influence British companies to stop their subsidiaries undermining Government policies?
    Dr. Gilbert: As I made clear to my hon. Friend on 8th February this year, the Government do not have any general powers to interfere with the export of information to South Africa or to prevent firms, by whoever they are owned, from manufacturing any product in that country. However, I have already made clear that we would be seriously concerned if British firms with interests in South Africa were acting contrary to the spirit of Government policy.

    White Paper
    Mr. Channonasked the Secretary of State for Defence what consultations he had with NATO Allies before the publication of the recent Defence White Paper.
    Mr. Mulley: The regular and wide-ranging consultations within NATO have naturally covered a good deal of the subject matter of the White Paper. However, the presentation of the annual Statement on the Defence Estimates to Parliament has never been the subject of formal consultation.
    Mr. Channon: In view of the fact that, according to the White Paper, the Soviet Union now allocates nearly 12 per cent.
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    of its gross national product to military programmes and is continuing to increase that sum, is it not all the more important that we should co-ordinate our activities with our NATO allies, and is it not foolhardy to think of cutting our defence expenditure when the Warsaw Pact is increasing its defence expenditure?
    Mr. Mulley: The hon. Gentleman is inviting me to give him the contents of the speech that I hope to deliver a little later today. However, I shall spare the House that now. Certainly we work in the closest co-ordination with our NATO allies, and although I have been censured by the Opposition Front Bench for so doing on the provision of AWACS we shall continue that co-ordination. For reasons that I shall explain, I believe that we are making a proper and full contribution to the Alliance.
    Mr. Blaker: Is the Secretary of State aware that Admiral of the Fleet Sir Peter Hill-Norton, Chairman of the NATO Military Committee, recently said that it was extraordinary how some of our political leaders view the military buildup of the Warsaw Pact as being only for defensive purposes, and added that Warsaw Pact forces are not the right shape for that purpose. Does he agree with that view?
    Mr. Mulley: I do not have in mind the remarks quoted by the hon. Gentleman but I have a clear recollection of a Press statement issued by the Admiral of the Fleet last week, in which he spoke of ill-informed armchair critics who criticised the fact that NATO is working all day and every day for 24 hours round the clock. I have a copy of the Press communiqué in which that statement is made. I am inclined to Sir Peter's view that NATO is wrongly knocked and alarm wrongly created by people who are not nearly as well-informed as is the Admiral of the Fleet.
    Mr. Fernyhough: What would be the effect on the pound and what would be the view of our foreign creditors if we were to indulge in another £2,000 million of defence expenditure—and what would be the effect on our already weak economy?
    Mr. Mulley: It would be a matter of serious concern for our creditors if we

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    were to announce an increase in any form of public expenditure totalling £2,000 million. Generally speaking, I do not find it worth while to seek to answer hypothetical questions.
    Sir Ian Gilmour: Did not the right hon. Gentleman's predecessor undertake that all Government cuts in defence would be discussed with NATO beforehand? Why, in the latest round of cuts, was that undertaking broken?
    Mr. Mulley: The undertaking has not been broken. I was asked whether the White Paper had been formally put to the Alliance. As the hon. Gentleman knows, that has never been the practice. I announced in the House on 12th January, and subsequently at Question Time, that we had sent to NATO details of the proposed cuts, which I have since announced to the House, and are in course of preparing our proposals for the cuts in 1978–79. There will be the fullest consultation with the Alliance in accordance with NATO procedures.

    BAOR (Costs)
    Mr. Gwilym Robertsasked the Secretary of State for Defence what are the latest figures available for the balance of payments costs of British forces in Germany; and what progress has been made in obtaining adequate offset arrangements.
    Mr. Mulley: The foreign exchange cost of British Forces Germany for 1977–78 is currently estimated at £544 million. As for the second part of the Question, I have nothing to add to my right hon. Friend the Prime Minister's statement to the House on 25th January last.
    Mr. Roberts: Is not the delay by the German Government in this matter deplorable? Has not the time come to give the German Government a date by which we shall expect a satisfactory agreement and indicating that unless we obtain agreement we shall commence systematic withdrawals?
    Mr. Mulley: In the past my hon. Friend has been kind enough to offer negotiating advice. I am not sure that the course of action that he proposes will be either satisfactory or successful. As I have explained many times, although I have
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    a great interest in the outcome of the negotiations their conduct lies with my right hon. Friend the Foreign Secretary.
    Mr. Maurice Macmillan: Will the right hon. Gentleman say whether that figure is gross or net? Does it include the entire pay of the Armed Services, on the assumption that it is all spent abroad and none is remitted home, and does it make any allowance for the normal import content of ordinary people's expenditure when in the United Kingdom?
    Mr. Mulley: It is a forecast of actual expenditure in foreign currency based on exchange rates of October 1976. It is less than the total budgetary cost, which is £699 million, because part of the cost of pay and part of the cost of weapons, and so forth, will fall to be paid in sterling and not in deutschemarks.
    Mr. Ron Thomas: Does my right hon. Friend agree that the cost of our military commitment overseas last year amounted to almost £1,000 million, and that over the last three years the total we have paid out in military expenditure overseas is equal to the amount we have to borrow from the IMF? Is it not time that we made considerable cuts in these overseas commitments?
    Mr. Mulley: I am afraid that I cannot agree with my hon. Friend's figures. The figures of expenditure are in the White Paper. I do not have them exactly in mind, but they are much lower than the sums we have had to borrow, and certainly less than £1,000 million. The sales of arms and equipment have equalled in foreign exchange terms the amounts that we have expended on the Rhine Army and in other ways.
    Mr. Forman: Will the Secretary of State resist firmly the suggestion put forward by his hon. Friends below the Gangway, since the West Germans already spend on defence 25 per cent. more per head than we do? We have no good reason to lecture them on these matters.
    Mr. Mulley: I have already said that although I am anxious that there should be some movement in the matter of offset costs the kind of enthusiasm shown by my hon. Friend is perhaps not the most successful way in which to approach these matters.

    Equipment Manufacturing Firms (Alternative Employment)
    Mr. George Rodgersasked the Secretary of State for Defence if any recent consultations have taken place relating to the introduction of alternate employment in factories at present engaged on the manufacture of defence equipment.
    Dr. Gilbert: No, Sir. Unless there is a substantial change in our assessment of the external threat, we expect overall employment in the defence industries to remain fairly steady over the next few years.
    Mr. Rodgers: Does my hon. Friend agree that it would be tragic if skills and apparatus already employed in the defence industry affected by cuts were not utilised to the advantage of civilian production? Is he aware of the proposals submitted by the Lucas Aerospace shop stewards committee to facilitate this changeover, and is due consideration being given to these proposals?
    Dr. Gilbert: I agree with the first part of my hon. Friend's supplementary question. We are aware of the Lucas Aerospace shop steward's committee proposals, but I am sure that my hon. Friends will agree that these are matters for the firm itself to consider.
    Mr. Thorne: Will my hon. Friend consider whether it is now appropriate for his Department to liaise with the Department of Energy to establish some sort of working committee to consider the whole problem of the diversification of those employed in the defence industry?
    Dr. Gilbert: I am always happy to consider any suggestions made by my hon. Friend. I must refer my hon. Friend to my first answer, namely, that over the next few years we expect overall employment in the industry to remain fairly steady. Of course, in some firms it will rise and in others it will fall.
    Mr. Churchill: Does the hon. Gentleman agree with his hon. Friend the Member for Salford, East (Mr. Allaun), who, at a recent meeting of workers and trade unionists at a Hawker Siddeley factory, expressed the Marie Antoinette view that they should be allowed to manufacture caravans at a time when there is a glut
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    of caravans on the United Kingdom market?
    Dr. Gilbert: I am no expert on the state of the caravan market.
    Mr. Frank Allaun: I am glad that the question has been asked, as I wish to ask my hon. Friend whether he thinks that the highly specialised skills of the aircraft factories and the workmen in them are especially suited for the manufacture of highly sophisticated machine tools that we are now importing in large quantities from America, Sweden, Italy and Germany?
    Dr. Gilbert: My hon. Friend may well be right. The problem is that within our given level of defence expenditure, if we forgo procurement of defence equipment from our own country we shall merely have to buy it abroad.

    Warsaw Pact Forces
    Mr. Croninasked the Secretary of State for Defence what increase he expects in the military capability of the Warsaw Pact forces by 1980 if their present rate of increase of military expenditure is maintained.
    Mr. Mulley: The Soviet Union accounts for most of the military expenditure in the Warsaw Pact. I would expect a substantial improvement in its military capability if it persists with its high rate of such expenditure.
    Mr. Cronin: Bearing in mind the current progress of mutual balanced force reduction negotiations and the heavy defence burden that Britain is now carrying, is there not a strong case for persuading our NATO allies to spend more on the defence of the Alliance?
    Mr. Mulley: It is right that we should not in any sense be complacent about the increasing capability of the Warsaw Pact. At the same time, the most urgent and important way to approach this matter is as the United States President has indicated, namely, by increased activity to seek the reduction of forces at both strategic and conventional levels between East and West.
    Mr. Wall: Is it not a fact that the most significant development in Warsaw Pact countries is not the increase in size but the fact that they are now at instant

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    readiness, which means that NATO will get virtually no warning time?
    Mr. Mulley: The hon. Gentleman is right. It is not the increase in numbers that is the most impressive aspect of recent years' developments but the increasing sophistication and high technology involved. In that sense, NATO's advantage in technology has been eroded. At the same time, it would be wrong to feel that the whole of the political considerations that have been explained from time to time are necessarily changed as a result of these developments.
    Mr. John Mendelson: Is my right hon. Friend aware that those who have been the firmest supporters of détente for many years are appalled at the continued increases in the high level of armaments in the Soviet Union, for which no justification can be seen by friends of peace throughout the world? Will my right hon. Friend give the strongest possible support to the proposal made by President Jimmy Carter that when the next meeting between America and Russia takes place a start should be made to the reduction of armaments and not merely an agreement on a new ceiling that will be more fantastic than the last?
    Mr. Mulley: I can assure my hon. Friend and the House that the Government will give maximum support to President Carter's initiatives in these matters. I agree that it is time that we saw the colour of the money of the Soviet Union and Warsaw Pact countries in terms of an agreement in this area. We cannot go much further without having some definite and tangible arrangements.
    Sir Frederic Bennett: Figures have already been published indicating that the Soviet Union is spending between 12 per cent. and 14 per cent. of its GDP on defence. Are there any comparable per capita figures within the Soviet Union? If the right hon. Gentleman cannot give me those figures, what is the absolute sum, in comparable terms, that is being spent—GDP always being a misleading figure?
    Mr. Mulley: I agree with the hon. Gentleman and the Committee of which he is a distinguished member that it is extremely difficult to make these comparisons, because, for example, of different standards of national incomes.
    1074
    It is quite impossible to give a realistic per capita figure. It is estimated that 12 per cent. and not 14 per cent. of the Soviet Union's gross domestic product is devoted to defence purposes. That indicates the high priority given to these purposes by Soviet and Warsaw Pact countries.
    Mr. Churchill: Does the right hon. Gentleman understand that the British Socialist Government, by their policy of five successive unilateral cuts in defence expenditure, are undermining the whole basis of getting an arms control agreement with the Soviets?
    Mr. Mulley: No, I do not understand that. What I understand quite clearly—this is borne out by SACEUR, who stated recently that the equipment that is coming now is the result of decisions taken a decade or more ago—is that the previous Conservative Government cut defence expenditure every year they were in office, and three times in the last year.

  MINISTERIAL BROADCASTS
  Mr. Rostasked the Prime Minister when he last made a ministerial broadcast.
  The Prime Minister (Mr. James Callaghan)rose—
  Hon. Members: Hear, hear.
  The Prime Minister: I was hoping it would be unanimous.
  I refer the hon. Gentleman to the reply which I gave him on 14th December.
  Mr. Rost: Is the Prime Minister sure that he can handle tonight's television interview on his own, or will he be begging one of the leaders of one of the other parties to go along with him to hold his hand?
  The Prime Minister: I am grateful to the hon. Gentleman for giving me the opportunity to intimate that I hope the whole House will watch an excellent broadcast on "Nationwide" at 6.20 this evening, although modesty forbids my saying who is taking part.
  Mr. Jay: In his next broadcast will my right hon. Friend point out to the public that even the remote possibility of a Conservative Government has led to a sharp fall in the value of the pound?
  The Prime Minister: Yes, I am aware that that has taken place. I have been informed that a few minutes ago it appeared on the tape that what was called "Callaghan's hopes of victory" is sending the pound, stocks and everything else soaring again.
  Mrs. Thatcher: In his several broadcasts as Prime Minister the right hon. Gentleman has laid great stress on the Labour Party's programme. Does he still stand by Labour's 1974 manifesto?
  The Prime Minister: I am grateful to the right hon. Lady for that inquiry, as it gives me the opportunity to intimate to the House—as I have recently had to review the manifesto—that, I am glad to say, about four-fifths of the programme has already been carried out. I have no doubt that we shall be able to complete the rest with the assistance of all parts of the House.
  Mrs. Thatcher: When the Prime Minister's party drew it up, did it anticipate a very short Parliament?
  The Prime Minister: No. We knew the celerity with which my hon. Friends would work and the desire of the Opposition to assist us. Therefore, we were quite clear, as we worked through it, that we would be able to get it done in a reasonable time. I am grateful to the Opposition for all the assistance that they have given us over the past few years.
  Mr. Donald Stewart: If the Prime Minister's next broadcast has to be a farewell performance on behalf of his Government, will he make it clear to his party that the main grave-digger figures were his right hon. and hon. Friends who permitted themselves the luxury of voting against the guillotine motion on the devolution Bill?
  The Prime Minister: There is no doubt that the Scotland and Wales Bill has meant a separation of the ways between the Scottish National Party, Plaid Cymru and the Labour Party, and that I regret. But I still have hopes of one day coaxing the right hon. Gentleman into supporting us again.

  NAIROBI
  Mr. Greville Jannerasked the Prime Minister whether he will pay an official visit to Nairobi.
  The Prime Minister: I have at present no plans to do so.
  Mr. Janner: When my right hon. Friend consults President Kenyatta and his other Commonwealth colleagues will he raise with them the necessity for a complete overhaul of the law on diplomatic immunity? Will he draw particular attention to the staggering abuse of our hospitality in London by visiting diplomats, especially by the Nigerians, who have succeeded in claiming diplomatic immunity on 6,500 occasions in the last year?
  The Prime Minister: Yes. I heard the "Today" programme. I am grateful to my hon. and learned Friend, because he gave me the opportunity of looking up some of these matters. It is true that there is considerable violation of the parking regulations. I am told that that is to some extent due to the fact that opportunities for parking in the case of people who enjoy immunity are more limited in this country than elsewhere. But there have been discussions and a series of meetings between the Greater London Council and heads of diplomatic missions to see whether more reserved parking spaces can be provided for the official use of missions. [An HON. MEMBER: "Why?"] So as to prevent parking infringements, I suppose.
  In answer to the first part of my hon. and learned Friend's question, I do not think that I shall be discussing the matter with President Kenyatta.
  Mr. Tim Renton: Switching from parking meters, will the Prime Minister, if he stays in office, go somewhat further than Kenya and take the opportunity of following President Podgorny and Fidel Castro in visiting Tanzania and Mozambique to discover for himself the alarming extent of build-up of Russian arms and influence in Southern Africa?
  The Prime Minister: My right hon. Friend the Foreign Secretary will be visiting both Tanzania and Mozambique in the course of his forthcoming journey to Africa. I am sure that he will have the opportunity of discussing this and other matters with President Nyerere and President Machel. I keep in close touch with President Nyerere on a number of matters, through correspondence. I shall certainly use all opportunities to see that our relations with Tanzania are maintained on the closest basis.
  Mr. Hooley: Does my right hon. Friend agree that the general stability and prospects for peace in Southern Africa would be improved if Israel and other countries followed the excellent example of this country of not supplying arms to South Africa?
  The Prime Minister: We are opposed to supply of arms to South Africa and accept the full United Nations decision on this matter. I trust that all others will do the same.

  TUC
  Mr. Canavanasked the Prime Minister what subjects he proposes to discuss at his next meeting with the TUC.
  The Prime Minister: I refer my hon. Friend to the reply that I gave him on 25th January.
  Mr. Canavan: Will my right hon. Friend discuss with the TUC the need for a united campaign against the kind of racialism that is being stirred up by the dirty Fascist tactics being used in the Stechford by-election by the Tories, who are using anti-immigrant posters similar to those being used by the National Front with the apparent approval of the deputy Leader of the Opposition?
  The Prime Minister: I read the account in The Guardian of the leaflet, or a facsimile of the leaflet, used by the Conservative candidate. It certainly is at variance with the views that have been expressed in this House on this matter.
  Mr. Skinner: Not really.
  The Prime Minister: Yes, because the Opposition have not said that they would stop all immigration. They have said that they would place limitations on it, as we have, and that they would need to examine carefully the question of a register, as we have done. I do not understand why the Conservative candidate is going so far beyond official Conservative Party policy. But if there is any doubt, perhaps the right hon. Lady would care to take advantage of this opportunity to make the position clear.
  Mr. Alexander Fletcher: Will the Prime Minister remind trade union leaders that it is the British people and
  1078
  not the TUC who will decide which Government they will deal with after next month's election? In particular, will he remind the general secretaries of the National Union of Mineworkers and of the Union of Post Office Workers that, provided that they and their colleagues act in the best interests of the British people, they have nothing to fear from a Conservative Government?
  The Prime Minister: The trade unions, like other bodies, have long memories. The hon. Gentleman said that they have nothing to fear from a Conservative Government. That may be true. But, as Aneurin Bevan once said, "Why peer into the crystal ball when you can read the book?" They remember the Industrial Relations Act.
  Mr. Pavitt: On a more harmonious note, may I ask my right hon. Friend whether, when next he meets the TUC. he will convey the sincere thanks of a large number of Labour Members for the way in which, in addition to its usual duties, it has pursued the cause of old-age pensioners and acted as the voice of the people who pay it their dues?
  The Prime Minister: Yes, Sir. There is no doubt that the TUC has felt very strongly, deeply and sincerely about the position of those on social security, including old-age pensioners. There is no need to remind the TUC or anyone else of their responsibility as citizens. It was because of that that three years ago it entered into the social contract, which dealt with matters on a much wider basis than money wages alone.
  Mr. Hugh Fraser: When the right hon. Gentleman is discussing matters with the TUC, will he pay attention to the views of Mr. Roy Fraser and those who feel themselves totally underpaid for skilled jobs as they are much more important than men like Jack Jones today?
  The Prime Minister: The Government's position throughout the whole of phase 2 of the incomes policy has been that the next phase must take into account the great pressures that have been placed upon skill and differentials as a result of the flat rate and small percentage increases. That is the Government's policy. That matter is now being discussed with the TUC to get an agreement

  1079
  for another phase. What I, the House in certain circumstances, and the country in even more difficult circumstances would be interested to know is whether the Opposition would seek such an agreement.
  Later—
  Mr. Mellish: On a point of order, Mr. Speaker. You will no doubt remember the dialogue that took place across the House during Question 3 to the Prime Minister, and that the honour and integrity of the deputy Leader of the Opposition was questioned. Is it not normal custom in this House that when such a statement is made about a right hon. or hon. Member, that Member then rises? Does it not—
  Mr. Speaker: Order. It is quite wrong to pursue an argument through what is clearly not a point of order. Right hon. and hon. Members are free to seek to catch my eye.

  NORTH-WEST ENGLAND
  Mr. Hoyleasked the Prime Minister when he next expects to visit the North-West.
  The Prime Minister: I have at present no plans to do so.
  Mr. Hoyle: If my right hon. Friend went to the North-West would he explain to the people there the valuable aid that they have received from this Labour Government, in that the temporary employment subsidy has enabled many firms to survive and that the textile industry, under the new Multi-Fibre Arrangement that the Government are pressing for, has a valuable and viable economic future? Would he also explain that all that would be thrown away if the Opposition came to power?
  The Prime Minister: Yes, Sir. The temporary employment subsidy has helped more people in the North-West
  1080
  than in any other region—54,000 in all. The number of people trained under the training opportunities scheme has also risen substantially.
  We are not satisfied with the operation of the Multi-Fibre Arrangement, which has to be renegotiated internationally. I explained to President Carter that we would want to see some changes in it, although some of the member States are not so interested.
  As for what would happen in certain unlikely events, I assure my hon. Friend that he need have no fears about that. I think that normal service will be resumed pretty soon.
  Mr. Prior: When the Prime Minister goes to Preston will he take with him the former Prime Minister, the right hon. Member for Huyton (Sir H. Wilson)? Will they both explain, on a platform there, the speech that the right hon. Member for Huyton made at Preston during the last General Election campaign, when he said that to have 1 million people unemployed would be quite intolerable to a Labour Government? The total is now nearly 1·4 million.
  The Prime Minister: I do not complain that the right hon. Member for Lowestoft (Mr. Prior) keeps referring to that point, because it should be and is of concern to the whole House and the country, but the matter goes wider than that. As the right hon. Gentleman knows, it is of concern to the whole Western industrialised world. At the Downing Street summit next month I hope to direct the attention of all leaders of the free world to this problem, to see what we can do about it, especially in relation to young people who, in the United States, for example, make up nearly half of the total unemployed. I am glad that the problem is not as bad as that in this country but we have a serious problem and it must be dealt with on not only a national but a world basis.

AUDITING REFORM
3.33 p.m.
Mr. Ivor Clemitson: I beg to move,
That leave be given to bring in a Bill to establish a public audit board for the purpose of providing an independent auditing service to companies, financed by a levy upon such companies; and for purposes connected therewith.
I beg leave to move this Bill against the background of what the Financial Editor of The Times described in September 1976 as
"a time of growing public disquiet about the rôle and responsibilities of auditors".
I wish to refer to two of the cases that have given rise to that disquiet. The first concerns the strange case of the profit that was not—the case of SUITS. I quote again from The Times of 21st September 1976:
"In a statement last night Touche Ross said that the mistake had arisen from a straightforward clerical error by Suits in the preparation of its accounts when the relevant loans were incorrectly added to cash at bankers and on hand. The relevant papers had been reviewed in the audit, but the error had not been noticed. There was no association, the statement said, between the error and the subsequent provision against the loan.
Despite the dismay in the City at the error, it seems unlikely at this stage that any of the major accounting bodies will feel the need to pursue the matter further."
I should also like to quote from the Department of Trade report on Lonrho:
"It is our view that it was the auditors' duty to test Mr. Rowland's retrospective expense claim by reference to the objective evidence available to them. This claim was an enormous claim by any standard of judgment."
The House may remember that it was about £300,000. The report goes on:
"The claim was submitted for the specific purpose of dealing with Mr. Rowland's overdrawn personal accounts which Lonrho had been advised were unlawful in terms of S 190 of the Companies Act, 1948.… Having regard to the size of the claim and the circumstances surrounding its preparation we believe that both firms of auditors were on notice to exercise particular care in dealing with the matter. It is our view that the auditors did not do so. They did not test the claim by reference to the objective evidence available to them and we are critical of them accordingly."
I do not suggest that the criticism that was levelled at the auditors in the cases to which I have referred—or in other cases that I could have quoted—is true
1082
of all or of a majority of auditors. I have no doubt that the vast majority of auditors try to carry out their functions in the most responsible manner, but the fact that auditors are appointed by companies and not to them militates against the independence of auditors that is at the heart of the function of auditing.
The Bill is intended to strengthen the independence of auditors and to raise standards of auditing. I am concerned to avoid the sort of scandals that have sadly become all too frequent in recent years and to do so without direct governmental interference and a further multiplication of patronage. The Bill's central proposal is to establish a public auditing board. The professional accountancy bodies, the TUC and the CBI would appoint representatives directly to the board. Under the board there would be an executive committee responsible for the day to day running of affairs. Auditors would be employed by the board and they would have the right to select part of the executive committee, the remainder of whom would be appointed by the board.
The board's functions would be three fold. The first function of the board would be to provide an auditing service to companies. In order to do that the board would need to recruit professionally qualified auditors and to provide the necessary training for them. Secondly, the board would be charged with the responsibility in consultation with professional accountancy bodies, of devising accounting standards. The profession itself recognises the need for proper and common accountancy standards and it has done some work on this matter. However, there is a need to accelerate the process and to give the agreed standards more weight and teeth than has hitherto been the case.
The board would also have the responsibility—besides that of publishing an annual report—of giving advice from time to time on auditing and accounting practices. This advice would be directed to the appropriate body or bodies and not necessarily to the Secretary of State. Advice might be given to the Secretary of State about, for example, changes in the law that were thought to be necessary to alter the present statutorily defined duties of auditors.
The board, through its staff, would have the power to audit the affairs of

1083
any company after having given reasonable notice that it intended to do so. The audit would be in place of the normal, legally required annual audit and a company audited in this way would pay a fee to the board.
Any interested person or body, including, for example, the trade unions or shareholders concerned, would have the right to make representations to the board that the company in which they had an interest should receive an audit by the board. It would be for the board to decide whether to act upon any such representations.
Clearly it would be impossible for the board to undertake the auditing of all companies in this country. It is probable that the number of companies audited by the boad in a year would form only a very small proportion of the total, but I believe that the significance would not be small. It would be much greater than the proportion of companies directly audited.
The board would provide a totally independent and highly skilled service which would, in large measure, help to reinforce the independence of other auditors performing traditional audits.
No well-run company need fear the possibility of an audit by such a board. Others would clearly have a strong inducement to improve the running of their affairs. Shareholders would benefit from the raising of standards in the companies in which they have investments. They have much to gain from such a proposal. Employees, whose investment of labour, skill and time, is no less significant, would similarly benefit. Consumers would benefit because it is obviously better to buy products from a properly ordered and efficiently run company than from an inefficiently run company. The accountancy profession would also benefit. The essence of a profession is that it should provide a service of high quality governed by high ethical standards.
The present system of having an auditor appointed by a company can easily put him in an invidious position and subject him to pressures to depart from his professional objectivity. The introduction of a totally independent service of high quality and the devising of proper standards would give more power to the auditor's elbow.
1084
It is tempting to condemn the obvious scandals in impassioned tones and then to forget about the whole business. I am proposing a serious plan to improve the standards of auditing in this country. I believe that it will benefit employees, shareholders, consumers and, last but not least, the accountancy profession itself.
Mr. Speaker: The hon. Member for Maldon (Mr. Wakeham) has given me notice that he wishes to oppose the motion for leave to introduce the Bill.
3.44 p.m.
Mr. John Wakeham: I beg to oppose this motion for leave to introduce the Bill. I believe that its effects would be harmful and bureaucratic and that it would not deal with many of the difficulties that arise from time to time.
I have to declare an interest as a chartered accountant who used to earn his living by auditing accounts and therefore perhaps has some practical experience in dealing with these problems.
Even the hon. Member for Luton, East (Mr. Clemitson) did not attempt to say that the established procedures for the appointment of auditors—not, as he said, by companies, but by shareholders—is not generally effective and acceptable in the overwhelming number of cases. There are 600,000 companies registered in the United Kingdom and the independence and objectivity of auditors has been called into question in no more than a handful of cases in the last 10 years.
The Companies Act 1976 requires shareholders to confirm the appointment of auditors every year. It is hard to see how, in practice, the powers of shareholders would be made more effective by the proposed new system.
When the independence of auditors has been in doubt, the main causes of concern have been where an auditor has had a financial interest in the company being audited or where he is excessively dependent on one client for his income.
Mr. Russell Kerr: That is very often the case.
Mr. Wakeham: That is correct. These are the areas where trouble has arisen in perhaps a dozen cases in the last 10 years. If we bear in mind that, in that time, there have been 6 million audits

1085
of these 600,000 companies registered in the United Kingdom, we can see the measure of the problem.
The profession is well able to regulate its members and to prevent the recurrence of problems. I can see no way in which a public audit board would provide a more satisfactory method of regulation. The accountancy profession is continually considering the standards of conduct of its members to see that appropriate standards of conduct and independence are applied. No nation in the EEC has found it necessary to establish a public audit board and our standards compare well with the standards
in the Community or anywhere else in the world.
A public audit board would employ a team of administrators. It would be an expensive and bureaucratic institution and would not deal with the problems that arise from time to time. I hope that the House will have no truck with the Bill.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of Public Business):—
The House divided: Ayes 159, Noes 194.

Division No. 93.]

AYES

[3.48 p.m.

Allaun, Frank

Garrett, John (Norwich S)

Noble, Mike

Archer, Peter

George, Bruce

Ogden, Eric

Ashley, Jack

Gourlay, Harry

Ovenden, John

Ashton, Joe

Grant, George (Morpeth)

Park, George

Atkins, Ronald (Preston N)

Grant, John (Islington C)

Parry, Robert

Atkinson, Norman

Grocott, Bruce

Pavitt, Laurie

Bagier, Gordon A. T.

Hamilton, James (Bothwell)

Perry, Ernest

Barnett, Guy (Greenwich)

Hardy, Peter

Price, William (Rugby)

Bates, Alf

Harper, Joseph

Radice, Giles

Bennett, Andrew (Stockport N)

Harrison, Walter (Wakefield)

Richardson, Miss Jo

Bishop, E. S.

Hayman, Mrs Helene

Roberts, Albert (Normanton)

Blenkinsop, Arthur

Heffer, Eric S.

Roberts, Gwilym (Cannock)

Booth, Rt Hon Albert

Hooley, Frank

Robinson, Geoffrey

Bottomley, Rt Hon Arthur

Hoyle, Doug (Nelson)

Roderick, Caerwyn

Bradley, Tom

Huckfield, Les

Roper, John

Bray, Dr Jeremy

Hughes, Rt Hon C. (Anglesey)

Rose, Paul B.

Brown, Hugh D. (Provan)

Hughes, Robert (Aberdeen N)

Sedgemore, Brian

Buchan, Norman

Hughes, Roy (Newport)

Selby, Harry

Buchanan, Richard

Hunter, Adam

Shaw, Arnold (Ilford South)

Butler, Mrs Joyce (Wood Green)

Irving, Rt Hon S. (Dartford)

Silverman, Julius

Callaghan, Jim (Middleton & P)

Janner, Greville

Skinner, Dennis

Campbell, Ian

Jay, Rt Hon Douglas

Small, William

Canavan, Dennis

Jenkins, Hugh (Putney)

Smith, John (N Lanarkshire)

Carmichael, Neil

Johnson, James (Hull West)

Spearing, Nigel

Cartwright, John

Johnson, Walter (Derby S)

Spriggs, Leslie

Castle, Rt Hon Barbara

Jones, Dan (Burnley)

Stallard, A. W.

Clemitson, Ivor

Kaufman, Gerald

Stewart, Rt Hon M. (Fulham)

Cocks, Rt Hon Michael

Kelley, Richard

Stoddart, David

Cohen, Stanley

Kerr, Russell

Summerskill, Hon Dr Shirley

Coleman, Donald

Kilroy-Silk, Robert

Taylor, Mrs Ann (Bolton W)

Conlan, Bernard

Lamond, James

Thomas, Ron (Bristol NW)

Cook, Robin F. (Edin C)

Latham, Arthur (Paddington)

Thorne, Stan (Preston South)

Cowans, Harry

Lestor, Miss Joan (Eton & Slough)

Tinn, James

Cox, Thomas (Tooting)

Lewis, Ron (Carlisle)

Torney, Tom

Crawshaw, Richard

Lipton, Marcus

Tuck, Raphael

Cronin, John

Loyden, Eddie

Urwin, T. W.

Crowther, Stan (Rotherham)

Luard, Evan

Varley, Rt Hon Eric G.

Cunningham, G. (Islington S)

McCartney, Hugh

Wainwright, Edwin (Dearne V)

Davies, Ifor (Gower)

McElhone, Frank

Ward, Michael

Dean, Joseph (Leeds West)

MacFarquhar, Roderick

Watkinson, John

Dempsey, James

MacKenzie, Gregor

Wellbeloved, James

Doig, Peter

McMillan, Tom (Glasgow C)

White, Frank R. (Bury)

Dormand, J. D.

Madden, Max

White, James (Pollok)

Eadie, Alex

Magee, Bryan

Whitlock, William

Edge, Geoff

Mahon, Simon

Williams, Alan Lee (Hornch'ch)

Ellis, John (Brigg & Scun)

Marshall, Dr Edmund (Goole)

Wilson, Alexander (Hamilton)

English, Michael

Maynard, Miss Joan

Wise, Mrs Audrey

Evans, Fred (Caerphilly)

Mellish, Rt Hon Robert

Woodall, Alec

Evans, Ioan (Aberdare)

Mendelson, John

Wrigglesworth, Ian

Ewing, Harry (Stirling)

Mikardo, Ian

Young, David (Bolton E)

Fernyhough, Rt Hon E.

Miller, Dr M. S. (E Kilbride)

Flannery, Martin

Molloy, William

TELLERS FOR THE AYES:

Fletcher, Ted (Darlington)

Morris, Charles R. (Openshaw)

Mr. George Rodgers and

Foot, Rt Hon Michael

Newens, Stanley

Mr. David Watkins.

Forrester, John

NOES

Adley, Robert

Grist, Ian

Nelson, Anthony

Alison, Michael

Grylls, Michael

Neubert, Michael

Amery, Rt Hon Julian

Hall, Sir John

Newton, Tony

Atkins, Rt Hon H. (Spelthorne)

Hamilton, Michael (Salisbury)

Onslow, Cranley

Baker, Kenneth

Hampson, Dr Keith

Oppenheim, Mrs Sally

Banks, Robert

Hannam, John

Page, Rt Hon R. Graham (Crosby)

Beith, A. J.

Harrison, Col Sir Harwood (Eye)

Parkinson, Cecil

Bennett, Sir Frederic (Torbay)

Harvie Anderson, Rt Hon Miss

Penhaligon, David

Bennett, Dr Reginald (Fareham)

Hastings, Stephen

Percival, Ian

Benyon, W.

Havers, Sir Michael

Pink, R. Bonner

Berry, Hon Anthony

Hayhoe, Barney

Powell, Rt Hon J. Enoch

Biggs-Davison, John

Hodgson, Robin

Price, David (Eastleigh)

Blaker, Peter

Holland, Philip

Prior, Rt Hon James

Boscawen, Hon Robert

Hooson, Emlyn

Pym, Rt Hon Francis

Bottomley, Peter

Howe, Rt Hon Sir Geoffrey

Raison, Timothy

Bowden, A. (Brighton, Kemptown)

Howell, David (Guildford)

Rathbone, Tim

Boyson, Dr Rhodes (Brent)

Howells, Geraint (Cardigan)

Rawlinson, Rt Hon Sir Peter

Bradford, Rev Robert

Hunt, David (Wirral)

Rees-Davies, W. R.

Britton, Leon

Hurd, Douglas

Renton, Rt Hon Sir D. (Hunts)

Brocklebank-Fowler, C.

James, David

Renton, Tim (Mid-Sussex)

Brooke, Peter

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

Rhodes James, R.

Brotherton, Michael

Jessel, Toby

Ridley, Hon Nicholas

Brown, Sir Edward (Bath)

Johnson Smith, G. (E Grinstead)

Ridsdale, Julian

Bryan, Sir Paul

Joseph, Rt Hon Sir Keith

Rifkind, Malcolm

Buchanan-Smith, Alick

Kershaw, Anthony

Roberts, Michael (Cardiff NW)

Buck, Antony

King, Tom (Bridgwater)

Roberts, Wyn (Conway)

Budgen, Nick

Kitson, Sir Timothy

Rodgers, Sir John (Sevenoaks)

Bulmer, Esmond

Knight, Mrs Jill

Ross, Stephen (Isle of Wight)

Burden, F. A.

Knox, David

Ross, William (Londonderry)

Butler, Adam (Bosworth)

Lamont, Norman

Rost, Peter (SE Derbyshire)

Carlisle, Mark

Lawrence, Ivan

Sainsbury, Tim

Chalker, Mrs Lynda

Lawson, Nigel

Shaw, Giles (Pudsey)

Channon, Paul

Le Marchant, Spencer

Shelton, William (Streatham)

Churchill, W. S.

Lester, Jim (Beeston)

Shepherd, Colin

Clark, Alan (Plymouth, Sutton)

Lewis, Kenneth (Rutland)

Silvester, Fred

Clarke, Kenneth (Rushcliffe)

Loveridge, John

Skeet, T. H. H.

Clegg, Walter

Luce, Richard

Speed, Keith

Cockcroft, John

McAdden, Sir Stephen

Spence, John

Cooke, Robert (Bristol W)

McCrindle, Robert

Spicer, Michael (S Worcester)

Cormack, Patrick

McCusker, H.

Stainton, Keith

Costain, A. P.

Macfarlane, Neil

Stanley, John

Craig, Rt Hon W. (Belfast E)

MacGregor, John

Steel, Rt Hon David

Davies, Rt Hon J. (Knutsford)

Macmillan, Rt Hon M. (Farnham)

Stokes, John

Dean, Paul (N Somerset)

McNair-Wilson, P. (New Forest)

Stradling Thomas, J.

Dodsworth, Geoffrey

Marshall, Michael (Arundel)

Tapsell, Peter

Douglas-Hamilton, Lord James

Marten, Neil

Taylor, Teddy (Cathcart)

Drayson, Burnaby

Mates, Michael

Tebbit, Norman

Durant, Tony

Mather, Carol

Temple-Morris, Peter

Edwards, Nicholas (Pembroke)

Maude, Angus

Thatcher, Rt Hon Margaret

Fairbairn, Nicholas

Maudling, Rt Hon Reginald

Thorpe, Rt Hon Jeremy (N Devon)

Fairgrieve, Russell

Maxwell-Hyslop, Robin

Townsend, Cyril D.

Farr, John

Meyer, Sir Anthony

Trotter, Neville

Finsberg, Geoffrey

Mills, Peter

van Straubenzee, W. R.

Fletcher, Alex (Edinburgh N)

Mitchell, David (Basingstoke)

Viggers, Peter

Forman, Nigel

Moate, Roger

Wainwright, Richard (Colne V)

Fraser, Rt Hon H. (Stafford & St)

Molyneaux, James

Walder, David (Clitheroe)

Fry, Peter

Monro, Hector

Wall, Patrick

Gardner, Edward (S. Fylde)

Montgomery, Fergus

Walters, Dennis

Gilmour, Rt Hon Ian (Chesham)

More, Jasper (Ludlow)

Weatherill Bernard

Glyn, Dr Alan

Morgan, Geraint

Whitelaw, Rt Hon William

Goodhart, Philip

Morgan-Giles, Rear-Admiral

Young, Sir G. (Ealing, Acton)

Goodhew, Victor

Morris, Michael (Northampton S)

Younger, Hon George

Goodlad, Alastair

Morrison, Charles (Devizes)

Gow, Ian (Eastbourne)

Morrison, Hon Peter (Chester)

TELLERS FOR THE NOES:

Grant, Anthony (Harrow C)

Mudd, David

Mr. John Wakeham and

Gray, Hamish

Neave, Airey

Mr. John Cope.

Griffiths, Eldon

Question accordingly negatived.

DEFENCE
3.58 p.m.
The Secretary of State for Defence (Mr. Frederick Mulley): I beg to move,
That this House takes note of the Statement on the Defence Estimates 1977 (Command Paper No. 6735); and endorses Her Majesty's Government's policy of basing Briitsh security on collective effort to deter aggression, while seeking every opportunity to reduce tension through international agreements on arms control and disarmament.
We have already had this year a valuable and stimulating debate on the Government's defence programme. As I have said on many occasions, defence is an important subject which deserves wide public understanding and discussion, and I look forward today and next week to a serious and wide-ranging debate.
The Statement on the Defence Estimates reaffirms the Government's determination to make a substantial defence contribution to NATO and deploy our forces where they can have the most significant effect on the security of the Alliance as a whole. It also reaffirms our determination, in conjunction with our allies, to seek reductions in the level of armaments, both nuclear and conventional, by international agreement.
The central security problem which the North Atlantic Alliance faces in 1977 is the fact that the military confrontation between NATO and the Warsaw Pact has not been reduced, despite the important political advances which détente has brought in recent years. There is now, or there soon will be, strategic nuclear parity between the two sides. Some observers believe, however, that the balance of conventional forces is tilting in favour of the Warsaw Pact and that if this imbalance is allowed to develop further, it could seriously undermine NATO's strategy of deterrence.
Nevertheless, the increases in Soviet capability, which I have set out in some detail in the White Paper, are not of themselves evidence that the leadership of the Soviet Union takes a different view than before about the risks involved in military action against the West. NATO's policy of deterrence is still working, and there is no imminent risk of aggression by the Warsaw Pact. This assessment has been made also in recent weeks by Secretary Brown and by the
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Chairman of NATO's Military Committee, Admiral of the Fleet Sir Peter Hill-Norton.
The policy of deterrence does not require that NATO matches the conventional strength of the Warsaw Pact, either globally or in particular areas. It does require that NATO maintains sufficient forces to deter aggression—that is to say, to make it clear to the other side that no easy victories can be won, and that any attempt to bring military pressure to bear involves incalculable risks.
Mr. Victor Goodhew: Would not the right hon. Gentleman agree that, whatever may be said about that, the lower the level of the NATO conventional forces as compared with the Warsaw Pact forces, the lower the nuclear threshold? One cannot dismiss it as lightly as the right hon. Gentleman is doing.
Mr. Mulley: I have a note on that very point in my next paragraph. Perhaps I had better develop the argument.
The essential point is not that increases in Soviet forces require exactly matching increases in NATO's forces but that the balance between the forces on either side should not become such that the risks involved in aggression are diminished or that the nuclear threshold is significantly lowered.
In this context, we must bring home to the Soviet Union and her allies the necessity of complementing with reductions in military forces the lessening of political tension which has already been achieved. We welcome the efforts of the new United States Administration to reach a new SALT agreement, to achieve a comprehensive test ban treaty, and to give a new impetus to the negotiations on the mutual and balanced reduction of forces in Central Europe. The aim should be to achieve greater stability at a lower level of forces deployed by both sides, and in particular to remove the possibility of a surprise attack.
In our last debate, we naturally devoted a good deal of our time to discussing the cuts in the defence budget which the Government had just announced.
Mr. Cranley Onslow: Before the right hon. Gentleman leaves the

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question of the Russian forces, can he try again to tell us whether he thinks that the Soviet Government's policy of increasing their spending on conventional armaments makes a surprise attack less or more likely?
Mr. Mulley: As I have said before, I am not able to answer on behalf of the Soviet Union, any more than was the hon. Gentleman when he was in Government. I dealt with this matter at some length in the White Paper. The importance of getting an agreement is underlined by the increasing growth of the Warsaw Pact capability.
I turn now to the question of defence costs. The relative burden which each member of the Alliance bears for the common defence should not and cannot be immutable. In my view, it is inescapable that defence, like all other public expenditure, must be considered in the context of our general economic situation. This is why the Government have given overwhelming priority to the tasks of industrial regeneration and fighting inflation, on which our future depends. I believe, further, that only this Government can achieve these objectives in present circumstances.
The fluctuation of exchange rates in recent years has made comparisons of relative burdens misleading, and there are good grounds for believing that the fall in the value of sterling in 1975 and 1976 resulted in our defence effort being undervalued relative to those of our allies, on a basis of purchasing power parity.
Let me also make clear the distinction between the defence review cuts and the cuts that have been made since. The defence review was a reappraisal of our commitments, and the savings in the budget reflected the reduction in our commitments which we were able to make.
The reductions made since affect mainly the immediate future, the two years 1977–78 and 1978–79. We have been able to achieve the reductions in 1977–78 without having to accept any reduction in our commitments to NATO. We are still looking at how to achieve the cuts in 1978–79, and we shall do this in close consultation with NATO. It is too early to say whether any reduction in our capabilities will be necessary, but my aim is to keep to a minimum the effect on our front-line contribution to NATO.
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I have read with interest the report of the Defence and External Affairs Sub-Committee of the Expenditure Committee, published last week, on this very matter. The Government are studying the Sub-Committee's views carefully, as we always do, and we shall be making a considered reply to them in the usual way.
Meanwhile, the point I wish to stress is that if cuts of the size we have had to accept since the defence review are made over a long period of years, then of course, there are bound to be, in the long run, effects on the teeth. The tail is not so long that it can be continually trimmed, but equally, to maintain that no trimming is possible in a programme of more than £6 billion is ridiculous. There are economies which I am making which I would wish to have made even if I had unlimited funds at my disposal. I shall, therefore, continue to search for economies wherever they can be found.
Mr. Nigel Forman: Why does the right hon. Gentleman feel it justified to agree to cuts in expenditure in 1978–79 in advance of knowing exactly where and how those cuts could be provided?
Mr. Mulley: In all matters of public expenditure forecasting over a long period, one does not get down to the very last items of detail. In any event, under the NATO rules, we have to consult NATO before we can make any announcement. Clearly, one has in mind what particular sums of money are likely to mean in individual votes, but one cannot give, three years ahead, the detailed revision of items in every account.
The White Paper says that the savings of £200 million in 1977–78 will be found in three broad areas. First, about £75 million will be found from the equipment programme. Here, the only significant cancellations we have made are, first, work on an improved version of the Ikara antisubmarine weapon system which was under joint development with the Australians. The improved version would have carried the new lightweight torpedo which we are developing and would have given some extra range but the existing version, which will remain in service, is still adequate to meet the threat and will continue to provide a quick reaction capability.

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The only other cancellation is the new Mark 29 cupola for the Chieftain tank. This cancellation is the result of technological developments which enables us to rely on an improved version of the existing cupola, and it has no operational significance.
Further savings on equipment have been found by postponing financial provision for the procurement of medium lift helicopters. Finally, the delay in NATO on a decision on an airborne early warning aircraft has resulted in planned expenditure next year being less than we had expected. I shall deal with that difficult issue later.
The second area of savings is in works and accommodation, which we have reduced by £64 million. In that the Services are sharing in the general cut-back in capital works expenditure applying to the whole of the public sector, though projects affecting operational capability and those linked with restructuring of the Services will be given priority for the reduced funds available. I much regret the need for this measure, since we had hoped to press ahead with our programme of improvements in accommodation for Service men in Germany and elsewhere. But we have decided that our present economic circumstances do not allow us to make up for this neglect at the moment.
The balance of the £200 million savings comes from a variety of small cuts and from the normal process of Estimates scrutiny which takes place just before the start of the financial year. No cuts will be made in Armed Forces training or in ammunition.
Mr. Hugh Fraser: Will the Secretary of State confirm that there have been no cuts in war stocks or provisions?
Mr. Mulley: Not as a result of this economy. I am advised that there was a cut in the scales for economic reasons in 1972 and, of course, we shall be seeking to put that right.
I have given the House details of proposed Government expenditure. Since they do not command the support of the Opposition we should be told what their policy is. So far we have been told only that they would strengthen our defence
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and that they would exempt defence from public expenditure cuts. Does that mean that they would restore the cuts that we have been obliged to make from future planned expenditure and, if so, to what extent. Would they abandon the conclusions of the 1975 defence review or not? Or do they intend only to exempt defence from future public expenditure cuts that they have in mind to make? If so, what are those cuts and where would they fall?
It has been suggested they have a further £5 billion cuts in public expenditure in mind and to that of course must be added any additional defence expenditure. The House and the country are entitled to know their policies since the consequences for the level of our public services, social services and employment would be catastrophic.
On the other hand, if I might repeat the Prime Minister's quotation of what Aneurin Bevan said,
"Why peer into the crystal ball when we can read the book."
There should be no need for me to spell out to the House or the country the contrast between pre-election Tory promises and post-election Tory performances. We have all learnt from bitter experience. For the record I must point out that, as set out in the Public Expenditure White Paper—Command 6721, Vol. II, page 2—defence expenditure actually fell every year from 1971–72 to 1973–74.
Sir Ian Gilmour: Why does the right hon Gentleman start his calculations in 1971–72 instead of from when the Conservative Government came in? The reason is that he knows that defence expenditure went up.
Mr. Mulley: That is not the case. The financial year 1970–71 was already settled when the Conservative Government took office. I am using the first full year for which the Conservative Government had a responsibility. I should like the House to focus on the year 1973–74 because I want to be fair to the right hon. Member for Chesham and Amersham (Sir I. Gilmour) and since that was the Conservatives' last year in power. The picture for that year is even more astonishing in the light of their protestations now. Before leaving office the Labour Government had planned to spend in

1095
the year 1973–74 £2,230 million on defence at 1970 survey prices. On coming to power the Conservatives announced a £60 million increase. This was followed by two further increases for the same year, 1973–74. But at the end of the day, after allowing for intervening price changes, the Conservatives actually spent less in real terms than had been planned by the Labour Government four years earlier. As I said in the previous debate, in 1973 the then Government, in three cuts in one year, cut £439 million at 1976 survey prices from their estimates for 1974–75.
Sir Winston Churchill once said, in relation to the intentions of the Soviet Union:
"they are a riddle, wrapped in mystery, inside an enigma".
That may well be applied to Conservative defence policy—indeed to Tory policy generally. I only hope that the right hon. Member for Chesham and Amersham will unveil a little of the mystery this afternoon.
Although we have had to reduce planned expenditure, we are still making a substantial contribution to the Alliance and re-equiping our forces with some good equipment. It is our aim to increase the proportion of the defence budget devoted to equipment. In the coming year we expect to spend £2,350 million on equipment, or 37 per cent. of the total budget. That is as high a share as we have achieved for many years and, as a NATO study has shown, the proportion of British defence expenditure devoted to the purchase of new equipment is the highest of the 11 members of the Alliance that were surveyed.
The figures reflect the Government's determination to see that Britain's forces continue to have modern and up-to-date equipment to deal with the increased sophistication of Warsaw Pact forces. But I am concerned not to allow the proportion of our equipment expenditure devoted to research and development to increase at the expense of that devoted to production.
As a medium sized power, Britain can no longer expect to develop herself the whole range of equipment required by her forces. That would place far too heavy a burden on our research and
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development resources and lead to the cost of new equipment becoming prohibitively high. Our policy must, therefore, be to keep our research and development expenditure to a manageable level by collaboration with our allies and by selective purchases abroad.
The reason for collaborating with our allies in the design, development and production of new weapon systems is not only to reduce their cost but also to provide our forces with weapons that are capable of operating with those of our allies. The Alliance cannot afford to operate with a great diversity of weapons or to duplicate research and development resources wastefully.
The search for standardisation and inter-operability is not easy. There have been a number of successes in this area, of which the Tornado and Jaguar aircraft, the Lynx, Puma and Gazelle helicopters and the two medium howitzers—FH 70 and SP 70—are good examples. But in other areas the problems of the different national priorities between individual members of the Alliance have resulted in potential collaborative projects not coming to fruition.
We have now completed the studies with Germany of our ideas for a future main battle tank. Their purpose was to establish whether there was a sufficient identity of views to justify a joint collaborative project. A large measure of agreement has been reached on the characteristics of a future tank but the replacement timetables of the two countries have gradually diverged to such a degree that in the view of both Governments collaboration on a project is no longer practicable at this time.
For our part we consider it essential to start replacing Chieftain in the late 1980s and we propose to maintain the excellent contacts we have made with Germany and to make use of our long established liaison with the United States to explore, in the interests of NATO standardisation, the possibilities of harmonising components in the tank forces of the three countries.
Mr. Michael Mates: Will the right hon. Gentleman let us know why it is that this divergence has grown? Is it because we are putting off and off and off the date for our next main battle tank?
Mr. Mulley: On the contrary, it is because we have re-equipped all our forces with up-to-date Chieftains while the Germans are still having to replace older tanks and are anxious to go into Leopard 2 production in the next year. We have already got Chieftain completely in service and the Germans have a priority to replace some of their tanks now, so their next replacements would be in the 1990s, beyond the date that we feel would be right for the Chieftain.
Mr. Philip Goodhart: Will the right hon. Gentleman assure the House that, following the discussions between the German Minister of Defence and the American Secretary of Defence last week, the gun competition is still open and that a British gun will be tested at the end of this year with the German and American rivals, so that we have a chance of getting this very important piece of equipment into the NATO forces?
Mr. Mulley: I give the assurance that, as I understand the matter—and it is a Congressional decision and not only an administrative decision—the Americans have said that they will not choose the gun until the end of this year. I cannot give any guarantee about which gun they or the Germans will choose.
Another important question on which the Alliance has not yet been able to reach a collective decision is on airborne early warning, about which we had same exchanges at Question Time. The provision of new airborne early warning aircraft is a programme to which we attach very high priority. As the House knows very well from the large number of questions I have dealt with both today and on previous occasions, and from the correspondence that Members have had with me and my ministerial colleagues, there are two ways in which this requirement could at present be met. The Government's preference has been for a truly collective NATO solution to what is a NATO-wide problem of air defence, based on the Boeing E3A AWACS aircraft. Agreeing to provide this support was not an easy decision in the first place because a British project was available to satisfy our national requirements for AEW and, by so doing, to contribute to the Alliance's defensive capability. But we took the decision in the first place in
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May 1975, and have stuck to it since, in the wider interests of the Alliance—which are, after all, our wider interests as well.
Later this week there is to be a further meeting of NATO Defence Ministers, the third in a series at which AEW has been fully discussed, beginning with the meeting of Ministers last June and continuing with that in December. At each of these two earlier meetings it had been our hope that a position could be reached on the strength of which we could take a clear-cut decision whether or not to proceed with Nimrod. This did not prove possible; but the Government were prepared to accept two postponements, given the importance of the issue to NATO and therefore to our own security. At the December meeting, however, I made it clear to our allies that I did not think we could afford further delay beyond the early part of this year. That remains my position.
If it proves impossible, even with the extra time we have agreed to make available, to arrive at a firm and fully worked-out decision in favour of the collective NATO force, then I do not at this stage see any alternative to our reconsidering our position. I cannot, of course, anticipate the outcome of Friday's meeting. However, if it should happen that we go ahead with Nimrod it would be on the basis that it would contribute to NATO's required airborne early warning capability and could be made compatible with whatever additional AEW capability our allies decided to procure.
Mr. Roderick MacFarquhar: May I press my right hon. Friend further on a matter that was raised at Question Time? That was the question of one of our allies not in NATO, the French, being interested in buying into the American AWAC system. Surely my right hon. Friend must have attempted to satisfy himself that if the Germans pull out, the French would not suddenly come in and thus keep us committed to this system, in which we have so much at stake in Nimrod.
Mr. Mulley: It has been hoped from the beginning that the French would contribute to a collective system, if for no other reasons than their geographical importance and the fact that they are in the

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ground-based early warning systems. The condition that we have maintained throughout is that it is possible to have a collective position only if all the major NATO countries take part. This problem is a good example of the area in which the Alliance clearly has to concentrate—namely, conventional forces—and in particular what General Haig has called the three "R"s of readiness, rationalisation and reinforcement. There is a good deal that can be done in these areas without massive increases in expenditure, as I have seen on visits to both the central region and the northern flank of NATO. British forces—in all three Services have measured up well in SACEUR's readiness tests and we welcome General Haig's concentration on these priorities.
If they catch your eye, Mr. Deputy Speaker, my ministerial colleagues will deal in more detail with these matters and the effectiveness of our contribution to the Alliance.
Our allies have shown understanding at our need to reduce our defence expenditure plans. They understand the Government's firm commitment to NATO and our firm determination to play as full a part in its defence as our economy allows. They would not thank us if we strove to contribute defence forces to the Alliance at the expense of our long-term economic strength.
No survey of defence policy would be complete without reference to the men and women who make it all possible. Times of economic difficulty and cutbacks in expenditure plans are not the easiest for those who are affected by them. Some redundancies in the Services and their civilian support are inevitable, though my aim is to keep these to a minimum.
Mr. F. A. Burden: The right hon. Gentleman has talked about readiness and the speed with which our front line forces could be mobilised. Surely there is nothing wonderful in that, as they are now small and getting smaller and smaller. Therefore, it should be possible to mobilise them that much more quickly. However, if they become smaller and smaller, there will be no support after the first impact.
Mr. Mulley: I do not think that the hon. Gentleman has taken on board the essence of what the Supreme Allied Com-
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mander is after. He is wanting response in terms of reaction times. He wants to know how long it takes to get all the aircraft off an airfield, and the turnround time for an aircraft after one mission before it can take the next. In NATO there are competitions, on very strict terms, for these purposes, and our boys are doing jolly well. That is the answer to the hon. Gentleman. We have not cut back in the size of the forces as a result of any recent measures. They were considered judgments of the defence review in the light of our concentrating defence effort on NATO and reducing commitments outside the NATO area.
I return to the real problem of the numbers that will have to be made redundant in the three Services. We estimate that the total will be in the region of 10,000 in the period up to 1979–80. By 31st December 1976, somewhat over 2,000 had left the Services on redundancy terms, mainly from the Royal Air Force. In 1977–78, the next financial year, we plan to reduce total civilian numbers by a further 8,000. Compulsory redundancies will be kept to a minimum and we shall continue to maintain close consultation with the staff associations and trade unions on the rundown of civilian staff.
On this point I am obliged to the hon. Lady the Member for Plymouth, Drake (Miss Fookes) and other hon. Members for their patience. I should like to make clear how we propose to deal with the difficult problem raised at Question Time, namely, the effect of the 1973 and 1975 pensions legislation as it affects gratuities for short-service air-crew. These officers were recruited on unique terms. I should add that this method of recruitment—which offered a pensionable career with the option to leave at eight or 12 years with the gratuities applicable to a non-pensionable officer—has now been abandoned, so that we are dealing with a declining number of officers. Only 450 or so remain who have the option to leave with a gratuity after April 1978. Those who leave before that date are being given the option of a gratuity or of a preserved Armed Forces pension.
The difficulty over these 450 officers is that, with the coming into effect of the 1975 Social Security (Pensions) Act, service after 6th April 1978 must give rise to a preserved pension, either under

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the Armed Forces scheme or the State superannuation scheme, whatever terminal benefits are paid.
These preserved benefits are, of course, a wholly uncovenanted benefit for the officers and, although they are deferred and do not represent immediate cash in hand, they are of considerable value. If a proper relationship with the conditions of service of other categories of officers is to be preserved, we must set a limit to the total value of the terminal benefits which these officers receive.
After very careful consideration, the Government have decided that the right course is for these officers to remain in the Armed Forces Pension Scheme after 6th April 1978. If, after that date, any of them exercises his option to leave at the eight or 12-year break point, he will be entitled to a preserved Armed Forces pension and terminal grant payable at the age of 60.
He may choose to take full advantage of this new benefit by forgoing his gratuity. Or he may choose to combine a preserved pension and terminal grant with a gratuity, but in that case only his service after 6th April 1978 will count towards his preserved pension, and the amount of gratuity will not exceed whatever rate is current before April 1978.
In this way, no officer who wishes to have it will be denied the gratuity which he was promised when he entered the Service. At the same time, those officers who attach greater importance to their superannuation provision for old age will not be denied the full benefits of the new pensions legislation. The Government believe that this solution will be fair to all the officers concerned, and will also be seen to be fair by their colleagues in other categories of the Service.
There has also been speculation about the gratuities payable to other officers who were recruited on normal short-service commissions with no entitlement to an Armed Forces pension. I wish to make it clear that these gratuities will continue as an essential recruitment and resettlement feature of the short-service career.
It is my intention to ask the Armed Forces Pay Review Body to include these gratuities in its 1978 review. Meanwhile, I can assure the House that officers in
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post prior to April 1978, when the Review Body's report would be due, will receive at least the rates of gratuity current before that date.
This has taken a long time to explain, but in essence it is answering the question asked by the hon. Member for Plymouth, Drake earlier today. The answer to her question is "Yes". I thought that it was right to go into this in detail, because unfortunate speculation and unfair, unhelpful allegations have caused a great deal of disturbance within the Services. I wanted to put on record quite clearly what the situation was. Of course, the effective decision is still more than 12 months away.
Mr. Eldon Griffiths: Since I have a number of Service people in my constituency who are caught in this matter, may I ask the right hon. Gentleman two questions? Will the Secretary of State put out as quickly as possible a simplified version of the fairly complex statement that he has just made, so that the relevant air crew and their wives may know what the position is? Secondly, is he aware that he has gone a long way towards doing the decent thing, and should never have contemplated doing otherwise?
Mr. Mulley: I shall see what we can do to make a simple statement. What I have tried to avoid is forcing officers to make an immediate decision in the next year. Everyone who wants it will get the gratuity. Everyone will get some element of preserved pension. If they go out shortly after April 1978 they can be credited with 12 years' preserved pension rights. That is a very substantial amount. In no case will an officer not be substantially better off, taking the whole package, than he could have been when he signed this unique contract.
Despite the reductions in numbers, I am pleased to say that recruiting to all three Services remains buoyant. We have, therefore been able to maintain high entry standards, and there is every sign that the high professional standards which now exist in all three Services will continue in the years ahead.
Whatever other differences we may have, I am sure I speak for all hon. Members in expressing our admiration and appreciation of the contributions of

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members of the Armed Services, and the civilians who support them, to our security, and of the high standard of efficiency they have maintained during the year.
I am sure the whole House will join me in paying particular tribute to the work of the men and women of the Armed Forces engaged in support of the civil power in Northern Ireland. They continue to carry out their difficult tasks with resourcefulness and courage. Last year members of the forces earned 45 awards for gallantry in Northern Ireland and 29 soldiers gave their lives. Fifteen of those killed were members of the Ulster Defence Regiment, and I should like to make particular mention of the UDR, which is taking over from the Regular Army some of the task of providing immediate military support to the Royal Ulster Constabulary.
Sir Frederic Bennett: I apologise in advance if I am raising something to which the Secretary of State will be referring later. I hope that, before he concludes his remarks on the Armed Forces generally, he will say something about the Territorial Army, which, although it is much fewer in numbers, still makes a valuable contribution and feels rather neglected in this kind of review.
Mr. Mulley: I had in mind to pay a general compliment to the voluntary contribution that the Territorial Army Volunteer Reserve makes, but my hon. Friend the Under-Secretary of State for Defence for the Army, who is to reply to the debate, intends to devote a substantial part of his remarks to that aspect of our defence services. I would like to endorse what the hon. Member for Torbay (Sir F. Bennett) has said about the work of our Reserve forces, not only in the Army but in other Services, too.
Finally, I would stress again that the purpose of the very significant contribution which we still make, and should make, to the collective defence of the West is to deter aggression. If fighting starts our policy has failed. Western defence is indivisible. We do not meet the Warsaw Pact threat alone but as part of an Alliance whose cohesion must be our first concern. NATO's strength is greater than the sum of its military manpower and equipment because of its collective will and purpose.
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I do not consider that there is evidence for great alarm that our security is immediately threatened by the increasing capability of the Warsaw Pact forces facing us, but we cannot afford to be complacent. We must work to reduce the military confrontation between East and West. I fully endorse Secretary Brown's recent statement:
"Real security lies in strategic arms negotiations to produce a lower level of armament and corresponding negotiations with respect to conventional arms".
We must also ensure that our deterrent posture remains credible. This requires a continuing effort from all members of the Alliance. I am determined to see that Britain's contribution remains a substantial one.
4.42 p.m.
Sir Ian Gilmour: There is certainly one thing to welcome in the Secretary of State's speech and one thing at least on which to sympathise with him. The thing to welcome is his belated surrender on the question of gratuities for serving officers. This matter was first raised by my hon. Friends the Members for Chippenham (Mr. Awdry) and Woking (Mr. Onslow) last November. If the arrogant and ill-considered remarks of the Minister of State at Question Time had any justification at all it would have been possible for the Ministry of Defence to say then "Whatever the difficulties, we shall not renege on our agreement." That was the one thing that we were never told in all the correspondence.
As I said at Question Time, I wrote to the Secretary of State nearly three weeks ago. He did not bother to answer. The Minister of State, Department of Health and Social Security, had rather more courtesy and made the subject less complicated than the Secretary of State made it appear this afternoon. We understand that he wanted to have something good to say today, and we welcome it. However, it would have been much better for the integrity of the Ministry of Defence and for the morale of our forces if this surrender had been made much earlier.
What I want to sympathise with the right hon. Gentleman about is the motion which the Lord President, with his traditional incompetence and trickiness, got on

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to the Order Paper only last night. Apparently, even the Government do not approve of this White Paper. The motion asks the House only to "take note". I understand that that is the first time since 1950 that those words have been used in such a motion. We all understand that the Government have their difficulties, but surely they should be able to summon up a majority to approve their White Paper. Apparently not.
The motion talks about reducing tension
"… through international agreements .. on disarmament".
That, one would have thought, scarcely fits in with the Government's policy of unilateral disarmament. The only part of the motion which makes sense is that which talks about basing British policy on "collective effort", by which of course is meant the effort of our allies rather than that of our own country.
In general, the motion that has finally gone down is unsatisfactory to us on the Opposition Benches but thoroughly appropriate to the White Paper. Again, we do not blame the right hon. Gentleman for not talking much about his White Paper today. He talked about a number of other things of varying relevance, although he was much more spirited than he had been the other day. We certainly welcome that. Indeed, if the right hon. Gentleman had been a racehorse and his running today had been compared with previous running, there would have been a stewards' inquiry and a saliva test to see whether he had been doped.
As the right hon. Gentleman, by his silence, seems to have appreciated, this White Paper is a thoroughly arid document—predictably so. The only unpredictable thing, the only surprise, about it is that it tries to play the same trick as was played last year. If the trick last year had worked one would understand the right hon. Gentleman doing it again, but since it completely failed last year, to go through the same old routine surely shows some poverty of imagination.
The same old trick is the pretence that although the Labour Government go on cutting our defence, in some mystical way they do not hurt our defence capa-
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bility That was said last year, and even then it was untrue. Since then, they have cut twice more, yet the right hon. Gentleman had the effrontery to say at his Press conference that his latest cuts would
"trim the tail but not blunt the teeth."
That, of course, is even less true this year than it was last year.
Mr. Frank Allaun: Does not the right hon. Gentleman think that it is a little unfair and a little tiresome to go on talking continually about these cuts in Government spending on arms when he knows as well as any man in the House that in real terms there has been a £200 million increase in the last two years?
Sir Ian Gilmour: What I know is that in real terms the Government are cutting defence this year by about £1,000 million, with great damage to our defences.
Mr. Frank Allaun: I am sorry—will the right hon. Gentleman give way?
Sir Ian Gilmour: No, I think that I have made the point. I know that the hon. Gentleman is saying that defence spending is more than it was last year—but it is £1,000 million less than it should be.
I suppose that we cannot expect the Government to tell the truth about defence, but since they do not it is relevant just to put on record what this Government have done. I cannot remember what adjective the right hon. Gentleman used today, but on previous occasions we have heard an orgy of self-praise in the following terms:
"the most extensive and thorough defence review ever undertaken … the most severe examination … the most comprehensive examination … we analysed every aspect of our defence policy"
and so on and so on.
As a result of that exercise, as the House knows, the Government have cut, or plan to cut, over £7,000 million at 1974 prices. Shortly after the defence review, the Government's chief adviser said
"We have been through a long searching examination … not just by the Ministry of Defence but on an inter-departmental basis, and as a result of that we have already made a very large contribution to the

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reduction of public expenditure. We have been through the examination and we should not be put through the examination again."
Nevertheless, since the "most comprehensive review" in history, the Government have cut defence no fewer than four times. Admittedly, they have not put defence through the examination again, because, as we know from the right hon. Member for Newham, North-East (Mr. Prentice), there was no proper examination last time; they merely cut without the examination. They just cut. The total cuts now made total about £8,500 million.
Mr. Frank Allaun: Quite untrue.
Sir Ian Gilmour: But according to the Government, so monumentally incompetent was the defence review and so disastrously inadequate was their "analysis of every aspect" of our defence policy that they have been able to make four further cuts without affecting the front line. They claim that the defence review cut the front line—it drilled away at the teeth—but entirely forgot to cut the tail. This is an extraordinary admission, but a gross libel on the very able men who carried out the defence review in the Ministry of Defence.
Mr. Frank Hooley: Is the right hon. Gentleman aware that, on published figures, which I am sure his hon. Friends will not challenge, expenditure this year on defence is higher than in 1972–73, 1973–74, 1974–75, and 1975–76? By what twisted semantics can the right hon. Gentleman describe that situation as a cut?
Sir Ian Gilmour: The hon. Gentleman knows very well that prices have risen by 70 per cent. under this Government—
Mr. Hooley: Constant prices.
Sir Ian Gilmour: The hon. Gentleman should read his Secretary of State's speech at Munich—not that it was very good, but he would learn something from it. The right hon. Gentleman pointed out that the cost of equipment was going up continually and that therefore if one keeps defence at constant prices, one is reducing one's defence capability. [Interruption.] That is obvious, and I refer the Minister of State to the Secretary of State's speech.
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It would have been courteous of him if he had read that a little earlier.
I turn now to the damage that has been done by this Government to our NATO commitment. The right hon. Gentleman and his predecessors pretend that the defence review somehow merely cuts our commitment outside NATO and does not cut our NATO commitments. That is quite untrue. They cut it in three important areas. First, they decided to weaken our effort on the flanks by cutting naval, air and amphibious forces. Secondly, they reduced our reserves earmarked for NATO by cutting the land element of the United Kingdom mobile force by two-thirds, with the result that, according to the Vice-Chief of the General Staff, we have the smallest number of units in this country ever. He said that there would be no uncommitted reserves as a result of which it is much more difficult to react to unforeseen national requirements. All of the 47 to 50 shooting operations undertaken by the United Kingdom since the 1945 war virtually come into that category, including most conspicuously those in Northern Ireland. Thirdly, the Government have made dangerous reductions in the capability of our air force. There is a reduction of 25 per cent. in helicopters and in the Nimrod force and 50 per cent. in fixed-wing transport.
Since the defence review the Government have tried to conceal the effect of their cuts by leaving the front line at the same nominal strength. But that strength has been greatly reduced by cuts in ammunition, fuel, spares, stores of all sort, training and equipment. The facade is still very impressive, but in the rest of the building the furniture has been taken out, and the foundations have been sapped. The only good thing that can be said about what the Government have done is that it is not irrevocable; the front line can be restored to its proper strength. The only way in which any sort of sense can be made of the Government's policy is the assumption that there will soon be a Conservative Government, who will rectify the position and give our troops what they need. On any other assumption, what the Government have done is not merely wrong but plain crazy.
The House does not have to take my word for this. Last week we had the report of the all-party Defence Sub-Committee, which does some very valuable

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work for this House. We are grateful to its members for the work they have done.
Mr. Burden: I wonder whether my hon. Friend can tell us whether the British half-speed Navy will be speeded up when doing exercises with the other NATO fleets or whether the other NATO fleets will be forced to become also half-speed.
Sir Ian Gilmour: I am afraid that that question must be answered by Ministers.
The report is a damning indictment of the Government and the Secretary of State. It says
"In our view, the point has now been reached where our forces are being seriously deprived of modern equipment necessary to maintain, with the other members of the Alliance, sufficient conventional capability to deter the Warsaw Pact from acts of aggression, to sustain an effective fighting force in the event of actual hostilities, and thereby to avoid early recourse to nuclear weapons."
A little earlier the report says
"We are bound to report to the House that we have come to the conclusion that the cumulative effect of the cuts has been and is likely to be increasingly felt not only by the services' support structure, itself important, but also by the front-line forces."
It therefore shoots to pieces the Secretary of State's teeth-tail argument and, much worse, it shows that the Government have been trying to deceive the nation about the true effect of the cuts inflicted on our forces.
In January, I pointed out that it was the Secretary of State's duty to resign. That is still the position. It was his proper course in January because he had lost the confidence of his professional advisers and our allies. That is still true. The Committee's Report provides even more compelling reasons for his resignation. First, it conclusively demonstrates the damage he and his Government have done to our defences and second it demonstrates that he and his predecessor have been trying to conceal from the nation the damage they have been doing.
I am sorry to hit the right hon. Gentleman when he is down, but as he is invariably down I never have a chance to hit him when he is up.
Mr. Mulley: The right hon. Gentleman presided over three cuts in one year, of a total exceeding those which I presided over for the two years at a lower level. That was at a time when every-
1110
one in Intelligence knew that the Warsaw Pact countries, as General Haig made clear, were producing this equipment. If he had set the example by resigning I could have considered following him.
Sir Ian Gilmour: I do not think that anything will make the hon. Gentleman resign. He does me greater honour than I deserve. I was not presiding. It is untrue to say that the threat was as great in 1973 as it is now. The right hon. Gentleman knows that perfectly well—[Interruption.] If Ministers cannot be bothered to read the Secretary of State's speech they ought at least to read the pronouncements of his predecessor. They should remember that it was the right hon. Gentleman's predecessor who pointed out that it was only within the last two years that it became known that the Soviet Union was spending about 50 per cent. more on arms than we thought it spent. It is quite wrong to think that the threat was the same in 1973 as it is now. If the right hon. Gentleman were less a member of the Labour National Executive Council and more a Secretary of State he would not make that sort of remark.
Although I have been unable to set the Secretary of State an example, because I am no longer in office, the fact is that the Secretary of State should know that he now has a chance to make a dignified exit shortly before the rest of his Government. He should certainly take that chance.
Before I leave the Expenditure Committee Report, I should like to mention one other passage in paragraph 7, which refers to the demands made on our forces by frequent, arduous and dangerous spells of duty in Northern Ireland. I echo what the Secretary of State said about our troops in Northern Ireland. They certainly deserve all the support that we can give them. Together with the police, they have borne the strains and frustrations of the last strife-ridden few years. It is due to them that the murder and bloodshed has not degenerated into a holocaust. I think that nearly everyone in the House salutes their magnificent achievement and offers them our unswerving support for all they do and all they and their families have to endure.
Returning to the White Paper—I apologise to the Secretary of State for this, but we are supposed to be debating the

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White Paper—it is the same old story; the Government go on cutting our defence while the Soviet military machine has been becoming much more powerful. It is the same old story. If the Government did not mishandle our affairs, I should be delighted to say something different. But as the same things have been done, I have to continue in the same way.
As last year, the White Paper suffers from an advanced state of schizophrenia. Parts of it relate the Soviet threat fairly and even starkly, but there are some passages of inspired idiocy, presumably contributed by the Secretary of State or other Ministers. Admittedly, the Secretary of State did not repeat in the White Paper his remark in the defence debate that Soviet armed forces were designed to defeat an attack on them from the West. But immediately after saying that the Government have made further unilateral cuts in our defences, the White Paper says, in paragraphs 108 and 110 that progress in the negotiations on the mutual and balanced force reductions has been "disappointing slow". Whoever has the right to be disappointed, it is certainly not the Government. Why on earth should the Soviet Union disarm when the Government do their work for them by disarming unilaterally?
Paragraph 112 says:
"The Government has no intention, in advance of mutual and balanced force reductions, of reducing the forces which are maintained on the mainland of Europe in accordance with its Brussels Treaty obligations."—
schizophrenia, indeed! If the MBFR negotiations are supposed to determine the Government's actions, why have they unilaterally cut our defence spending five times? Why did the Prime Minister threaten on television last year to bring our troops back from Germany if the IMF and our allies did not lend him enough money? Why have the Government weakened our forces while maintaining their numbers? Whoever wrote that sentence is oblivious to what has been happening to our defences.
But the collector's piece is in paragraph 107, which says:
"There is no evidence to suggest that NATO's policy of deterrence is failing and that the Warsaw Pact is contemplating aggression against NATO."
Will the Secretary of State plase tell the House what he means by "evidence" in
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this connection? Does he expect to receive a little note from Mr. Brezhnev saying "Dear Fred, I am contemplating aggression. Yours sincerely, Leonid Brezhnev". I believe that if he did receive such a note ne would pay no attention and would go on cutting.
The right hon. Gentleman's own White Paper points out, in paragraph 119, that
"over the last three years … the military expenditure of the Soviet Union has grown by some 5 per cent. a year in real terms."
Paragraph 120 draws attention to the increase in the Soviet fleet's offensive capability. Paragraph 121 says that
"A substantial helicopter assault capability is now available in Eastern Europe".
Paragraph 122 refers to a major advance in the ability of the Russian tactical air force
"to engage in conventional offensive air operations instead of the earlier concept of air defence over, and direct support of, the Soviet Army. Their already formidable tactical nuclear capability is also being considerably increased."
Paragraph 123 admits that
"In the nuclear missile field, the Soviet Union is about to deploy the new SS-X-20 intermediate-range ballistic missiles … capable of reaching any major target in Europe."
Mr. Frank Allaun: The right hon. Gentleman has referred to increases in Soviet military force, which may be true. [Interruption.] I have plenty of time. The debate continues until 10 o'clock. Opposition Members know my view about military increases anywhere. Is the right hon. Gentleman suggesting that there have been no military increases on the American side, that the Americans are pacifists? Does he suggest that inside the Kremlin there are not hawks, like him, pointing to the increase in the American and NATO forces, just as he is pointing to increases in the Soviet forces? It is the hawks on this side who help the hawks in the Kremlin, and vice versa.
Sir Ian Gilmour: In fact—and this bears out my remarks rather than those of the Secretary of State—the Americans reduced their defence expenditure considerably in the early 1970s, thus agreeing with me rather than the Secretary of State about the threat. The Morning Star, like the hon. Gentleman, talks about "alleged increases" in Russian arms. This plainly shows that the Morning Star is as servile to Moscow now as it was

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in 1939–41, when it refused to support the war against Hitler and the Nazis. There is no doubt about the Soviet increases, which have been considerable. The balance has been tilting against us. The hon. Gentleman should take off his ideological spectacles for a moment and look at reality.
Is the Secretary of State really telling the House and the country that the vast military explosion I have described adds up to no evidence that the Soviets have aggressive intentions? If he really believes that, will he explain why the Russians are devoting all that effort to bring about that explosion in their offensive capabilities?
Mr. Frank Allaun: For the same reason as the Americans.
Sir Ian Gilmour: I have said this to the right hon. Gentleman and I say it to the hon. Gentleman: the Russians have a strong superiority in tanks and aeroplanes on the central front. NATO has a superiority in anti-tank guns. It is easy to invade with tanks and aeroplanes but very difficult to invade anywhere with anti-tank guns. It is obvious to anybody who cares to look that the West not only does not have the capability to attack the East but has not the remotest intention of doing so. Whatever the hon. Gentleman or the Morning Star think, the Secretary of State knows very well that the Russian build-up has taken place. He even admits in paragraph 107 that
"political intentions can change rapidly, whereas military capability can only be altered over a long period."
Obviously, capabilities are largely determined by intentions. The Soviet Union has been turned into an arsenal by the conscious intention of its rulers. But intentions are also affected by capabilities, and the stronger the Warsaw Pact becomes relative to the West, the greater become the appetites and ambitions of its dictators.
Mr. Norman Tebbit: My right hon. Friend will perhaps remember the expression "Why peer in the crystal ball when we can read the book?" which has been used twice today already. Perhaps that is what we should do. There are no American forces in Western European countries that do not have freely-elected Governments that have
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invited the Americans there. The aggressive Russian forces are sprawled across a number of countries in Eastern Europe, whose inhabitants have rebelled and tried to get rid of them and have been put down by force. Is not that the answer to the hon. Gentleman?
Sir Ian Gilmour: My hon. Friend is right. In intention, capability and behaviour, there is no comparison between the East and the West. But the British Government fail to recognise the obvious truth about capabilities and intentions.
The Government also fail to recognise that, as Dr. Brown pointed out in January, Russian intentions are affected by what the West does. But the Government must ignore that fact, too. Otherwise, their policy of weakening this country while the Russians grow ever stronger would look even more negligent than it does. It is blatantly wrong for the right hon. Gentleman to carry on as he does while the Russians are strengthening themselves. That is why he must make the sort of mindless remark that I have quoted about Russian intentions.
The NATO communiqué in December reaffirmed that
"the close relationship between the Alliance's twin objectives of maintaining an effective defensive and deterrent posture and of seeking a relaxation between East and West".
That is very true, but we shall not achieve the second objective if we neglect the first, and that is unfortunately what the Government have consistently done.
The major objective of our policy is peace, and we on this side of the House, just like those on the Labour Benches, would be relieved if peace could be assured at a lower level of armaments. Naturally, we are all in favour of detente, provided it is mutual. But one-sided detente, which is what we have been getting so far, helps only the Russians, and one-sided disarmament endangers peace. It does not safeguard it.
Admittedly, foreign policy and defence have never been the Prime Minister's strong point, but even he should realise that the right way to persuade the Russians to disarm is by agreement, and that the wrong way is by unilateral disarmament and then in a feckless way just to hope that the Russians will follow suit. They have not, and they will not.

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Luckily, the Government's approach is not shared by our allies. We should all be very grateful to the present American Administration and their predecessors, because the United States is making a real increase in its defence expenditure of 5 per cent. this year. The Americans do not conceal from themselves, as this Government tries to do, that there has been, in the words of General Haig,
"A fundamental transformation in the nature of Soviet military power"
That transformation may mean that NATO strategy is now inadequate and out of date. There is remarkably little about strategy in this White Paper and what there is is highly uninformative. But there is one key sentence in the White Paper in paragraph 135 which reads:
"Although Nato needs powerful ready forces in situ to deter and defend against a sudden attack, it is probable that a period of warning would be available".
Of course, Russia has long possessed the capacity to launch a limited attack without warning but now she has the capacity to launch an all-out attack without warning, and the White Paper admits that this is now a possibility.
It would be very hard to exaggerate the importance of that. The whole of NATO strategy has been based on the calculation that a Russian attack would be preceded by a period of tension during which the vital American and British reinforcements would cross the Atlantic and the Channel to take up positions in the front line. The NATO order of battle depends for credibility on the presence of those reinforcements and reserves. If there is a possibility that there will be no time for those troops to arrive, NA M strategy will have to be reviewed and different dispositions will have to be made. That strategy has always had risks, but the risk now becomes very much greater. This subject is well discussed in the report by Senators Nunn and 3artlett on NATO and the Soviet threat.
This real world is miles away from the dream world of the Labour Government's complacency, and their incessant cutting of defence not on defence grounds but merely because they want to appease their left wing, which is just about the most anti-West and anti-NATO body of people in Western Europe not excluding the Italian Communist Party. The defence of this country and of the West is a vital
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matter, which should be dealt with on its merits and not as a matter of bargaining between different factions of the Labour Party. The Sub-Committee also said:
"We ask, however, whether it is now the Government's policy that defence spending should be treated on the same footing as that of any other department regardless of the effect on the operational capability of the forces, or whether the defence budget ought to be assessed in the light of the perceived threat to national and NATO security".
We know the Government's answer to that. The Secretary of State gave it with the utmost complacency in the speech at the Wehrkunde Conference in Munich, when he said that he did not believe that Governments could give a higher priority to defence. We Conservatives give the other answer to the Sub-Committee's question and we believe that
"the defence budget ought to be assessed in the light of the perceived threat to national and NATO security."
The Sub-Committee also said:
"Nevertheless, we believe that this combination of reductions and delays in equipment programmes and in manpower levels will, if corrective action is not taken, involve a significant impairment of the front-line capability of our forces as the effects of the cuts become progressively felt in the next few years".
Obviously this Government would not take corrective action even if they were still in power next year. But the Conservative Party will take corrective action. The Conservative Government will restore defence to its rightful place, in the words of my right hon. Friend the Leader of the Opposition, as the prime task of Government. But while we shall strengthen our defences we have, as I have told the House before, no intention of making detailed commitments as to exactly where and in what proportion we shall strengthen them. There are so many prime candidates. There is the inadequacy of our air defence; there is the need to protect our sea lanes. As General Haig has said, the West cannot
"any longer afford to apply artificially restrictive criteria to the definition of North Atlantic interests".
There is the shortage of uncommitted reserves; there is the need to preserve the effectiveness of our nuclear deterrent. Those are only some examples. But defence is such a complex and long-term business, as the Secretary of State pointed out in his speech, that anyone who knows anything about defence realises that it

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would be folly for an Opposition to commit itself to a detailed defence policy. Only those who have an excessively high opinion of their abilities as amateur armchair strategists can seriously believe that detailed and costed commitments should be entered into in Opposition.
Our priorities, and the final shape of our defence policy, can only be determined after we come into office in consultation with our allies, our military and civil advisers and British industry.
Mr. Mulley: We understand that the right hon. Gentleman would not be able to give a precise indication of where he would like more money to be spent. But if events take a particular course people are entitled to know in broad terms how much additional expenditure would be put to defence. Will the Conservative Party go back, for example, on the 1975 review or do they accept that? Many figures of the reductions quoted, like the Sub-Committee of the Expenditure Committee itself, do not accept the decisions taken in 1975. Going back would be extremely costly. Indeed, if the Opposition are to cut public expenditure elsewhere, in addition to spending billions of pounds extra on defence, the British people need to know where the money will come from and which sectors of public expenditure it will come from.
Sir Ian Gilmour: We shall not return to places from which the Labour Government have withdrawn. We regret the withdrawals in many cases but we cannot have our forces going backwards and forwards. But as the Government have been concealing from the House and the country the exact extent of the damage they have done, how can we possibly know exactly where we shall repair it? If the Government had been more honest, and told us exactly where the damage was, we would be able to be more specific.
Government supporters go on about cuts in Government expenditure and they have always said that it is impossible to cut until they have to do it. They have had to do it because they have been dictated to by the IMF but they have done it in the wrong places. We shall not be dictated to by the IMF, and we
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shall do it much more sensibly than they did.
There is one overriding priority for us which is obvious and inescapable, and it has been demanded by the actions of the Labour Government. That is to restore the proper fighting capability of our front-line soldiers, sailors and airmen. The facade has got to be made real. Our forces must have sufficient ammunition to train with and to fight with. They must have sufficient fuel, sufficient spares, sufficient servicing equipment and sufficient training. Above all, they must not be starved of essential weaponry and armaments because of continual stoppages in delivery owing to Governmental cuts.
That must be our first priority not only on material grounds but also on grounds of morale. There could be no greater demonstration of the high calibre of our armed services than the fact that the Labour Government's attitude to them has not wrecked their morale. Morale has been lowered in some places, but in Northern Ireland and elsewhere it has remained much better than might have been expected. Our forces have shrugged off this Government. They manage to ignore the damage they have done and they get on with the job. But one thing they cannot ignore is the decline in operational capability. In repairing the damage done to our forces by the Labour Government that will be our highest priority.
The Government's pretence that they have not weakened the teeth may deceive some people but it does not deceive any of the people who matter. It certainly does not deceive the Russians, who well know what troops need if they are to be in a position to fight for any length of time. It certainly does not deceive our allies, who were gravely concerned even before the last three rounds of cuts. Above all, it does not deceive our own forces. They know the truth and they merely despise people who try to conceal it.
For Britain to play its proper part in defending itself and the West our forces have to be fully credible to three sets of people—to the Russians, to our allies and to themselves. It will be a prime objective of the Conservative Government to make them fully credible to all three. After the mess made by this Government that

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will be a big task but I have no doubt at all that we shall achieve it.
Mr. Mulley: The hon. Gentleman says that he cannot quantify expenditure because he does not know where he may have to make repairs. Apparently he is not aware of any defects in our present system. On the other hand, he makes sweeping allegations—which can only be calculated to encourage the Russians while demoralising our troops—none of which is supported by factual evidence.
Sir Ian Gilmour: That is a remarkably foolish intervention. In fact, I had finished speaking. But I pointed out that the Government have been trying to deceive the people by what they have done and, therefore, we cannot know exactly the true state until we get there. We know the patient is ill, but we do not know the exact medicine to give until we have actually had a chance of examining the patient.
As to the Secretary of State's absurd idea that we demoralise our forces by pointing out that they are not sufficiently equipped, he ought to realise that what has demoralised the forces is the fact that the Government go on cutting their equipment, thereby showing that they have not given defence a sufficient priority and that they are more concerned to keep their party intact than they are concerned with the defence of the country.
5.20 p.m.
Colonel Sir Harwood Harrison: We are discussing one of the most serious aspects which come before us in the parliamentary year; that is, the adequate defence of our island. It is no good comparing defence with housing, education or roads, all of which may be very desirable in themselves. Defence is an essential first priority. It is no good having a lovely house if there is not the means in the country with which to defend it. It is in that spirit that I wish to speak today.
The Sub-Committee of which I have the honour to be Chairman has produced a Second Report for the Expenditure Committee in this Session in which we have dealt with expenditure and the defence cuts which have taken place over recent years. The Secretary of State was good enough to say that he would let us have his Department's comments in due course. We never expected them earlier than "in
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due course". The only occasion on which we objected was when the Department took more than half a year to let us have its comments. Presumably, we can expect them in some weeks.
Our report got a lot of publicity in the national Press last Friday. I think that the reason was that the report was a unanimous one of the whole Sub-Committee which had been worded factually on what had occurred, and it is possible that many people did not realise how much the cumulative effect of these cuts amounted to. The report was written before the White Paper was published. However, I do not think that there is anything in the White Paper which would have made us alter our minds.
It must be said at the outset that our relations with the Ministry of Defence remain excellent. We are intensely grateful for the papers which are supplied by it, and we are also especially grateful to the Secretary of State for coming to give evidence to the Sub-Committee. Therefore, anything that I say is in no way meant as a personal attack on any defence Minister but as a statement of the facts as I see them.
We have been active as a Committee and recently we paid a visit to NATO headquarters in Brussels. We also went to Norway following a trip last June to Canada and the United States. In NATO, it was interesting to find the great respect with which, I am glad to say, we are still regarded by our allies. It was also gratifying to find in various league tables which were produced for us that we stood relatively high in what we contributed to NATO.
One matter which caused us some concern about the defence cuts during our recent visit was the communiqué issued by NATO Defence Ministers after their meetings on 7th and 8th December of last year to which Her Majesty's Government were a signatory. We attached so much importance to this statement by NATO Ministers that we thought it right to append the full text of the communiqué to our report.
In their statement, the Defence Ministers expressed their serious concern about the relentless growth of the strength of the Warsaw Pact forces in which an increasing emphasis is being placed on offensive weapons. The Ministers further

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recognised that the achievement of these objectives would call for real annual increases in defence expenditure by the Allied Governments, and that increased emphasis should be placed in defence budgets on the allocations to major re-equipment and modernisation programmes. It is, therefore, all the more to be deplored that, shortly after the Secretary of State signed that communiqué on behalf of Her Majesty's Government and endorsed the need for real increases in defence spending, this House was told of further real cuts for 1977–78 and 1978–79.
This action was disturbing for two reasons. First, it further weakened the capability of our forces at a time when the very reverse was being strongly advocated by the NATO Alliance of which this country is a principal member. Secondly, and in some ways even more regrettably, the discrepancy between the words of the Secretary of State and his subsequent actions is bound to undermine the confidence in the strength of the commitments of Her Majesty's Government to the NATO Alliance and to cast doubt on the good faith of British Ministers generally.
I should like to put one question to the Secretary of State. Does he consider that he has acted honourably in this White Paper compared with what he signed at Brussels? Can he say how he will maintain and improve our contributions and whether this White Paper contains improvements, or can we be accused again by our allies possibly of being "perfidious Albion"?
I now digress on to a more pleasant subject and say a few words about the visit of the Sub-Committee to Norway, where we saw our troops with 45 Commando at their training. We were very struck by the enthusiasm displayed by these men and by how well they got on with their Norwegian hosts. If war came and they had to go back, to them it would feel almost like going to a second home, because they know the whole area.
There were two points which struck me. Any troops that we might have to send to Norway would, owing to the geography of the country, have to land during a period of tension. We also found the morale excellent among the high-1122
ranking Norwegian officers. We did not see the troops, of course. We have to remember that a very high percentage of them are on the Norwegian Reserve and in civilian life. But they are all capable of bearing arms to defend their country.
One factor alarmed me. We British have to go across the North Sea in civilian transports. Our soldiers do not know whether they will get the ones that they have used before. I am sure that this is an aspect on which there could be good co-operation. These Commando men who come from Plymouth should know the boats which will have to take them and something of their civilian crews.
I know the difficulty about Norway having said that she will not have a standing army of a foreign country on her soil in peace time. I feel that a period of tension can hardly be peace. Perhaps we can get this matter sorted out with them.
Another trip which I wish to mention is one which the Committee made in this country. We spent two days in Edinburgh. There, in the afternoon, we saw static displays given by the various TAVR regiments, and, in the evening, we visited some of them in their drill halls. All I can tell the House is that the spirit and enthusiasm of these men and women—I stress "and women" because this is a new aspect to me—was very marked and gratifying to an old Territorial like myself. The Territorial Army is the cheapest way—if one is concerned about cost—of getting a body of trained, disciplined troops and the Territorials have twice served this country well this century.
There was one minor matter up in Edinburgh that we thought was a disadvantage. The Commander-in-Chief had no helicopter under his control. If he wanted one he had to apply for it and get it sent up from the South of England. It is very costly to send a helicopter up to Edinburgh and back. Considering the Commander-in-Chief's wide and extensive command, this is something that should be looked at.
In the period of bringing the central front up to full fighting strength, certain TAVR units have been earmarked for action in the front line. This demand has never been placed on them immediately

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in war before. It is a sobering thought. Although some of their vehicles are, to say the least, rather on the elderly side, as far as I can ascertain, the equipment going to TAVR, particularly the units for BAOR, is vastly superior to that which we were getting in 1939. I remember the woefully short conditions under which we went to war.
The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): Hear, hear.
Sir H. Harrison: I am glad that the Minister says Hear, hear". We will not allocate blame for that to anyone.
As a Sub-Committee we have been studying the best ways of getting reinforcements to the central front and other theatres on time in a time of tension. In all the evidence given to us, it was thought that the period of tension was likely to be shorter rather than longer. We visited the port of Marchwood, near Southampton, a place that will have a very big part to play, remembering that it is not a question of taking troops straight to France. They have to go via Holland and Belgium, which means a longer time at sea.
I realise that up till now I have spoken only of the Army, but we are an island race which has always relied heavily on the Royal Navy, and in more recent years, the Royal Air Force. We looked closely at these two aspects when we were in Canada and the United States in June last year. We visited the wide training area at Suffield, the use of which has been granted by the Canadian Government. I am sure that the troops who go there will be very glad of the opportunity. We also visited Omaha, the centre of the Strategic Air Force, where we were very well instructed. We visited the naval base, at Norfolk, as well. These two countries like ourselves, have the extra difficulties to solve over other allies in NATO because we all have to send our troops overseas.
While I was in Canada and the United States I was particularly anxious to impress upon all the groups of officers—we met mostly officers, although we did meet some other ranks as well—the high professional quality of all ranks in the British Services, and I stressed that if called upon they would give a very good account of themselves.
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I find the change of form in the White Paper rather disturbing. Perhaps the growth of the threat against us does not come out as clearly as it did last year. We do show the amount spent on new equipment but we really do have to measure it against what the Russians are building, and we must not put our well-trained men at a grave disadvantage. Is the Secretary of State satisfied that if we were engaged in a long-term war—and the last two wars were both long—on the central front we could continue to get men across, as well as equipment and spares in the quantities required?
We are particularly interested in antisubmarine warfare which is being developed and the use of guided weapons. We have followed very closely the development of the Tornado for the RAF. We are glad that this aircraft is being produced in co-operation with West Germany and Italy, because we are certain that the more we combine as allies in the production of equipment and its Command usage, the more efficient we shall be.
Only last week, sadly, we had to go to Westminster Abbey for a moving service to the Chief of the Air Staff, Air Marshal Sir Andrew Humphrey. This country has suffered a grave loss as a result of his early and sudden death. I am afraid that we shall miss his brains and his talents and the guidance he could give in this top job that he was starting.
I wish to establish the operational impact of successive cuts in equipment and manpower levels. Are the force levels, equipment programmes and provisions of stocks of ammunition, spares, petrol, oil and lubricants being affected by any recent reassessment of the threat to members of NATO severally and collectively and, if so, can examples be given?
As far as operational stocks are concerned, I wonder whether financial considerations inhibit in any way the provision of a full-scale of operational ammunition and other warlike stores to the wastage rates currently agreed within NATO, and for the number of days required by NATO.
Will the Minister tell us the approximate date when it is planned that the issue of the Milan anti-tank weapon will be complete to the first of the divisions

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in BAOR to get the system, and to the last, and to United Kingdom battalions earmarked for BAOR? What were the original target dates, and what plans are there for re-equipment with longer range anti-tank guided weapons and helicopter-borne anti-tank guided weapons?
On air defence, is the air defence coverage of I Corps area in BAOR now complete? Do the systems at present in service have Blindfire? If not, what are the plans for introducing this? Will Rapier be mounted on armoured personnel carriers as in the case with the systems supplied to Iran which are on the American M-113 chassis, instead of being towed by Land Rover? Would this not give much increased protection to vital weapons?
I turn to the subject of the RS80. What area weapon system is there to be now that the RS80 project has been cancelled as a result of the Defence Review in December 1974? What is the rate of introduction into service of the programme of helicopters for the Royal Air Force? How much is involved in the purpose of the heavy-lift helicopter as requested by the Royal Air Force in BAOR? As a matter of interest, what amount of money would be involved in completing SAM protection of airfields and headquarters?
On the subject of Army manpower, it has been necessary to draw on BAOR units to maintain an adequate garrison in Northern Ireland, resulting in a lowering of formation and specialist training standards there and a weakening of ready peace-time strength in defence. Even with that movement of units from BAOR, the frequency with which units serve in Northern Ireland is an indication of a shortage of combat manpower and a strain on the men concerned and their families. Why then was Army manpower reduced in the defence review? We are hoping to visit Northern Ireland later this week provided that visit will still take place following tomorrow's events in the Division Lobbies.
I should like to turn to EXOCET which is being widely fitted in guided missile destroyers and other surface warships. For how many ships was the equipment planned in 1974, and what was the approximate time scale for fitting? How many missiles was it intended to pur-
1126
chase hese plans been amended and, if so, can the House be told to what extent the changes have been dictated by financial considerations? When on a private visit to Gibraltar a few years ago, I called on the Admiral in the port and he took me to see an old target ship that had been hit by EXOCET. I am certain that not one man would have lived in that ship if that missile had been launched in war conditions. I was most impressed by how destructive that guided weapon could be.
On the subject of naval manpower, may I ask to what extent financial considerations have affected the availability of manpower on naval vessels and other vessels at such notice that they can be brought forward for service in an acceptable timetable?
I have been fortunate in having paid a number of visits to our troops in various parts of the world, and I am satisfied that they are doing a very good job. With their readiness and ability to fight, they are a deterrent. I humbly ask Members of this House who see Service men in their constituencies to say "Well done, thank you very much for what you are doing. You are showing a great willingness to fight and to help to keep the peace of the world." I am convinced that it is only by showing the Russians that we are ready that we can keep the peace of the world. I go further and say that if the Russians think that they will get a bloodier nose by attacking us, they will not do so.
I hope that all hon. Members realise the serious threat posed by the Russians, who are the dynamic power in the Warsaw Pact. It is our responsibility as Government and Parliament to defend our people. We must do our duty by our Allies.
I was glad to be present in January when my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) said that a future Conservative Government would restore the defence cuts and see that the right amount is spent on defence in light of the dangers that may present themselves.
I am happy to serve under my right hon. Friend the Leader of the Opposition. She has shown herself resolute in exposing the threat involved in Russian

1127
actions. Peace is very nice and enjoyable for us all, but, by God, one has to fight for it.
5.46 p.m.
Mr. Alan Lee Williams: I wish to congratulate the hon. and gallant Member for Eye (Sir H. Harrison) on the manner in which he delivered his speech and also on the way in which he chaired the Select Committee. The Committee's report is a most important document and draws attention to certain dangers in the cuts in our weapon systems. I hope that my right hon. and hon. Friends in Government will bear those matters firmly in mind.
I did not plan to speak in this debate, and I am surprised to find so little competition from the Labour Benches. I had hoped to make my speech on Monday. Obviously many of my hon. Friends are absent today following the change in business, and some vote or other that is to be taken tomorrow obviously has affected attendance in this debate!
One of the great concerns I have always expressed in successive defence debates relates to the danger of piecemeal defence cuts. I am thoroughly unhappy with the way in which savings in defence are made not only by the present Labour Government but by former Conservative Governments. The fundamental review instituted by my right hon. Friend the Member for Barnsley (Mr. Mason), when he was Secretary of State for Defence, was a workmanlike review and a considered statement. The point made in that review—and it was a point which I made at the time—was that if we were to have a fundamental reassessment of defence, it must follow strategic consideration. In other words, it must seek to assess the threat which this country, in conjunction with its NATO allies, faces. It should not be carried out solely on the basis of taking equal shares of the cuts in respect of other Government economies. The defence of the realm has always been a matter of such importance that it must by its essence have a higher degree of priority and consideration in expenditure terms.
Nevertheless, I realise that we do not live in a perfect world, and it is difficult to explain to the country that one must make cuts in the sensitive social areas
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about which most of us care if we are not to make cuts in defence. Nevertheless, that must be done bearing in mind the wider considerations.
It cannot be denied—I do not think my right hon. and hon. Friends would attempt to do so that the world situation in terms of the massive Russian build-up is most worrying for the West. When we consider the way in which the Russians have expanded their armaments in the past five to seven years we are tempted to ask the question that cannot be easily answered—namely, "Why are they doing it?" In these circumstances the last thing we must do is to give them any temptation. I have always profoundly believed that the only way in which we can resist the Russians is to show determination and strength.
I find this a difficult speech to make. My right hon. Friend the Secretary of State for Defence made an admirable speech which was reasonably buoyant. Of course, my right hon. Friend is under great pressure within the Cabinet and within the Government. I understand why he has had to announce a series of cuts. Nevertheless, the report of the Select Committee is a highly damaging assessment of our present defence capability. It would be wrong for me not to say that from the Labour Benches. However, I have sufficient confidence in my Government to believe that as soon as the economic climate improves they will have the determination to do what is necessary to ensure that the British contribution to NATO is maintained. It is upon that basis that the defence of the free world can be maintained.
5.52 p.m.
Rear-Admiral Morgan-Giles: I congratulate the hon. Member for Hornchurch (Mr. Williams), the sole occupant of the Labour Back Benches, upon his informed and thoughtful speech. We have had an interesting and valuable report from the Select Committee chaired by my hon. and gallant Friend the Member for Eye (Sir H. Harrison). It is relevant to point out that the committee has presented a unanimous report. I am glad that my right hon. Friend the Member for Chesham and Amersham (Sir Ian Gilmour)) has repeated unequivocally that defence spending will be increased by a Conservative Government.

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In these debates we tend to escalate discussion about defence subjects into a supposed situation of declared war in Europe while all the time we seem to pay little or no heed to military events taking place outside Europe, especially in Africa. The Defence White Paper does not mention the word "Africa" and it is that part of the world that I wish to talk about. The illustrative maps of deployment of the Armed Forces show pathetic little outposts dotted around the world like measle spots but there are no spots in Africa.
I believe that the Soviet Union is trying to keep the West guessing by a large build-up in Europe while mounting a deadly politico-military offensive in Africa against the interests of the West. The map that should have been incorporated in the White Paper shows the situation throughout the African Continent. In Somalia there are Cuban troops with Russian supplied arms and equipment. There is a Russian naval base at Djibouti. In Tanzania there are Cuban advisers and technicians and training and sanctuary for terrorists. In Mozambique there are more Cuban advisers and technicians, plus Tanzanian troops supporting Frelimo. Four large deep-water harbours have been made available for the Soviet Union. There are raids over the border into Rhodesia. In the course of those raids farmers are murdered and there is the ham-stringing of cattle. There is the terrorising of mission schools and the indiscriminate murdering of black and white Rhodesians, including, most recently and most horribly, priests and nuns.
In Angola, Cuban and Nigerian troops backing the MPLA are believed to total about 14,000. There are Cuban forces, including an armoured regiment with 120 Russian-built tanks. There is an armoured car regiment with 70 Soviet-made vehicles. There are five regiments equipped with multi-barrelled rocket launchers—namely, the dreaded "Stalin Organs". All in all, that is not a bad build-up for a Caribbean sugar-cane republic with a population of only 8 million.
Added to that there is the ever-increasing Soviet naval build-up in the Indian Ocean. This very week there are visits by Fidel Castro and President Podgorny.
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Even if the West has closed its eyes to events in Africa, clearly the Soviet Union and its satellites have not.
I turn briefly to the action that we see from the Labour Government. Britain has vital interests in the freedom of shipping, especially the carrying of oil around the Cape. That can be illustrated by any schoolboy atlas. Secondly, we have interests in minerals in Rhodesia, South Africa and other countries such as Zambia and Angola.
The oil and the minerals are essential for British industry both in peace and war. Without them the high-technology industry of Britain and the West as a whole would wither and perish.
What action do we see from the Labour Government? We see nothing, or worse than nothing. If the Government were doing nothing, we might hope to see them wake up in time and realise what is happening. But instead, successive Labour Ministers have supported policies based on ideological obsessions, including an absurd failure to understand the real situation and the real state of affairs within Africa.
Astonishingly the new Foreign Secretary is the author of a book published in 1972 that highlights some of the obsessions of Labour Ministers. I refer to his book entitled "The politics of defence". In that book the right hon. Gentleman, the present Secretary of State for Foreign and Commonwealth Affairs, lets the cat out of the bag. I shall give a few examples. The first quotation states:
"It is not too fanciful to imagine a situation where a Russian presence could be used to ensure that South Africa did not invade an African country which was harbouring and encouraging guerrilla action."
In my second example the right hon. Gentleman asserts:
"The Russian build-up in the South Atlantic poses no dangerous new military threat to the Cape route."
Thirdly, when referring to Rhodesia the right hon. Gentleman suggests that Britain
"should have seriously considered threatening a maritime blockade of any country which connived at sanction-breaking."
The right hon. Gentleman also argued for an international maritime blockade of the whole South African coastline. In another fascinating extract the right hon. Gentleman, when discussing what should have

1131
been done at the time when sanctions were put on Rhodesia, states:
"To have landed troops would have necessitated first destroying the Rhodesian air force, and this would have meant extensive bombing of airfields close to civilian housing, and inevitably leading to loss of life."
In talking like that the right hon. Gentleman might well join the erstwhile Leader of the Liberal Party!
I am not criticising the right hon. Gentleman personally. I am bound to say that I have always regarded him as a sensible man. I considered his appointment by the Prime Minister as an imaginative one.
Mr. Alan Lee Williams: Does the hon. and gallant Gentleman agree that the overall thrust of the booklet to which he refers, which was written by my right hon. Friend a number of years ago, is to call for a greatly strengthened NATO?
Rear-Admiral Morgan-Giles: Yes, that is right, but what sticks in my gullet are the extraordinary obsessions buried in it. Either the present Foreign Secretary regrets many of the things that he wrote, or this is the sort of cloudcuckoo-land rubbish that one has to have on the record to climb up the ladder in the Labour Party, which the right hon. Gentleman has certainly done. However, lie is a big boy now and must come to grips with the real world as it is. I suggest that he can no longer afford the fantasies of Fabian youth. As Foreign Secretary he must understand that he has responsibility, first and foremost, for defending British interests wherever they may be. To do that requires a complete reappraisal on certain lines. First, to cease cold-shouldering and ostracising the Government of South Africa. In any case ostracism is the least likely way to achieve results with the South Africans, knowing the kind of people that they are.
Secondly, the Government should resume supplies of maritime arms and equipment to South Africa forthwith. It is a cynical absurdity to pretend that frigates or anti-submarine aircraft can be used in any internal security situation.
Thirdly, we should stop moralising about apartheid. It must be realised that policies within the Republic of South Africa are internal affairs. We may or may not like them.
Mr. Deputy Speaker (Sir Myer Galpern): Order. The hon. and gallant Gentleman is not in order in discussing apartheid on defence policy.
Rear-Admiral Morgan-Giles: With respect, I am trying to point out that there is an urgent military situation in the southern part of Africa and that it is linked with the matters that I am discussing. I should like to continue, but I pay heed to what you said, Mr. Deputy Speaker.
It may be that some liberals in South Africa do not like what has to be done by British security forces in Northern Ireland, but it is not their business to say so. We would be annoyed if they started telling us what to do in Northern Ireland.
We should drop the absurd argument that, by aligning ourselves with what the author of this book calls "racist regimes",
"is to drive black Africa into the hands of the Soviet."
In any case, black Africa is coming under Soviet domination at a most alarming rate, as I have tried to show. We need a major diplomatic effort to explain to the black African States that their newfound freedom and independence, which they value so much and which everybody agrees they should have, is at risk from Soviet imperialism: and that their freedom and economic prosperity depend on unfettered use of the sea routes round the continent of Africa.
The next change in policy is to ask the South African Government to restore the Simonstown Agreement. There is every advantage for Britain and the West as a whole in a continuation of the Simonstown Agreement. It was absurd to abolish it. It is particularly valuable for the intelligence material which would be available under it. Of that I shall not speak further.
We should stop immediately any subsidies or financial aid to African countries which supply, arm, train or harbour guerrillas. The hon. Member for Portsmouth, North (Mr. Judd), who is not present, but who is a Minister of State at the Foreign Office, declared in this Chamber that he saw no objection to the supply of funds to what he likes to call "freedom fighters", but which I prefer to call terrorist murderers.

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As regards Rhodesia, an agreed solution must be found by Rhodesians of all races. It must not be imposed from outside by a vindictive Labour Government acting through the so-called Front Line Presidents, or by terrorist gangs working to Soviet orders with Russian automatic rifles in their bloodstained hands. Mr. Smith has said that he will turn over Rhodesia to Africans but not to anarchy, and that must be realised. Why does not the Foreign Secretary go to Rhodesia during his forthcoming tour of Africa and see conditions for himself?
Next, I believe that sanctions should stop forthwith.
Mr. Deputy Speaker: Order. In my opinion, the hon. and gallant Gentleman is debating foreign affairs, not the defence White Paper.
Rear-Admiral Morgan-Giles: I entirely take your point, Mr. Deputy Speaker. However, defence policy is the handmaiden of foreign affairs. My whole point is to get away from the sterile discussion of the number of tanks on one side and the number of guns on the other side and to look at the part of the world where military operations are actually in progress. I am doing my very best to keep within order.
If the Government claim continued British responsibility for the constitution in Rhodesia, the logic is that they have a continuing responsibility for the defence of a British colony.
The rôle of the Armed Forces is to prevent war. The rôle of the Government is to protect British interests. The continent of Africa is now the cockpit of the world. I say that the Government must turn and face it and no longer pretend that it does not exist.
6.6 p.m.
Mr. Philip Goodhart: My hon. and gallant Friend for Winchester (Rear-Admiral Morgan-Giles) entered the House 12 years ago. Since then he and I have taken part in virtually every defence debate in this Chamber. If 12 years ago one of us had suggested that within 12 years Cuba would be a more important military power on the continent of Africa than Britain, one of the Whips would have quietly moved round to the Bench behind,
1134
there would have been a short, sharp prick, a sedative would have entered one's bloodstream, one would have fallen back, been led out of the House, and medical treatment would have been provided quickly and no doubt adequately. But that which would have appeared lunatic 12 years ago is the reality today. Cuba matters a great deal on the continent of Africa and we matter not at all militarily.
I should like to pay tribute to another veteran of defence debates, my hon. and gallant Friend the Member for Eye (Sir H. Harrison), who has chaired the Select Committee for many years and produced so many valuable reports. The Committee, under his leadership, has tended to ask the right questions, even if it has not always received the right replies. It is a great tribute to his chairmanship that the reports should have been unanimous.
In opening for the Opposition, my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) went through the series of defence cuts imposed by this Government during the last two years. I am delighted that the Secretary of State for Defence has re-entered the Chamber, thus swelling the strength of Labour Members by almost 25 per cent. I suggest that the situation is even worse than my right hon. Friend indicated. Apart from the various cuts which have been announced, I understand that cash limits have been imposed by the Treasury on the Ministry of Defence. If I stray from the truth, I should be delighted if the Secretary of State would contradict me. I understand that the Treasury has imposed 11 per cent. cash limits on the Ministry of Defence for the forthcoming financial year.
Anybody who thinks that inflation is now running at 11 per cent. must have been mesmerised by the speeches that the Chancellor made before the last election. Inflation is a good deal higher than 11 per cent.—probably 5 per cent. or 6 per cent. higher. The imposition of cash limits by the Treasury at a much lower rate than the current inflation level means that there will be further substantial cuts of our defences. That has been hidden from the public and the House.
I want to talk mainly about the Army and the choices that now face it. One choice is that considerable additional financial resources may be made available to keep the fighting strength of the Army

1135
intact or, indeed, to improve it. That is unlikely to happen under this Government, but it will, I trust, happen under the Government that will be elected in a few weeks' time.
Another choice that faces the Army is to have a sharp reduction in either the size or number of units and to have some improvement in equipment. That is difficult, given our treaty commitments to NATO and our standing commitment—that I feel will continue for some considerable time—of providing almost 14,000 men in Northern Ireland. Of course, one could try to build up the indigenous defence forces in Northern Ireland. Indeed, that is the stated policy of the Government, and the IRA response to this has been the stepping-up, in the last few weeks, of the murders of members of the RUC and the Ulster Defence Regiment. We on this side of the House call for an increase of not just a couple of hundred in the full-strength of the Ulster Defence Regiment but for something four or five times larger than that. Indeed, there could be a need for an even larger increase still. Given the continuing violence in Northern Ireland, one must allow the people of Northern Ireland to play their full part in putting down terrorism and violence.
I suspect that the Government will try to muddle on to the end of their days—which may be short. Even if the Government continue in office for a few months more, they will try to get by with letting the Army quietly and slowly run down. During the last fortnight I have heard of numerous examples of the way in which the Army is quietly and slowly running down. I have heard of exercises, planned weeks ahead, being cancelled two days beforehand because of the lack of transport. In order to save money, staff officers at Aldershot are not now allowed to use the public telephone system before 1 p.m. As for the training of mortar groups—
Mr. Eldon Griffiths: They are not allowed to shoot.
Mr. Goodhart: My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) says that they are not allowed to shoot. I understand that they are allowed to shoot one live round in five months and that soldiers who have been trained in that way are then sent off to
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Northern Ireland. The IRA may have better practice field firing facilities for certain arms than the British Army.
Mr. Eldon Griffiths: I am sure that my hon. Friend the Member for Beckenham (Mr. Goodhart) is right because he has great knowledge of this subject, but I know of at least one unit of Royal Marines, which has served in Northern Ireland, and which contained a number of soldiers who had never fired the heavy machine gun or the mortar. Yet those soldiers were sent to Northern Ireland to face IRA thugs who had regularly fired similar weapons more often than they had.
Mr. Goodhart: My hon. Friend has underlined with characteristic understatement the case that I was trying to put.
The morale of our forces is being slowly but surely undermined. One can now find units that have been sent back to Northern Ireland seven times. It is not the danger that has affected such units—that is a stimulus and provides valuable training for junior leaders—but the discovery that there has been so little improvement on each occasion that they have returned.
The Government are trying to run the Army not so much on a shoestring as on a broken bootlace. The Army cannot continue in such a way for long. The situation is worsening.
General Brown, who is a rather outspoken gentleman in the United States of America, has suggested that the Armed Forces of this country now consist of generals, admirals and bands. I share the enthusiasm of the Under-Secretary of State for the Army for bands. I know that the basic musical course at Kneller Hall—which is the best school for military music in the world—still lasts for eight months, but one month of the course is spent on cooking fatigues because the civilian staff there has been sacked.
There is one figure in the report of the Select Committee on Expenditure with which I quarrel. It is the figure for 1977–78 in Appendix A which says that the cost of civilian staff is likely to be reduced in the coming year by only 0·3 per cent. over this last year. I understand the situation to be quite different. The opening bid that has been made in negotiations

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by the Ministry of Defence means that the take-home pay of the industrial civilians employed by the Army will be reduced by no less than 25 per cent. This can be achieved either by eliminating overtime—and a lot of overtime has been eliminated already—or by sacking people. It is not possible to get rid of the jobs. We can get rid of the range wardens but not of the need for ranges. The result will be that soldiers will have to do the jobs that the sacked civilians used to do. Once again, the Army will be even more stretched than it is now.
In the past week, we have seen what maladministration can do to the morale and fighting qualities of the Parliamentary Labour Party. I hope that the maladministration that the Government are forcing on our Services does not have the same catastrophic effect on them.
6.20 p.m.
Mr. David Walder: When a constituent tells me that he has been sitting in the Gallery and has been horrified to see the small attendance in the Chamber, I have a customary reply that is used, no doubt, by other hon. Members. I say that Parliament is an iceberg and the real things happen below the surface. Looking round the Chamber today and noting the absence of all minority parties, one could be forgiven for thinking that perhaps things are indeed happening elsewhere.
I have taken part in a number of defence debates and I find that they have got progressively worse—and that is not entirely cause and effect. This White Paper reaches a nadir, because we are asked only to take note of it and not even to approve it, but in the last three White Papers there has been an incredible dichotomy. They start with a statement of the threat, set out as clearly as anyone could wish, but what follows appears to have no relation to the problems posed in the first part.
I accept that it is impossible, in discussing defence matters, to set absolute standards and say that there should be so many men, or that we should spend a certain percentage of our GNP on defence. The White Paper supports this view when it says that GNP is not an absolute standard. It is not entirely money, or men, or weapons.
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So we sometimes engage in rather fruitless arguments on defence, but the Secretary of State engaged in a particularly fruitless one with my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) when he kept asking precisely what a Conservative Government would spend on defence. If there is any justification for the Secretary of State's occupancy of his office, he must know that that is an absurd and meaningless question.
In considering the size of our Armed Forces, we have to take into account the state of our economy. It would be absurd to spend so much on defence that we wrecked our economy. There was talk in quite responsible journals a few years ago that such a policy was being adopted by the United States against the USSR in the hope of breaking the Soviet Unions economy. I accept that there is an economic argument and that we cannot prepare for all emergencies, but we must prepare for some.
My hon. Friend the Member for Beckenham (Mr. Goodhart) spoke about predictions of what has happened to Cuba. Who would have predicted, a few years ago, that we would have an emergency in Northern Ireland? The Secretary of State for Defence has to think of the unthinkable and the unforeseeable.
We live in a deterrent age. The object of the maintenance of our forces is the prevention of war, but below the nuclear threshold, a great deal happens, has happened in the last decade and could happen in the next decade. All this will affect our options and NATO's options and may circumscribe our freedom and strength as a nation and the freedom and strength of NATO as an Alliance.
Perfection is impossible, but our Armed Forces have received a number of blows from the Government which are most important in terms of the Services' morale and pride in themselves. I am sure that the fear in the forces now is about what will happen next.
The Government's reassurance is set out in the White Paper. I have said that these documents seem to have been set on a decline, but the latest is just about the worst that I have ever seen. There is one passage with which I agree. It says that
"There is no evidence to suggest that NATO's policy of deterrence is failing and

1139
that the Warsaw Pact is contemplating aggression against NATO. But political intentions can change rapidly, whereas military capability can only be altered over a long period."
Looking at the analysis in the White Paper, one must ask how we can match the increased military capability of the Warsaw Pact with the peaceful statements and motives that we are prepared to attribute to their participation in MBFR and the like. How do we square that with their massive build up of weaponry? Does that go together nicely as a piece of logic and represent a cohesive policy or can we be forgiven in the West for looking at it with some suspicion?
The answer was provided today by what I call "Mulley's theorem" which says that "the strength of NATO is greater than the sum of its parts" because—apparently—of the secret ingredient, cohesion. I should not care to count the number of times that those of us with the interests of NATO at heart have sat in this Chamber or in defence Committees and, without being overcritical, pointed to the lack of cohesion in the Alliance and the political difficulties of keeping together democracies and free nations as opposed to the monolithic alliance on the other side of the Iron Curtain.
The Secretary of State's remark was totally illogical, and, with the addition that he provided, it was just about the silliest statement on defence that I have ever heard in the House.
We have to balance a White Paper that has no real form or argument against the practical observations made by the Expenditure Committee. The Committee is made up of all parties, and it reached a unanimous conclusion and said:
"We hope, therefore, that by setting out the facts we may make some contribution to a more informed debate in the House on this year's Defence White Paper as well as on defence matters generally."
That is an admirable objective, but unfortunately the defence White Paper falls well below that standard, and the Secretary of State today told us that he would be replying to the Committee "in the usual way"—whether by word or gesture I do not know.
I am afraid that one can only come to the conclusion that a Labour Government, ignoring observations made by ex-
1140
perts, them drawn from their own party, and purely, I imagine, to keep their left wing happy, have decided, through either weakness or blindness—I cannot tell—that in this necessary field they can cut expenditure but meanwhile maintain luxuries that no doubt they think will attract votes.
It is a curious thing that when there is discussion about a future Conservative Government the first response that we have from Labour spokesmen is "What about confrontation?"—referring to internal confrontation in Britain. Yet, quite seriously, by their defence cuts the Labour Party seems—some members willingly, perhaps some unwillingly—to have brought international confrontation nearer.
6.32 p.m.
Miss Janet Fookes: Like Alice in Wonderland, defence debates get curiouser and curiouser. For a start, for a long time we were not even given the motion that we were to debate, and all the proddings that we put forward could not persuade the Leader of the House to give us that information. It seemed to be shrouded in mystery. When at last we see it, we begin to understand why, because it appears that the Government do not even have the courage to suggest that we should approve the White Paper and the Defence Estimates. We are asked only to take note of them. Indeed, the Government Back Benches are not only sparse in attendance; they seem strangely muted. Perhaps they, too, are depressed by the White Paper, and even more by the speech that we heard from the Secretary of State this afternoon.
Certainly the Secretary of State commands no confidence on the Opposition side of the House, and one can only presume that he gets very little confidence on the Government side. He treated us to what I would only describe as bleatings about Conservative defence cuts, as though that in some way enabled him to make cuts with impunity.
For a start, I do not accept that any cuts made when we were in Government were anything like the order of magnitude of those that are being undertaken by the present Government. Even if one conceded that argument, surely it means that there would be even less room for manoeuvre than there is. One cannot go

1141
on cutting and cutting and still have sufficient left at the end of it.
What is more, Labour Members are always very keen indeed to compare what we spend with what is spent by our allies, in terms of a proportion of gross national product. That always seems a quite pointless exercise. It seems to me that if any comparison is to be undertaken it should be a comparison with what is spent as a proportion of gross national product by our potential adversaries, and on those grounds there is every reason for concern.
The White Paper admits that, so far as we can tell, the Soviet Union is spending between 11 per cent. and 12 per cent. of its GNP on defence, and that this is a very marked increase over recent years. So the threat is undoubtedly becoming very much greater than it was previously.
Mr. John Roper: I understand the hon. Lady when she says that the Soviet Union is spending between 11 per cent. and 12 per cent. of its GNP on defence, but I am not quite sure where in the White Paper she finds the statement that this is a much larger share of GNP than that of recent years.
Miss Fookes: The White Paper says that it is a 5 per cent. increase over the last few years. Without looking at the White Paper, I cannot say exactly where that statement is, but it is certainly there. I give that assurance.
Moreover, we should also bear in mind the amount that we spend on pay and allowances and on pensions for our troops. I make no quarrel about that. Our troops deserve the best that we can give them. However, when one is making a comparison with the Soviet Union it is important to remember that the pay of their ordinary Service men is very poor indeed, and that their conditions of service are also very poor. This means that the Soviet Union is able to spend very much more on equipment than we are. I do not know what the proportion is in the Soviet Union. It would be interesting if the Minister would tell us. However, from the White Paper it appears that we spend no less than 45 per cent. of the defence budget on pay, pensions and allowances. I should be prepared to bet,
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although I am not a gambling woman, that the proportion is considerably smaller in the Soviet Union.
However, we had one small crumb of comfort this afternoon concerning our own forces. That was the assurance by the Government that short-term Service men will not lose their gratuities. That was the fear. But of course, that assurance, though welcome, was rather marred by the delay in its coming. I noticed that even this afternoon, in response to a direct Question that I put on the subject, the Minister was remarkably coy about giving us much information. Now we have had it, and we are thankful. However, we are left with the sneaking feeling that if a great deal of fuss had not been made in the intervening period the Government would have gone ahead and ratted on their responsibilities.
There is one further potential crumb of comfort, namely, the possibility that we may after all get the airborne early warning system based on the British Nimrod rather than on the American Boeing. When the Secretary of State meets his colleagues later in the week. I hope that he will pursue this point with great vigour and determination—rather more vigour and determination than we customarily expect from him.
Mr. Onslow: I reinforce my hon. Friend's plea. I hope that the Secretary of State will see that a full report is made to the House when this debate resumes, if it does resume, on Monday.
Mr. Mulley: I can give the assurance that a report of the meeting will be made during Monday's debate.
Miss Fookes: Perhaps that is why we are delaying the second day of the defence debate.
It is a mystery to me how the Government got themselves impaled on this particular hook of accepting the American system. We are told that it was in order to play along with NATO requirements, but I have the feeling that had we been more persistent we might have got our own Nimrod accepted for the whole of NATO. Surely, at least, it was worth a good try.
I have had the pleasure and the instruction of a briefing, in common with other

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hon. Members, from Hawker Siddeley and Elliot Automation, which are responsible for the work on the Nimrod, and I am quite sure that Nimrod satisfies our requirement, largely in a maritime role. But more important still, the company is quite certain that if it were given the brief to do so Nimrod could quite easily be adapted for use over land, which would make it more suited to other NATO allies' requirements. I take it very ill that apparently representatives of the American firms are going around saying that in no circumstances could our system be adapted for use over land, when that is not so. I hope that the Secretary of State will make it his business to refute that very firmly.
Mr. Mulley: I should make it clear that, with the full support of the Government, the Nimrod Marconi system was one of those examined by the NATO Military Committee, and every facility was given for that comparison to be made. It was after tests that the military committee came to a judgment that the Boeing AWACS solution was to be preferred.
Miss Fookes: The Americans are known for their hard sell, and I suspect that it was a hard sell on this occasion.
I also understand that the Hawker Siddeley and Elliott Automation system is entirely interoperable with other NATO forces. Even if we continued with the project on our own, as now seems probable, the system would still fit in with NATO requirements at a later date. On a military basis there seems no reason why we should not have the Nimrod. I press the Secretary of State to do his utmost to see that we have Nimrod, and have it quickly. We have already dillydallied for a year or more and I do not think that the RAF can expect to be kept waiting. Certainly the Russians will not wait.
Adopting the British system would give as a number of perks which have nothing to do with the immediate military advantages. First there is the question of jobs. Hawker Siddeley estimates that about 7,000 jobs would become available, in contrast to the very small number of jobs that would accrue if we adopted the American system. Secondly, many of these jobs would be highly skilled, where-
1144
as the jobs provided by the American system would be of a fairly low grade.
Adopting the British system would enable us to keep in being highly-skilled technological teams that have worked together for a considerable time. They should have the opportunity of going on and completing this project. This is important not just for this project; the skilled expertise that has been built up also acts as the seed corn for future developments. This is of the utmost importance for the high technology in which we are second to none when we are given full opportunities. Finally, there is the perk of the export potential. Clearly, nobody will buy this system if the British Government do not back it.
There is a curious contrast between Government spending on civilian projects and spending on military projects. If a civilian project is involved the Government try to provide jobs even if only for a short duration, as in some of the job creation schemes. They pour money into a firm even if it is plagued by serious industrial disputes. It is still OK to pour in public money. Even if there is not a cat's chance in hell of the firm making good and making a profit. The Government still pour money into it.
But if it is a military project the Government take a different attitude. They let competitors talk it down. They do not hit back. They do not hit hard enough. They say that if jobs are lost, that is too bad, and if skilled teams are broken up that is a pity, but we cannot afford to keep them. I am sorry to see this difference in outlook.
I hope that the Nimrod scheme will not go the way of so many other military projects and that we will make a real attempt to put it on the map. If that happens, at least something good will have come from an otherwise depressing debate.
6.43 p.m.
Mr. John Roper: I apologise for interrupting the hon. Member for Plymouth, Drake (Miss Fookes) on her point about statistics, but there is a substantive point here that I should like to develop.
It is true that the most recent CIA estimates quoted by my right hon. Friend the Secretary of State for Defence in the

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White Paper have shown an uprating in the share of Soviet GNP allocated to defence. It is now between 11 per cent. and 13 per cent., whereas on an earlier calculation it was much smaller, but if we go back to the original CIA figures, examining the percentage of Soviet GNP devoted to defence, we see that the 5 per cent. growth referred to in the White Paper broadly represents the rate of growth of the Soviet economy over recent years. Obviously the figures are serious, and 11 per cent. to 13 per cent. of a country's GNP is a substantial amount, but it is wrong to double the seriousness by suggesting that there has been a rapid growth in the share of Soviet GNP devoted to defence. The Soviet Union has a large GNP, and the amount devoted to defence increases as the Soviet Union's GNP expands. We should not over-dramatise the threat, otherwise we might terrify people into thinking that the Soviet Union or Warsaw Pact were nine feet tall.
I was interested in what the hon. Member for Plymouth, Drake said about AWACS. A difficult choice has to be made here, and I want to return to this subject later.
First I wish to comment on a remark made by the hon. Member for Clitheroe (Mr. Walder), who rather derided something that my right hon. Friend the Secretary of State said today about the importance of NATO cohesion and the fact that NATO as a whole was worth more than the individual forces of each of the individual countries separately. I believe that my right hon. Friend is right. The Soviet Union knows that if it attacks any member of NATO the whole Alliance will retaliate. This gives a dimension of synergy to the situation. This relationship means that the Alliance, in spite of the differences of opinion that one finds between 15 democratic Governments, has a greater strength than the oppressive, monolithic strength of the Warsaw Pact. How certain are we of the reliability of the forces of the Warsaw Pact countries, other than the Soviet Union? I am not sure that monolith has the strength that the hon. Member for Clitheroe suggests.
My right hon. Friend the Secretary of State, in his speech and in the White Paper, has had a doubly difficult task. I
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suspect that any Labour Minister of Defence has a difficult task, but at a time when public expenditure has to be cut he has the doubly difficult task to ensure that the share of resources going to defence is maintained. Although I regret the cuts that have had to be made it is particularly encouraging that we are now spending a larger amount of our total resources on equipment than any of the other NATO countries, which goes some way to answering the point made by the hon. Member for Clitheroe.
Mr. Patrick Wall: Surely the hon. Member realises that the reason for the high share of resources devoted to equipment is that spending on the MRCA, now called the Tornado, and the through-deck cruisers, now called the AW cruisers, has reached its peak. That is why we are spending more money on equipment, and these programmes started a long time ago.
Mr. Roper: If we look at the proportion of our expenditure that is devoted to equipment we see that we have been top of the league in NATO for a long time. On a NATO basis, which is different from the basis in the White Paper, our share of expenditure last year was 18 per cent. and this year is 19 per cent. to 20 per cent. The fact that at the moment a substantial part of our expenditure is on those two projects is, in a sense, inevitable. because they are the two major pieces of re-equipment at this time.
One might argue whether, in the case of the through-deck cruiser, that it is necessarily the most effective use of our resources, but the fact that we have two major projects taking up the bulk of the share of resources going to equipment does not seem to invalidate the fact that in our long-term costings over a long period, we have allocated sufficient funds to equipment.
That is why I believe that it is easier for my right hon. Friend to come to a decision on the airborne early warning project than it is for some of his colleagues in NATO. We in this country, by our long-term costing procedure, provide for our new defence projects. That is why we have already in our Estimates provisions for the years to come for the airborne early warning aircraft, whether the Nimrod or the Boeing AWACS aircraft. That makes all our decision

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making much easier than that of some other countries, which have to work things out from year to year.
I should like to turn now to our problems in NATO—not merely on the central front, which is of major importance, and where we make our major contribution, but on the southern and northern flanks. One of the things about which the Select Committee on Defence and External Affairs has been concerned in recent years is the effect of defence cuts on the flanks as well as on the central front.
On the southern front, irrespective of the present British contribution, the position of NATO is far fom satisfactory because of continuing difficulties and disagreements between the Greeks and the Turks. One hopes that the Foreign Secretary and his colleagues in the EEC will be able to take early action to use their good offices, particularly now that the Greek Government are requesting membership of the Community, to solve the problems of the Eastern Mediterranean, so that those two NATO partners can play their full rôle again.
At the western end of the southern flank things are more encouraging than they were a year ago when we last discussed defence. First, the movement towards democratic government in Spain means that we may be moving to a situation in which Spain can become a member of NATO after a democratic Government have been elected. That, I believe, would strengthen our defence capabilities on the southern flank. Second, the fact that Portugal, rather like Britain, is now concentrating her defence effort in Europe means that she will be able to contribute a brigade, if not two, to the mobile reserve of SACEUR. That is another addition to the strength of NATO on the southern flank. Thus, when we say that there are many problems on the southern flank, we should sometimes remember that there are things which are improving alongside those which are becoming more serious.
On the northern flank, the Sub-Committee of the Select Committee on Defence and External Affairs was fortunate enough earlier this year to be able to go to see 45 Royal Marine Commando carrying out its annual "Clockwork"
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training in North Norway. While we were there we appreciated the considerable importance, when one sends troops into that sort of country, of proper training and equipment. Certainly, in the 45 Royal Marine Commando we have the equivalent of a battalion which is ski-trained and splendidly equipped to serve in that area. This is very much appreciated by the Norwegians.
However, what is still a matter of concern, I suspect, in many parts of the House is our ability to get this unit to North Norway. Although the roll-on/roll-off ferries have some advantages—obviously they are much more economic than maintaining our own capabilities—there are, unfortunately, only a limited number of places in North Norway where they can usefully go ashore. That is one of the decisions which must be re-examined because of the importance, if that unit is to be equipped for that task, of being able to get it ashore in the places where it may need to be. Therefore, when the Government consider this matter I hope that they will look again at this difficult problem.
Turning to the central front, there has been in recent months a great deal of over-dramatic hysteria about possible Soviet southern attacks on the central front. There was the book by the Belgian General Close, which was summarised by Lord Chalfont in The Times and reported elsewhere—a magnificent piece of military fiction, but considerably overstated.
None the less, that book and the report by the two American Senators Nunn and Bartlett, who recently visited NATO, questioned whether the assumptions previously made about the amount of warning time available for reinforcement on the central front were valid. Although I have tried to look at this matter and I have now concluded that the assumptions are not invalid, it seems certainly possible that the Warsaw Pact, if it wished, could mount a limited but perhaps dangerous onslaught into the central front at shorter notice than is generally assumed.
We should then have the problem described in General Close's book and elsewhere of using theatre nuclear weapons in West Germany. Clearly, with the high density of civilian population, there are

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considerable dilemmas—moral and military—about using such weapons in such an area.
Given those two problems, I am obviously concerned that any reduction in the effectiveness of our conventional forces on the central front—coupled with the fact that the Belgians are withdawing one of their divisions from Germany, and the fact that the Dutch forces are not at the moment based in Germany, although theoretically they should be—might lower the nuclear threshold on the central front. Those of us who are concerned about the use of nuclear weapons in Central Europe, on the other side of the argument must be concerned to ensure that we maintain an effective conventional deterrent on the central front. It is very much for that reason that the members of the Select Committee were concerned that, if not immediately at least cumulatively, cuts in equipment might affect the conventional deterrent capability of our forces on the central front.
The table in Figure 2 on page 7 of the White Paper shows that there has been only a 20 per cent. increase in the number of Soviet tactical aircraft between 1968 and 1976, but this is one of those statistics which is somewhat misleading. Paragraph 122 of the White Paper gives details not merely of the quantitative improvement in the size of Warsaw Pact air forces on the central front over the last six years but, and much more important, the increase in the quality of those aircraft:
"The introduction of three new types of swing-wing tactical aircraft, which can deliver both conventional and nuclear weapons, is particularly significant. The weapon loads of these aircraft are double those of their predecessors and their greater operating range enables the TAF to reach targets much deeper into NATO territory than hitherto, including parts of the United Kingdom."
We should always consider the qualitative improvement alongside the quantitative statistics. Certainly the Warsaw Pact tactical airforce has significantly increased.
This matter of course leads to the argument about airborne early warning systems. NATO must make an early decision upon a system to deal not only with the threat over the central front and the considerable build-up of the tactical air force, but also—just as important—the threat over the North Sea, and the Back-
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fire a bomber flying not necessarily in its anti-ground rôle but in its anti-ship role.
One of the threats of the Backfire bomber would be to NATO shipping in the North Atlantic. Certain analysts have suggested that the Backfire bomber could be as serious a threat to the maintenance of communications between North America and Europe in time of war, as the Soviet anti-submarine threat. The introduction of the Backfire bomber and the possible missiles which could be fired from it pose a serious threat to allied communications across the Atlantic.
In this situation, quite clearly, the need for airborne early warning equipment, with the longest possible range, operating over the North Sea, is essential. This is where we come to this terribly difficult decision facing my right hon. Friend over the choice of airborne early warning aircraft.
The hon. Member for Plymouth, Drake put extremely clearly and cogently, the strong national case for choosing the Nimrod aircraft. There is a case the other way; a case to which my right hon. Friend has also to give appropriate weight. In part this is in terms of the performance, of the definition and of the target differentiation over land, and in part it is a question of range, but as much as any of this, to go back to the point made by my right hon. Friend the Secretary of State in his speech, it is the importance of NATO cohesion. If it were possible for NATO to come to a common agreement to buy the same aircraft, right across the board, and to fly it as a NATO aircraft, that would not merely be more effective militarily, but would also have considerable symbolic value, as NATO would have its own aircraft in the air.
My right hon. Friend is faced with a dilemma between the strong arguments put so eloquently by the hon. Member for Plymouth, Drake for British aircraft, the argument which I passed on to him from trade unionists and others in my own constituency, the other military arguments made after detailed assessment of both aircraft, and also the arguments of general NATO cohesion.
In the debate on the Air Estimates a year ago I said that I hoped it would be possible to find a NATO solution to this, but, if it was not possible, I hoped that we would go ahead and buy Nimrod

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and sell it to as many as possible of our European partners. I hope that that still will be possible and I hope that my right hon. Friend and his colleagues at the meeting on Friday will be able to find an answer to this problem. We cannot put off the decision any longer. NATO urgently needs this equipment and quite clearly Britain cannot afford to continue funding the Nimrod project without a decision. Therefore, it is essential that the other countries make up their minds and we make a decision one way or the other at the end of the week.
The arguments which occur over Nimrod, the arguments of the natural interest of one country against the advantages of standardisation, takes one into the more general problems of standardisation within the Community and of interoperability. All NATO countries, not merely Britain, will be facing in the next decade the effects of inflation and of the much higher cost of technologically advanced equipment, and will thus have great dilemmas in their military procurement programmes. If we are unable to reach disarmament agreements, and we need to maintain effective armed forces, the only way in which we shall be able to deal with this is if we can find a basis of common procurement.
That is why I believe that one of the most important developments of the past 12 months has been the creation in Europe of the European Procurement Group to work out among its European members of NATO, including France, a common basis for the procurement of weapons where possible. This will not only have a value purely as a European Procurement Group effort but it also will have a value in developing one of the pillars for an effective two-way street across the Atlantic. Unless within Europe we can agree on our requirements and unless we can develop an effective common armament industry, we shall not have a basis for an effective dialogue with the United States, and we shall continue in the situation, which the hon. Member for Plymouth, Drake suggested arose over Nimrod, that we on this side of the Atlantic are dominated by the greater size of American technology.
This need not be the case. On the eastern side of the Atlantic we have sufficient resources to build up our own
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industry, but that means that we must work it out together rather than competing, one country against another. It is only if we can achieve a common effort and common industry, research and development on this side of the Atlantic that we shall be able to have an effective dialogue with the United States. It is only in that way that we shall be able to have an effective two-way street with the United States and that we shall be able to ensure that the United States buys weapons on this side of the Atlantic, as well as our buying weapons on the other side of the Atlantic.
At the moment there is a risk that unless we can achieve that two-way street, Europe will end up as the sub-contractors to the American armaments industry with all the loss that implies, not merely in the armaments area but in other areas of industrial development. If one studies the post-war economic history of this country or the United States, it is clear that the implications for research and development initially were in the armaments industry but with significant effects in other industries as well.
Although there are many things which, perhaps, have not gone as well as they might in recent years, these initiatives taken by my right hon. Friend the Secretary of State for Defence and his predecessor, to ensure a better basis for co-operation between European countries and also between European countries and North America, in the field of arms procurement, constitute one of the most encouraging things for the future.
7.7 p.m.
Mr. F. A. Burden: We would all agree that the hon. Member for Farnworth (Mr. Roper) made a thoughtful, articulate and penetrating speeches. He has shown the enormous nature of the defence effort that is necessary. No matter how much he may desire to do so, he must find it difficult in some ways to agree with the attitude of his right hon. Friend. I think that he was probably more in sympathy with his right hon. Friend the Secretary of State for Northern Ireland who recently vacated the office of Secretary of State for Defence. Now we are faced with a Defence Minister who is prepared to cut and cut and cut. He has brought us to a situation in which our forces overall are being reduced.

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What is perhaps more significant in the present situation is the fact that the ships in the Royal Navy have to operate at a reduced speed to conserve fuel, that there is not enough ammunition—
The Under-Secretary of State for Defence for the Royal Navy (Mr. A. E. P. Duffy)indicated dissent.
Mr. Burden: That has been stated. In many cases there is not enough ammunition for troops on the ground I presume the same applies to ships at sea--to carry out what is thought to be essential training exercises.
At the end of the debate, I hope that the Secretary of State will be able to give an undertaking that no instructions whatsoever have been given to cut back fuel to the Royal Navy or to the other Armed Forces, that there is adequate training, by enabling troops to undergo conditions that they may experience on active service, and that weapons and live ammunition are not denied to them on training exercises. If the Minister can unequivocally say that such instructions have not been given and that on every occasion adequate provision is made for training and exercises, it will go at least some way to convince many right hon. and hon. Members that things are not quite as bad as we had thought.
The Labour Party's attitude to defence follows the same pattern through the ages. Before the last war, until the Germans went into Austria every attempt to increase and improve our Armed Forces was opposed in the Lobbies by Labour Members. There is no argument about that. I remember it only too well. The same attitude prevails today. Before the war Labour Members said that Germany would not go to war, that Hitler was a clown, and the Russians would never allow Germany to go to war if she wanted to. They said that Germany was no danger, but Germany did go to war and the Russians helped her to do so.
Mr. Hooley: What did the Tories do about it?
Mr. Burden: It was not possible to fight the Germans alone, without weapons. If the Tory Party had suggested it, members of the Labour Party would have declared that the Conservatives were the party of war and that theirs
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was the party of peace through disarmament. The country and the world would have suffered as a result.
It is a tragedy that even now many Labour Members do not realise that there is a danger from Russia. One has only to look at the situation, as admittedly some Labour Members do. The hon. Member for Farnworth obviously recognises that there is a danger, but many Labour Members can see no danger from Russia. They seem to fail to realise that Russia has been a deliberate aggressor in some countries that are now members of the Warsaw Pact. They were not invited in, but were forced to join. Why should Russia stop now or at any other time if they think that they can roll Communism forward, as they have rolled their interests forward in Eastern Europe?
Mr. John Lee: Before the hon. Gentleman develops this theme any further, will he tell us what action of any effect NATO took to help the Hungarians in 1956 or the Czechs in 1968?
Mr. Burden: Unfortunately, it did nothing, but the hon. Gentleman has accepted my point. He has accepted that the Russians can be naked aggressors.
Mr. Lee: Of course I accept it.
Mr. Burden: If so, surely the how Gentleman agrees that there is every reason for this country to take part in a defence structure that will help to resist Russian operations further west, which would involve this country and the other NATO countries.
What we on the Conservative Benches object to is the fact that our country, sadly, appears to lack sufficient weapons and, above all, sufficient determination by the Government to counter the threat. Germany was a danger which many of us saw, though Labour Members, alas, saw it far too late.
Mr. Hooley: Rubbish.
Mr. Burden: The hon. Gentleman probably was not even alive then. I was, and experienced it all. I knew all about it.
Mr. Hooley: The hon. Gentleman seems to be adopting a peculiar attitude to the history of the 1930s. He knows

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perfectly well that his party sold out to the Fascist Governments of Europe. The Labour Party always advocated a collective security system under the League of Nations and active co-operation with the Soviet Union, which the Tories then in power repudiated.
Mr. Burden: That is an extraordinary argument. I presume that the hon. Gentleman is talking about Franco's Spain, for one—
Mr. Hooley: Italy.
Mr. Burden: —and Italy. What stopped the hon. Gentleman fighting on the side of what he considered to be democracy, if he felt so strongly about it? The point is that the hon. Gentleman is prepared to involve this country in all these matters, and even to go to war if it suits his political purposes, but many Labour Members are not even prepared to ensure that the country has weapons and power to defend itself if it is attacked. That is where I part company with him.
There is no doubt a very grave danger from Russia. Does anyone in the House or in the country suggest that the Western nations have designs on Russia, that we would embark upon a war against Russia, that we would start a war against Russia or the other Warsaw Pact countries? I put the question "Why, then, has Russia constantly increased her forces and arms considerably? Who is she scared off? Who does she believe will attack her—the other Warsaw Pact countries?" No one has the remotest intention of attacking the Soviet Union. History shows that this country should have forces with which it can defend itself and with which it can make a proper contribution to the NATO defence Alliance.
I should like briefly now to come down to rather more mundane matters and to raise the question of morale in our forces. We hear from the Government a great deal about the need for morale in our industry, in private industry in particular. We hear that there seems to be a lack of association and understanding between the shop floor and management. If ever there were an example of lack of understanding between what may be called the shop floor and the Government it was evidenced in recent weeks in the question of the payment to short-service men of
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the gratuities to which they were entitled for joining the forces.
Of course, we are grateful to the Secretary of State for his statement today, but it was two weeks ago that I put down a motion on the subject, signed by more than 130 right hon. and hon. Members. I asked the right hon. Gentleman to make clear the position regarding payment of the gratuities. Last Thursday and the previous Thursday the Leader of the House said that his right hon. Friend would make a statement in this debate. When I told the Leader of the House that the matter was causing a great deal of unrest in the forces, and great harm to the morale of not only the men involved but others, he said:
"I have nothing to add to what I said to the hon. Gentleman and others on this subject at an earlier stage. A statement will be made soon."—[Official Report, 17th March 1977; Vol. 928, c. 625.]
One hon. Member shook his head when I said earlier that our motion had raised the matter, but it was admitted by the Leader of the House that it was under consideration, and the Government should have made a statement at the time to clarify the situation, as it has been clarified today. Over two weeks have passed during which time we have been pressing for information. That is an indication that but for the pressure brought upon the Government we would probably have had a very different answer from the one that we received today.
Mr. Duffy: Rubbish.
Mr. Burden: It was rubbish even to suggest that something should be done without making it clear in the first instance that the rights of the men concerned would not be abrogated by the Government. That is where members of the forces will see the rubbish to be.
I wish to refer to a subject that is very close to my own constituency, namely, Chatham Dockyard. I should like to know the Government's absolute intention with regard to that establishment. How many staff will be there? What work will be there in future? Will the nuclear submarines continue to be repaired and refitted there, irrespective of what happens at Devonport when the two streams are constructed there? What will happen to the repair and refit of frigates and conventional submarines in

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Chatham Dockyard? What is the difference between the number of employees today and the number a year ago, and what will be the situation in another year's time?
I draw the Minister's attention to a report produced by the Admiralty for Members of Parliament for the Royal Dockyards on 21st May 1976, which said about Chatham:
"Broad aims. An overall dockyard development plan has been produced in draft form and will shortly be submitted to the Admiralty Board for consideration."
May we know what that means and what it offers and promises for the future of Chatham Dockyard? That is very important to my constituents. I believe that it is also important to the country. I happen to believe that if we constantly cut back what is called the tail—the support services—in the Royal dockyards and elsewhere we shall without doubt impair the sharpness of the teeth of our front line defence forces.
7.22 p.m.
Sir Frederic Bennett: Tempting though it is, I shall resist the temptation to wander back into the question of who was responsible for what during the 1930s, although I am sure that I would be able to stand up against any suggestions as to the allocation of blame.
I should like to come a little more up to date and deal with an intervention during the last speech with regard to what NATO was able to do to help Hungary and Czechoslovakia. That intervention was rather illuminating, because the whole purpose of NATO is that its members bind themselves to come to the aid of other members and not to spread elsewhere their responsibilities under that treaty.
Under no circumstances could the NATO treaty have been invoked with regard to either Czechoslovakia or Hungary. If anything, quite different steps would have been taken. We do not want to accredit to NATO functions and responsibilities that it has not got.
It is, of course, for that very reason that a number of countries would very much like to come under that umbrella if they could. It is noticeable that even the Communist Party of Italy, if one can believe it, wishes to stay within the NATO
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umbrella. That is a rather significant fact, because that party, which has been very close with its Muscovite friends, does not want to leave the NATO shelter, if one takes it at face value.
I should again like to ask a question that I put to the Secretary of State during Question Time. I hope that I can get an answer from the Minister, because it is a grave question. I pointed to the fact that present Soviet defence expenditure was between 12 per cent. and 14 per cent. of GDP. I asked whether the right hon. Gentleman could say what was the per capita amount and whether he could give the total amount spent either for the Warsaw Pact or the Soviet Union.
I was told that it was very difficult to get these figures, but I would point out that if the Soviet Union is spending 12 per cent. of its GDP, it must be 12 per cent. of something. That something cannot be "X". Ministers must therefore have had in their minds what the total figure of GDP was if they say that 12 per cent. was spent on defence.
It is not very difficult to divide that total figure by the total population of the Soviet Union and at least come to a per capita figure. I hope that on reflection the Minister will try to give more information. I do not mean this in a controversial way, but I do not think that the man in the street, when considering the danger that faces us, really understands what we mean when we talk about 12 per cent of "X". It would help Ministers themselves, in setting out the position, if they could give some kind of figure.
I was absolutely delighted when my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilrnour), in opening the debate, said quite unequivocally what some of us, including myself, have pressed for for years, irrespective of which party was in power. I do not want any jibes about the cuts that the Tories made. Some of us have been consistent in saying for many years that the criteria for defence expenditure have to be set against the extent and the scope of the threat that faces us. That is the only way that one can make a realistic calculation. It is impossible to talk in terms of sharing out resources unless one takes into account the need to provide security. That figure may be anything at any given time, because obviously

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the threat that faces us can be totally different.
If the Soviet Union were suddenly to change its form of government and its ambitions and become a peace-loving power, it is quite clear that the threat that faced us would diminish and our need to spend more on armaments would correspondingly diminish. We must start off not with a series of figures, but by asking "How much would you spend?" I shall answer that. I would get together with the Chiefs of Staff and ask "How much do you need to provide security for the responsibilities that we have undertaken?" If that is so damned funny, I remind hon. Members that that is exactly what the Israelis do and have done in the past. They take into account what is essential for their own protection. So do the Turks and the Pakistanis, and any others who feel that they are facing a real threat.
We need to protect ourselves against an existing and living threat. I would be more impressed if the hon. Member for Sheffield, Heeley (Mr. Hooley) made his own contribution instead of merely interrupting hon. Members on the Opposition Benches.
Mr. Hooley: I shall be happy to make my contribution when the hon. Gentleman finally shuts up. Is the hon. Gentleman really saying that the kind of defence policies being operated by foreign countries in the Middle East are a recipe for stability in the centre of Europe?
Sir F. Bennett: I did not say anything of the sort. I said that a future Conservative Government would engage an amount of defence expenditure to provide the capability to defend ourselves against whatever the threat is. I am sorry, but I assumed the hon. Gentleman was not going to speak. He can hardly blame me, because he is in rather rare company in rising to his feet to make a speech this afternoon. However, I shall leave Hansard to speak for itself tomorrow.
I turn now to the Report of the Defence and External Affairs Sub-Committee of the Expenditure Committee, of which I was a member. I point out again that it had as many Labour members as it had Conservatives, and it produced a unanimous Report. What is more, I
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believe that it had only one or two critics within the main Expenditure Committee itself. In no way can it be said to be an undermining attack on the Government. Indeed, those hon. Members who have spoken have paid tribute to the objectivity of the Report and, judging by the tributes that have been paid to it, it appears that Ministers themselves have valued their study of it.
Various suggestions have been made that if these cuts continue they will have serious effects on the morale of our troops, if they are not doing so already. However, "morale" is a very tricky word to use. No one means by that accusation that our troops would lose the will to fight or their desire to do the best possible job. I do not believe that any cuts that we imposed would prevent British soldiers, sailors and airmen doing the very best with the equipment that they had. However, there is another stage below that of morale—self-respect. I believe that the point has been reached where our soldiers, sailors and airmen are beginning to regard themselves as poor relations when they see the care which the Government expend upon their well-being and equipment.
I give two or three examples. After Dunkirk, I can remember that when we came back there was a period when ammunition for the old ·303 rifle was so scarce that we used to have sleeves made in the workshop so that we could fire ·22 bullets out of our ·303 rifles. That was when we were in extremis after Dunkirk. I ask hon. Members to imagine how shocked I was to find that in Germany today some of our forces were actually using sleeves fitted into rifles of precisely the same sort that we had had to use in the dark days after Dunkirk. They were having to shoot on the ranges with ·22 ammunition, which happened to be cheaper and which on some occasions even regimental funds were used to buy in order to give the soldiers the bare minimum. Does anyone believe that that is the way to give a soldier a sense of genuine self-esteem?
I also remember going to one barracks which was built by the late Adolf Hitler in the late 1930s to house some of his Blackshirts or Brownshirts—I forget which. Our troops were still living in those barracks, which were unchanged since those days. Sometimes I wonder

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what would be the criticism of Government supporters if those engaged in industry were made to live in anything like the conditions inflicted on our troops.
I might add that on one occasion I discovered that our soldiers were so tired of successive cuts preventing the erection of new buildings for them that they indented for paint so that they could paint their own buildings and live reasonably decently. After a certain amount of paint had been provided, they were told that they had spent all that could be afforded and that they must stop their work in the evenings painting their barracks. The result was that half the barracks were done and the other half was not, for lack of paint. Does that make Government supporters proud of the way that we treat our forces?
The third illustration that I give concerns the restrictions on fuel, which actually interfere with training programmes. When our troops are alongside Dutch, German, French and Americans and training is being carried out, our troops are told that they cannot have as much training as they should have and that they can have it only until they have gone through so many gallons of fuel. Does that make Ministers feel proud of what we are inflicting on our troops?
But the cuts are not only affecting the self-respect of our forces. They are also affecting the esteem in which the British Army is held by our allies. Any Minister meeting his counterparts in the other NATO allies must appreciate that they, too, are beginning to feel the emotions which I should least like, namely, pity and sympathy for British troops. I can produce concrete evidence to that effect.
I give one example. Does anyone think that it has not escaped the notice of our allies that our troops are using little metal sleeves in their weapons and firing 22 ammunition? Do Ministers believe that that is likely to win the admiration of the other NATO forces, when they can have the ammunition that they need? If Ministers believe that, they are living in a dream world.
I conclude my remarks by reading a few sentences from one of the appendices to the Second Report of the Expenditure Committee. At first, I was surprised that
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this document had not been attached to the White Paper itself. Then, on the reflection, I readily understood why it had not been. I refer, of course, to the communique which was issued by NATO Ministers, including the British, after their meeting on 7th and 8th December 1976. I have no desire to quote them out of context. I limit myself to only a few sentences.
In paragraph 5, we read that
Ministers expressed their serious concern at the relentless growth in the strength of the Warsaw Pact forces in which an increasing emphasis is being placed on offensive capabilities."
If a British Minister put his signature to that communique, I do not know how the Secretary of State can say that he sees no evidence of the Warsaw Pact having offensive intentions. A British Minister signed this saying that the offensive side of the Warsaw Pact armament was building up.
We read in paragraph 6 that
"Ministers discussed the implications for NATO of this continuing build-up of Warsaw Pact military strength in Europe."
Paragraph 8 reads:
"Ministers concluded that the improvements noted in NATO forces, though uneven, are significant, but that there is a need for all of the Allies to undertake further measures if the Alliance is to reverse effectively the adverse trends in the NATO-Warsaw Pact conventional military balance."
In paragraph 9, we read that
"Ministers recognised that the achievement of these objectives"—
that is to say, the objectives of regaining our secure position—
"would call for a real annual increase in defence expenditure by Allied governments".
Is there really a Minister on the Treasury Bench who suggests that that final undertaking has not been broken? Can we really say that a further substantial round of immediate and future cuts can possibly be reconciled with what the Minister put his signature to on 8th December? If it is suggested that we can, I should like to find the use of English which would enable anyone to explain satisfactorily how a Minister can sign a solemn pledge to the effect that real increases are necessary and then indulge in a further round of cuts. Our allies do not think like that. Even little Norway is stepping up its real percentage. Denmark, which is even smaller, is stepping up its

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real percentage, and so are France, Germany, the United States and Canada. Britain alone among the signatories of that document is flying directly in the face of her pledged word to her allies and her partners in the world back in December of last year.
7.39 p.m.
Mr. Frank Hooley: First of all I must comment on the cant and humbug we have heard from the Benches opposite about cuts in defence expenditure. We have heard a continual series of speeches claiming that the Labour Government are imperilling this country's defences, recklessly cutting public expenditure on defence and generally behaving in an irresponsible manner. The implication is that the Conservatives would spend hundreds, if not thousands of millions of pounds more on the Armed Forces.
It is proper that the record should be put straight. In 1972–73 when the Conservatives had an overall majority of 30 or 40 Members in this House—an absolute majority that could not be challenged by the then Opposition—they reduced expenditure on defence at constant prices by £162 million. In 1973–74 they reduced it again by another £40 million. I do not quarrel with them. I am pleased that they showed a glimmer of common sense when they were in power and that they behaved quite contrary to the way they behave in Opposition. However, we have had a lot of cant and humbug tonight because the record shows that the Conservatives were compelled by economic circumstances to cut defence expenditure when they had the complete power to increase it.
Unfortunately, in my opinion, the opposite has occurred since then. In 1975–76 the Labour Government actually increased defence expenditure at constant prices by just under £300 million. That was the biggest jump over a five-year period. In the current financial year we have increased it again, although not by such a large amount.
The figure in the current financial year is the biggest figure of expenditure at constant prices for the past five years. I regret that, and it gives me no pleasure that expenditure in real terms by a Labour Government has increased, whereas under the previous Conservative
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Government it was cut and cut again. It will not do for the Conservatives to flaunt around the hundreds of millions of pounds that they will spend on defence and talk about the irresponsibility of the Labour Government when the record hows—depressingly—that there has been a pretty broad consensus on the level of expenditure over the past seven or eight years.
Sir Frederic Bennett: I hope that before the hon. Gentleman leaves that argument he will cover the point that I raised—that the level of expenditure which any Government have to take into account should correspond with the size of the threat. It has been the common belief among Ministers in three White Papers that the threat has increased and is still increasing.
Mr. Hooley: The threat must be measured in political terms, and over the past two years we have seen a very serious effort by the United States, the Soviet Union and Western Europe to develop a policy of détente. This has been expressed in the extremely important Helsinki Agreement. Whatever one says about the implementation of that agreement, there is no doubt that it was a serious effort by 35 nations to bring about a feeling of greater stability and a more relaxed attitude between East and West. If in the light of that Conservatives claim that the threat has increased, they are being politically naïve.
The sad fact is that in strict terms of public expenditure at constant prices over the past seven years, there has been some fluctuation downwards during the period of Conservative Government and this unfortunately has been restored upwards by the Labour Government in the past couple of years. I hope that the figures for 1977–78 will show a reduction, though, alas, it is always next year that we shall see the reduction and it will be £180 million less than the current figures when we see the final result. I am not terribly optimistic about this, but I think it is important that the general record of the figures should be put right.
My main concern this year, as it was last year, is with the service of the Hydrographer to the Royal Navy. I spoke on this at some length last year but I think that it is important to raise the matter again because we do not seem to

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have had much progress from the Ministry of Defence on this important issue. I quote from the section dealing with the Hydrographer on page 22 of the White Paper:
"The basis of the operation of the Hydro-graphic Fleet beyond 1977–78 is being reviewed with the aim of ensuring that in the long term, and having regard to its commercial potential, the fleet will continue to be able to carry out a full programme of surveying in support of all national requirements."
There is no need for a review. As far back as 1975, a very thorough, exhaustive and responsible study was made of hydrography by a special working group. It examined the needs of this country for an adequate fleet to carry out hydrographic work and its recommendations are there to be studied. They have never been carried into effect, and on this subject I received a rather depressing Answer to a Parliamentary Question that I put down. Only yesterday the Minister concerned said:
"As I announced in a reply to my hon. Friend on 12th October 1976, it has been decided that the Hydrographic Fleet will remain at its present size for the time being."—[Official Report, 21st March 1977; Vol. 928, c. 434.]
Since we last debated this matter all we have had is a decision to leave the fleet as it is and a suggestion in the present White Paper that some time in the far distance after 1977–78 there may be a review to see what the Hydrographer needs in terms of vessels to carry out his very important duties. All the Ministry of Defence has done is a certain amount of financial fiddling in managing to scrounge £500,000 from the overseas aid Vote and an undisclosed sum from the Department of Energy for work done in relation to the safety and of installation of oil rigs in the North Sea.
The need is not for such financial fiddling but for extra ships to enable the Hydrographer to carry out his extremely important and highly skilled work of surveying and charting the seas around our coasts and in many other parts of the world. There is an urgent need for at least four coastal survey vessels to enable him to get on with the job properly. It is ironic that we should be complaining bitterly about the state of the shipbuilding industry, the lack of orders and the general running down of that industry at a time when there is an urgent need for survey vessels for this country. Britain has a
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great international reputation, yet money cannot be found to provide the extra ships necessary.
It is not only a question of surveying the seas around our own coast. In response to another question which I addressed to the Ministry of Overseas Development, I was told that requests for aid in respect of the hydrographic service had been received recently from Governments as varied as Bangladesh, Cyprus, Ghana, Guyana, Malta, New Hebrides, Philip, pines, Oman, St. Helena, Thailand and other countries. It is well known that the work of the Hydrographer and the charts he produces have an extremely high reputation, and I believe that that work should be expanded and developed.
The matter is urgent and important since a few months ago we passed legislation that extended our coastal limits to 200 miles, and many other countries are contemplating the same course. The United Nations Law of the Sea Conference is grinding on slowly, but it seems clear that a 200-mile economic zone will be the consensus of opinion at that conference. That will increase the need for surveying and expert charting of waters which may not have been greatly studied in the past. Therefore, there will be a most important international market involving the services of the British Hydrographer.
Also arising from the extension to 200 miles involving our jurisdiction for economic purposes over coastal waters will be a need for faster smaller patrol craft to replace the highly expensive frigates now in use for surveillance and patrol of fishing areas round our coasts. I have no quarrel with the efficiency of the men on the frigates or of the ships, but they are highly sophisticated war vessels which are expensive to operate. There is a strong case for building a new type of craft that will undertake the task with speed and efficiency and, if necessary, take over from the much more expensive and high powered vessel that is now used.
The Royal Navy now has in train five orders in the Island class. Two have been delivered and three are on the way. I am not sure that that will be enough to cover the much greater load involving surveillance and the checking of fishing activities in our waters, because subsequently there may be other things to watch as well. We must remember that there are oil rigs and

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pipelines to be surveyed. I believe that we have a need for a new class of ship to undertake this work, and some constructors have already drawn my attention to the type of ship which they are prepared to produce. There could be an enormous world market for this kind of vessel, and the British shipbuilding industry would be extremely remiss if it went to sleep on the possibilities because of haggling over whether these matters should be charged to the Defence Estimates or to some other area of Government activity.
I should also like to comment on the appalling charge on the balance of payments imposed by our defence expenditure. The figure shown in the current White Paper is £769 million. The previous year's figure was £780 million, and I have no doubt that similar figures apply in earlier years. It was said at Question Time this afternoon that three years of such expenditure adds up to the money which we have recently borrowed from the IMF to cover our international payments situation. I do not understand how we can go on year after year spending sums up to £800 million in foreign exchange in observing overseas commitments, some of which are out of date and indefensible.
The subject of offset arrangements in regard to West Germany is specialised and I shall not enter into that matter now, but I wish to draw attention to the fact that we are still spending money in maintaining troops in Hong Kong. That is a totally ludicrous defence posture. That colony, if attacked, could not be defended. Our troops are wasting their time there, and we are spending valuable taxpayers' money that could be diverted for use by the Hydrographer where that money would be put to a more useful purpose. I believe that there is no military case for maintaining four battalions of infantry in Hong Kong. If the Hong Kong Government say that they require those troops to be kept there for internal security purposes, surely that Government should raise their own local militia and pay for it themselves. I am aware that under a recent agreement the scandalous waste of taxpayers' money in maintaining troops in that part of the world has been somewhat reduced, but there is still a total of £21 million provided in the Estimates for that purpose. I believe that money is totally wasted.
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I was glad to see that we had disengaged from our squalid activity in the civil war in Oman.
Mr. Antony Buck: What war? We have won it.
Mr. Hooley: Whether we have won it or not, it is a pretty squalid exercise. I hope that we shall have some guarantee from the Secretary of State for Defence that we shall not be involved again in military operations in that part of the world.
On a slightly more cheerful note, I was glad to see in the White Paper mention of the valuable support given by British forces to the United Nations force in Cyprus. That is welcome and constructive work, and I am sure that the British contribution is regarded as valuable and is appreciated.
Rear-Admiral Morgan-Giles: Will the hon. Gentleman explain why it is squalid for British forces to contribute to peacekeeping in Oman and not squalid to contribute to peacekeeping in Cyprus?
Mr. Hooley: There is all the difference in the world between peacekeeping operations that are authorised by an international body, such as the United Nations, and a unilateral commitment between two Governments in respect of a feudal régime. That is a totally different exercise. If the hon. Gentleman does not accept that, he is being a little naive. I am glad to see that British forces are making a valuable contribution to international peacekeeping in Cyprus and I hope that we shall continue that contribution for as long as the international force is needed there.
I turn to the subject of arms sales. It is probably not unreasonable within the Western Alliance and between allies that there should be some mutual traffic in defence equipment, and so far as this is balanced one against the other it is a fairly normal transaction. However, I and others are dismayed by the growing deliberate effort of this country to become a major arms salesman in the world. We now rank No. 3 after the United States and France in this sphere.
Mr. Buck: What about Russia?
Mr. Hooley: It is unsatisfactory that we are making a determined effort to

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pour arms into an unstable part of the world, such as the Middle East, and that we are selling arms to régimes of which hardly any hon. Member approves. It is becoming an international problem of great seriousness. There is a strong case for some form of international registration or control of the traffic in arms, and I hope that in future a Labour Government, far from allowing the figure of arms sales to rise, will express concern about where those weapons are directed and will inquire into the purposes for which they will be used in future.
I hope that I shall have some comments from the Front Bench either tonight or next week on the points that I have made relating to the Hydrographer, overseas expenditure and the deliberate promotion of arms sales.
8.0 p.m.
Mr. Antony Buck: What an interesting speech we have just heard from the hon. Member for Sheffield, Heeley (Mr. Hooley). The hon. Gentleman ranged far and wide. For once I shall not apologise for not taking up what he has said, because I shall, indeed, try to respond to some of his points. I agree with everything that the hon. Gentleman said about the work of the Hydrographer. It is time that decisions were made about the future refurbishment of the ships that provide the Hydrographic service. I agree with the hon. Gentleman's comments in that respect.
The hon. Gentleman's remarks about patrol craft were interesting. I have a certain sympathy with his views. Although it would not be right for us to cut the frigate building programme to provide patrol craft, it is true that a case can be established for suggesting that the Royal Navy has neglected the small patrol craft side of our equipment. We have, I think, only four patrol craft, three of which are unarmed. I shall try to recall their names from the days that I was the Navy Minister. I recall the names of HMS "Sabre" and "Scimitar" but the third name escapes me. These three unarmed vessels are used for training our naval forces on the South Coast. The other patrol craft is HMS "Tenacity", which is used for fishery patrol work. That craft is armed only with machine guns.
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One of the lessons from the six-day war was that small patrol craft can now pack a punch that is effective in a fullscale war. With their speed, manoeuvrability and sea-going capacity they can also have a rôle in fishery protection, as HMS "Tenacity" has at the moment, although she has no war-time rôle assigned to her. If I may say so, I have a certain sympathy with the hon. Gentleman's comments about fast patrol craft.
I have no sympathy, however, with the hon. Gentleman's remarks about Hong Kong. It is necessary that we keep forces in Hong Kong to prevent a takeover as a result of Chinese-organised riots and internal disruption, which is something that they have tried before. The presence of our forces means that the Chinese would have to go for an all-out war to take Hong Kong. For that deterrent reason it is necessary for our troops to be present.
I am sorry that the naval forces in Hong Kong have been somewhat reduced. As I understand it, we have only MCMVs in the area, some of the patrol craft that the hon. Gentleman was talking about earlier could well be deployed in those waters. No doubt they would be helpful in controlling the illegal narcotics trade that I fear continues in and out of Hong Kong.
I regret to say that the hon. Gentleman is completely wrong in his attitude towards defence cuts. No doubt it will be a pleasure to him, although it is a bitter disappointment to me, to be reminded that his Government have gone in for massive defence cuts. The hon. Gentleman will find that the cuts have been set out paragraph by paragraph in earlier White Papers. For example, in paragraph 76 of the 1975 White Paper there is set out an estimated cutting of £4,700 million over the review period instigated by the Government. No doubt the hon. Gentleman will be pleased about that.
Year by year we have these depressing White Papers put before us. Each year they are more and more depressing. The menace or the "threat" is admirably set out with the assistance of superb diagrams, namely, the mounting threat from the Warsaw Pact countries. Although these matters are put succinctly before us each year the response seems to be along the

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lines of saying "The power of the Warsaw Pact countries grows, therefore we must cut unilaterally and decrease our forces."
I find that response depressing. The retort that is thrown at us by Labour Members is that the previous Conservative Government made some defence cuts. That is true, we did. The fact that we made some defence cuts makes it even less excusable that there should now be further cuts. I accept some element of criticism from the Labour Benches about the defence cuts that we made. At that time I was the Navy Minister. We all know of the struggles that takes place to retain certain items in programmes when there are Departments competing for resources. We made cuts, and perhaps made them almost to a dangerous level. If we did so, a fortiori, it is wrong for the present Administration to go further and to start cutting into the real muscle of our Armed Forces, as I suggest is now happening.
My first remark of a general character is that it is depressing to find year by year that our Government's response to the growing Warsaw Pact menace is to cut unilaterally. As many of us have pointed out over the years, such an attitude can only undermine the possibility of achieving mutual balanced force reductions. Why should the Warsaw Pact countries go in for balanced force reductions if we are going for unilateral force reductions?
The situation is even worse than that set out in the White Paper. Over the last year and more I have travelled through various parts of the world. That travelling has been undertaken largely under the auspices of the Western European Union. I am grateful for its sponsorship as it has assisted me and others in keeping abreast of defence matters.
At Kolsas, in Norway, we find the northern flank balance to be truly alarming. I have checked that the briefing from which I am about to quote can be made public and that I am not in contravention of the Official Secrets Act. By means of the briefing I am able to make public the balance of power on the northern flank at Kolsas. The briefing paper sets out the formidable level of Soviet Union forces maintained in the Kola Peninsula. It states that they are
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highly trained and well equipped. The briefing then sets out what is not in the White Paper—namely:
"By comparison, our own forces in North Norway are small in number. Even after mobilisation and transfer of forces from South to North Norway, the ratio of strength is approximately one to four in land forces, one to seven in naval units and one to five in air forces."
It continues:
"The imbalance is increased when we consider the numbers of tanks, artillery pieces, all-weather aircraft, and highly mobile naval coastal vessels available to the Soviet forces."
This is something that is not set out in detail in the White Paper or in any other White Paper but it can be made public. The briefing paper indicates that there is an imbalance of a remarkable character. The imbalance is so considerable that it is possible that if the "hawks" were to take over in the Politburo they could arrive at the view that they could "snatch" Northern Norway as their forces are so overwhelming compared with those available to the NATO forces. The "hawks" could well take the view that they could snatch Northern Norway before there could be a reaction from the NATO forces. That could happen on the basis of the official figures. Perhaps they are slightly out of date—that is, out of date by a few months—but they indicate an imbalance of a remarkable character on one of the NATO flanks.
I am afraid that the Labour Government have made one of the decisions with which I have quarrelled most over the years, namely, to abolish one complete Royal Marine Commando unit. It is true that one unit is still deployed for reinforcement purposes on the northern flank, but it was the Government's decision to abolish a full Commando unit.
Let us consider a practical improvement. After all, we do not want to be destructive on these occasions when we can see a possible improvement that may be made at either no cost or little cost.
The reinforcement of the northern flank, where the balance is so desperately against us, is to come from our one Royal Marine Commando unit and from the Canadians. The Canadian reinforcements are to be flown in, but their equipment is to come by sea. If it ever gets there! I say that because of the time factor and the preponderance of Russian strength

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relative to submarines in the Atlantic. Let us have a concerted effort to persuade the Canadians to keep their heavy equipment in Norway.
I have carried out some soundings at what might be described as "middle management" level. I understand that the Canadians would wish to keep some equipment in Norway but the cost is a deterrent to them. I have talked to the Norwegians and I understand that there would be no objection to Canadian heavy equipment being kept in Norway.
On the northern flank we have a worse situation relative to the balance of power than is deployed in the White Paper. Certain things can be done about that. One thing would, as I say, be to persuade the Canadians to keep their heavy equipment there or—perhaps at extra cost but not a cost which is so considerable—a duplicate set of equipment. That would make a great difference to NATO's flank position there.
We find the depressing scene of White Papers year by year deploying the menace. But when one investigates it closely, one finds that it is even worse than is often revealed in outline in the White Papers.
I turn to the other flank of NATO. I wrote a report for WEV on the balance of power in the Mediterranean. I shall not weary the House at this hour with what is in that report. It is sufficient to say that it is a shame that we have pulled out of the Mediterranean.
I am worried about the situation in Malta, with our Commandos leaving the island. The strategic importance of Malta is not what it was, but it is still of great significance. If the Russians were to take it over, especially in the conext of their having their first aircraft carrier, the "Kiev", deploying itself in the Mediterranean, the situation could be serious.
The recommendation in my report, made before the Maltese election, was that Malta should be offered membership of NATO. If the election had resulted differently, I understand that interest would have been shown in that idea. Alternatively, we must find another NATO nation with an interest there. I understand that Italy has shown interest.
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I should be interested to hear the Government's views on Malta.
There is a depressing situation in Gibraltar. We command the Straits there. But we have no minelaying or minesweeping capability deployed in Gibraltar. That seems ludicrous. We could send such a capability to Gibraltar in due course. However, not to have a mine-laying and minesweeping capability there seems ridiculous. At relatively small cost, that situation could be rectified.
There are neither guns nor missiles owned or possessed by us dominating the Straits of Gibraltar. It would be an easy matter to put a static Exocet on the Rock to ensure our command of the Straits. I asked Sir Joshua Hassan, the Premier of Gibraltar, whether there would be any objection politically to the installation of anything of that type in Gibraltar and he said not. The last of the old, almost Victorian cannons has gone out of service. Of course, we could send forces to Gibraltar, but we have nothing there that readily commands the Straits. I ask the Government to consider whether, even with the limitations of the present budget, something can be done at relatively low cost to strengthen our military position in Gibraltar.
It seems wholly ludicrous, year after year, to have the menace deployed and the response to be a unilateral cut in our defence forces.
I am glad to see the Secretary of State for Defence in his place. Of course, one reads with attention what he may say about Service matters. I have had the pleasure of hearing him talk to semiprivate gatherings. Therefore, I read with interest what he said to the Select Committee, but one finds some signs of schizophrenia about Service matters. The right hon. Gentleman said that he shared the Committee's views about
"the importance of the conventional rôle and, as Mr. Roper mentioned, of getting the nuclear threshold as high as possible."
Of course we want to do that, but we can raise the nuclear threshold only if we increase our conventional capacity.
I entirely agree with what the right hon. Gentleman said to the Committee, but it is a strange response to an expressed desire to raise the nuclear threshold to find a personnel rundown of the character anticipated by the succession of

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White Papers with which the Government have confronted us.
The Government appear to be on target relative to their force reductions. I am worried about that. I was hoping that it would be one of the targets that might be missed. However, I shall not be snide on this occasion and talk about missed targets. That would be inappropriate. We want to talk about defence matters without party rancour as far as possible. However, the Government have reduced our forces to a considerable extent and regrettably appear to be on target.
Representing a garrison town, I am particularly worried about the position of those who serve in Northern Ireland. As has been mentioned, some units are on their fifth or sixth tours of duty in the Province. I understand that the Under-Secretary of State for Defence for the Army is to reply to the debate. I should like some indication of the effect that the proposed manpower rundown is likely to have on the frequency with which units will have to serve in Northern Ireland. This matter is of considerable importance relative to the morale of our forces and the long-term prospects for recruiting, and so on.
Obviously it is not good for morale if the Service pattern is to be Northern Ireland with an occasional visit to Germany and the rest of the time spent at Colchester, Aldershot, or elsewhere. It is not an attractive pattern if the unaccompanied tours to Northern Ireland become ever more frequent.
One part of the White Paper which has not had any attention paid to it so far is page 53, paragraph 517—"Family welfare". This matter is, partly, within the ambit of the Under-Secretary of State for Defence for the Army.
Two points strike me as being of concern to the House. The first concerns family support for the Royal Navy. That support was set up during my tenure of office as a result of the admirable Seebohm Report. Apparently the proposed full expansion of the welfare service is not to go ahead. That is a great pity. I realise that there may be room for legitimate cuts in that area, but naturally I feel disappointed, and so will Lord Seebohm, that the projected plans are not to go ahead.
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The second paragraph, which is more serious in a sense because the Seebohm plan has gone some way towards being implemented, concerns the Army Welfare Inquiry Committee under Professor Spencer. Again, that is not to be implemented. As far as I am aware, it has not been published. I shall be grateful if the Minister, in his winding-up speech, will deal with the question whether it will be published—to use Service jargon—in a sanitised version, if need be, if security matters are involved, because of course one would expect such matters to be excluded. Otherwise, I should expect to see the Spencer Report, because it concerns a matter dear to my heart—the morale of our troops serving in Northern Ireland.
I want to refer to a constituency matter that ties in with my last point, because it is relevant to the morale of troops in Northern Ireland. The Under-Secretary for Defence for the Army is persistent in his avowed intention to close the military hospital in Colchester. I appeal to the Secretary of State to look at this again. Up to a few weeks ago the Government were still spending money on the hospital and hundreds of thousands of pounds have been spent on it during the last 18 months or so.
This hospital closure is bound to affect the morale of troops in Northern Ireland, especially those who have to leave their families in Colchester. If a soldier feels that his young wife, pregnant, say, with her first child, will not have first-class medical attention in Colchester, that will not help his morale when serving in Northern Ireland. I have talked about this to many troops. I hope that, even at this late stage, in response to the representations that I have made on more than one occasion in the House and in response to a petition that I presented to the House on 28th January this year—signed by 50,000 people living in North-East Essex appealing for the hospital to be kept open—there will be an alteration in the determination to close the hospital. If it is closed, another £80,000 to £100,000 will have to be spent in order to build another medical unit by the barracks.
The Army has been too generous in providing medical facilities for us in North-East Essex. There should be a charge from the DHSS Vote to the Defence Vote when civilian work is done. We pay lip service in the House to the

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admiration that we feel for the way that our troops and Royal Marines operate in Northern Ireland. None but British forces could have operated in the Northern Ireland situation in that way—with restraint and discipline. But we must match the lip service that we pay to the troops with actions. This is the action that should be taken to support them—they should be given absolutely first-class medical services for their families at home and the finest conditions of service.
I hope that I have made practical suggestions about the ways in which our defences can be strengthened at relatively small cost. Conservatives do not have the monopoly of patriotism or concern for the Armed Forces, but I hope that we shall soon have a return of a Government that has at the forefront of their thinking their duty to protect the nation from external aggression and internal subversion.
8.23 p.m.
Mrs. Audrey Wise: We certainly live in a dangerous world. The curious aspect of the Opposition's view is that they have a rigid and static concept about what constitutes danger. A world in which enough weapons are stored to kill us all several times over is bound to be dangerous and unstable, but the Opposition's view that there are two hostile camps facing each other, and that that is the world, is artificial and untrue.
There are far more causes of danger than are admitted by the Opposition. The situation is infinitely more complex than the way that they see it. I suggest, for example, that a world in which so many people suffer severe physical privations and constant hunger while so many others are struggling to diet because they are too fat is bound to be dangerous and unstable. Such inequality is bound to lead to tensions.
If there are many causes of danger it is bound to follow that there are many kinds of defence. In their speeches the Opposition have not established any justification for the view that we should spend on defence a far greater proportion of our gross national product than our allies do. They did not establish any reason for this and they wilfully neglect to see the danger of the situation.
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I am not arguing a case for disarmament, but there is a self-evident case for the reduction of our arms spending at least to a level that would be in proportion to our total resources and to the spending of our main allies. If this were done it would help us to find the means of defending ourselves in other ways from the real dangers that face us.
For example, our real economic problems would be greatly eased by such a reduction. Since I am not arguing a disarmament case—I readily admit that there will be armaments expenditure and that some of that expenditure will be on military hardware—I should like to make a plea on behalf of both management and workers in some sections of our industry that such defence expenditure should be on goods manufactured in our own country. I and other hon. Members have received representations from workers in the aircraft industry, for example. These representations were in agreement with the management of Rolls-Royce and Lucas Aerospace that it would be far better for us to devote resources to Nimrod rather than to the Boeing AWACS. No valid answer has been given to the workers on this point.
Such expenditure as we feel it is incumbent upon us to make on military hardware should certainly be used to maintain employment in this country and should be used here rather than drained off abroad. Workers here have a valid case. However, the workers themselves, especially in the aerospace industry, are extremely conscious of the fact that something more than this is needed. For instance, the National Aerospace Shop Stewards Liaison Committee—some members of which were lobbying Members of Parliament a week or so ago—has worked out a charter of action points in relation to their industry, which is now heavily engaged in defence. The charter makes the point specifically that it is necessary
"to explore diversification to the application of technology to socially useful commodities such as medicine, medical appliances, energy, motive power, etc."
This is an initiative and view to which the Government should respond favourably.
The Opposition are fond of raising fears about employment in defence industries but they show no interest in working out constructive alternative strategies. The

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motion shows why such strategies are necessary. Regardless of any controversy between us, it must surely be agreed that the Government are right to draw attention to the need to seek every opportunity to reduce tension through international agreement on arms control and disarmament.
If that is our objective, even though some hon. Members may regard it as a long-term objective, we must consider the industrial implications and consequences of such a policy. It is essential that the Government and workers, and managements, if they are willing, should look at the problem together. The greater our economic dependence on arms production, the more difficult we shall find it to respond to genuine initiatives on controlled disarmament.
One of the most encouraging initiatives has been that of the Lucas Aerospace workers. It has been drawn to the attention of Ministers on a number of occasions, but so far they have said that they would prefer a response to the workers' plans to come from the management. I earnestly request my right hon. Friend and his colleagues to think again. If we are ever to move towards controlled disarmament we shall have to look at alternative sources of employment for our people. The Lucas workers took into account their skills and resources and worked out concrete alternatives. It is in the interests of any Government, but particularly a Labour Government, to extend a helping hand to those workers.
The initiative of the Lucas Aerospace workers was based on their knowledge of their capabilities. Their corporate plan has isolated six areas of work in which they think that their skills and the capacity of their company enable them to make a special contribution. The areas are oceanics, remote control machines, transport systems, braking systems, alternative energy sources, and medical equipment. These are important areas, because they have other implications that can contribute to our defence in the different ways that I suggested at the start of my speech, would be necessary.
For example, within oceanics the workers have been considering the problems of marine farming. In a world in which tension and danger are, at least partly, caused through the extreme
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poverty of some nations and peoples, it is surely important that we should look carefully at all means of increasing food supplies. The use of high technology in this area is not a move away from defending ourselves but a move towards a different and constructive kind of defence. In advocating that they should be involved in products for marine agriculture, the Lucas workers are seeking to help to defend Great Britain.
My hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) mentioned our fearsome dependence on arms exports. I think that everyone who is interested in maintaining peace and in securing a more truly peaceful world, with a lessening of tension, must be concerned about arms exports. It is surely extremely dangerous for us to contribute to the following through of conflicts in which we ourselves are not engaged. It is surely extremely dangerous for the jobs of our workers to depend to the enormous extent that they do on the exporting of arms to other countries, thereby, in effect, taking part in other conflicts in which we may not have any sympathies.
I submit also that there is the danger that these selfsame exports may one day be turned against us. Once we export armaments there can never be any guarantee that, at some stage, by some route or other, they will not be used against our own forces. Surely everyone in this House must be afraid of that kind of development.
So we need not only new products; we need new products that would be useful both domestically and for export in order to replace the dependence we now have on exports of arms. Here again, the proposals of the Lucas aerospace workers are particularly interesting.
One of the causes of instability in the world surely relates to energy—the shortage and imbalance of control of the sources of energy. It is the cause of a great present and potential danger. So, if we here could develop different forms of energy and discover ways to harness the forces of nature in order to provide ourselves with warmth and power, that in itself would surely be a contribution to our defence. If, as I believe, other countries also have these requirements, surely it is in our interests to develop such exports.

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The hon. and learned Member for Colchester (Mr. Buck) finished his speech with a reference to internal subversion, but nothing is more dangerous to our internal security than shortages and deprivation in our own country. One of the shortages that we have is in housing, and linked with that is the problem of providing heating and energy in our housing. The Lucas Aerospace workers have turned their minds to this problem. They have proposals for making components for housing which would bring about low energy housing. This is one of the most constructive suggestions which could possibly be made for our economic welfare, our internal stability, and our general contribution to supplying more of man's needs in the world at large and thereby the means of reducing tension.
The view of the Opposition in this matter is curiously one-dimensional and artificial, absolutely outdated and highly dangerous. They seem to see the world in terms of toy soldiers. To me and to many others that is a useless view to take of how to defend ourselves.
In drawing the attention of the Government to the part of the motion that I have quoted, relating to the need for international disarmament, I hope that they will also take my point about the need, therefore, to develop viable and useful alternatives to the destructive products that we and others build up, to the ever-increasing danger of the whole human race. No one suggests there can be miracles in this or anything else, but we must start moving in the direction of providing an example of constructive attitudes to the world's future, and I hope that I can ask the Government to give a more positive and forthcoming response to the initiative of the Lucas Aerospace workers and any other workers who look at this kind of problem, because these workers are helping us to do the job that a Labour Government will have to do, and the sooner the better.
8.40 p.m.
Mr. Michael Mates: It would be difficult, if not impossible, for me to follow the speech of the hon. Member for Coventry, South-West (Mrs. Wise), so widely divergent are our views. I have never heard matched the sheer hypocrisy that she revealed in the first part of her contribution to the debate.
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The hon. Lady has constantly opposed her Government's defence policy and has constantly called for more cuts in defence expenditure, but now she has turned round and bleated about her constituents who might be affected. That sticks in one's gullet.
The hon. Member for Sheffield, Hillsborough (Mr. Flannery) has been sniping at our troops in Ulster. For him to bleat about Nimrod, the contract for which his constituents' jobs depend on, is beyond any condemnation.
Mrs. Wise: There is no hypocrisy in saying that whatever we spend on armaments should be spent in this country. It is the worst of all worlds to spend too much and to spend too much of it abroad. There is nothing hypocritical in that. The hon. Member for Petersfield (Mr. Mates) should weigh his words with more care.
Mr. Mates: I weigh my words with care, and I shall repeat them. The hon. Lady bleats about jobs in her constituency as if she has just discovered that along with mine workers and car workers, soldiers and Servicemen are as much affected by cuts as is anyone else.
How refreshing it was, by comparison, to hear the contribution made by the hon. Member for Farnworth (Mr. Roper). I hazard a guess that those who sit on the Government Front Bench wish that they had more hon. Members behind them to give such penetrating, critical analyses of the defence problems.
I shall make one comment on the hon. Member's speech. He said that a surprise attack by Warsaw Pact forces could be ruled out. That is a very dangerous assumption indeed. I remind him and the House of what happened on 13th August 1961, when 14 Warsaw Pact armoured divisions were mobilised overnight. I have a vivid recollection of that event, because it was the day after my son was born. I was sent to Helmstedt and faced some of the armoured troops deployed along the East-West border. I ask hon. Members to recall the lack of warning of the major adventure by Russian forces in Czechoslovakia in 1968. It would be foolish for any Government to pretend that an attack cannot come without warning, because we know from experience that it can.

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I repeat the words of the Expenditure Committee in its Second Report. The Committee said:
"Nor do we believe that the defence of our national security can be founded on arbitrary comparisons with Allies whose interests and resources may wholly differ from our own."
That is such a fundamental point in assessing how one is to make a defence contribution that I should have liked to ask the Minister, who has been absent from the Chamber for the last hour, about it. How he can make a substantial reply is difficult to see. Presumably, he is in purdah rehearsing the words that have been decided for him already. But this is at the heart of the decisions that have to be taken by a Government, and so far we have not had the answer from the present set of Ministers.
Is it their policy—and can they justify their policy if it so is—to base their contribution to NATO on that of their allies, regardless of the fact, stated so often by my hon. Friends, and indeed, stated by the Government in successive White Papers, that the threat is increasing year on year? If they are going to maintain that that is the basis upon which they are assessing their contribution, in all fairness to the country they must justify it.
I should like to make one more comment on the Secretary of State's opening remarks and try to dispel the myth of the word "deferment". That is something trotted out by successive Labour Ministers as a panacea to try to lessen the effects of cuts which they keep on successively announcing. I want to make it quite clear that when they are talking about deferment, when they are trying to allege that that is a better thing than a cut, that may be so in the long term but in the short term a deferment is a cut. If a programme is put back three years and the equipment for which that programme has been designed and introduced is suddenly called upon because we need to deter, it simply is not there. It is no use anyone bleating "It was only deferred." It is missing.
Too much is made of the view "We can stretch this. We can put it back another couple of years. It does not make any difference." All the time that these deferments are rolling on they are making a signficant difference and can be
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regarded in the short term as no better than cuts.
Again, the Secretary of State has been seeking to reassure and to soothe those who are genuinely worried with his remarks as to teeth and tail. He has been asked to define them and to say by what definition he classes those parts of our forces as teeth or as tail. There may be at the extremes of both ends of this mythical animal some small items that can truly be classified as coming from the teeth or the tail. What no mention is ever made of is what must be in between those two extremities in any creature so far known to this universe—that is muscle, sinew, blood and bone. That is where the Secretary of State is cutting, time after time, when he assures us that all that he is cutting is the tail.
Let me give one example of a classic misuse of this phrase. When the right hon. Gentleman's predecessor—to be fair—tried to justify the reduction of the brigade headquarters of the BAOR a year ago, it was said that that would not affect the fighting troops. Of course it affects the fighting troops if the communications are not available to them and if the flexibility is not available to commanders to deploy an ever more stretched force across the entire central front and concentrate that force where and when the necessity arises.
Since that brigade headquarters has gone and since the reorganisation of the divisions forced upon the Army in Germany by the cuts and by the need to maintain a man-to-weapon ratio, what has happened? We have lost flexibility. We have lost tactical manoeuvrability. We have lost the well-tried formations that have served us—although they were constantly adjusted within the techniques and adjustments of modern warfare—for certainly all of my lifetime and experience in the Services.
This is not a mere cutting of tail, and anyone who tries to delude himself or others that it is is doing a grave disservice to the country.
There is one more point on which I wish to comment about the Secretary of State's opening remarks, and, indeed, about something that he said to me when I interrupted him. It concerns the equipment programme. Once again we come back to the myth of deferment.

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When I was asking the Secretary of State about the new main battle tank for the British Army he took it that I was referring to the Chieftain, but I was not. I was referring to the Chieftain's successor. The Secretary of State tries to soothe us by telling us not to worry, that we shall be all right and that this tank will see us through to the late 1980s, and he tries further to justify that by saying that the Germans would need a new tank at a different time from us.
In my 20 years of service in an armoured regiment I spanned the life of the dead and dying Centurion tank. I was in at the birth pains of the Chieftain tank and saw all the delays before it came into service, which went on year after year. I can tell the Minister, from my small experience, that if we have decided only in the last few weeks that we cannot plan for the new generation of tanks in concert with the Germans, and that as a result we have to start it ourselves, then, if we need a replacement in the late 1980s we are already behind schedule.
If a new British tank is not on the drawing board, if the specifications are not being collected together, and if the time-scale of production has not been worked out, there is no way in which the new tank can be in service by the 1980s. That is a dangerous myth that the Secretary of State continues to repeat when he tries to assure us that the cuts have no detrimental effect on our front-line troops.
I turn now to what is perhaps a point of difficulty between the Service Ministers and the Northern Ireland Ministers. I am not trying to drive a wedge between them because it would be dangerous to do so, but I hope that we can hear some reassurance from the Minister tonight—or if not tonight, certainly on Monday—that under no circumstances will the Minister of Defence give his approval to soldiers, when operating in aid of the civil power in Northern Ireland, being anything other than fully operational, and that he would never allow the Army to be restrained for political reasons from carrying out its task as an aid to the civil power within the law as it exists in Northern Ireland today.
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It has been made clear that the Army has been under such political constraint in the past, but I do not know whether it has been at the instigation of the Secretary of State for Northern Ireland or whether it was with the approval of the Minister of Defence. It must form no part of any Government's policy that, when a political decision has been made committing troops in aid of the civil power, political restraint should be used, or that the forces should be used as a regulator. We often hear the words high profile and low profile being tossed about in reference to the Army's operations. This is debilitating for the Army and ought to be totally unacceptable to anyone in the House.
The decision to commit troops in aid of the civil power is unpleasant anywhere in the world, but it is doubly unpleasant when it happens in the United Kingdom. However, once that unpleasant decision is taken, it is everyone's duty to make absolutely certain that the troops are given every facility and that, when they are carrying out their duty under the law in aid of the civil power, they should not be fettered by Ministers seeking to negotiate this or that with this faction or that faction.
In conclusion, I wish to make a constructive suggestion, although it is difficult to be constructive when in opposition. One point that struck me when I was looking through the White Paper and the Select Committee's Report was the way in which time after time, because we seek to get the best of all worlds, we ask too much of new equipment. We make the equipment too sophisticated and, as a result, we are lumbered with problems which may be out of all proportion to the otherwise excellence of the equipment. A quick example that springs to mind is the Chieftain engine. Did it have to be multi-fuel? Yes, some boffin said, it had to be because of the possibility of breakdown of oil supplies in a future conflict. That decision has produced its penalty in engine wear and unreliability which has marred the performance of what is still the best tank in the world but which otherwise would have been superlative.
On support equipment, could we not go on to the civilian market much more than we do, adapting its products which

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have been tried and tested under commercial conditions? Did we not perhaps err in trying to ask too much of our last load carrier? Did it have to be able to swim and do all the things that we built into the Stalwart, when for a fraction of the cost we could have picked up a tried and tested workhorse from the civilian market and adapted it?
The classic example of what not to do was the Champ, which some hon. Members may remember, of 10 or 15 years ago. The classic example of what to do was what was done with the Land Rover. I hope that Ministers will in future look to the commercial market, where there is excellence and where products have to compete commercially. If they can do that, nine times out of 10 they are good enough for our forces.
8.57 p.m.
Mr. Tam Dalyell: I want to put one question to the Minister and he will be scarcely surprised to learn what it is. When shall we have a fuller statement of information from the Ministry of Defence on precisely what would be meant by a separate Scottish Army, a separate Scottish Navy and a separate Scottish Air Force?
I have spent the last 48 hours composing a draft and wholly precautionary election address, which probably well not be used. In that draft, among other things, I ask my electorate whether they want a separate Scottish Army, Navy and Air Force. It would be greatly helpful if some Minister in the near future will spell out the technical facts involved. I should like to know more about such details as how one maintains Nimrod squadrons based at Lossiemouth to protect North Sea oil and about the mechanics of keeping a tartan navy afloat.
Like other hon. Members, during last year I went as a guest lecturer to the Royal Military Academy at Sandhurst and spent a very interesting day. After the lecture—senior officers at Sandhurst will bear this out—a number of the young men asked me precisely what would happen to them if there were separate Scottish forces. A number of them who were born and bred in Scotland hope to receive or have received Her Majesty's Commission, but servicing in a separate Scottish Army would be a very different matter.
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On these issues, I should like some statement at the Minister's early convenience.
8.59 p.m.
Mr. R. Bonner Pink: First of all, I welcome the Secretary of State's announcement that short-service officers are to receive the gratuities to which they are entitled. I am sure that that will give comfort and help morale in the constituency.
Apart from that, however, there is little comfort to be obtained from the right hon. Gentleman's speech or from the White Paper. Hon. Members opposite seem to put considerable emphasis on the percentage of the gross national product which can be spared for defence by comparison with our NATO Allies. The trouble is that our GNP is far too low—and the present Government are to blame for that.
As my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) said, Russian influence outside Europe is rapidly expanding. Russia is getting stronger and we are getting weaker. I am particularly worried about the situation in the Navy, because I wonder whether we are getting the best value we could. I am particularly concerned with the slow replacement of ships, the ever-lengthening building time and the inevitable increase in cost. This is largely due to the continual introduction of modifications. Why can we not build as planned, and modify during a refit? Hon. Members should compare the building time for Vosper Thornycroft Ltd. for the Royal Navy with that for foreign navies, where the original design is kept.
My second criticism is about the size of ships in relation to armaments. I appreciate that size is of importance in providing a stable platform, but given the size, why do we not fit more armament into our ships? We are still designing for a world-wide rôle. If we are to accept that we no longer have a commitment east of Suez, the accommodation for the crew is excessive.
At sea, the crew is divided into three watches. Therefore, one-third of the crew is always on watch, so accommodation is necessary only for two-thirds of the crew. I recently went over HMS "Antrim" and the Russian cruiser which recently visited Portsmouth. No doubt

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our accommodation is unduly luxurious by comparison. The remedy is, as we are now to have only local commitments, to put the crew ashore when the ship is in harbour. It might be worth-while considering having two crews for each ship so that the seamen can have more sea time.
My other criticism is over the design of the new patrol vessels. Last week we saw the shocking spectacle of a minesweeper engaged on fishery protection being unable to catch a French fishing boat which made off with its boarding party. I understand that the new patrol boats are little, if any, faster.
That brings me to the increasing problem of fishery protection and the protection of North Sea oil and gas installations. The number of oil rigs and gas rigs is increasing. The size of our commitment with the new 200-mile limit is vastly bigger. That enormous area has to be patrolled. At the moment we are using frigates and Nimrods. Both are extremely expensive and sophisticated weapons and a complete misuse of our limited resources.
Should not the Navy examine this commitment urgently? I am sure that an extremely good case could be made out for a new civilian force, similar to the United States Coastguard. New types of ships would be required, small, fast ships with good sea-keeping qualities and possibly with a provision for operating helicopters.
New types of aircraft would be required but they also could be simpler and cheaper -- possibly current commercial types. Such a civilian force would be backed by the Navy. All these suggestions could result in reduced naval commitments and could provide more money for other duties.
As has already been mentioned, other matters could be removed from the Defence Estimates. The Hydrographer has been mentioned, but the charting of the seas is not strictly a defence matter. There are other matters such as education and fishery protection which are rightly and properly the province of other Ministries.
These services have grown up over the years, but the expenditure should be put where it belongs and not on the Defence
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Estimates. We no longer have commitments east of Suez, but in spite of this our defence expenditure is still far short of our needs and far from meeting the dangers that face us. I condemn the Government.
9.4 p.m.
Mr. Patrick Wall: As usual, we have had a very wide-ranging debate and, as usual, there have been two themes. The first came from the Government Benches, when they maintained that although cuts had been made and had affected the forces they were not enough to undermine our defence posture. The Secretary of State's predecessor said that after the Defence White Paper in 1975 and again six weeks later when the Government made cuts in April 1975. The same was said in February, July and December last year. If it was true at the beginning we cannot believe that it is true today. The cumulative effect of the cuts must seriously impair and undermine our defence posture.
The theme from the Opposition has also been the traditional one, that cuts gravely impair and undermine our defence forces and put in jeopardy our position in the North Atlantic Alliance. If this sort of thing goes on we shall have to give up many of our senior NATO commands, because our allies in NATO who make a bigger contribution are bound to ask to take over some of the senior posts that we now hold. That would be very unfortunate. It is a danger to which we must have some regard.
There is normally a third theme, which has been missing today—the theme of the Tribune Group, whose members voted against their own Government in the last defence debates. They have been notably absent today. We have not had the professional pacifism from the hon. Member for Salford, East (Mr. Allaun), who was here at the beginning of the debate but went away. We have not had the rather more informed criticism of the hon. Member for Edinburgh, Central (Mr. Cook). We have heard the hon. Member for Coventry, South-West (Mrs. Wise), but the House will agree that the less said about her speech the better. We know why members of the Tribune Group have not been here in force. We shall leave the matter at that.

1191
The defence debate concerns strategy, and I should like to examine the Government's strategy in response to the Soviet threat, which the Government themselves take seriously. They take from page 4 to page 15 of the White Paper to set out the dangers of the Soviet threat and they are right. I should like to quote a passage from Pravda which underlines the aim of the Soviets:
"Peaceful co-existence does not spell an end to the struggle between the two world social systems. The struggle will continue between the proletariat and the bourgeoise, between world socialism and imperialism, up to the complete and final victory of communism on a world scale."
That is the Soviet strategy—the complete and final victory of Communism on a world scale.
The Russians' first aim has nothing directly to do with defence. It is to soften up the Western will to resist. They do that through national Communist parties, front organisations and fellow travellers. Only last year the Communist Party of Great Britain said in its pamphlet "Strategy for the Socialist Revolution"—and when Communists use the word "Socialist" they mean "Communist":
"Socialism can only be won on the basis of Labour-Communist unity."
I hope that the country will ponder those words in the next few weeks.
This erosion of will covers all fields—erosion of moral values, the mocking of respect for authority, be it of the State or the Church, the undermining of a sense of purpose. The House would do well to remember that the United States owed its defeat in Vietnam not to defeat on the battlefield but to defeat in the USA through the media, through the television set. That is a lesson the House should learn.
Once the will to resist is sufficiently undermined, the USSR has two alternative courses—a sudden attack in the North and on the central front or the more long-term and far less dangerous rolling up of NATO's flanks and the cutting off of its access to raw materials.
I take those two alternatives in turn, beginning with the central front. What is the threat? My colleague on the North Atlantic Assembly, Senator Nunn, now regarded as one of the main defence experts in the Senate, presented a paper to Congress at the end of last year, to-
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gether with a colleague, Senator Culver. Those two senators had been to look at the United States force in Europe. I should like to quote certain sentences from their report. Senator Nunn said:
"I believe that the survival of Western Europe is vital to the United States of America."
I am glad to hear, as the whole House will be that America still considers that her front line of defence is beyond the Rhine. He goes on, and this is germane to the debate that we are having now:
"We can and should insist that our allies pull their own weight in NATO, although in my opinion this is not the case today."
I submit that that is directed largely at the Government. Talking about the central front proper, Senator Nunn says:
"The numerical inferiority of NATO forces in the Central Region; their protracted war bias; and the great difficulties that would be encountered, once hostilities commence, of lifting sufficient US reinforcements across the North Atlantic have, for several years, correctly been cited as the principal weakness of NATO's conventional force posture in the Centre."
He goes on:
"The apparent aim of Soviet strategy is simple—to preclude NATO from bringing to bear in Europe its ultimately greater but typically less ready and more dispersed forces. To accomplish this, the Soviets and their Warsaw Pact allies have prepared to wage a short war of singular violence, preceded by little warning, and characterised by a massive blitzkrieg which seems aimed at overwhelming NATO forces deployed in the Centre before they can be augmented from outside the European theatre."
I believe that the whole posture of the Soviet forces in Central Europe now bears out Senator Nunn's statement. We should remember that since the Helsinki Conference Soviet forces have been reinforced by about 1,000 modern aircraft, 700 helicopters, 3,000 tanks and 4,000 APCs. The hon. Member for Farnworth (Mr. Roper) mentioned this problem in an excellent speech but he did seem to characterise the whole concept of blitzkreig as being hysteria. The hon. Gentleman talked atbout General Close's and Lord Chalfont's article in The Times. I agree with the hon. Gentleman that the imbalance of numbers between NATO and the Warsaw Pact has been there for a long time, but I hope that he will agree when I say that what has happened in the last 18 months is a change in the Soviet air and armed forces from a defensive posture to an offensive posture.

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Perhaps more important still, those forces are now kept in a state of readiness and can launch an attack at 24 hours' notice. This emphasises the importance of warning time, which has been mentioned by hon. Members on both sides of the House. It used to be that NATO could probably expect to get one to three weeks' warning of any attack in Central Europe. Now I believe that one to three days is far more likely.
Mr. Roper: The hon. Gentleman referred to the possibility of quick movement in Central Europe. Quite clearly, if the Soviet Union were to do that it would probably need to have some of its shipping out of the Kola Peninsula area and other areas. Surely that would allow NATO rather more than 24 hours' notice.
Mr. Wall: I do not think that actually follows. I accept that they would want to co-ordinate an armoured attack with a naval presence in the Atlantic. I shall come to the wider aspects of the flanks, which is what the hon. Gentleman is talking about, in a moment.
If the warning time is to get less it means that we parliamentarians have a very great responsibility to be prepared to reinforce when tension starts and not when the balloon finally goes up. As General Haig has said, and as the Secretary of State has quoted "readiness, reinforcement and rationality". Briefly, on readiness, many of our troops in NATO are not at their battle stations. We have the equivalent of about 14 battalions in Ulster and they have to be brought over in time. Reinforcements will therefore have to come by air. Have we sufficient aircraft? After all, over the past few years the Government have cut RAF transport aircraft by 50 per cent. What are they doing about taking up civilian aircraft? Have they made sure that civilian aircraft, such as VC10s, have sufficiently large doors to take the equipment needed for the infantry? These are issues on which we should be prepared, and the Government should be taking action now.
I am sure the House would agree that the main danger on the central front is from armour and air. What is the Government's response? Let us take antitank guns. My hon. and gallant Friend
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the Member for Eye (Sir H. Harrison) pointed out that Milan has been deferred. My hon. Friend the Member for Peters-field (Mr. Mates) spelt out very impressively the fact that the deferment was not just a panacea but meant that our forces would be denied that weapon for some time to come. There is an even worse story with regard to TOW and HOT, the anti-tank missiles carried by helicopters. These were first tested by the Government in 1969. They have not yet been ordered. Again, the decision has been deferred. So our helicopters are armed with the SS11, which is a French wire-guided weapon of the 1960s. Recently, in The Economist it was described as being "hopelessly out of date".
Let us turn to the air and consider the lessons of the Yom Kippur war. The use of surface-to-air missiles and cannon shells was enormous in the first few days of that war. Have we enough reserves and ammunition to use up anything like the amount of ammunition used then? Here again, we find deferment. The blind-fire Rapier has been deferred, and, as my hon. and gallant Friend the Member for Eye pointed out, apparently the tracked Rapier has now been put off altogether. We have no modern guns to deal with low-flying aircraft, and the suggestion in the Committe's Report is that the Army will have to take over exnaval Oerlikon 20 mm. guns which are relics of the Second World War. That is not exactly helpful in trying to deal with a massive Russian air threat.
What about tanks? I agree that the Chieftain is probably the best tank in the world. We now have this marvellous invention, the Chobham armour, which is not to be fitted to our tanks. It is going to Iran, but not to BAOR.
While I am on the subject of tanks, what about track mileage? I hope that we shall be told whether there are serious limits on track mileage and how that has affected armoured exercises in Germany. Perhaps we shall be told also how many divisional exercises have taken place in BAOR in the last two years—[An hon. Member: "None".] That is probably right, but I should like to have it confirmed by the Minister.
That brings up the whole question of training, which was referred to eloquently by my hon. Friends the Members for

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Beckenham (Mr. Goodhart) and Torbay (Sir F. Bennett). My hon. Friend the Member for Beckenham talked about there being one live mortar bomb in five months for training. I am also told that some troops have only 100 rounds of ·303 ammunition, or whatever ammunition is used, for a year's training. My hon. Friend the Member for Beckenham also talked about bands, and about Kneller Hall. One of my colleagues whispered to me that the Government appeared to be more interested in bassoons than in bazookas.
Moving from the ground to the air, we are told in the White Paper that a squadron of Jaguars has been cancelled. That does not sound too bad, until we see in the White Paper that only five squadrons are allocated to RAF Germany, which means that the cancellation represents one-sixth of the total. Tornado delivery has again been slowed. As for the problem of mobility, which is so vital these days, especially on the central front and on the flanks, we find that deliveries of Gazelle and Lynx helicopters have been cut and that medium-lift helicopters have disappeared altogether. I remind the House that it was the Labour Party, when last in power, which cancelled the HS681 in 1965, heavy or medium-lift helicopters in 1967, again in 1974, and again now in 1977. That is a prettty good record!
Why do we need these helicopters? In the old days, they were needed to lift forward field artillery. Today, they are needed above all to supply the Harriers. The whole essence of the Harrier is mobility. That can be achieved in a front line position, but only if there is mobility for its supplies. If it has to rely on lorries or tracked vehicles to bring in those supplies, the result is to negative half the advantage conferred by the mobility of the Harrier.
I suggest that all these cuts and deferments represent a reduction in our contribution to RAF Germany and BAOR and, therefore, to NATO as a whole. What is more, they lower the nuclear threshold and therefore, make more likely the use of tactical nuclear weapons.
I am one of those who believe that the Soviet Union is not likely to initiate a war in central Europe because it runs the risk of nuclear retaliation. I believe
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that it has a longer-term and much safer alternative, which is to roll up NATO's flanks. That being so, I want briefly to deal with the flanks.
On the question of the northern flank my hon. and gallant Friend the Member for Eye talked about the Royal Marine Commandos. I say in passing how proud the Royal Marines are that for the first time one of their generals—General Whiteley—has been given a senior NATO command as C-in-C AFNORTH. My hon. Friend also illustrated the importance of getting reinforcements to Norway in a time of tension. My hon. and learned Friend the Member for Colchester (Mr. Buck) also pointed out the dangers of imbalance in the situation on the northern flank today. Reinforcement of the northern flank is primarily a British responsibility. In the past the Government have cut the carrier replacement programme, which could have given support, and they then removed the Commando carriers and have taken out the amphibious warfare vessels. Occasionally one of these is made available, but they are not permanently committed. The Government have also cut the number of Royal Marine helicopters—in fact, Government strategy now depends on British Rail ferries. Yet this is one of our primary NATO responsibilities!
The hon. Member for Hornchurch (Mr. Williams), who is chairman of his party's defence committee, said that the Expenditure Committee Report was highly damaging to his own Government. I fully agree with him. The Report has this to say about the southern flank.
"There is now a tendency to overlook the full extent of the Mediterranean withdrawal, which includes not only the Naval amphibious force (a commando group, commando ships and assault ship) destroyer/frigates and MCMVs but also the RAF's Canberras and long range maritime patrol Nimrods."
In other words, after more than 200 years and in the face of a Soviet build-up the British have completely withdrawn from the Mediterranean, and that is clearly extremely damaging to NATO. The Secretary of State knows that, and he has been told about it by the NATO Commanders in that part of the world. It can he said that we have forgotten the "soft under-belly of Europe".
There is something even more important—the sea flanks. I quote Admiral

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Gorshkov, who is perhaps the greatest Russian seaman of modern times and the creator of the Soviet navy. He said, in 1967:
"The disruption of the ocean lines of communication, the special arteries that feed the military and economic potentials of the West has continued to be one of the fleet's missions."
That was said a long time ago, and it is much more true today. Recently we saw the Russians in Exercise Okean making exercise attacks on ocean convoys. We can draw our own conclusions from that.
The arteries to which Admiral Gorshkov referred are in the Atlantic, and they run from north to south and from east to west. Fifty per cent. of our oil—probably more—and 25 per cent. of our food pass around the Cape to come north to Western Europe. The Soviet Union has the world's largest nuclear submarine force supported by surface vessels with guided missiles. As pointed out by the hon. Member for Farnworth, it also has the Backfire bomber, operating over the waters of the Atlantic. We have only the counter of 20 Sea Harriers, which we hope one day to operate from HMS "Invincible".
The Government have cut the building programme by nine frigates, and scrapped the advance Ikara despite all the money already spent developing it, very little more being needed to give it extra range. They have deferred Sea Skua, the weapon needed to deal with surface ships. The major weapon that we have not yet bought, is the Sub Harpoon, which will be the only effective weapon for our nine Fleet submarines. As a previous Labour Government once said, these submarines are the capital ships of the future, but the fact is that they have no modern weapon except the Sub Harpoon. When is it expected that these weapon systems will be operational in the Royal Navy?
The Government have abrogated the Simonstown Agreement at a time when the Soviet satellites have occupied Angola. My hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) made his characteristic, forceful speech about the importance of the southern flank to this country, to Europe and to the United States. Yet at a time when the Soviet Union has control
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over Mozambique and Angola and has assisted in installing Marxist-Leninist presidents in those countries, we have abrogated Simonstown. If the Soviet Union obtains the same control over South-West Africa—Namibia—Rhodesia and South Africa itself—as it has in Angola and Mozambique it will control not only the Cape oil route but 60 to 90 per cent. of some of the key minerals of the world.
That is a fact at which Western Europe cannot blink. These minerals include uranium, manganese, chrome, vanadium, platinum, gold, industrial diamonds, and so on. If the Soviets obtain control of those minerals, they will have a stranglehold over the Western economy. That matter is of vital importance to this nation and to Europe as a whole. But the Government appear to be completely oblivious to these dangers.
So much for the North-South communications. I now turn to the East-West situation. Our reinforcements must come largely from the United States. The men will come by air, but the hardware and supplies must still come by sea. At a recent meeting of the North Atlantic Assembly in Williamsburg last November, Admiral Kidd, Supreme Allied Commander Atlantic, said:
"There is a tendency to believe our considerable airlift capacity"—
he was referring to American rather than British capacity—
"can solve the reinforcement and resupply problem. This is a terribly misleading concept. On the contrary, the great bulk of the equipment, weapons, ammunition and other initial supplies—plus the resupply pipeline—must be delivered on the surface of the sea."
If I may quote figures that I have given on other occasions, the ratio of anti-submarine forces to German submarines in World War II was 6:1. The ratio of NATO's anti-submarine force to the Soviet submarine force today is 2: 1. That is the ratio in this nuclear age, when nuclear submarines can traverse the world under water without coming to the surface.
What do the Government do about that situation? They cut our anti-submarine forces. HMS "Invincible" will probably be two years overdue before she is launched, and it looks as though "Ark Royal" may have to be retired because

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of old age before "Invincible" becomes operational. Incidentally, I hope that we shall treat like with like. It is incorrect to call "Invincible" a cruiser when she is an aircraft carrier. The Russians have called the "Kiev" a helicopter carrier. Should we not call "Invincible" the same? She is certainly not a cruiser.
Have the Government made any special arrangements for the conversion of tanker ships or tankers which could be converted into helicopter carriers for anti- submarine purposes? My hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan-Giles) and I have been plugging away at that matter for years. However, nothing has been done about the situation. We must have re- serve helicopters and helicopter pilots, but I understand that there are now no such reserves. I understand—I should be happy to be told that I am wrong—that there are even no plans to train helicopter pilots in an emergency. That appears to be utter lunacy. Our shipping will depend on those helicopter pilots and their craft, and there must be an adequate reserve for emergencies.
The Government have dismissed the whole of our vital sea communications in one paragraph of the White Paper—namely, paragraph 145, headed "Commitments outside NATO". They have done this at a time when NATO is becoming increasingly concerned about areas outside the NATO boundaries. SACLANT is making contingency plans for the protection of NATO shipping in the South Atlantic and Indian Oceans, but the Government apparently have dismissed as irrelevent the part of the world from which comes our food, our oil and our minerals.
The threat is now as grave as it was in the 1930s, if not graver. I believe that the Government agree with this view because they virtually say so in their White Paper. We believe that defence should be measured against that threat and not against the efforts of our allies in NATO. I am sure that the House, in its heart of hearts—and this must be the view of Members on both sides—accepts this view. Yet what do the Government do about the situation? They cut our already attenuated forces. They cut the logistical tail and research and development, which is the life blood of the future. In this they are mortgaging future gene-
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rations and that is perhaps the most serious cut of all.
They say nothing about the weapons of the future—for example, Cruise missiles, Smart artillery shells, which may be of great importance in future and much cheaper than aircraft, and other precision-guided missiles. They cut the teeth of our forces. There are to be fewer anti-submarine vessels, fewer maritime aircraft, fewer helicopters, fewer transport aircraft, and slower deliveries of vital anti-tank weapons, surface-to-air weapons and strike aircraft. There will be smaller reserves of men, munitions and fuel. In page 19 the Estimates Committee states:
"The Government should make clear the basis on which they make choices as between defence and other spending programmes."
The Government are spending millions of pounds on nationalisation, yet they are cutting defence. Why do they maintain a giant bureaucracy to supervise handouts not only to those in need but right across the board, yet risk our ultimate security? I suggest that one of the reasons is to appease the Tribune Group, whose members voted against their Government on the occasion of the previous defence debate. They have been, remarkably silent today. I see that one or two of them have just entered the Chamber. I am delighted that they have come to listen to these words.
I have no doubt that many Members expected to hear much more from them today, as in the previous defence debate, when, as I say again, they voted against their own Government. However, we have all noticed that they have been remarkably silent, and we wonder why. I suggest that the risk of defeat tomorrow makes them swallow their principles today.
The Government, to maintain the unity of the Socialist Party, have put at risk the security of the State. Clearly they have thus failed in their primary duty. I hope that the whole nation will remember the pledge of my right hon. Friend the Leader of the Opposition that Conservatives will give the defence of the realm top priority. There is a clear choice, which will be made in the very near future, if not tomorrow. The Government have failed. They have failed the defence forces and they have failed

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the nation. There can be only one verdict; they must go.
9.32 p.m.
The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): Much has been said today in criticism of the Government's defence policy and of the capability of our Armed Forces. I shall redress the balance by selecting two areas that I believe illustrate the general and continuing high quality of our Armed Forces.
First, I pay a sincere tribute to the work performed by our forces in Northern Ireland. As the House knows, the Government's security policy is to achieve the development and increasing acceptance of the Royal Ulster Constabulary as the major instrument for the detection, arrest and charging of terrorists and other criminals to be brought before the courts. The rôle of the forces is to remain as the essential buttress of this policy for as long and in such force as is necessary. The Army's rôle requires restraint, determination and skill, qualities which experience has shown us our soldiers possess in greater measure than any other army in the world.
I visited the Province only last Wednesday and I saw for myself, as I do on every occasion I visit the Province, just how high the morale of our forces is in Northern Ireland. One regiment that I visited normally combines two rôles—namely, public duties in London and an armoured rôle with Chieftains in the British Army of the Rhine. To those rôles it has added a third—namely, an infantry rôle in Northern Ireland. It has taken to it with vigour and success almost like a duck to water. I mention this performance not because it is rare but because it characterises the achievement of our modern Army in Northern Ireland.
Later in the day I witnessed the splendid work of our security forces in the border area. As I arrived in the area just as an operation was being mounted I was able to see for myself the smartness of the reaction that our security forces can produce. This was at a little outstation under the command of a second lieutenant. It did the heart good to see how our forces reacted to an emergency situation on the border. I also saw the excellent co-operation that exists across
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the border between the RUC and the Garda.
I should like to say something about the Ulster Defence Regiment. This mainly part-time force does an excellent job of work and makes a most valuable contribution to security in Northern Ireland. Despite the manifest dangers that the regiment's members face, morale remains extremely high. I assure the hon. Member for Beckenham (Mr. Goodhart), who raised this point, that the participation of the UDR in security operations is being increased and it now provides the first line of military support to the RUC in six police divisions. Moreover, as the House knows, the full-time permanent cadre of the regiment is being strengthened to give it a greater operational capability, particularly during the day. Recruiting for the initial increase of 200, which has been announced as the first step in this expansion, is well in hand and some of the new recruits are already being used on operational tasks.
It has become something of a tradition in these debates for us to mark our appreciation of the work of the Armed Forces in Northern Ireland, but our appreciation is none the less genuine for that, and I am sure that the whole House will wish to join me in expressing our gratitude.
Secondly, I turn to an area which I believe illustrates the success of the Government's policy of seeking the most efficient and cost effective use of the resources which can be allocated to defence at a time when my Department must bear its share in those economies in Government spending which are essential in securing the country's economic future and upon which, incidentally, our ability to assure our long-term security must be based.
The Reserve forces, in accordance with the policy stemming from the defence review, are being much more closely integrated with the Regular forces. An example of this can be seen in the new type of Army formation that we have created, to be known as Field Forces. The first two of these, the 5th and 8th Field Forces, come into existence on 1st April this year. Each will contain—as, indeed, will the remainder—two TAVR infantry battalions and supporting units as an integral part of it.

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Nor should it be thought that these TAVR units will in any way be poor relations. Under the "one Army" concept, TAVR units are now similarly equipped to regular units with a comparable rôle. That has meant that in some cases they have received, or are planned to receive, equipment, such as the Fox armoured car, the Milan anti-tank missile system, and the Blowpipe man portable anti-aircraft missile system in advance of parts of the Regular Army. In addition, those units of the TAVR that are committed to NATO—we have recently re-roled an additional three TAVR infantry battalions from a general reserve to a NATO rôle—train regularly in Germany and their commanding officers are in regular contact with their superior formation commander in Germany. Every year over 16,000 volunteers are sent across to train.
Without a doubt, the TAVR is a first-rate element of the forces that we have available, both for NATO and for home defence, being well trained, well equipped and highly motivated. It is also extremely cost effective, consuming only 1 per cent. of the annual defence budget, and therefore is a clear example of the way in which we are making the best possible use of resources.
Mr. Wall: Before the Minister leaves the subject of the TAVR, can he say roughly what proportion of the TAVR would go to reinforce BAOR—in which case it would need all this first-class equipment—and what would be left to defend the country after mobilisation?
Mr. Brown: The hon. Gentleman knows well enough that it is not customary to give details of dispositions, but I can say that the 55,000 strength of BAOR would be increased to about 120,000 on mobilisation.
We are making the best possible use of resources and I saw the truth of this for myself recently, when I participated in a major TAVR exercise in the North-East on 5th to 6th March. The men to whom I talked were keen and professional, and the units involved were well up to strength. In fact, the TAVR has just launched a new nation-wide recruiting campaign to improve this still further. In its first two weeks, this has brought in more than 2,000 inquiries to the Ministry of Defence, and many more at a local level. I am sure the House will be
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pleased to hear the success story that is the present TAVR.
Mr. Tebbit: Before the Minister leaves the subject of the TAVR, can he say how long it would take to mobilise TAVR and to transport it and its equipment to BAOR and in what vehicles that would be done?
Mr. Brown: The hon. Gentleman must be asking that question with his tongue in his cheek because he knows that it would not be right for me to go into such detail. I can say only that I am confident that our mobilisation procedures will meet the needs of Supreme Allied Command Europe.
I now turn to the remarks of the hon. Member for Haltemprice (Mr. Wall) who asked about training and track mileage. There is a lengthy piece on track mileage on page 3 of the Defence and External Affairs Sub-Committee proceedings and the minutes of evidence of the Committee of 1st February that answers the question. As for divisional exercises, the answer is "Yes". There have been divisional exercises in BAOR during the last two years culminating in corps exercises.
Mr. Mates: Does the Minister mean command post exercises or divisional exercises using troops of all divisions?
Mr. Brown: I said divisional exercises culminating in corps exercises. The hon. Member knows that.
Hon. Members have referred to, and I have read with interest, the Expenditure Committee's Report on the cumulative effect of cuts in defence expenditure, and I welcome it as a valuable and timely contribution to our debate. The Government will, of course, be presenting its formal observations to the House in due course.
Mr. Buck: Does the Minister want to bet?
Mr. Brown: I am not a betting man, but that is one bet that I should like to take.
There is much common ground between the Committee's approach and the policy of the Government as set out in the White Paper, and if some of its comments are critical, they are criticisms that the Government note with attention and respect.

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Nevertheless there are important features of the Committee's analysis that I find difficult to accept. The Committee's main conclusion is expressed in the form of a question:
"We ask, however, whether it is now the Government's policy that defence spending should be treated on the same footing as that of any other department regardless of the effect on the operational capability of the forces or whether the defence budget ought to be assessed in the light of the perceived threat to national and NATO security."
I do not find that a distinction. Of course the defence budget will be assessed in the light of the perceived threat to security. The Government would not be spending over £6 billion on defence next year if we did not perceive a very clear military threat, in face of which appropriate defensive preparations must be made.
At the same time the defence budget, important though it is—indeed, precisely because it is so large and important—must also be viewed in its broader context and must respond where necessary to wider economic constraints. The Government have found it necessary to reduce public expenditure generally in order to bring down the level of public sector borrowing and free resources for industry—objectives which our critics opposite no doubt share. It is unrealistic to suppose that any Government, faced with the need for public expenditure cuts, would say of the defence budget—which represents over 10 per cent. of public spending, "This must remain sacrosanct come what may; however pressing our need for financial savings, we shall not even consider whether it could be trimmed at the edges."
No Government could afford to take this view, unless the country were faced with imminent attack and its immediate survival was threatened—which, I am glad to say, is not our position, disturbing though the increases in Soviet capability are. Certainly there is nothing in the Conservatives' past record to suggest that they would have given the defence budget absolute protection in similar circumstances—whatever they may say today.
To say that the defence budget must be reviewed along with other programmes is not to say, as the Committee have implied, that this should be done:
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"regardless of the effect on the operational capability of the forces".
On the contrary, our concern has been, and is, to keep to an absolute minimum the effect on our front-line forces. This is made clear in the White Paper and we have said it on many occasions.
The hon. Member for Petersfield (Mr. Mates) asked for an assurance that the forces in Northern Ireland would have the operational capacity and freedom to render aid to the civil power under the law. I am sure that the hon. Gentleman is aware that this is precisely the position at present and we have no intention of altering it.
My hon. Friend the Member for West Lothian (Mr. Dalyell) asked when he would get a full statement of the cost of separate Scottish armed forces. I have some sympathy with the point that he was making and if Scotland becoms independent and has to organise independent armed forces, it will cost a great deal more than it currently costs Scotland as an integral part of the United Kingdom. That is fairly obvious. I assure my hon. Friend that we shall look at his request and if we can get some facts and figures, I shall let him have them.
Mr. Dalyell: In 15 defence debates I hope that I have never asked the Ministry to do unreasonable work for no good purpose, but this matter is now a major issue. The House has spent all this time on Scottish affairs and it would be worth while if the Ministry confronted Scottish people with the precise cost of such a proposition.
Mr. Brown: As I said, I have a great deal of sympathy with what my hon. Friend was saying. The question of an independent Scotland is hypothetical—
Mr. Dalyell: It is topical.
Mr. Brown: It may be topical, but I am sure that my hon. Friend, as a reasonable man, would agree that there are many more important issues with which we have to deal.
The hon. Member for Colchester (Mr. Buck) asked about the Army Welfare Inquiry Committee Report by Professor Spencer and said that it had not been published. He is wrong again.
Mr. Buck: The hon. Gentleman was not here. I asked whether the report had

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been published and used some unsalubrious defence jargon to ask whether, if it could not be published in full, we could have a sanitised version. If the Minister really has so much concern about the troops in Northern Ireland, perhaps he could also take this opportunity of dealing with the closure of the military hospital in Colchester—
Mr. Speaker: Order. That is enough for now.
Mr. Brown: I unreservedly apologise to the hon. Member for Colchester. I misread a note that a colleague took for me. The hon. Gentleman asked whether the report had been published. I can tell him that it was published last year and is referred to in paragraph 518 of the White Paper.
The right hon. Member for Chesham and Amersham (Sir I. Gilmour) also raised the matter of the call for real increases in defence expenditure in the DPC communique. Her Majesty's Government recognise that, in the face of the continuing build-up of Warsaw Pact military strength, the North Atlantic Alliance is the best guarantee of our continued security. We intend to continue to make an effective military contribution to the collective security of the Alliance, commensurate with our economic situation. At this point, I want to quote from Hansard;
"We have pursued a definite policy of giving a somewhat higher measure of priority to the materials needed for exports. The grave financial crisis under which we are labouring supplies more than sufficient explanation for this decision. We depend upon exports to purchase the imports of food and raw materials without which we can neither re-arm nor live as a solvent economic society.
I accept the responsibility only for doing all that was possible, having regard to the state of our defences and the economic position"—[Official Report, 5th March 1952; Vol. 497, c. 433.]
Those were the words that Mr. Winston Churchill used, when he was Prime Minister, in presenting the statement on the Defence Estimates on 5th March 1952. I think that what he said bears some resemblance to our present situation.
The hon. and gallant Member for Eye (Sir H. Harrison), as Chairman of the Defence and External Affairs Sub-Committee, has done a first-class job which I am sure the House would wish me to acknowledge, since I understand
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that he will not be with us in another Parliament. I am hopeful that he will be with us for another year or two. He raised a number of detailed points in connection with the report of the Expenditure Committee. These points were raised by the Committee in its defence cuts questionnaire, and the Ministry of Defence submitted a memorandum to the Committee answering them.
However, I would like to mention the point about the reduction in Army manpower. The primary aim of the Army restructuring plan was to make savings by reducing manpower while preserving the front-line capability of the Army, and by this means savings were to be made in the total manpower allocated to the combat arms.
The resulting order of battle was fully justified in terms of Britain's primary defence commitments as established in the defence review. It was accepted that, as a consequence of this policy, continuing requirements, like the Northern Ireland emergency, would have to be met, as they were before the defence review, by the use of both units and manpower established primarily for other purposes.
The hon. and gallant Gentleman referred to the tragic loss which the whole country has suffered in the death of Marshal of the Royal Air Force Sir Andrew Humphrey. This was indeed a tragedy, and I know that the whole House echoes those sentiments. There has also been the untimely passing of General Sharp, and I am sure that the whole House would equally wish to record our sadness at the passing of such an excellent servant.
The hon. Member for Gillingham (Mr. Burden) asked for assurances about fuel and ammunition for training. Since the fuel crisis, we have naturally had to watch fuel consumption in all three Services very carefully. My hon. Friend the Under-Secretary of State for Defence for the Royal Navy will deal with the question of naval fuel separately, but I can give the assurance that, in the reductions we were obliged to make for 1977–78, the purchase of fuel has been unaffected.
As far as ammunition is concerned, we have only recently emerged from a period of great industrial disruption, stemming from the fuel crisis and the three-day

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week—and that was certainly not the fault of this Administration.
Mr. Churchill: That was three years ago.
Mr. Brown: The hon. Member for Stretford (Mr. Churchill) may say that but hon. Members should believe me—although some may prefer not to—when I say that we are only now coming out of the problems that were created by that period of industrial confrontation under the last Tory Government. As a direct result of the three-day week there was a rationing of certain natures of ammunition. The impact of that rationing has been substantially reduced. The present situation has been caused by industrial difficulties and not by cuts.
The hon. Member for Gillingham also suggested that had it not been for pressures on the Government in the House the answer given about short-service gratuities by my right hon. Friend in his opening speech would have been different. The Government never had any intention of abrogating the rights of Service men. The men involved were worried about Press reports which wrongly gave the impression that a decision had been taken. Our responsibility as a good employer to the Servicemen—in the face of premature Press reports—was fully discharged, first, by keeping the men involved informed about discussions and, secondly, by the outcome that was announced by the Secretary of State. The attempt by the Opposition to make capital out of inaccurate Press reports is unworthy.
Mr. Churchill: Give way.
Mr. Brown: I shall not give way. The argument has been covered twice already.
Mr. Churchill: Will the hon. Gentleman give way?
Mr. Speaker: Order. If the Minister is not giving way, the hon. Member for Stretford (Mr. Churchill) must resume his seat.
Mr. Brown: I shall not give way since I have only three minutes left.
I welcome the support that my hon. Friend the Member for Farnworth (Mr. Roper) gave to the work of the European Programme Group. Although my hon. Friend will be dealing with that subject
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in greater detail on Monday, I can say that I share my hon. Friend's concern that the countries on this side of the Atlantic should play their full part in developing and producing the military equipment that they require. My hon. Friend will realise, however, that the task that the group has set itself is lengthy and difficult. It involves finding the best balance between the military, financial and industrial interests of member countries. We cannot expect dramatic results overnight. There is now a will among, the member nations of the EPG to work together to produce the equipment that they need in the interests both of efficiency and economy and of the standardisation of equipment among the forces of the Alliance.
I also agree with my hon. Friend about the importance of establishing a two-way-street with the United States in equipment purchasing. We welcome the signing of the Memorandum of Understanding on Reciprocal Purchasing. I am glad to say that British industry is taking advantage of the new opportunities that the memorandum presents. Although success with the United States market brings valuable rewards—as the experience with the Harrier has shown, for instance—it is a very competitive market indeed and British industry will have to put in substantial effort, sustained over a long period of time, if the opportunities that now exist are to bear fruit.
Having dealt with all those points—[HON. MEMBERS: "Oh."]—I must apologise for not having time to cover all the important and valuable matters that have been raised. I shall finish with one thought. No one is more conscious than the Government of the threat to which we must address ourselves. We shall be unremitting in our effort to ensure Britain's security as a member of the NATO alliance which is the linchpin of our policy.
Britain's security is better assured by the present Government's policy of careful, cost-effective and considered policies to achieve the best possible use of resources and the minimisation of waste than by the fantastic, reckless and unfinanceable programme—
It being Ten o'clock, the debate stood adjourned.
Debate to be resumed Tomorrow.

MERIDEN MOTOR CYCLES LTD.
10.0 p.m.
The Minister of State, Department of Industry (Mr. Alan Williams): I beg to move,
That this House authorises the Secretary of State to pay or undertake to pay by way of financial assistance under section 8 of the Industry Act 1972, as amended by the Industry Act 1975 and the Industry (Amendment) Act 1976, sums to Meriden Motor Cycles Ltd. in connection with its business, being sums which, when aggregated with the £4·95 million previously paid by the Secretary of State under that section in respect of that business, exceed £5 million but do not exceed £5·45 million.
I should like to think that the sudden discovery of interest in other parts of the House implies that perhaps we shall not have too lengthy a proceeding on the motion.
The House is already familiar, as a result of the statement that my right hon. Friend made to the House, with the general outlines of what I have to say this evening. It is just over two years since the Meriden Motor Cycle Co-operative was established, with a grant of £750,000 and a loan of £4·05 million, and then, in October 1975, a further loan of £150,000—bringing the total Government provision to £4·95 million. That is where it has stood until this motion.
In this time the Co-operative has produced over 19,000 motor cycles, most of which have been exported. In addition to the production of its own Bonneville motor cycle, it is also assembling machines that have been imported in knock-down form from Italy and Austria, and it is also now making—I am sure that this will be a matter of great interest to hon. Members who are possibly considering ordering such an appliance—an exercise machine for an Austrian manufacturer.
During this period the company has shown itself capable of running a complex manufacturing plant and a medium-sized manufacturing plant with great flexibility in the use of labour and without industrial disputes. The very encouraging aspect of its work has been that productivity has shown a marked improvement since the Co-operative took over. Under the previous owners—and recognise that the manufacturing pattern was somewhat different—productivity was
1212
running at the rate of 14 machines per man-year, whereas now the Co-operative has attained a rate of 22 machines per man-year. This represents an increase in productivity of over 50 per cent. during the time in which the Co-operative has been operating.
This has been achieved in the face of considerable difficulties. I think that hon. Members who have followed the work of the Co-operative will recognise that the management has operated with considerable skill, expertise and efficiency.
Nevertheless, what has emerged from various discussions with the Co-operative and from assessments that have been made on behalf of the Department is that there is still a need to evolve a more satisfactory management structure. That is a point that the Co-operative itself recognises. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) will no doubt be contributing to the debate later if he should catch your eye, Mr. Speaker, and he will be able to give the House considerable personal information on the way in which the attitudes of the Co-operative have developed towards the need for managerial expertise.
These difficulties are hardly surprising when one thinks of the very radical change in the management form between the original private ownership and the current co-operative ownership. Therefore, one should not see this limited management shortcoming as in any way an indictment of the experiment as such but rather as one of the spin-offs of the experiment in that it has identified an area in which further attention will be needed.
When the Co-operative was set up, it was considered that it would be unnecessary for it to set up its own world marketing organisation because it was thought that the marketing could be achieved quite efficiently by using the world network of the Norton Villiers Triumph organisation. NVT itself was at that time a substantial producer of motor cycles, but, of course, in 1975 there was a considerable levelling off of demand in the United States and there was considerable over-stocking by the Japanese, which led to an intense period of price cutting. This price cutting was so severe that NVT was unable to meet the competition.

1213
Therefore it had to cut back on its production and was forced to revise the scale of its marketing operation.
Since then, it is reasonable to say—without attributing any fault to either side—that because of the nature of the changes that have taken place in the world market and the nature of the changes in the marketing machinery, the relationship between producer and marketer has not been ideal.
Again, in fairness to both parties, I must say that in discussions that they had with the Chancellor of the Duchy of Lancaster and myself, both parties recognised that it would be preferable if the Co-operative were to have its own marketing operation. There is deep-seated conviction among members of the Co-operative that they would do far better if they were marketing their own product and therefore deriving more of the profits margin for the Co-operative.
Since NVT was willing to co-operate in this objective, we felt that it was a further experiment worth supporting. Therefore, the Co-operative will be buying from NVT certain marketing assets and rights such as the right to use NVT's markets, the designs and special tools for the models that they produce, spare parts, dealer franchises, and so on. My hon. Friend is in a position to explain, if he thinks it necessary, the internal strategy of the Co-operative, in view of the effective role that he has played as the Co-operative's adviser over a considerable period.
My right hon. Friend the Secretary of State indicated to the House on 7th January that in view of the representations made by NVT and the Co-operative, we had accepted their proposition to establish a marketing facility and agreed that this would be a valuable further experiment, and that we would provide £500,000 for this purpose. That is the purpose of the motion before the House this evening.
The £500,000 is part of a package which was negotiated by NVT and the Co-operative, and which also involves GEC, a completely new element in the fortunes of the Co-operative. The Industrial Development Advisory Board has been consulted about these proposals and has supported them, given that the
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Government's further commitment is strictly limited.
Under the new arrangements, GEC will provide £1 million worth of working capital for the Co-operative in the form of revolving credit. It will buy machines from the Co-operative and will hold them until United Kingdom dealers take them and sell them. It will have paid the Co-operative the base price on purchasing, the price agreed between the Co-operative and GEC. The difference between the base price and the actual marketing price will be returned to the Co-operative minus a nominal handling charge for GEC, plus a deduction to be decided as appropriate between the Co-operative and its dealers as the dealers' margin.
Mr. Geoffrey Robinson: In case GEC should interpret too literally what my right hon. Friend has said, I should make it clear that GEC will pay us immediately on sale to the dealer and not wait for the dealer to sell to the trader. If GEC waited till then, it would make a difference to our cash flow.
Mr. Williams: I am sure that GEC will operate strictly to the terms we have agreed. My hon. Friend the Member for Coventry, North-West was correct in remedying the slightly inaccurate version that I put forward. This means that the Co-operative feels that a larger proportion of the eventual marketing price will return to it than at present.
In addition to this revolving credit, which is an extremely important factor, as my hon. Friend has said, in the firm's liquidity, GEC will also provide certain managerial, marketing and technical advice in the further development of the existing machine, where there are one or two areas of difficulty which the Co-operative and some of its customers would like to see eliminated. Also, to help with the marketing side, Lord Stokes has now agreed to help the Co-operative in setting up its marketing organisation.
The Government will relinquish their present security over the whole assets of the Co-operative and subordinate their loan to all other creditors. The payment of interest between now and the end of 1978 will be deferred. This will mean a total deferment of £1·05m. The purpose of this relinquishing of security is to

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enable the Co-operative to obtain a facility which is normal to virtually all other enterprises—namely, access to bank overdraft facilities.
Because of the high credit gearing in the original structure of the company when it was set up just over two years ago, and with the Government having this prior claim, it has been extremely difficult for the Co-operative to obtain normal commercial credit. It is hoped that by altering the status of the Government loan, while in no way writing it off or even writing it down, we shall give the Co-operative access to bank facilities.
In the same way that we are not writing down or writing off the loan, it should be stressed that the interest has not been waived. It has been deferred. Therefore, the interest will still be payable and there will be negotiations between the Co-operative and the Government to establish a programme of repayment of loan and interest. This, however, will be at a later stage, as we see the financial development of the Co-operative. I shall keep the House informed of developments in this sector.
Because of the burden which I have described of a high gearing of loan finance, the Government propose that the new £500,000 should take the form of a straight grant rather than add further to the loan capital of the Co-operative. Hon. Members will notice that the motion makes no reference to either the subordination or the deferment of interest, because under the Act we are required to get permission for further finances. The objective here is not further finances but the altering of the handling of existing finances. Therefore, under the Act, it is not necessary for us to seek a resolution for the subordination or the deferring of interest, but clearly the House should be told fully what the package consists of. That is why I have expanded on the arrangement.
Finally, at the suggestion of NVT, as a separate transaction, when NVT receives the assistance which is being paid to the Co-operatives to buy NVT's marketing assets, the Government have agreed to allow NVT to use that money to redeem part of the Government's preference shareholding in NVT. That of course will be done on the basis of expert advice. We shall be employing valuers to establish
1216
precisely what would be the appropriate redemption for the sum involved.
The effect will be that there will be little or no net outward flow of capital so far as the Government are concerned, but that is largely an irrelevancy. One must recognise that there will be a loss of a real asset in the loss of part of the shareholding in NVT, but in terms of cash flow it means that the Government will pay out virtually nothing.
It is reasonable to say that in these two years the Co-operative has made considerable achievements. It is equally true to say that there are many problems still confronting it. The managerial problem still has to be met, and the assistance from the GEC will be invaluable in this respect. From the discussions I have had with the Co-operative—I have been in the Department only a relatively short time, I know that its members are determined to stand on their own feet. While they welcome the advice from the GEC, they want to develop their own full managerial capacity. In addition, they will need to develop new products or to improve existing ones. These are challenges to the Co-operative.
The present proposals are intended to correct certain of the deficiences which the first two years of operation have highlighted. We believe that the link established with the GEC is a helpful support to the Co-operative in the next phase of its existence. We believe that the Co-operative experiment should continue. I hope that the House will share this view and support the motion.
10.16 p.m.
Mr. Kenneth Clarke: This motion is part of an interesting package deal whereby it seems that one of the country's leading capitalists, Sir Arnold Weinstock of GEC, is coming to the rescue of what was originally a Socialist-inspired workers' co-operative. The Government are asking for approval of further advances of £500,000, and NVT, which will receive that money, will use it to redeem preference shares held by the Government. But the important part of the package is that Sir Arnold Weinstock and GEC are injecting £1 million, plus other assistance, into the future running of the Co-operative. We hope

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that this intervention by GEC will begin to introduce some new realism into the Meriden Co-operative.
I am sure that everyone who has looked aver the first two years of what the Minister described as an experiment will realise that there is room for more realism in the running of the Co-operative. In order to guarantee its survival, it needs to produce a product with real market prospects at home and overseas. It needs so to conduct itself that it can produce a sensible return on capital.
Mrs. Audrey Wise rose—
Mr. Clarke: We have only an hour and a half for debate. The Co-operative also needs good standards of management and some design and marketing skills before it can make real progress. I hope that proper remuneration will be available for that management, as opposed to the present arrangement. We accept that there is a need for common sense in the running of the Co-operative and we hope that the new package will produce that.
Mr. Robinson: In case the hon. Gentleman is under any illusion that there is a lack of realism for management in those areas to which he referred, they were precisely excluded from the Co-operative because it did not have the right to do those things. There was no idea on the part of the Co-operative that management was not needed. Now we have the selling and design rights, we shall fill those management slots too.
Mr. Clarke: I shall be coming to the way in which it was set up with deficiencies in management. Perhaps when the hon. Gentleman catches your eye, Mr. Speaker, he will be able to satisfy the House on those points. What is needed for the future
Mrs. Wise rose—
Mr. Clarke: I cannot give way again, or we shall get nowhere in the debate and the hon. Lady will run the risk of not being called to speak. Let me go into the details of the matter before provoking the hon. Lady to intervene.
No one on this side of the House has anything at all in principle against the
1218
idea of worker co-operatives. Properly managed, they seem to me and to many of my right hon. Friends to be an attractive idea. We are principally in favour of them so long as the workers who own the industry raise capital on the market and aim to produce a proper return on the capital, so long as they can survive in a competitive market, and so long as they are subject to the same disciplines as anyone else running an industry. Most important of all, we are certainly in favour of worker co-operatives so long as they can be viable without continued support from public funds.
But we sometimes have some hostility towards what seems to be the instinctive approach of some of those within the Labour Party in favour of worker co-operatives in all circumstances. We hope that what is now being done to Meriden will bring an end to there being those in the Labour Party who seem prepared to demand the support of taxpayers' money for any organisation run on worker co-operative lines, even if it is uncompetitive and unsuccessful, so long as it is worker-owned. We must not drift into a situation in which every factory faced with closure for some unfortunate reason immediately resorts to appealing to the Government for public assistance for a worker co-operative way out of its difficulties.
However, we are basically in favour of worker co-operatives run on sound commercial lines. We also wish to make clear that we do not rejoice in the difficulties that the Meriden Co-operatives has undoubtedly got into. We realise what really lay behind the Co-operative. It was conceived by those who run it principally because of the great pride which those who were employed in the factory took in their craftsmanship and in the motor cycle that they produced, a fine piece of engineering in its time. Since they began the Co-operative enterprise they have achieved great increases in productivity. We realise that a great deal of blood, sweat, tears and sheer honest effort have gone into it.
Having spoken of the effort that has gone into the enterprise, I must add that no one can be made very happy by the fact that it has once more returned to the House for the approval of further public assistance in order to carry on. Given this further resort to the House, we

1219
can now see that there were certain important ways in which the whole idea of the Meriden Co-operative was misconceived as it was originally set up in the rescue deal by the Minister who is now Secretary of State for Energy.
The Co-operative was launched with public assistance on what was declared at the time to be a once-for-all basis—words uttered several times by Ministers then and to be found in, for instance, the annual report on the operation of the Industry Act for 1974–75, at page 13. Having been launched with substantial public assistance on that once-for-all basis, the Co-operative found itself in February of this year unable to pay its bills and trading debts, with 600 out of 700 of its employees laid off, and with a large quantity of unsold motor cycles stored by its salesmen or in the factory.
What we now need to do, given that the first rescue operation has not succeeded, is to take as constructive a view as we can, to ask what has gone wrong with the Socialist dream that first conceived the Co-operative, and to decide how some common sense can now rescue it, if it proves possible to find a serious market for its main product.
This is an appropriate time to look back over the Meriden operation. Looking back, we can see what was needed in the original deal that has proved to be wanting. First, it has become obvious that more management skills were needed. I am sure that the majority of hon. Members will agree that management in industry is a profession in itself, a craft, a skill. It has its own arts, and it is a serious lifetime career for the best. Meriden has proved that the enthusiasm of workers from other backgrounds in managing an organisation is no substitute for basic management skills.
GEC is about to provide those management skills. It is worth bearing in mind that that is not the first help from the private sector that the Co-operative has required for its management problems. It has already had help from a three-man senior management team from GKN, who were seconded to the Co-operative in 1976. The Co-operative began by losing £1 million in its first year of operation. It is now breaking even, largely because of the assistance of the team from GKN, who helped to turn a monthly loss of
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about £80,000 into a profit of about £3,000 a month by the end of the year.
Those management advisers had some wise words on their experience of trying to intervene in the Government's favourite child, the Meriden Co-operative, and what they found they had to deal with. I wish to quote from The Times of 25th January this year and to ask hon. Members to reflect on what was then said by a member of the GKN team who had worked inside the Co-operative.
He said:
"It is a great pity that the Government did not insist on proper management controls when it set up the co-operative. If this had been done at the start Meriden would have been in a competitive position today.
"It is still not too late to save Meriden but it is essential that professional management and experienced engineers should be introduced."
He went on to point out a particularly silly aspect of the original Meridan conception. He said:
"the big stumbling block remained the flat rate payment of £56 a week for all 700 employees. This would have to be changed to attract the right sort of recruits."
I think that members of the management coming in from GEC are unlikely to be employed on the flat-rate basis which was originally one of the great principles of the Meriden Co-operative. If we derive anything from this lesson we should remind ourselves that management is a much undervalued profession in British industry at the moment. Let us hope that from now the value of real management skills will be appreciated and will be paid for properly within the Meriden Co-operative.
What the original deal needed was a proper marketing operation. It had the arrangement with NVT to market the Triumph motor bicycle, which expires early this year, and which NVT is only too anxious to be relieved of. This arrangement was set up at a time when NVT had a large stage in the motor bicycle industry. The Minister referred to the great upsurge in Japanese competition, but we cannot help thinking that it was partly as a result of the Meriden deal itself that NVT has been driven out of motor bike production.
The factories at Wolverhampton and Smallheath, both producing a perfectly reasonable bicycle, have been closed partly because of the subsidised competition from Meriden. NVT was anxious

1221
to get out and now the Government are to pay £500,000 to NVT to buy out the marketing rights for Triumph motor bicycles. NVT has agreed to use that to redeem some of the Government's preference shares, and in that way it is only a book keeping operation. I think NVT is only too glad to get out by redeeming those preference shares and its former workers have a great deal to regret in the history of the whole Meriden operation.
But the main thing that Meriden needed, and still needs, is a product which has an assured place in the market place both in this country and overseas. Its principal product is the Triumph Bonneville motor bike. Although other products are being assembled they are very fringe activities and the future of Meriden depends on the Triumph Bonneville.
Anyone who knows something about motor bicycles will agree that this was a very good bike when conceived and was a considerable triumph in engineering, but it is of very out of date design. It now has a very small and declining specialist market. The BMW machine is preferred by the British police force and it is increasingly preferred by the market. I hope that no pressure will be put on any part of our domestic market to take that old fashioned bicycle in preference to overseas competition.
But the Meriden Co-operative has continued to turn out the Triumph Bonneville motor cycle and has failed to sell them in adequate quantities. There is no future for a worker co-operative, or any other industry, which makes a product in excess of the capacity which the market can absorb. I should like to ask the Minister how many of these bicycles are at the moment still unsold either in the hands of NVT or at the factory.
Mr. Robinson: Perhaps I can inform the hon. Gentleman.
Mr. Clarke: The hon. Gentleman wants to intervene in everyone's speech. He clearly takes a great pride in his part in the position of the Meriden Co-operative, but I would ask the hon. Gentleman to contain his information until he is lucky enough to catch the eye of the Chair.
The Triumph Bonneville remains unsold in large quantities, and it remained unsold at the time the Government
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stepped in in February. Can the Minister confirm that the present deal involves no new product development at all? To update the Bonneville significantly or to introduce a new product would cost millions of pounds of further investment. GEC's £1 million will only pay the bills of the Co-operative, even though it is euphemistically described as "working capital", and enable it to continue. Given that the present product has proved difficult to sell and has an uncertain and specialist market, is it the case that GEC will provide what at one time was thought to be part of the deal—some sub-contract engineering work and some other product which can usefully employ the skills of the Meriden Co-operative in some worthwhile and sure market?
If it is not, returning to these bicycles—the purchase and marketing of which I gather the GEC money will largely finance—will that marketing be assisted materially by the ECGD facility which is being handed on to the Meriden Co-operative? This seems to some of us to be a more significant part of the Government's part in this rescue than the £500,000 which we are asked to approve tonight.
A £6 million facility was given to NVT originally to finance export sales. My understanding is that about £2·5 million or £3 million of that remains unused. We should like to know how far that facility is approved of by the ECGD itself, and how far it will supervise the terms on which use is made of the facility. My understanding is that, when the ECGD was ordered to provide this facility to NVT, it was on the basis of the public interest and not on the advice of its own advisory board or its own commercial judgments.
On what basis will the future of what is left of this ECGD facility be used by the Meriden Co-operative? Will it continue to be provided, at the Government's insistence, in the public interest, not on the advice of the ECGD and not in any way whereby the Government are answerable to Parliament for that important facility being made available for the sale of motor cycles?
Having got on to the ECGD credit, I conclude by commenting on the stranger parts of the Government's part in financing this operation over and above this

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£500,000, which everyone realises is part of a package.
The Government were inclined to refuse Meriden's request for assistance when they were first approached early this year, and they must have had some basis for reaching a judgment that it was right to refuse the Co-operative's application. Certainly they waited for the crisis at Meriden to build up. It is true that no formal application for assistance was made until December, but everyone knew that the Co-operative was heading for deep financial crisis. That information was available to the Government last summer, but they took no steps.
The Government turned down flat the first application made for Industry Act assistance. In his statement on 10th January of this year, the Secretary of State made it clear that he had turned down the original application because he was concerned about the stocks of motor cycles with which the factory was filling up and which his hon. Friend the Member for Coventry, North-West (Mr. Robinson) is anxious to explain away. The right hon. Gentleman was also saying that the future of the company depended on its market position and long-term viability. After that, the Government waited until 600 of the 700 employees were laid off and the Co-operative was in serious difficulties in continuing to trade at all, and then we had the rescue, which was conceived by the Chancellor of the Duchy of Lancaster.
Why did the Government turn down the original application and then apparently change their minds? The deal was announced on 7th February of this year. Describing the position of the Co-operative, the Secretary of State said:
"On the production side the co-operative has made a promising start, but it has not yet been able to demonstrate its ability to create the necessary conditions for long-term viability without further support from public funds."—[Official Report, 7th February 1977; Vol. 925, c. 1057.]
How does that description square with the Government's own criteria for assistance to companies under the Industry Act, which were announced a few months ago? Will more assistance now be given to companies other than Meriden, which have not so far been able to demonstrate their ability to create the necessary long-term viability without help from
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public funds? If this is the Government's new recipe, it is a recipe for creating permanent pensioners of the State from companies that are not able to demonstrate financial viability and soundness.
Why have the Government changed their minds on this occasion? It is difficult for us to challenge the motion because there is limited State involvement—£500,000 will go to NVT, which will pay it back to the Government. The Government also are deferring payments of interest until 1978. This company has already had one year interest-free on its loan and these further five instalments are worth £1·05 million. The Minister says that he will keep the House informed about the scheme to repay more than £1 million of deferred interest. But no matter how that will be repaid, the fact is that it has been deferred until 1978. The Minister has at least assured us that the payments will be deferred, and not waived.
The Industrial Development Advisory Board has, on balance, come out in favour of the proposition, as long as the Government commitment is strictly limited. Perhaps some Member of the Government could underline the fact that the commitment is strictly limited. I have already recalled that the last time that Meriden got Government assistance it was on a once-for-all basis." Now this is a "strictly limited commitment". Perhaps someone could tell us whether we have at last reached the end of the road, and that in two years time we shall not have another "limited" application before the House for approval for public funds that are required essentially to enable the Co-operative to pay its bills.
We shall give the Co-operative one more chance because of the advice of the Industrial Development Advisory Board, and because GEC has put its money up. I would not advise my hon. Friends to be more capitalist than Sir Arnold Weinstock and GEC. However, we are deeply suspicious of deals that are conceived between Sir Arnold Weinstock and the Chancellor of the Duchy of Lancaster in the Chancellor's flat. That is how this whole rescue deal was conceived.
One may well ask what is in it for Sir Arnold and GEC. Why is he rushing in to rescue a Socialist co-operative that is so dear to the hearts of hon. Members below the Gangway? Maybe he sees a

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great future for the motor cycle industry, and a return on his capital from sales of the Triumph Bonneville motor cycle. If so, then good luck to Sir Arnold, this company and all who sail in it.
But maybe Sir Arnold has bigger irons in the fire with the Government. If ever a capitalist was in the know about trends in Whitehall, and had Ministers to breakfast, it is Sir Arnold Weinstock. He has interests in power plant manufacturing, and ordering, and in the future development of nuclear policy in this country. He has been criticised heavily by the Left Wing of the Labour Party for his company's distribution of capital to shareholders. It is unworthy to think that the El million is a down payment for other things in prospect, but it was very good public relations to go in when the Government were about to abandon the Meriden Co-operative, but Jack Jones said they could not do so. That was the stage when Sir Arnold Weinstock stepped in.
Given what has happened, we hope that the Co-operative will achieve commercial viability and make motor cycles that will sell in a market that is prepared to buy them at a proper price. We hope that the concern will make good without further recourse to public funds.
We do not underestimate the fact that 700 jobs are at stake at the Meriden Co-operative, and we appreciate the Government's concern. But we must remember that those jobs have not been saved by Socialism or by a Bennite rescue operation. We hope that the Co-operative, with good management and sound commercial advice, will prove that it can give better job security to its members from now on.
10.42 p.m.
Mr. Geoffrey Robinson: Since the Opposition do not intend to press this matter to a vote, I shall be brief.
I was slightly disappointed at the sour tone of the early remarks of the hon. Member for Rushcliffe (Mr. Clarke). However, he improved somewhat towards the end of his comments. I do not begrudge him his party political points, but he asked some nit-picking questions and offered some totally irrelevant criticisms,
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which no doubt arose more from the hon. Gentleman's inexperience that from any wish to hurt the venture.
The fact is that the motor cycles are selling well in North America, stock levels are well below what we anticipated, and the machines are selling at a profit. But that is not to say that our problems are solved. We still have many problems. But the tone of argument brought to this matter by the hon. Member for Rushcliffe in his opening remarks will do nothing but damage to the situation. It is precisely that divisive attitude, which goes so deep in many of our companies, that prevents them from realising their full potential. I shall deal no more with the hon. Gentleman's remarks, but I only hope that he does better next time.
I should have thought that the financial ingenuity of my right hon. Friend the Secretary of State for Industry and the involvement of the Chancellor of the Duchy of Lancaster was a matter for admiration by Conservative Members, particularly among those who have the interests of the financial community so much at heart and know so much about these matters. This transaction has been achieved at virtually no cost to the Government since it involves an alleged asset which some Opposition Members might seek to value.
I wish to pay tribute to the constructive work carried out by my hon. Friend the Minister of State, Department of Industry. This has been one of the most complicated negotiations I have ever seen. I shall not weary the House with the details, but I believe that it has involved Dennis Poore in negotiations involving eight companies in three different continents. The House will realise what a bonanza it has been for the legal profession. We are nearly at the end of the tunnel, and it has taken quite a while to get there.
I do not want to appear churlish about the Government, but I wish to voice one criticism. It relates to the appalling length of time taken by the Government to put through a fairly simple governmental operation. It is not a House of Commons problem, but a management and organisation problem within the Department. The fact that the matter took so long to agree is inexplicable and unjustified.

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The Co-operative and Mr. Dennis Poore, with whom I had protracted and complicated negotiations over a period of two and a half years, and who has shown complete integrity throughout, decided that it was not possible to continue with an artificial relationship that bore no resemblance to the original relationship that was envisaged when the Co-operative was set up.
I do not want to go over the past. That is water under the bridge. It is time to make a new start. It was because he and the Co-operative recognised and agreed that it was not possible going on with that relationship, that brinkmanship with the Government became inevitable and a crunch could not be avoided if we were to get the terms that would offer the basis of an ongoing operation. That is why he stopped taking bikes and why he stopped selling them. That is why the stocks built up at Meriden. That is why people have had to be laid off and why it has taken so long to do so over the past five weeks excruciating negotiations. They have stuck it with the same pride as they stuck the difficult periods that they have had to overcome in these most difficult negotiations.
Mr. Kenneth Clarke: If the Government's involvement was so trivial, if there was no commitment to public funds, and if the hon. Gentleman cannot understand why the Government delayed, why is it necessary for the Co-operative to have this motion and the extra half a million pounds of public funds? Why is it necessary to defer over £1 million pounds of interest to the end of next year? Why does the Co-operative need almost £3 million worth of export credit? I cannot understand that.
Mr. Robinson: All exporting companies need export credit and Meriden exports 90 per cent. Most exporting companies, or all of them, use ECGD. It is to be used on the same terms as the previous company used it. If only the hon. Gentleman would take the trouble to inform himself before he gets on his feet to ask questions to which he should know the answers, it would be so much better for the House. The hon. Gentleman does not like it when he gets the answers.
When the Co-operative was set up, the operation was mounted on the basis that we would have an ongoing viable motor
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cycle industry, including the factories of NVT. The reasons that that was not the case had nothing to do with me or my right hon. Friend the Minister of State, but they were fundamental to why we did what we did. That may have been wrong, but two wrongs do not make a right. Let us try to be constructive. That is by far the better approach. It is an approach that would become the hon. Member for Rushcliffe.
Mr. David Watkins: Does my hon. Friend agree that there were problems because of the limitations imposed by deficiencies in the Tory Industry Act 1972 and that the project was undercapitalised from the beginning?
Mr. Robinson: That was one reason, and there were many others, most of which were outside the control of the Co-operative. However, we put together a deal that gave us a sporting chance of making it through. We have the selling rights that we need above all. We have the waver on interest and the subordination of security, which in its turn gives us the overdraft facility which was negotiated and agreed with the Nat-West. We have also agreed with the Nat-West to take over on the same terms the ECGD as with previously applied. There is therefore the ECGD financing and we have the £1 million from the GEC.
The problem of Meriden was not a management problem. The problem was that we did not have what is known as the industrial property rights, which meant the trade marks. The franchises, the selling rights, even the special tooling rights were not ours. Such matters are at the heart of any business. If we do not have these things, we are not viable. That is where the crunch comes. That is when we decided to do a deal, which is a very good deal.
The GEC comes in on the management, which will be helpful, because we are now taking on two new, entirely separate and indispensable managerial aspects. One is the selling and the other is the engineering. Of course, GEC can help in both, but let us remember that there are a great many people who would still be interested in coming back into the motor cycle industry who have a great deal to contribute.
Long term it is clearly understood between the Co-operative and GEC and

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the people who are being spoken to now with a view to their coming in that the Co-operative must have its own management if it is to succeed. We cannot have advice without responsibility from outside. Advisers cannot say that they are not responsible because they are only advisers. No business can be run like that. It bears reflecting why the industry under its marvellous management talent—I am not referring to Mr. Dennis Poore, but long before his time—got itself into the mess that it did.
I believe that we have put together a good deal from the Co-operative's point of view. Does it deserve it? I think that the case is clear: a 50 per cent. increase in productivity; no strikes; full flexibility of labour; a growing maturity; a growing sense of responsibility; sensible and practical industrial democracy; and a recognition that it would always need the management skills that it would not get until it had the two vital areas denied to it so long as they were with NVT. I believe that the Co-operative more than deserves this deal.
I suggest that this deal will make many people very happy. It will certainly make very happy two old-age pensioners who sent Meriden their life savings of £364. That is the kind of feeling of loyalty that can be built into industrial relations in this country and from which we can gain and on which we can capitalise.
This is a constructive night, because the Government have shown that they are prepared to change course. They are prepared to change their mind. What is wrong with that? Every sensible businessman changes his mind at times. Why cannot the Government change their mind? They changed their mind over Chrysler and over Meriden. No doubt there will be other cases which deserve such treatment. I hope that my right hon. Friend will not flinch if he has to change his mind. There is nothing wrong with that. That is a situation that any sensible Government must face.
10.53 p.m.
Mr. Hal Miller: Overlooking the arrogance, exuberance and inaccurcy which no doubt took the hon. Member for Coventry, North-West (Mr. Robinson) out of Jaguar—some may say unfortunately—
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into this House, I should like to echo his plea that a constructive approach be adopted to the problems of the Meriden Co-operative. I pay tribute to the work done by the hon. Gentleman behind the scenes on behalf of the Co-operative. However, I cannot share his enthusiasm for this excessively cosy deal between Mr. Dennis Poore, GEC and the Co-operative, with the taxpayer apparently having no right of representation whatsoever.
I cannot agree with the hon. Gentleman that it is not a matter for the House of Commons how another £500,000 of the taxpayers' money is spent immediately and another £1 million of interest is deferred. Indeed, the hon. Gentleman is asking for the right for the Co-operative to change its mind, so there is no guarantee that this is the end of the matter.
The hon. Gentleman will realise, from my record, that I am deeply committed to trying to save not only the motor cycle industry, but the motor car industry of this country. Indeed, it was a Conservative Minister who first made the scheme of arrangement to try to do just that. Because Meriden would not go along with that scheme, the Government were driven to the three-factory solution and further injections of public money—not Government money—with the result forecast by myself and others that it would inevitably lead to the closure of one or more of the other factories still remaining in private hands. Unfortunately, that is what transpired.
To get back to a constructive approach, is the Minister telling the House that a grant of £5 million, plus some deferment of interest, plus some working capital from GEC, will be enough to produce a new engine?
I do not want to detain the House with many technicalities. However, it is common ground that the present machine is not adequate for development. We need not go into whether the engine should be vertical or flat. Again, I ask: is it enough money to assemble a design team? I have spoken with the former chief designer of motor bikes—who, so far, has not been tempted back into the service of the Co-operative. Is this enough for the design and production of a new model, let alone the problems of the sales facilities that are so absolutely necessary? Here

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I am at one with the hon. Member for Coventry, North-West.
The original deal was set up on a false basis, with NVT retaining the marketing rights and the rights to the name. The House should not have agreed to that. It reflects no credit on either the Government or the House that they fell for a deal that was solely in the interests of Mr. Poore and that he has now managed to come out of quite well—thanks to the recycling of this £500,000 grant. Is not the House entitled to a bit more information about how Mr. Poore exercised his stewardship in the selling of Meriden bikes and in purchasing and selling goods from the receiver of the Norton factory in Wolverhampton? The House would like more information about that before he is allowed to repay this Government asset.
We have not been given much information upon which to form a judgment. The Minister has made no attempt to make available—and I have checked the sources that are available outside the House and in the Vote Office and Library—the GKN Report on which the GEC interest was apparently aroused. Nor have we had anyinformation about the GEC involvement other than the sparce allusions that the Minister made tonight. It is not good enough. We are entitled to more information before being asked to underwrite this instalment on what remains a blank cheque.
We have had no indication that this will understand that this puts those of in the matter. I hope that the Minister will understand that this puts those of us who are trying to take a constructive attitude in a difficult position. We have to justify this not only to taxpayers but—in my case—to constituents who have been done out of their jobs in Small Heath and Wolverhampton by the rescue. What they want to know—and here I am trying to reach the root of Government policy—is where the drift of Government policy is in this matter. Is it just drift or is there indeed some plotted course that is being adhered to?
Without wishing to denigrate at all the virtues of the experiment of a workers' co-operative, do not let us pretend to ourselves that the people at Meriden are some sort of Latter-Day Saints. They are the people who deliberately sabotaged
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the first rescue scheme and who undermined the livelihoods of their fellow workers at Small Heath and Wolverhampton. The mere fact that there have been no industrial disputes since then reflects little credit on what went on before—when they made no attempt whatsoever to co-operate.
More recently there has been a change in the atmosphere and I pay tribute to that fact. On that I agree with the hon. Member for Coventry, North-West. But we have not been given enough information on which to base an assessment about how the experiment should proceed in the future. It is not enough just to give assurances that the mere addition of Lord Stokes to the team or the passing interest, by means of working capital, of Sir Arnold Weinstock will be a guarantee of success. These flutterings of well-known names is no substitute for hard information about the Government's policy and what is proposed.
Here I come to something that is at the root of present industrial problems. There is no confidence on the shop floor or among management in the Government's policy for industry. This is particularly true in the motor industry, but is it shared by the motor cycle industry. The Government have no clear policy for these great industries on the basis of taxation, road building, fuel policy, marketing policy or import strategy. No clear path is shown by the Government to those who work in these industries that will give them any confidence for the future.
I do not see how those involved with this enterprise can feel secure on the basis of a £500,000 grant, some extra working capital and assistance with managerial and other skills from Sir Arnold Weinstock. That is no basis on which to build and develop confidence, industrial skills and the capability that we need so badly. The Government should give us more assurances about where the future of the industry lies and what is Government policy.
Mr. Deputy Speaker (Mr. Oscar Murton): Order. The scope of the debate is fairly narrow. It affects all aspects of the affairs of the Co-operative, but it would not be in order to debate the motor cycle industry in general. I

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appreciate the hon. Gentleman's difficulties, but we must not go too wide.
Mr. Miller: I shall follow your guidance, Mr. Deputy Speaker. I was saying that I found it difficult to see how those in the Co-operative could have confidence in the future on the basis of the financial assistance so far made available and without any assurances for the future. The sums mentioned tonight cannot take the industry very far along the road that it would like to travel.
I should like to draw attention to some of the lessons that can be learned from the Co-operative and the conclusions that my constituents who have been working in the other factories should draw from the Co-operative and the finances made available to it. Is this putting a premium on the occupation of factories and the scuppering of Government plans that are funded by taxpayers' money? My constituents are confused. They ask why similar facilities were not made available to them. What have they done wrong that prevents similar assistance being given to enable them to retain their jobs and to build up their industry?
These people are proud of motor cycles and the Norton that they built was better than the Bonneville. The police would have ordered the Norton machine if it had not been sabotaged by the continuance of the Co-operative and the collapse of Norton. That was why they had to buy BMW machines.
Serious questions have been left unanswered about the future of this enterprise and this industry. The Government owes the House more information and the industry a better basis for confidence in the future.
11.3 p.m.
Mrs. Audrey Wise: In view of the churlish and sneering speeches by hon. Members opposite, it is astonishing to learn that they do not intend to vote against the motion. It is clear that at least those who are in the Chamber would dearly love to do so if they dared.
They are fond of telling us about the sins of workers, but this is an enterprise in which the workers have shown great devotion to their factory and a determination to keep it open and in which there has been industrial peace.
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There has been this unprecedented enthusiasm, but all we get from hon. Members opposite are baseless and disgusting accusations of sabotage directed against these workers. The hon. Members for Rushcliffe (Mr. Clarke) and Bromsgrove and Redditch (Mr. Miller) should be ashamed of themselves.
Mr. David Watkins: It is their class hatred and bitterness coming out.
Mrs. Wise: My hon. Friend is right. That is just what it is. Hon. Members opposite have accused us of having "an instinctive prejudice in favour of worker co-operatives." Yes, I think that many of us have an instinctive prejudice in favour of workers' co-operatives, and I for one am proud of it. What we are expressing is a determination that the workers should have as much control as possible over their own working lives. That is what workers' co-operatives are about.
Let there be no misunderstanding that the failure of the motor cycle industry was a failure of private enterprise, no more and no less. It was not the failure of the workers in the industry. They were not responsible for the management, nor the design nor for the marketing. It was a private enterprise, and it went bust, and many of our constituents were expected to go bust with it. But they refused. So I am pleased that, despite the length of the negotiations in this case—which I regret—in the end correct decisions have been taken and this Co-operative will stay in being.
It is necessary that the Labour Government should make this gesture. I call it a gesture advisedly because the amount of money involved in the whole of this enterprise is chicken feed compared with the amounts of money being daily disbursed to private industry, without the say-so of this House and with far less justification than is the case with Meriden.
Hon. Members opposite have talked of bad management. Yet here we have a factory which was being closed but which is now producing motor cycles successfully. We are told about bad management. We are told that GEC's intervention will mean production of a product that will sell. I wish that GEC was doing that very thing with its own enterprise in my city of Coventry, because there are

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many workers at GEC in Coventry who would be pleased if GEC was doing something to produce there a product with an assured place in the market. I suggest that GEC should use some of its management skills to protect the jobs of GEC workers in Coventry and elsewhere.
Mr. Deputy Speaker: Order. Perhaps the hon. Lady did not hear what I said earlier. We must relate this debate to the affairs of the Meriden Co-operative.
Mrs. Wise: Yes, Mr. Deputy Speaker. Before you were in the Chair, the hon. Member for Rushcliffe dwelt at length on the benefits that would accrue to the Co-operative, which, he said, is being kept alive by means of the injection or what he called "GEC realism". I am following in that exposition.
Despite the sneers of the Opposition, the Government are doing the minimum which it would be proper for a Labour Government to do in their reaction to the worker Co-operative. I believe that working people throughout the country would have been horrified had there been anything less, and that, conversely, they will be pleased by the motion tonight.
We heard from the hon. Member for Rushcliffe an interesting exposition of capitalist ethics. He said specifically, without being called to order, that he wondered "what was in it for GEC". In his exposition of capitalist ethics, he said that it was unworthy to think that this contribution by GEC was merely a down payment but that it was "very good public relations." I hope that my constituents will be watching his opinion of what makes capitalists operate in this kind of economy. He is saying that GEC is not interested in maintaining work but is trying to smooth its own path in its other relationships with the Government. I have not said that—the hon. Gentleman has.
I hope that the hon. Member is wrong. I hope that the facility that GEC is to give to Meriden comes from respect for the achievements of the Meriden Co-operative. Whether it does or not, I have no doubt that the Labour movement and the working people in general would have been disheartened in the extreme had Meriden been allowed to collapse, because it does not deserve to collapse. It has succeeded, and it needs relatively
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little assistance. I am pleased that the Government have decided to be forthcoming with that assistance.
11.11 p.m.
Mr. Michael Marshall: Those hon. Members, such as my hon. Friend the Member for Rushcliffe (Mr. Clarke), who would like to support workers co-operatives particularly when they show that they are able to go out to the capital market—as we hope Meriden will do—are faced with the problem of reconciling our good wishes with immodest speeches such as that made by the hon. Member for Coventry, South-West (Mrs. Wise). Such speeches make it difficult for those hon. Members who wish to give the Government some support.
Other hon. Members wish to take part in the debate so I shall be brief. I regret that the principle at stake is caught up with the emotionalism about co-operatives. Once more, late at night, the Government are trying to get through public expenditure on the nod in a disgraceful manner.
The Minister of State is the most mellifluous person who could have been chosen to open the debate. When he was doing his "foot in the door" bit today he was taking part in a confused piece of salesmanship. He brought forward a shoddy prospectus for what my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) described as a blank cheque. We have no repayment schedule and we know nothing about how interest payments are to be found. We have another grant making the total grant £1 ¼ million.
At least two questions must be answered before the end of the debate. What does managerial help mean? Does it mean that managers are to be seconded from GEC or are a specific number of people to be trained by GEC? The Minister also talked about GEC's contribution to new and improved products. Launching new products is an expensive operation and, in contrast with the engine problems, this could be an expensive business. Is GEC to share the research and development costs? Exactly what is the commitment of GEC?
Those of us who wish to see this opportunity taken up are persuaded that because GEC is willing to back it there is more

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hope than we originally believed. But the attack on GEC by the hon. Member for Coventry, South-West will not help the enterprise to go forward to success.
Because of the GEC commitment and the reconfirmation by management, some of us may be persuaded to support the Government, despite the hon. Member and her hon. Friends below the Gangway.
11.15 p.m.
Mr. Anthony Nelson: I shall intervene briefly and I shall not follow in the technological discussions. I should welcome the Minister's comments on a particular matter about which I am concerned. Some hon. Members who are members of the Select Committee on Science and Technology recently had the pleasure of visiting the Honda works in Japan. We were immensely impressed by two matters—first, the degree of production automation and second, the degree of quality control instituted in the factories.
I recognise that the Meriden Co-operative will not necessarily be producing a mass-production motor cycle that will be competing in the same markets and that it has tried to get into a more specialised sphere. Nevertheless, even with the higher quality vehicle or bike, a high degree of automation, as many might suggest, will be increasingly vital in the future if the industry is to hold its own and compete against resurgent competitive industries in countries such as Japan.
This is a matter on which we can reasonably seek, in a debate such as this, some comments and reassurances, as we would like to feel that both the question of automated production lines and the question of quality control will be looked at very carefully, and that the proper means of instituting both will be followed up by the provision of this further money.
11.16 p.m.
Mr. Richard Page: In view of the time, I shall be very brief. I should like to make one point and to put one question. Before doing so I should declare a degree of personal interest.
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Apart from my training as an apprentice on the shop floor of a vehicle manufacturer, I was, before my recent incarnation as Member of Parliament for Workington last year, slightly involved through my company in the retail aspect of motor cycles. To my horror, when I went into that side—discussing the point that has just been made—I found that it was completely dominated by Japanese machines. I endeavoured to introduce British machines—to be told by distributors that, first, they were like hens' teeth, and second, that they did not sell when one got them. Despite that, and despite not selling on the home market, I welcome the increased production figures that were mentioned earlier.
In his statement on 7th February, the Secretary of State mentioned the three points of success, which were marketing, design and product. In common with everyone present, I hope that we welcome the package that has been put together on marketing.
However, my point—it has also been made by my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller)—is that unless we have a correct design programme, that is particularly in respect to the smaller machine, this brave experiment will ultimately fail. It is no good talking, as we are at present, about cobbling together a very small machine from foreign products, or enthusing over selling rowing machines or health machines or whatever. We are wasting our time on that, and it will ultimately fail if we continue on this line, no matter how much money is put in. I hope that when the Minister winds up the debate something will come out about this.
Is any money being spent on new designs? Is there any launching date for new machines? I want to see British machines conquering this country. I do not want to see us swamped by Japanese machines—motor cycles, cameras, cars or anything else.
My other question follows up the remarks of my hon. Friend the Member for Rushcliffe (Mr. Clarke) on the ECGD loan of £6 million. I should like to know whether it was based on a commercial decision on the books or whether it was a political decision. I believe that this is a disproportionately huge sum. Those who made the decision do not appear to

1239
be accountable to Parliament, and at present it appears to be an indirect unaccountable method of pump-priming the hoped for increase in motor cycle sales in North America, which, if that is so, will make a nonsense of any Government statements about limits of financial support.
Mr. Hal Miller: Will my hon. Friend recollect that these ECGD facilities were originally refused to NVT to compel NVT to agree to the Government's scheme?
Mr. Page: My hon. Friend makes the point very well. I hope that we shall be having some explanation. That has been asked for in the past.
I come to the point about future design and model production, apart from the ECGD question. I hope that the results will be encouraging. I do not want to see this brave experiment fail, particularly after the tremendous individual efforts and sacrifices of the members of the Co-operative. They deserve to succeed. I shall support the measure tonight, despite the activities in my hon. Friend's constituency. But unless there is an ongoing Government product policy, new design and increased production, particularly in the 100 cc to 250 cc range, this Co-operative will ultimately fail, and its death throes will be drawn out by taxpayers' money. If there are no new products this measure will be a waste of money and those involved, apart from those working in the Co-operative, will have to bear the responsibility of raising and prolonging false hopes for the workers and squandering taxpayers' money.
11.20 p.m.
Mr. Alan Williams: I am sorry that the support of Conservative Members tonight has been given so reluctantly. I am sure that the truculance of some of their speeches will be noted by the workers in the Meriden Co-operative and those in the area. The Opposition could have been more generous in their welcome. However, that is for them.
The hon. Member for Rushcliffe (Mr. Clarke) said that this situation represented the involvement of one of our leading capitalists--GEC—with a Socialist co-operative. So what? This is an industrial experiment. If the co-operative feels that
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a relationship with a private firm can be of benefit, all strength to it. I am in favour of the Co-operative trying such a venture. I should have thought that the House could welcome that, without looking for any sinister motive.
The hon. Member was skirting around a veiled innuendo, and did not do himself much credit. Having heard him speak before, I found his speech tonight below his usual standard. Because of his implication, let me make it absolutely clear—there is no quid pro quo, there has never been any question of a quid pro quo and I would never agree to a quid pro quo to GEC for this operation.
Mr. Kenneth Clarke: All I said was that it was interesting that Sir Arnold Weinstock was prepared to put up £1 million after the Labour Government had decided to turn down a similar application because they were not satisfied about the viability and future marketing prospects of the company. That aroused the interest of those who observed the negotiations.
Mr. Williams: I am surprised that the hon. Gentleman finds this a matter for satirical comment. It was reasonable to establish, as we did, that, in the arrangements implicit in the original proposal, we were not convinced that the Co-operative would be able to carry out its own marketing effectively. The relationship with GEC has made a major difference to our assessment and, I suggest, probably to the IDAB's assessment of the possibility of the Co-operative now being able to carry out a world-wide marketing operation. Conservative Members pride themselves on their knowledge of business. They must know that it is not simple to go for the first time into world-wide marketing, with stocks and on-going production, and be able to sell.
I see some of them nodding agreement. For us, therefore, the involvement of GEC and Lord Stokes tilted the balance—I am sure that the same applies to IDAB—in making us feel that this marketing proposition has a reasonable chance of success and that the Co-operative should be given this opportunity.
The hon. Member for Rushcliffe also asked how many bicycles were unsold. Offhand, I would not regard that as appropriate information to give, as it is internal information of the Co-operative. The

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motor cycle market is a seasonal one, particularly in the United States. This is only the first selling month of the year there. It would therefore be normal practice to build up stocks during the winter period.
Mr. Kenneth Clarke: Oh.
Mr. Williams: The hon. Gentleman draws in his breath in a quizzical way. If one does not carry on with a steady production level, it means hiring and firing. In this sort of industry, therefore, stocks build up over the non-selling period and are then disposed of over the selling period. The Co-operative could further legitimately defend itself by saying that when the stocks were being built up, it was not doing its own marketing—NVT was—and the purpose of this operation is to enable it to do its own marketing.
The hon. Gentleman also asked about the ECGD facility. All we have done is to transfer the facility. It is implicit in the fact that it is a seasonal industry and therefore will build up stocks that it will need an ECGD facility to hold stocks in the overseas markets. That is perfectly normal. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) assures me that the stocks are now running down. I must take his advice on this. Certainly, the ECGD facility is subject to the same rules as it was previously, the normal rules of its operation. There is nothing different in that.
The hon. Members for Rushcliffe and Bromsgrove and Redditch (Mr. Miller) asked about the development of a new engine and a new product. There is no finance in this proposal for new product development. That was not part of the proposition, because the Co-operative is still considering a range of possibilities, and producing a new product is one possibility. It may decide to establish a relationship with another firm in another country. That is entirely for it to decide. It was not part of the existing proposal.
The hon. Member for Arundel (Mr. Marshall) may have misunderstood what I said about the GEC technical involvement. That is to help deal with certain design factors in the current model. It is not that GEC will take on responsibility for designing a completely new model. That has never been part of the
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deal, and I would not want the House to feel that I had left that as a suggestion.
The hon. Member for Bromsgrove and Redditch asked about the GKN report. Hon. Members are fully conscious of the need to avoid publishing documents which contain confidential information. There is always a difficult balance of decision as to where it is worth publishing documents and where it is not. We are considering whether to publish the latest of the Boston Group investigations, because certain hon. Members have asked for publication. The consultants' investigations would involve so much detailed internal information that it would have been inappropriate for us to publish that document, but where we can be helpful we hope to be so.
My hon. Friend the Member for Coventry, South-West (Mrs. Wise) made the point that the industry's failure was a failure of private enterprise. It is worth repeating that we are in this predicament because there were years and years of inadequate investment and inadequate product development when the industry was in private hands. Whatever the hon. Member for Bromsgrove and Redditch says—and I fully appreciate the vigour with which he defends his constituents—if he wants to lay blame at anybody's door for the collapse of the operations in his constituency he should look at those who owned the business and let it run into the sands.
Mr. Hal Miller rose—
Mr. Williams: I have only two minutes left.
Mr. Williams: The hon. Member for Bromsgrove and Redditch then said, to murmurs of assent from his Front Bench, that there was no confidence in the Government in managing this country.
Mr. Robert Rhodes James: Or on the shop floor.
Mr. Williams: Tomorrow we are to have a vote of confidence. It is intriguing that yesterday there was another vote of confidence—on the floor of the Stock Exchange, where business voted £1,000 million of no confidence in the Leader of the Opposition as a potential Prime Minister.
Mr. Michael Marshall rose—
Mr. Williams: The hon. Gentleman cannot take attack.
Mr. Marshall: On a point of order, Mr. Deputy Speaker. Is it in order for the Minister of State to discuss fluctuations on the Stock Exchange in connection with this motion?
Mr. Deputy Speaker: I think that the Minister of State would be the first to admit that that matter has nothing to do specifically with Meriden.
Mr. Williams: I would be the first to admit it, Mr. Deputy Speaker, but I am very glad that I said it.
We have seen this evening a fraudulent attempt at support from Conservative Members. Many of them are afraid to be seen in the Midlands expressing the views they really—
It being one and a half hours after the commencement of the proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
Question agreed to.
Resolved,
That this House authorises the Secretary of State to pay or undertake to pay by way of financial assistance under section 8 of the Industry Act 1972, as amended by the Industry Act 1975 and the Industry (Amendment) Act 1976, sums to Meriden Motor Cycles Ltd, in connection with its business, being sums which, when aggregated with the f4-95 million previously paid by the Secretary of State under that section in respect of that business, exceed £5 million but do not exceed £5·45 million.

TANYA PRICE (WHOOPING COUGH VACCINATION)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Stoddart.]
11.30 p.m.
Mr. Robert Adley: Tanya Price is now two years old. At six months she had a whooping cough vaccination and shortly thereafter she developed convulsions. She is now a motionless and expressionless being.
I make no apology whatever for raising her case specifically again tonight and the general case of children who are suffering from the side effects of the whooping cough vaccination. We are fight-
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ing a war of attrition. I am fighting a war of attrition on behalf of Tanya, and many hon. Members on both sides of the House are fighting a war of attrition against the Government for justice for these children.
It is not surprising that the debates that we have had on this issue in the last few weeks have tended to get a little heated. I shall do my best to lower the temperature tonight because I am sure the Minister will agree that we shall not get anywhere if we start shouting at each other across the Chamber.
This fight has been going on for a long time. Certainly in the last four years a group of parents have sought to get what they see as justice for their children but they have had precious little satisfaction. The battle is in many ways a repetition of the thalidomide debate in which my hon. Friend the Member for Wirral (Mr. Hunt), whom I am glad to see present, played a significant part. The patience of these parents has so far not been rewarded.
The result is decaying confidence in all the immunisation programmes. It represents a flirtation with tragedy, particularly when most of the other vaccines appear to be safe, harmless and have litte or no disadvantageous side effects. But the position adopted by the Secretary of State in his refusal to consider compensation, and until very recently, his refusal or at least unwillingness even to discuss the problem openly and publicly, reminds me of the position of the general of an ill-equipped army whose troops are unable to defend themselves and who seeks to run away from his responsibility by blaming his critics, rather than getting new weapons. What I want to see is the Secretary of State getting new weapons in this battle of vaccination so that once again the parents of Britain can obtain confidence in the vaccination programme. Awarding compensation would be one weapon.
Fighting Tanya's battle has meant fighting the NHS. It is rather like sparring with at giant octopus. But David beat Goliath and I certainly do not intend to stop fighting on Tanya's behalf and many hon. Member's on both sides of the House do not intend to stop fighting until we have obtained what we believe to be justice for these children.
In Tanya's case the wheels of the administrative machine grind mighty slow.

1245
The Secretary of State told me on 4th February last that he had agreed to my request to overrule the refusal of the Dorset Family Practitioner Committee to investigate the circumstances surrounding Tanya's vaccination and the events subsequent to it. But I received a letter dated 18th March, only a few days ago, from the solicitor acting for the Price's and he says
"As yet I have not been told when the hearing is due to take place".
I do not know whether the Minister can tell me why. The only reason I have been able to adduce is the difficulty of identifying the locums who examined Tanya after she had her vaccination! When one realises that on 22nd December last—col. 234 of Hansard—it was stated that the administrative costs of running the National Health Service amounted to £172,566,000, that seems to be a wholly inadequate excuse for not getting the hearings under way.
The case that we are discussing is not yet sub judice, although Tanya has now been granted unrestricted legal aid to fight not only the doctor who vaccinated her but the DHSS and the drug companies. The battle that those of us who are concerned are fighting is not just a battle based on the question whether or not only wholly fit children are being vaccinated; one of the great problems is: how many children who are vaccinated may, at the time of vaccination, be suffering from a minor medical impediment which the vaccination then magnifies? Quoting the British Medical Journal on 31st August 1974,
"They include children with existing disorders of the central nervous system, a history of convulsions, or a family history of convulsions."
It is because of the dangers to children in these categories that the availability of their medical records is essential not only to their parents but to people who may be called upon to vaccinate these children. It is essential that we do everything that we can to determine both the family's medical history and the current history of every child before he or she is vaccinated.
When I started probing into Tanya's case, at every turn I was told why her subsequent brain damage had not been caused by vaccination. I resent the use
1246
of the phrase "coincidental illness", which the Minister of State used to me in a letter to me of 21st February of this year, when he said:
"It is often difficult to determine whether such reactions are attributable to vaccination or to a coincidental illness."
The fact is that Dr. Rogers, who finally was able to examine Tanya Price's medical records, after I obtained help from the Minister and advice from my hon. Friend the Member for Wirral; said, in describing the situation between the routine examinations that Tanya had before her vaccination and afterwards, that Tanya was not pushed out of a window and did not fall under a bus. The only significant medical event in her life in these few weeks was that she had the whooping-cough vaccine.
It was because of this that I wrote in Clause 5 of my Whooping-Cough (Vaccination) Bill a brief provision which reads:
"In any action for the recovery of damages under this Act, injury or damage incurred by a child within 14 days of the administration of whooping-cough vaccine shall be deemed to have been caused thereby unless proved to the contrary."
Who should get the benefit of the doubt, the National Health Service; or the parent, and the children themselves? I think that in a humane society the benefit of the doubt must be granted to the child and the parents.
Is the Minister satisfied with the standard of the pre-vaccination checking procedures being carried out under the National Health Service at the moment? I asked the Secretary of State recently
"if he is satisfied that the standard procedures followed by doctors and clinical staff in ascertaining the medical history of children prior to their being vaccinated against whooping-cough, is fully adequate to prevent vaccinations being administered to children with medical histories, or from families with medical histories that might be deduced, in the light of current medical knowledge, to be susceptible to harmful side-effects from the vaccination."
The Minister of State replied:
"This is a clinical matter for the medical and nursing professions."
1 realise that, but when I further asked the Secretary of State
"what proportion of children vaccinated against whooping-cough were vaccinated (a) by their own general practitioner in his or her surgery, (b) by their own general practitioner

1247
at a health clinic, or (c) by someone other than their own general practitioner for each of the last five years."
I was told:
"The information requested is not available from information collected centrally."—[Official Report, 22nd March 1977; Vol. 928, c. 489–90.]
This means that medical staff may be vaccinating children in clinics without full knowledge of the medical history of the children themselves, or of the family.
In the few minutes left to me, I want to turn the spotlight on the manufacturers who, until now, seem to have escaped. We know that the manufacturers are Duncan Flockhart and Company Limited, Evans Biological Limited, Glaxo Laboratories (NZ) Limited, the Lister Institute and Wellcome Research. Is it just coincidence that, in the only three cases so far where legal action has been taken or is being considered, the manufacturer concerned has been the Lister Institute?
I should like to inform the Minister that I had a recent meeting with the Association of Trial Lawyers of America, whose President, Mr. Robert Begam, has put his association's facilities completely at my disposal in fighting this battle. He believes that, if it can be shown that any of the manufacturers supplying the National Health Service has any financial connections with American companies, it would be possible to consider taking action against them in United States courts. The Secretary of State informed me that the Wellcome Foundation had four subsidiaries in the United States. I passed on this information to Mr. Begam, whose colleague, Mr. Tom Bendorf, the director of national affairs of ATLA,
"will, through our resources in Washington, explore the United States connection' of the Wellcome Foundation Limited."
I welcome that very much. Mr. Begam goes on:
"I am convinced that on this issue you and your colleagues are right and I am still naïve enough to believe that being right on an issue is an advantage."
I believe that, too.
It is appropriate for me to finish with the words of the late Martin Luther King in that I know that in due course "we shall overcome". We shall obtain justice. I shall obtain justice for Tanya,
1248
and we shall obtain justice for all these children.
11.42 p.m.
Mr. David Hunt: I congratulate my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) on having so vigorously pursued the case of Tanya Price which raises so many emotional and serious problems. His perseverance has been a major contributory factor in securing the partial success so far achieved. But I ask the Minister whether the case, the availability of medical records and the general problems involved do not raise a much wider question.
In the cases involving thalidomide children, there was recourse to legal action at first. But eventually, mainly through public pressure and revelations in The Sunday Times, a fund was set up by the Distillers which is now working extremely well. I am involved in a professional capacity for one of the thalidomide children.
Have not we there an example which we could follow? The Secretary of State agreed on 8th March that there were hazards involved in the vaccination. That was accepted. But he said that the hazards of the disease itself far outweighed the hazards of the vaccination. But, in acknowledging the existence of hazards, was not the right hon. Gentleman really saying there must be some responsibility for compensation?
I know that the Pearson Committee is considering this, and I hope that the part of its report which deals with this aspect will be expedited and made retrospective. But, irrespective of that, this agonising episode and the agonising cases of all the other children who are in some way affected would be dispelled by the Government acknowledging their responsibility and, like Distillers, setting up some method by which compensation could be paid to these unfortunate children. If such a fund were set up, it would help to alleviate much of the public unrest about these cases in general. Distillers set an example, albeit under pressure. Cannot the Government follow that example and take a much more constructive approach?
11.45 p.m.
The Under-Secretary of State for Health and Social Security (Mr. Alfred Morris): This is the second occasion on

1249
which this very unfortunate and tragic case has been debated in the House, and I welcome the opportunity now of trying again to be of some help.
In this regard I note the statement of the hon. Member for Christchurch and Lymington (Mr. Adley) early in his speech that he wants not confrontation but constructive exchanges in further service of Tanya and her parents who are his constituents. They could hardly have had their case put with more persistence and consistency.
Before summarising the latest developments, I must first make it clear that it would not be proper for me to comment in any way on the merits of the case for reasons that I shall explain later. Moreover, I understand from Press reports that Mr. and Mrs. Price have now either taken or are contemplating litigation against, among others, the Department of Health and Social Security.
I refer to a report in the Daily Mail of 18th March. It said:
"The parents of Tanya Price, the two-year old girl who suffered severe brain damage after a whooping cough vaccination, have been granted full legal aid to sue the Government for compensation. Writs are to be issued before the High Court in the next few days, citing three defendants—the family doctor who vaccinated the child, the Department of Health and one of the country's three vaccine manufacturers, the Lister Institute of Preventive Medicine."
Nevertheless, I can make some more general points about the principles governing the disclosure of medical records. I explained to the House on 20th December last that the Dorset Area Health Authority was urgently pursuing the possibility of disclosing Tanya's hospital and clinic records to a medical adviser nominated by Tanya's parents. This was in keeping with a suggestion that I made to the hon. Member when I met him to discuss Tanya's case on 11th November, 1976. The hon. Member kindly referred to that occasion, and recalled that his hon. Friend the Member for Wirral (Mr. Hunt) had joined us in a very important discussion of the case.
I am pleased to be able to say that the hospital and clinic records were made available on 6th January to Dr. Rogers, who was nominated by Mr. and Mrs. Price to provide them with an independ-
1250
ent medical opinion. I understand that Dr. Rogers subsequently reported to Mr. and Mrs. Price verbally. As the hon. Member will confirm, it was at my suggestion that he put to Mr. and Mrs. Price the possibility of having Tanya's medical records made available to an independent medical adviser nominated by them.
I turn now to those aspects of the case involving the general practitioners concerned. Through their solicitors, Mr. and Mrs. Price lodged a formal complaint with the Dorset Family Practitioner Committee last December. They alleged that, irrespective of whether Tanya's brain damage actually had been caused by the vaccination, not enough care was taken in deciding, first, whether the vaccination should have been administered, secondly, what the content of the vaccination should have been, and thirdly, treatment for the consequences as soon as they occurred.
The procedure for investigating complaints against general medical practitioners is, of course, governed by regulations made under the National Health Service Acts. These regulations prescribe that a complaint must normally be lodged within eight weeks of the event giving rise to it. If, however, the Family Practitioner Committee's medical service committee decides that the delay in lodging the complaint was due to illness or other reasonable cause, they may seek the consent of the doctor or, failing him, of the Secretary of State, to an investigation of the complaint.
In Mr. and Mrs. Price's case, the events complained of took place in August, 1975. But their formal complaint was not lodged until fifteen months later. At their meeting on 15th December last, the medical service committee of the Dorset Family Practitioner Committee decided that the reasons given for the delay, basically that Mr. and Mrs. Price were ignorant of the complaints procedure, did not constitute reasonable cause and that consent for an investigation of the complaint should not, therefore, be sought.
The regulations provide a right of appeal to the Secretary of State against a decision of a medical service committee not to seek consent to an investigation of an "out-of-time" complaint. Mr. and Mrs. Price exercised this right, and an appeal was received from their solicitors

1251
on 29th December last. As the regulations require, my Department then sought the comments of Dr. Gweneth Brown, who was the doctor who administered Tanya's vaccination. My right hon. Friend the Secretary of State then considered the matter in the light of the original statement of appeal and of Dr. Gweneth Brown's comments. He concluded that, in all the circumstances of the case, he should allow the appeal and direct the medical service committee to investigate the complaint. His decision was conveyed to Dr. Gweneth Brown, Mr. and Mrs. Price's solicitors, and the Family Practitioner Committee in a letter dated 4th February.
This did not, however, conclude that aspect of the case. After the decision of the Secretary of State had been given, my Department realised that Tanya was on the list of another doctor in the same partnership for whom Dr. Gweneth Brown was, in her treatment of Tanya, acting as a deputy. My Department was advised by the Family Practitioner Committee that a locum mentioned in the original complaint, though unidentified, was on the list of the Family Practitioner Committee. In the circumstances, the regulations provide that the complaint against Dr. Gweneth Brown is to be deemed to have been made against the principal and through him the locum if in fact the locum is on the Family Practitioner Committee medical list. But neither of the doctors had been given the opportunity, to which the regulations entitle them, of making representations against the "out-of-time" appeal.
My Department must, therefore, try to establish the identity of the locum and then invite the additional respondent doctor or doctors, as the case may require, to comment on the out-of-time aspects of the case. Once this has been done, the Secretary of State will decide whether he should direct the Medical Service Committee to investigate the complaint in so far as it relates to either or both of those doctors.
Mr. Adley: I know that the Minister is doing his best when reading a prepared brief, but does he not realise that my constituent had to draw an Identikit picture to try to find this locum? We are surely talking of only a handful of people. It should not take seven weeks to
1252
complete that agonising process. Cannot we administer a quiet or even a noisy kick up the backside to get the process moving?
Mr. Morris: My right hon. Friend wanted to do his best to assist in terms of the appeal. His concern was reflected in the action he took after the discussion I had with the hon. Gentleman. I have carefully noted what the hon. Gentleman said in his opening speech. If there is anything I can do to facilitate matters, I shall be delighted to do so. He can be assured that we shall move with the maximum possible expedition.
These are matters that bring out the complexity of the case. I am sure that with all his experience of thalidomide cases the hon. Member for Wirral will agree that there is scarcely one of them that is not a complex matter when subjected to detailed study. The hon. Memmer for Christchurch and Lymington has made his point very strongly. I shall do whatever I can to help to ensure that there is progress at the earliest possible date.
Mr. Adley: Does the Minister realise that those concerned are cocking a snook at him and his right hon. Friend by refusing to get moving?
Mr. Morris: I note what the hon. Gentleman says. He can be well assured that every point he has made in the debate will be carefully considered.
After the medical service committee has investigated the complaint, it will report its findings to the Dorset Family Practitioner Committee, which will then decide whether the doctor or doctors concerned have complied with their terms of service. The party to whom the Family Practitioner Committee's decision is adverse will have a further right of appeal to the Secretary of State against that decision. For this reason, reverting to the point I made at the beginning of my speech, it would be quite wrong for me to pass any comment at this stage on the merits of the case.
I shall come to the question of the availability of medical records in medical service committee proceedings in a moment. Before doing so, I should like to deal with one or two general matters relating to the Department's policy about disclosure from medical records. I have

1253
already give the House a considerable amount of information about this in the speech I made in the debate on 20th December.
There is, first, the question of the ownership of medical records and the powers of the Secretary of State in relation to them. This was raised by the hon. Member for Derbyshire South-East (Mr. Rost) in the debate last December. The question involves both the law and the policy and practice of my Department.
It is the view of my Department's legal advisers, which I accept, that medical records produced in the course of the provision of medical services in the National Health Service belong to the Secretary of State. Any copyright in the material entered on these records created by the officers of the Secretary of State, being created arising out of and in the course of their employment, belongs to the employing authority. It follows that the Secretary of State could direct that records be produced to such person or persons as he deemed appropriate.
That is the legal position. It is, however, the long established policy and practice of the Department, which has been upheld by successive Administrations since the inception of the National Health Service, that questions of disclosure from medical records are a matter for the doctor responsible at the time for the patient's treatment and are part and parcel of the exercise of his clinical judgment. It is a judgment which he can be expected to exercise responsibly, and I believe does, in accordance with his professional ethic and in the best interests of the patient. It would be a sad day for the medical profession, for the National
1254
Health Service and, I believe, for patients, if any Minister sought to intervene for whatever reason, in the exercise of that judgment. This is certainly not a precedent which I would care to see established.
It is for these reasons that questions of legal ownership do not figure largely in my Department's policy on confidentiality of, and disclosure from, medical records. This is a matter for the good sense and sound judgment of the responsible clinician.
In his speech last December, the hon. Member for Christchurch and Lymington referred to the recourse which may be had to the courts for the production of documents. I should like to deal briefly with this and also with the production of documents in connection with the proceedings of Medical Service Committees.
As I have said before, when litigation is in process or contemplated, the patient or his representative may wish to see more of the medical records than the doctor concerned has judged it appropriate to disclose. The doctor will, if so requested, usually be prepared voluntarily to make the contents of the records available to a medical adviser nominated by the patient or his representative, who will be in a position to interpret them without risk of misunderstandings. Indeed the Department has advised—
The Question having been proposed, after Ten o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at Twelve o'clock

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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.

HUMAN RIGHTS: UN COMMISSION RESOLUTIONS
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what conclusions were reached at the United Nations Commission on Human Rights at Geneva, and what proposals were made by the United Kingdom delegation.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, the Commission passed some eleven resolutions, including ones on Southern Africa, Chile, and the use of torture. The United Kingdom delegation succeeded in having passed a resolution on the protection of mental patients, it co-sponsored the resolution on Chile, contributed to the drafting of the resolution on torture, and other resolutions, and pressed hard for an independent investigation into the situation in Uganda.
Lord BROCKWAY: My Lords, appreciating the decisions which were reached, were they not rather inadequate? Is it not one of the illnesses of the world today that the denial of human rights, according to the American State Department, now occurs in 80 countries? Is it not now possible for Her Majesty's Government to take an initiative in an international convention which shall deny the right of Governments to persecute people for their political opinions?
Lord GORONWY-ROBERTS: My Lords, I very much appreciate my noble friend's concern, as always, with these matters. We certainly were not satisfied
378
with the Commission's performance taken as a whole, but I am glad to assure my noble friend and the House that our delegation played a forceful and honourable role in these discussions. I will not quarrel with him about the extent to which Member States of the United Nations are, in varying degrees, guilty of the infringement of basic human rights. As to the efficacy of a new international convention, the proposal certainly has merit, but I would remind my noble friend that at the end of the day the terms and obligations of an international convention are for application and implementation in the Human Rights Commission.
Lord AVEBURY: My Lords, is the noble Lord aware that it is all very well to pass resolutions in Geneva but it is another matter entirely to have proper machinery for their enforcement? What view do Her Majesty's Government take about the proposal that there should be a United Nations High Commissioner for Human Rights? Do the Government intend to present concrete proposals for monitoring the adherence by Governments to the United Nations Convention on Civil and Political Rights, which has been signed by many of the 80 nations which are in contravention of it? Will the noble Lord make a further Statement about this matter in due course?
Lord GORONWY-ROBERTS: Yes, my Lords, I would welcome the opportunity. At the moment I would say that this country, with others, is in favour of examining any practical way to make effective these resolutions. Of course, these resolutions, when they are adopted, have a certain influence and a certain force. But I take the point that we need to consider at least moving on to the applicatory aspects of the discussions in Geneva and in New York. As to whether the appointment of a High Commissioner is the best way to do this, it may well be. I will certainly, with my right honourable friend, give consideration to this. I repeat, I would welcome the opportunity in due course, not too soon, of making a Statement on this matter.
Baroness ELLES: My Lords, may I ask the Minister whether any other countries sponsored the draft resolution

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on Uganda which was put forward by the United Kingdom delegate? Secondly, would the Minister give an assurance that the Government will co-operate in every way with the Human Rights Committee, which is meeting, I believe, for the first time in New York, under the International Covenant on Civil and Political Rights, which, of course, came into force last year?
Lord GORONWY-ROBERTS: Yes, my Lords, I can be responsive on the second part of the noble Baroness's question. As to the modalities of the resolution sponsorship, I think I would need notice of that question; but I understand what lies behind it, and I should like to inform the noble Baroness, and indeed the House, of the position. We played a prominent, and, I think, up to a point, effective part; but I appreciate that the sponsorship of this particular resolution raises important questions. I will do my best to meet the point raised by the noble Baroness.
Baroness GAITSKELL: My Lords, may I ask the Minister whether it would be true to say that our delegation did reasonably well in the circumstances of today? Would it not also be true to say that those who ask for conventions and for instant solutions in regard to the problems of human rights, are crying for the moon.
Lord GORONWY-ROBERTS: My Lords, I have a certain reluctance to be drawn into that particular civil war. No doubt the noble Baroness and the section of this noble House to which the second part of her question was directed will get together and agree on the resolution. As to the first part of her question, I certainly agree; our delegation, as I said, played a forceful and honourable part. I think it cannot be too often emphasised that this country, whatever its weaknesses—it has no deficiencies, but temporary weaknesses—plays an effective part in these discussions. It is always to be found on the side of human rights, and it always presents its view on a basis of morality and practicality.
Lord BROCKWAY: My Lords, although I support the action which Her Majesty's Government took on Uganda,
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is there not now a danger that one may select certain countries as breaking human rights when that action is deplorably extensive over the greater part of the world, even in many countries which are our allies as well as those with which we have differences?
Lord GORONWY-ROBERTS: My Lords, I agree that there is always this danger. However, I insist that Her Majesty's Government's policy on human rights is very well known, and is applied across the board to all countries which are found to be infringing these basic rights without regard to their political or other complexion. However, as my noble friend said, it must be borne constantly in mind that our policy is evenhanded and consistently applied to all countries.
Lord SLATER: My Lords, I am at a loss to understand why Her Majesty's Government should come under attack with regard to this very important matter of human rights, in view of the attitude that they have taken in the past. We are not responsible for the educational systems that operate in countries such as Chile. Nevertheless, is it not also true to say that on this major issue the previous Government took a similar stand to the one which Her Majesty's Government have taken?
Lord GORONWY-ROBERTS: My Lords, not for the first time I welcome my noble friend's contribution. I agree with all that he has said, and I am sure that he and other noble Lords will agree that it is now time to pass on to the next Question.

SOLAR HEATING
2.46 p.m.
Baroness VICKERS: 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 can give any information about progress being made in regard to solar heating especially for domestic use.
Baroness STEDMAN: My Lords, about 10,000 solar water heating installations are

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believed to have been supplied last year. Half of these were for swimming pools and the rest mainly for dwellings. Solar space heating is at present too costly to be widely justified, but the Government are supporting development of this and of other applications of solar energy in their own laboratories, in industry and in the universities.
Baroness VICKERS: My Lords, I thank the noble Baroness for that reply. What advice has been given to domestic users?—because one has seen advertisements on the television and so on which may be rather misleading. In view of the fact that the costs of electricity, gas and coal are continually increasing, does she think that further experiments could advantageously be continued?
Baroness STEDMAN: My Lords, I take it that the noble Baroness saw the programme on television last Sunday night, as I did. I can only urge her to advise people to take the advice that was given in that programme and to consult the appropriate trade organisation before entering into any commitments. The Building Research Establishment has a major programme of research on energy use, with particular emphasis on housing. At present it is costing about £500,000 a year. One of the three new experimental houses that we are monitoring is solar heated. We hope to obtain more information as a result of these experiments.
Lord THOMAS: My Lords, does the noble Baroness agree that one of the most promising applications of solar energy is the desalination of sea water? Is any effort being made towards the development of this system which can bring infertile lands into good agricultural use?
Baroness STEDMAN: My Lords, I was sure that this House would live up to its name and that we would even find an expert in solar energy. I do not have the answer to the noble Lord's question. My brief is peculiarly concerned with the application to domestic heating, but I shall certainly make inquiries and will write to the noble Lord if we have any information.
Lord STRATHCONA and MOUNT ROYAL: My Lords, will the noble Baroness tell the House what improvement
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grants one is eligible for if one installs a solar-assisted hot water system?
Baroness STEDMAN: My Lords, none, because at the moment it is not one of the approved means of heating the water in one's house.
Lord WYNNE-JONES: My Lords, in view of the peculiarly scandalous nature of some of the advertisements, would it be possible for Her Majesty's Government to take steps to advertise the fact that only those systems which have been approved should be installed? Many people are not aware of how deplorably inadequate some of the systems can be.
Baroness STEDMAN: My Lords, although I share my noble friend's concern, we might be accused of trying to tell people how to spend their money if we said in which direction and with which firm they should spend it. I can only reiterate what I said in my answer. There is a trade association covering this and I hope that those who are considering spending a lot of money will make sure, through the auspices of the trade association, that they deal with competent and reputable people.
Lord IRONSIDE: My Lords, can the noble Baroness say whether the Government are participating at present in any European Community programmes with regard to solar energy?
Baroness STEDMAN: Yes, my Lords; there is international collaboration involving several of the international scientific organisations. In addition, we include programmes under both the EEC Joint Research Centre and indirect action sponsored research, and the International Energy Agency also has a five-point solar heating programme. The United Kingdom will eventually take part in all these programmes.

RUDOLF HESS
2.50 p.m.
Viscount MASSEREENE and FERRARD: 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 time has not come for a new consultation with the other three powers responsible for Spandau, to give Rudolf Hess parole in view of his state of health and the 30 years he has already spent in jail.
Lord GORONWY-ROBERTS: My Lords, there is, unfortunately, no evidence that there has been any change in the Soviet position on this matter. But we are always ready to consider and to take, in consultation with the French and American Governments, any steps likely to lead to agreement between the four Powers concerned on Hess's release; and we are in touch with them on this subject at the present time.
Viscount MASSEREENE and FERRARD: My Lords, I thank the Minister for that reply. Would he not agree that the continued incarceration of this sick old man in solitary confinement is a gross violation of human rights? Would the noble Lord impress on his right honourable friend the Foreign Secretary to do all he can to impress on the Soviet Government that, if the other three signatories to the Potsdam Agreement request the release of Hess on parole, it would be entirely in the spirit of détente and humanity if they would comply with this request?
Lord GORONWY-ROBERTS: My Lords, I shall certainly convey to my right honourable friend the Foreign and Commonwealth Secretary the noble Viscount's feelings, which I take to be the general feeling of the House. I think it is the general feeling in this country. I do not think that this is quite necessary. I know my right honourable friend's views on this and those of the Prime Minister and of the Government, but it is always well that good intentions are reinforced, especially from this House.
Lord SHINWELL: My Lords, may I ask my noble friend whether the occupying Powers other than the Soviet Union contribute to the maintenance of Spandau? Is it not time that this situation, which is no longer a farce but a tragedy, was brought to an end? What possible advantage is it to the Soviet Union to keep this old man in prison almost at the end of his life?
Lord GORONWY-ROBERTS: My Lords, I think we are all familiar with the statement of Soviet objection to the release of Rudolf Hess. It is based, as they say, on the state of Russian public opinion, which recalls, as they say, the involvement of Rudolf Hess in the events of 1933 to 1941, when he left the country. However, on my noble friend's question as to the costs of Spandau prison, all the costs of the three Western Powers in Spandau prison are borne under the 1953 agreement by the Federal German authorities as part of the Berlin occupation costs. I would hazard the opinion, in reply to my noble friend, that the Russians have no financial preoccupation about this, but they do insist that they have an ideological, and indeed political, preoccupation arising from what they conceive to be a continuing responsibility for the events of the period I have mentioned.
Lord CAMPBELL of CROY: My Lords, will the Government remind the Soviet Government that Hess was not sentenced to solitary confinement, but that he has been having to endure that penalty for several years simply because of the death or release of all the other war crimes prisoners who were at Spandau? Should not this be the deciding humanitarian reason for mercy now, to which even the Russians ought to be able to agree?
Lord GORONWY-ROBERTS: My Lords, I believe it is true to say that Hess is now the only inmate of Spandau. Whether the conditions of his detention there fit the term "solitary confinement", I am not so sure. We are, of course, apart from our representations with our other partners in the four-party agreement for his release on the grounds succinctly put by my noble friend Lord Shinwell, concerned that the conditions of his detention should be as humane as possible. I understand that those are basically acceptable, but I take the noble Lord's point that we should have a constant and careful look at conditions as well as at the question of release.
Lord BLYTON: My Lords, is the Minister aware that the trial of Warren Hastings in Westminster Hall was in no way comparable to what we are doing to this old man, Rudolf Hess? Is it not time

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that we threw away the niceties of diplomacy and that the Three-Power Commission, apart from Russia, said that we are going to release this man, because Russia is only keeping him in Spandau jail in order to keep afoot in West Berlin and to protect that monument beside the Brandenburg Gate?
Lord GORONWY-ROBERTS: My Lords, my noble friend presents what is an attractive course of action. I would, if I may presume, advise the House that it is very important that we maintain the four-power agreement which was negotiated with some difficulty in 1953. Although it creates this kind of difficulty in regard to Rudolf Hess, it is very important on the plus side for the allies that it should be maintained. I think that this is a case for keeping a balanced view of the results of anything like unilateral denunciation of that agreement.
Baroness EMMET of AMBERLEY: My Lords, may I suggest to the noble Lord the Minister that the reason why I take particular interest in this matter is that I knew Hess before the war? I spent one whole afternoon trying to persuade him to come to England and not believe his unfortunate Ambassador in London. Already, then, he impressed one with the fact that he was not a normal man. I would suggest to the noble Minister that possibly in getting together with the other three Powers one might save the face of the Russians by this question of parole. Whereas they will never agree to release, one could on health grounds, and from the public opinion point of view, get them to agree to granting parole. I think that this would meet the case at the moment.
Lord GORONWY-ROBERTS: My Lords, we are in touch on this subject with our allies and other co-signatories of the agreement at the present time. I most certainly will convey to my right honourable friend the tone and temper of the House as expressed this afternoon on this subject.
The LORD PRIVY SEAL (Lord Peart): My Lords, I think perhaps we might hear from the Cross-Benches now.
Lord BOOTHBY: My Lords, the Cross-Benchers have not had a chance,
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and I am going to ask a short question. I would simply ask the noble Lord how the Government can bring themselves to participate any longer in an act of barbarity which really amounts to the slow torture of an old man to death?
Lord GORONWY-ROBERTS: My Lords, I think the question, fairly, would be what considerations weigh with this Government and weighed with their predecessors in maintaining the four-power agreement. As I have said, there are distinct advantages to the West in maintaining that agreement which, I repeat, was negotiated by a Conservative Government with laudable skill against very grave difficulties. I would hope that my noble friend Lord Boothby would reflect on the implications of his question to me today.
Baroness WARD of NORTH TYNESIDE: My Lords, would it not be a good idea if—
Lord PEART: My Lords, we all appreciate the feeling of the House on this matter. I think we ought to proceed.
Baroness WARD of NORTH TYNESIDE: I should have liked a go, too, my Lords.

ROMANIAN EARTHQUAKE: RELIEF SUPPLIES
3 p.m.
Lord ELTON: 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 had considered the use of an RAF aircraft to deliver a consignment of drugs available for despatch to Bucharest on 7th March for relief of the victims of the recent earthquake there; whether it is true, as reported in the Press, that this method of delivery was rejected as too costly; and, if so, how much time was lost and how much money was saved by the implementation of this decision.
Lord GORONWY-ROBERTS: My Lords, the Government decided not to charter an RAF aircraft to deliver medical

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supplies to Romania on 7th March because British Airways and the Romanian State airline were able to take the available supplies on their flights to Bucharest on 8th and 9th March free of charge. The cost of an RAF aircraft would have been roughly £5,000.
Lord ELTON: My Lords, I thank the Minister for that reply. Do I understand that there was a delay of 24 hours before the consignment was sent and that the saving thereby was £5,000? Did the noble Lord say that an RAF plane could have taken off on 7th March and that a civilian plane took off on the 8th?
Lord GORONWY-ROBERTS: My Lords, there was a difference in the time of the first delivery of 24 hours, but I am advised that that delay was not effectively impactive on the situation in Romania. It was in part in response to a suggestion by the Romanian State airline. In those circumstances, we did not feel that we should reject the joint proposal of British Airways and the Romanian State airline when the delay was only a few hours, one day, and the saving of £5,000 was available to add to the donation we were contemplating making to the Romanian authorities.
Lord ELTON: My Lords, while accepting that the saving could be otherwise used, may I ask the noble Lord to accept that there are occasions when delay is critical? Will he bear that point in mind with every case, as with this case? Does he feel that there is any other way in which Her Majesty's Government can facilitate the recovery of people who, although they live under a political system with which we do not sympathise, deserve our sympathy all the more in their present physical hardship?
Lord GORONWY-ROBERTS: My Lords, I would instantly agree that there are occasions when a delay of only a few hours may be critical. No doubt the Romanian State airline would also have had that point in mind when they made the proposal to us, with British Airways, that a delay of a few hours was fully justifiable and would not have an effective impact on the operation of the aid. I am glad the noble Lord raised the point in
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the second part of his supplementary question because it gives me an opportunity to inform the House that, in addition to the governmental and considerable private subscriptions made from this country to the Romanian Government and people, the Export Credits Guarantee Department has decided in principle to make available to the Romanians a special credit line of£10 million on favourable conditions. The Romanians will be able to use this to place orders with British companies to replace equipment damaged during the earthquake.
Lord TREFGARNE: My Lords, may I ask the Minister to say whether the figure of £5,000 which he mentioned as the cost of the aeroplane included a provision for RAF overheads? If so, is not the real marginal cost of the operation substantially less than£5,000?
Lord GORONWY-ROBERTS: That may or may not be so, my Lords, but I must repeat that this was a consensus decision which involved not only Her Majesty's Government and British Airways but also the Romanian State airline. In that context, I think the House can be assured that no undue delay was caused by this, I think, very sensible adjustment of costs. It adds £5,000 to the totality of what we are able to make available to the Romanian authorities and people, and, as I explained in reply to the noble Lord, Lord Elton, we are following up that extra £5,000 with an extra credit line of £10 million.
Lord GEORGE-BROWN: My Lords, may I put to the Minister in the form of a question what is really an assertion? May I suggest that we should protect the Government—if they need our protection—from any suggestion that they acted improperly in this matter? Those of us who know Communist States do not need to spell out in fine detail the embarrassment and tenderness they feel about having a British military aircraft landing in Romania. We can be certain that in this case it was a Romanian suggestion to which our Government had no choice but to adhere. I feel that in this matter the Opposition are not being altogether fair either to the Secretary of State or to the Government.

PEERS' EXPENSES ALLOWANCE
3.5 p.m.
Lord PEART: My Lords, with the leave of the House, I should like to make a Statement about the expenses allowance for Members of your Lordships' House.
In January 1975 the Top Salaries Review Body under the chairmanship of the noble Lord, Lord Boyle, were invited by the Prime Minister to undertake a review of the remuneration and pensions of Ministers of the Crown and Members of Parliament and of the Peers' expenses allowance. The final part of the Review Body's report, which deals with the Peers' expenses allowance, is published today (Cmnd. 6749) and copies are available in the Printed Paper Office.
I should like to express my thanks to the noble Lord, Lord Boyle, and the Review Body members for carrying out their task assiduously and with great insight. The Government welcome their analysis of this difficult problem, and I will summarise their recommendations for your Lordships. I regret, however, that until pay policy permits, the Government must defer detailed consideration of these recommendations.
Since the Peers' expenses allowance was first introduced in 1957, its coverage has never been clearly defined. The Review Body seek to remedy this, and conclude that a clear specification is needed of the items of expenditure that can properly be claimed in attending the House. They recommend that expenditure should be divided into four elements, each with its own separate limit. The first covers night subsistence for those Peers who necessarily have to use overnight accommodation away from their only or main residence, and for this purpose a limit of £11 a night is recommended. Secondly, a limit of £6·50 is recommended for day subsistence to cover meals and incidental travel. The third element is for reimbursement of secretarial expenses within a cumulative limit of £4 a day. Lastly, postage and certain other additional expenses would be met within a cumulative limit of £3 a day. A minority of the Review Body would prefer to see these last two limits combined into a single grouping.
These daily limits together total £24·50; but only those Peers who have to incur
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overnight accommodation expenses in London in order to attend the House would be eligible to claim against the overnight allowance of £11. Other Peers would be restricted to the three other allowances with limits totalling £13.50.
I ought perhaps also to draw your Lordships' attention to certain of the Review Body's remarks in their concluding paragraph. They said:
"We have observed during the course of this review that an impression exists outside Parliament —and, indeed, that it has been fostered over the years—that the Peers' expenses allowance is a daily attendance fee that Peers can claim as of right by attending the House of Lords. The impression is false, but it has persisted in spite of periodic restatements of the facts…The allowance has always been a maximum daily amount against which Peers can claim reimbursement of at least some of the expenses that they have actually incurred in attending Parliamentary business."
Although detailed consideration of the report has to be deferred, the Government recognise that the current limit of £13·50, which was fixed in June 1975, is now clearly inadequate to cover the expenses of those Peers who have to occupy overnight accommodation in London in order to attend the House. I therefore intend to table a Motion which would enable such Peers, and them alone, to claim expenses allowance up to a limit of £16·50 a day. This increase of £3 a day would be consistent with pay policy, as it broadly reflects the rise in costs since the limit of the allowance was last revised.
Peers who have no need to incur overnight accommodation expenses in London in order to attend the House will remain subject to the present daily maximum of £13·50. Any increases above that amount would in any event exceed the Review Body's recommendations. A resolution to give effect to the £3 increase will be taken on Thursday, 24th March. If this is agreed to, the proposed increase will have effect from that date. My Lords, that concludes the Statement.
3.10 p.m.
Lord CARRTNGTON: My Lords, I join with the Leader of the House in thanking the noble Lord, Lord Boyle, and his colleagues, among them three Members of your Lordships' House, for the report. I must say that I have never been a supporter of the system whereby your Lordships have to claim expense

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allowances. I think that it leads to anomalies, difficulties and embarrassment, and I think that view is shared by quite a number of your Lordships. The difficulty is to think of anything more suitable. I know that the noble Lord, Lord Boyle, and his colleagues tried to do so, but they have not come up with anything. In any event, all these difficulties may disappear, since if, at the next Election, which may be sooner rather than later, noble Lords opposite win, there will, as I understand it, be no House of Lords to have an expenses allowance. If, on the other hand, I have my way, it will be quite easy to pay the House, since we shall have a reformed House. Nevertheless, in the meantime, it seems to me that the Government could do little else but what they have done, since they quite clearly could not breach their own pay policy. No doubt when the Leader of the House introduces his Motion we shall have an opportunity to debate the whole subject; so I will not take the matter any further this afternoon.
Lord PEART: My Lords, the noble Lord made a political comment, but I understand that. I am confident that I will be here, probably dealing with this matter, and that is very important. I agree that a reformed House would enable us to have a completely fresh look at whether or not we should have a salaried element here. But that is another matter. I believe that we should look at this when our colleagues have read the report itself.
Lord AMULREE: My Lords, in the absence of my noble friend Lord Byers, I wish to thank the Leader of the House for the Statement he has made. I am very pleased to read from the report of the noble Lord, Lord Boyle, that he tried to make something of the attendance allowance, but it has never been quite clear what it is about. I should like to have longer time to consider the Boyle Report. We look forward to considering the Motion when the noble Lord the Leader of the House presents it.
Lord PEART: My Lords, I am grateful to the noble Lord. This is a difficult task for any Leader of the House. I was new to this matter, and with my predecessor and my noble friend the Chief
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Whip I have been looking at it very carefully. But as I have said, I think that Members should examine the report. Some of our colleagues sat on the Boyle Committee, and we will have a resolution on Thursday.
Lord SHINWELL: My Lords, with regard to the reference to the abolition of the House of Lords, would Peers, if they were regarded as redundant, be able to claim a redundancy payment?
Lord PEART: I do not think that that will ever happen, my Lords.
Lord HARMAR-NICHOLLS: My Lords, when we consider this matter on 24th March would it be possible to include the question of postage costs? I am not suggesting extra pay. I agree with my noble friend that not much more can be done than is now suggested; but noble Lords sometimes find that the absence of free postage to cover their Parliamentary work is perhaps unfair, and possibly this question could be included in our consideration of the Motion.
Lord PEART: That is another matter my Lords, but it is something we must look into in the future.

NUCLEAR INDUSTRY (FINANCE) BILL
Brought from the Commons, endorsed with the Certificate from the Speaker that the Bill is a Money Bill within the meaning of the Parliament Act 1911; read 1ª, and to be printed.
REPRESENTATION OF THE PEOPLE BILL
Brought from the Commons, read 1ª; and to be printed.
AGRICULTURAL HOLDINGS (NOTICES TO QUIT) BILL [H.L.]
Read 3ª, and passed, and sent to the Commons.

SOCIAL SECURITY MISCELLANEOUS PROVISIONS) BILL
3.15 p.m.
Report received.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 1:
After Clause 1, insert the following new clause:
Power to restrict entitlement to credits for weeks prior to coming into force of amending regulations
. The power to amend regulations made before the passing of this Act under section 13(4) of the principal Act (crediting of contributions for the purpose of enabling contribution conditions to be satisfied) may be so exercised as to restrict the circumstances in which and the purposes for which a person is entitled to credits in respect of weeks before the coming into force of the amending regulations; but not so as to affect any benefit for a period before the coming into force of the amending regulations if it was claimed before 18th March 1977.
The noble Lord said: My Lords, I beg to move the Amendment standing in my name introducing the new Clause 1A and will, if I may, deal also with Amendments Nos. 3, 4, and 5 which are also down in my name, to Clauses 23 and 24. I must preface my introduction of these Amendments, however, with an apology to your Lordships that we should be amending the Bill still further at this late stage in its proceedings. I assure your Lordships that we would not take up the time of the House unless it was absolutely necessary.
These Amendments arise from a problem in connection with our legislation which we simply must put right. Their purpose is to avoid the unintended effect of a complex of changes to the National Insurance Scheme made since 1975, which would have enabled people to acquire contributory benefit rights although they have not paid contributions or received contributory benefit for many years. The new clause will extend the existing power to make regulations, and it will enable regulations to be made restricting the use of existing credits in establishing future benefit rights. I hope that your Lordships will regard it as helpful if I give some background to this matter. I may say that the problem is a highly complex one—as regrettably some of our social security legislation undoubtedly is; and I made this point yesterday, your Lordships will recall, when introducing the new regulations relating to family income supplement.
Perhaps your Lordships will not expect me to venture too far into its intricacies. The problem concerns entitlement to contributory benefits where this is based on credited contributions, and not on contributions actually paid. As your Lordships will know, under the Social Security Act 1975 there are provisions enabling people not in work because of sickness or unemployment to be credited with contributions so as to maintain their contribution record for entitlement to contributory benefits. This was, I understand, seen at the time as a continuation, in slightly relaxed form, of similar provisions under the scheme which existed before 1975, and as part of the general easements for contributions under the new scheme. It has, however, become apparent that the effect of these provisions, together with that of other new or changing provisions—notably the new noncontributory incapacity benefits, and the arrangements for phasing out the married woman's contribution option—produce a quite unlooked-for, and until quite recently unnoticed, consequence. As a result, it would have been possible for large numbers of people to qualify through credits for contributory benefits though they have been for a long period removed from the employment field and also from contributory benefit entitlement, have therefore not paid contributions for many years and, generally, could have had no expectation whatever of contributory benefit. In brief, if a person had at some time, however remote that time, paid some contributions, incapacity or unemployment years later could lead to credits and thence to contributory benefit.
As your Lordships will appreciate, it is hardly consistent with the principles of a contributory scheme to provide benefits where there is only a very tenuous connection with contributions. Furthermore, there are expenditure implications which, while it is not possible at this stage to estimate precisely what they might be, could be in the order of something like £100 million per year. This is an amount which, I suggest, is totally inconsistent with the Government's stance on public expenditure and, indeed, incompatible with proper husbandry of our resources.
In order to prevent this wholly unintended effect of our legislation—which, as I have said, arises from the combined

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effect of a number of developments in the social security field—we are proposing to make regulations to place some appropriate limitation on the circumstances in which credits given under the new contribution scheme can count for benefit entitlement. The details of the regulations, as to the circumstances and the benefits involved, have still to be settled. They will, however, aim to achieve a restriction consonant with our original intentions and with the contributory nature of the scheme, and, incidentally, rather closer to the pre-1975 arrangements.
The new clause itself is necessary to enable regulations to be made restricting future benefit rights where these depend on credits given between 1975 and a current date. The extension of existing powers is needed if we are to avoid letting in a large number of unwanted claims from this coming May, when the post-1975 rules come fully into effect. But, as the clause itself makes clear, we shall not be seeking to touch benefit claimed before the 18th March for any period before the regulations bite. That sets the outer limit of the new provisions. Within that outer limit, we in fact have it in mind to be rather more generous, both to avoid anything that looks like retrospection and to match so far as possible the pre-1975 arrangements. For example, credits given while in receipt of contributory benefit will not be affected.
The two other Amendments follow on from the introduction of the new clause. The Amendment to Clause 23 provides that the regulations we shall be making under our extended powers need not be referred beforehand to the National Insurance Advisory Committee. The Amendments to Clause 24 enable us to make use of two previous Amendments immediately the Bill receives Royal Assent. As noble Lords will appreciate, we wish to bring the limitations to which I have referred into operation as soon as we can. We shall therefore be making the regulations as soon as we can after Royal Assent, and, in the normal way, these will be laid before Parliament after they have been made. I hope your Lordships will feel that I have said enough on this matter, and I therefore beg to move.
Lord HAWKE: My Lords, the noble Lord has dealt very largely with people
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who were credited with contributions though they were unemployed or sick. I wonder whether he could say a word about the people who are presumably credited with contributions because they earn too little to be subject to National Insurance. Could he say what is their position? Their case has been changed recently. I think that as from 5th April they will be allowed to earn £15 a week without contributing anything. Are they credited in any way so that in due course they can get their various benefits and/or pension?
Lord WELLS-PESTELL: My Lords, my understanding of the situation is that those who are earning too little to pay National Insurance contributions in the ordinary way are in fact covered but, as I understand it, they will not be given any credits now. So I think the answer to the noble Lord is that there are no credits for anybody who is earning less than the £15 a week. It is now £13 but, as the noble Lord points out, it will be going up to £15 in April.
Baroness YOUNG: My Lords, I think we are all grateful to the noble Lord, Lord Wells-Pestell, for his explanation of these Amendments. He has my sympathy. I think he has been put into a very difficult position over these Amendments, coming, as they do, at a very late stage of this Bill. As they apply to the 1975 Act, they have obviously been put down to meet, as he has indicated, what has proved to be a loophole in the law. From this side of the House we shall not oppose any of these linked Amendments, because we appreciate the reason for them; namely, the need to save public expenditure and, indeed, to fulfil my understanding of what Parliament intended in the case of the 1975 Act, which it now appears was not correctly drafted.
I am bound to say that I think that this is an example of over-legislation, and one is bound to ask what would have happened had this Bill not been going through the House at this time. I suppose it would have meant that the Government would have had to bring forward amending legislation. I am also bound to say that I think it very unfortunate that what could prove to be a major loophole has been allowed to escape attention for such a long time.

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Perhaps I could now question the Amendments themselves. The noble Lord spoke, I think, to Amendments Nos. 1, 3, 4 and 5 at the same time. His Amendment No. 3 is in fact slightly different from the Amendment which was tabled with the first list at the weekend. He may find that there is a perfectly reasonable explanation of this, but I would not want us to leave the Report stage and still find that we had not got the matter completely in order. On my reading of it, Amendment No. 4 is also slightly different, again, from the one tabled before the weekend. The earlier Amendments are, of course, unnumbered, so it is a little difficult to tell. There are explanations in italics, of course; but in the case of Amendment No. 4 the original one said, "insert (1A)". I hope that the explanation is in fact a suitable substitute for the new clause. It no doubt means precisely the same thing, but I think the House should know, for our sake as well as for the sake of the noble Lord, that we are not going through all this and will then have to face further Amendments on Third Reading tomorrow.
Baroness SEEAR: My Lords, could I ask the noble Lord one question? I am afraid I must have misunderstood him. He said that people below £15 a week, as the figure will be, are covered. In what sense are they covered?
Lord WELLS-PESTELL: My Lords, I think that I ought to have added something more after that. I was aware of this when I saw the look on the face of the noble Baroness as I sat down. They are covered only in respect of supplementary benefits. They would be entitled to this. They are not covered so far as contributory benefits are concerned. One has to bear in mind that in the ordinary way, as I understand the situation, it would be young people who might be earning less than £13 or £15 a week. They eventually come into the category of contributors.
Lord HAWKE: My Lords, I think the noble Lord is mistaken. A considerable number of these people will be elderly ladies who work part-time.
Lord WELLS-PESTELL: My Lords, if that is so, then it may well be that they have a substantial contributory record behind them, so that if and when they are sick they would be entitled to benefits.
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What I am concerned about is people who normally work for only a short period earning now less than £13 a week, or in April less than £15 a week. If they have no contributory entitlement, then they are covered in the sense that they can apply for supplementary benefit in order to live. But when people advance in years and have a shorter period of work, they often have behind them a substantial contribution record which brings them into contributory benefits as and when they require them. The noble Baroness, Lady Young, is right. The answer to what she has said is, Yes. It is merely a tidying-up by the draftsman and there is no change in substance whatsoever.
Lord BANKS: My Lords, this Amendment raises the question of the desirability of the contribution system as the principal determining factor for entitlement. If your Lordships will consider for a minute the position of invalidity pensioners, the point I am making will be appreciated. The invalidity pension on a non-contributory basis was introduced because it was felt that there were people who, because of their disability, had not been able to build up a contribution record at all. But if you look at the figures you find that the contributory invalidity pensioner gets £15·30p a week, and the non-contributory invalidity pensioner £9·20 a week. One is bound to ask whether that difference is fair.
It is not as if the £15·30p level was excessive. We know that many people on that level are obliged to resort to supplementary benefit in addition. So there is a case for saying that all who fall into a particular category shall receive the same basic benefit as of right. It would of course be the aim of a comprehensive tax credit system to bring that about. So long as there is a distinction between Contributory and non-contributory benefits, there will be pressure to maintain the differential. Clearly, so long as the distinction remains, it will be illogical to allow non-contributory benefits to entitle the recipient to secure contribution credits. Although we have these reservations, we nevertheless will not oppose the Amendment.
Lord DRUMALBYN: My Lords, in preparing the regulations, will the noble Lord bear in mind the considerations

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which my noble friend Lord Hawke has mentioned? Some people—be they men or women—look after disabled people who may live until they are in their 'eighties. A person looking after such an invalid may have spent his or her entire life doing this without payment. I suggest that, in the changes which are taking place here, there is room to provide for these people in some way or another. I have a good deal of sympathy with what the noble Lord, Lord Banks, said in this regard.
There ought to be some means for exempting from paying the contributions people who have no income or a very small income, while at the same time treating them as having contributed in some way. The saving to the State, among other things, is considerable by having invalids looked after by relatives rather than putting them into hospitals or homes. This is a consideration which ought to be taken into account in the changing character of the whole of our benefits system.
Lord WELLS-PESTELL: My Lords, I accept what noble Lords have said. If the noble Lord, Lord Banks, will not mind my saying so, it has been declared Liberal Party policy for a good many years, if I understand the situation, that there should not be this difference between contributory and non-contributory benefits. But the system being as it is, it would be a little unreasonable to expect people who had contributed over a period of years a considerable sum of money to secure certain National Insurance benefits, to receive precisely the same benefits as those who had not contributed, although possibly through no fault of their own.
This would be seen as involving a degree of unfairness, until people realise that one has a responsibility to do this in order to help those less fortunately placed. We are, I feel, not living at the moment in a society which would accept that. One also has to bear in mind that there are a wide range of allowances and benefits for people who, for various reasons, cannot receive the normal National Insurance benefits. I was thinking of the attendance allowance and the invalid care allowance. Of necessity, there has to be this difference between the amount one receives on a non-
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contributory basis and the amount one gets an a contributory basis, bearing in mind that if the non-contributory pension or benefit is not sufficient, then there are other ways—or at least one other way—of getting it made up, so that people get enough on which to live.
Lord DRUMALBYN: My Lords, could I put it in another way? I am wholly in favour of the contributory system. I think that it ought to be safeguarded. There are in certain circumstances occasions when a person could be treated as having made a notional contribution because of the saving he—or more often she—is making to the State in other ways. There are considerable savings to the State from people looking after parents or relatives at home.
Lord WELLS-PESTELL: My Lords, this is so. Later we will deal with the question of the allowances to foster parents in the matter of handicapped children. Undoubtedly they are saving the State a considerable amount, because if the children became the responsibility of the local authority that would be an additional cost to the State. It is very difficult to introduce a scheme which would produce a great deal more complexity than the existing schemes are producing at the present moment. We need to have a deep and close look at the whole benefits system with which we are faced at present.
On Question, Amendment agreed to.
Clause 13 [Amendments of Supplementary Benefits Act 1976]:
3.40 p.m.
Baroness YOUNG Baroness YOUNG moved Amendment No. 2:
Leave out Clause 13.
The noble Baroness said: My Lords, I put down this Amendment not because I have any intention of pressing it this afternoon, but because at an earlier stage we had a discussion on allowances for foster parents and the noble Lord, Lord WellsPestell, then said that the Government were prepared to accept the principle of the Amendment that we on this side had put down, but that they would implement it by regulation.
Following upon the Committee stage of the Bill, the noble Lord was kind enough to write me setting out the circumstances of how this would apply. It seemed to me that it would be valuable to have this on the record, as the question of paying attendance allowances to foster parents who foster severely handicapped children is a matter of considerable concern to a number of organisations as well as to individuals. I therefore thought it would be helpful to quote part of the letter and to ask the noble Lord one more question arising from that quotation. The letter reads:
"The Government accept the case for making the change which your Amendment was designed to secure and we have sufficient powers under the law as it stands to make the regulations necessary to achieve the result which you wish to be brought about. We will make these regulations which will be subject to the Negative Resolution procedure at an early opportunity at a cost at current rates of attendance allowance of the order of some £200,000 a year and benefiting, we estimate, something like 300 children."
It goes on:
"We shall make these regulations at an early opportunity after the Royal Assent and we hope to have them in operation by the date you had put in your Amendment."
Lord WELLS-PESTELL: My Lords, will the noble Baroness allow me to intervene? It is probably I who am at fault; but I am rather under the impression that the noble Baroness is speaking to Amendment No. 6 and not Amendment No. 2. Am I right?
Baroness YOUNG: No, my Lords. I am sorry if I have caused confusion about this; but I wished to raise the point about my Amendment on foster children and it is difficult to know where to bring it in. I have done so at what seemed to me an appropriate moment in the course of the Bill. I want to say something about the regulations on another Amendment which we shall come to later.
The question which I shall ask the noble Lord is straightforward and, as we are grateful for the Government's agreeing to implement this suggestion, the last thing I wish to do is to put any difficulties in his way or in the way of the Government. Naturally enough, those who might expect to receive the attendance allowance are anxious to know when this would come about. I understand that the Bill is to have a Third Reading in this House
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tomorrow, will be considered in another place on, I think, Thursday, and will receive the Royal Assent on April 1st. If this timetable is correct, the regulations would be laid immediately afterwards. What I should be grateful for is an assurance that they would come into effect by the Summer Recess. The other regulations concerning students will, I understand, come into effect immediately on the Royal Assent. If the noble Lord could tell me when these regulations could come into effect that would be helpful.
I am grateful for the assurance given in the letter and it is merely to make this absolutely clear to a number of interested organisations that I have put down this Amendment. As the noble Lord will be aware, we could not on Report discuss this matter unless I had put down an Amendment on which we could have some debate. If the noble Lord could let me have this information I should be grateful.
Lord WELLS-PESTELL: My Lords, let me admit at the beginning that I am not in any real difficulty except that, on reading it, I had understood the noble Baroness's Amendment No. 6 to deal with the attendance allowances for foster children. It does not much matter, but this is how I understood it. However, I can deal with it now. The regulations with regard to students we intend to bring in immediately after the Royal Assent, and the other regulations, which will deal with attendance allowances for foster children, as soon as possible. I should like to repeat what I said earlier, that the Government accept the case for paying attendance allowance to foster parents, and we have sufficient powers under the law to make the regulations necessary to achieve this result and to bring about what the noble Baroness wishes. I can assure the House that our intention is to make these regulations as soon as possible and that the regulations will be subject to the Negative Resolution procedure. At the current rates of attendance allowance, which are £12·20 per week at the higher rate and £8·15 at the lower rate, the cost will be about £200,000 a year. We estimate that the allowance will become payable for about 300 children. We aim to make the regulations in time to begin payment by September 1st at the latest.

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The noble Baroness may know that to some extent we, in this House, have been anticipated by three Questions which were put down yesterday in another place, two of them by a Member of the Conservative Party and one by a Member of the Labour Party. Both are members of the disabled group on this very matter, for which I think the noble Baroness ought to take much of the credit. Perhaps it would be of interest to your Lordships if I read part of the reply given by my honourable friend the Minister for the Disabled. He said:
"This is a matter in which the honourable Gentleman and my honourable friend with their colleagues in the All-Party Disablement Group have taken a sustained interest. They will he glad to learn that the regulations for extending the allowance to qualified foster children will be laid shortly. While at this stage I cannot give the precise date from which payment will be made, it will not be later than 1st September, 1977".
[Official Report (Commons W.A.); 21/3/77, col. 409].
I had hoped that I could have said this in this House. We have been anticipated; but a good deal of the credit should not be taken from the noble Baroness in this matter.
Baroness YOUNG: My Lords, I am grateful to the noble Lord for his answer and for the help and courtesy he has shown throughout this matter. The important matter which arises from all this concerns the number of foster parents and children who will benefit. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 23 [Supplemental]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 3:
Page 23, line 21, at end insert ("or that they contain provisions made by virtue of section (Power to restrict entitlement to credits for weeks prior to coming into force of amending regulations) of this Act.").
The noble Lord said: My Lords, I spoke to this Amendment when dealing with the first Amendment. I beg to move.
On Question, Amendment agreed to.
Clause 24 [Citation, commencement and extent]:
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 4:
Page 23, line 38, after ("1(5)") insert ("Power to restrict entitlement to credits for weeks prior to coming into force of amending regulations)").
The noble Lord said: My Lords, I spoke to Amendment No. 4 when dealing with Amendment No. 1. I beg to move.
On Question, Amendment agreed to.
Lord WELLS-PESTELL Lord WELLS-PESTELL moved Amendment No. 5:
Page 23, line 39, leave out ("and 17") and insert ("17 and 23(1) to (5)").
The noble Lord said: My Lords. I have already spoken to this Amendment. I beg to move.
On Question, Amendment agreed to.
3.50 p.m.
Baroness YOUNG Baroness YOUNG moved Amendment No. 6:
Leave out Clause 24.
The noble Baroness said: My Lords, again, the intention of this Amendment is to get on the record a part of the letter that the noble Lord, Lord Wells-Pestell, was kind enough to write me following our proceedings at Committee stage. We had a considerable discussion about whether or not the regulations, particularly those governing students, should be by Affirmative or Negative Resolution. We on this side were very anxious that these regulations should be by Affirmative Resolution as the effect of them was to put back the position of students to what it had been in 1966.
The noble Lord indicated in his reply that because of the timing of this it was necessary to use the Negative Resolution procedure since it was the intention of the Government that the provisions should come into effect immediately following Royal Assent. The reasoning for that is understandable because, of course, the Easter vacation is now upon us, and were the regulations not to be enforced it would be possible, following the court case, to claim supplementary benefit in the Easter vacation. Therefore it is necessary that the regulations should come into force if Government policy, as we have always understood it, was to be kept.
Two points concern me. We also had a debate about disabled students, and it would be very helpful if the noble Lord could confirm that disabled students will

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still be able to apply for supplementary benefit. The important point is that they should have the £4 per week disregard and it is a matter about which the disabled feel very strongly. If we could, once again, have that on the Record it would be very helpful indeed. The position of disabled students is clearly quite different from that of other students and it is a matter of concern to a great many people. Therefore, it will be very helpful to have the information before us.
The other point is purely technical. I am grateful to the noble Lord for having sent me a copy of the proposed regulations. If, as I understand it, they are to come into effect immediately on Royal Assent, does it mean that even under the Negative Resolution procedure they will not be scrutinised by the Committee which looks at subordinate legislation? If so, is that not a rather unusual step to take? I can quite understand the difficulty as regards the timetable, but my understanding is that regulations, even under the Negative Resolution procedure, are normally looked at by the Joint Committee on Statutory Instruments. Perhaps in the present circumstances there is not time for that to be done. I beg to move.
Lord WELLS-PESTELL: My Lords, I appreciate the point raised by the noble Baroness. It is desirable that we should have this in Hansard, and I think the best thing I can do at this stage—I hope the noble Baroness will agree—is to read part of my letter to her, dated 16th March. I was referring to Amendment No. 12, put down by the noble Baroness at Committee Stage, and I said this:
"…I am afraid that there could be no question of our accepting your Amendment No. 12 if you were to put it down again for the Report stage. What this Amendment would do would be to delay the implementation of the regulations which we are going to make under Clause 12(1) of the Bill, effectively until certainly the end of April, since there could be no question of the necessary Affirmative Resolutions going through both Houses until Parliament reassembled after the Easter Recess. The result would be that, instead of our being able to reapply the longstanding provisions relating to parental contributions and to no disregard of a student's grant from very shortly after the Bill receives Royal Assent—our intention is in fact to bring the regulations into effect on the day after Royal Assent, that is to say from 1st April—we would have to continue the procedures which we are having to apply as a result of the Court of Appeal judgment throughout the Easter vacation. As I made clear on Monday, there is no question of our not applying
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the law as the Court of Appeal has stated it to be for the moment; but equally we do not want to continue to do so for one unnecessary day after we have the legal powers required to enable us to revert—because the additional public expenditure incurred if the Court of Appeal judgment had effect throughout the whole of the Easter vacation would be of the order of £2 million. Almost all of this would arise in relation to the £4 disregard of student grants which we would have to allow."
I went on to say that,
"under a Bill, the prime purpose of which is a saving of public expenditure, this particular additional expenditure, for this particular purpose of all purposes, could in no conceivable circumstances be justified…".
I pointed out that disabled students would continue to get a disregard but that it would be only £2, as it is at present, and also that there would be a disregard of any special allowances paid by the local educational authority.
The Joint Committee will scrutinise the regulations, but that will be after they have come into operation and not before. In point of fact, they will scrutinise them and I should imagine that if there were any really serious defects they must of necessity call the Government's attention to them. I hope I have covered all that the noble Baroness asked me to deal with.
Lord SANDYS: My Lords, I think we are in some difficulty here. Not only are we now on Report, but my noble friend and I are privy to a letter which the noble Lord, Lord Wells-Pestell, was kind enough to send, and he has quoted to us that section of the letter which deals with the Court of Appeal case. As we understand it, as a result of that case the disregard was increased from £2 to £4. If I am wrong, I hope the noble Lord will interrupt me at this stage. Then may we take it that the Court of Appeal did so declare and therefore we must be concerned with the Court's judgment in regard to the drafting of regulations? The noble Lord was kind enough to send us both copies of the proposed draft regulations under Clause 13(1) to 13(3) and Clause 14 of the Social Security (Miscellaneous Provisions) Bill. A particular point is made that the disregard is to be only a factor of £2. There appears to be some inconsistency here, because the Court has made a ruling but the Government do not appear to be taking that into account in drafting their regulations.

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Further, I should like to draw the attention of the noble Lord to another matter; that is, the position of single-parent families and the fact that they are subject at the moment to a £6 disregard. In the case of a disabled student there is perhaps a case for increasing the £4 disregard to £6. However, I will leave that point with the noble Lord.
Lord WELLS-PESTELL: My Lords, in the letter to which the noble Lord has referred I pointed out that the Court of Appeal did not increase the disregard. That is normally £4, but not for students, who will again get no disregard unless disabled or single parents, and such students will get the £2 disregard. I do not think I can add anything more.
Baroness YOUNG: My Lords, I thank the noble Lord for that explanation, and for the points he has made. I am bound to say that, as a procedure, it does not seem to me very satisfactory to make regulations and then to have them scrutinised after they have been made and have come into effect. But no doubt this is a matter which, at this stage of the procedures on this Bill, we can do very little about.
I am disappointed that the noble Lord does not feel that the Government can maintain the position on the £4 disregard of income, which followed the Court of Appeal judgment in the student case; and, in fact, in putting the situation back for all students, they are also putting it back for disabled students to what it was before the case. I have, of course, considered this matter and I did not feel (I have not tabled Amendments on it) that it would be appropriate at this stage to pursue it further. But I should like to leave the noble Lord with this thought about it. When money does allow, this is the kind of instance where a relatively small sum would make a great deal of difference to people who will frequently find themselves in a difficult position, as they are, of course, unable to work in the vacations and are therefore in an entirely different position from able-bodied students. My Lords, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.

GAS (NORTHERN IRELAND) ORDER 1977
4.2 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett)The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett) rose to move, That the draft Gas (Northern Ireland) Order 1977, laid before the House on 1st March, be approved. The noble Lord said: My Lords, the existing code of gas legislation in Northern Ireland is extremely complex, consisting of 15 pieces of legislation made during the past 130 years. This order consolidates this legislation into one instrument. This will have the two-fold effect of removing several archaic Acts from the Statute Book, and providing a more comprehensible legislative code. The provisions have been updated and amended, where necessary, to bring them into line with legislation in Great Britain, particularly in the safety and consumer protection fields. There are also new provisions for bringing the functions and staff of the gas meter testing station under Government control; for introducing quality control of gas, and for enabling powers in relation to metrication corresponding to Section 41 of the Gas Act 1972.
Article 3 of the order applies to the gas undertakers a gas supply code, which is detailed in Schedule 1. This is based on legislation in force since the midnineteenth century, but it has been modernised and supplemented to make it very similar to those provided for the Northern Ireland Electricity Service and the British Gas Corporation under their relevant legislation. The position on debt is clarified so that, while the final sanction of disconnection is reasserted, it may be exercised only after the expiration of 28 days from making the demand in writing, and 7 days after giving notice of intention to cut off supply. Gas and electricity industries in Northern Ireland are currently considering the adoption of a code of practice similar to that in operation in other parts of the United Kingdom, whereby powers of disconnection will be used with discretion and only after considering the financial position of the debtor.
As is usual, this order was circulated in draft to interested parties. All the comments made were of a minor nature, and these have been taken into account in preparing the version of the order which

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I now ask your Lordships to consider. There is nothing in the order which anticipates the findings of the British Gas Corporation's study team which will shortly submit its final report on the Northern Ireland gas industry. I believe that this order will be widely welcomed in Northern Ireland for consolidating and clarifying a complex and detailed body of legislation. My Lords, I beg to move.
Moved, That the draft Gas (Northern Ireland) Order 1977, laid before the House on 1st March, be approved.—(Lord Melchett.)
4.5 p.m.
Viscount LONG: My Lords, I am sure that the whole House is very grateful to the noble Lord, Lord Melchett, for the information which he has given us on this Northern Ireland gas order. We welcome it, because it makes the provisions more modern and streamlined, in line with the position in the United Kingdom. I should have thought that that in itself would make it much easier for officials to administer the legislation covering Northern Ireland. What is quite amazing is the number of different Acts which this one order incorporates; I believe it consolidates nine whole Acts and parts of three others, all in one go. The noble Lord said that this order takes account of metrication, which is very important indeed. It also covers the supply of gas, the compulsory laying of gas pipes, the compulsory acquisition of land and penalties for breach of any order. It is interesting to see how this has been brought about in one order. I wish that we could have an order like this to cover much of the legislation which has been going through in the last year or so.
There are only a few points which I should like to make, which are these. In looking through the part of the order dealing with the compulsory acquisition of land, I could not find out—and perhaps the noble Lord can enlighten me—whether the public is still allowed to have a public inquiry in the event of gas undertakers crossing someone's land. The noble Lord informed us that there is still a period of 14 days' notice, but I wonder whether there is still a right to a public inquiry. Secondly, how will the gas undertakers be able to pay for metrication? The cost of dealing with all the
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gas meters in Northern Ireland will be quite phenomenal, so I wonder how much the Government think it will cost and how long it will take.
Lastly, we in the United Kingdom now have natural gas and are trying to use that more and more. I know that this is an energy matter, but I wonder whether the noble Lord can say whether Northern Ireland has, or is to have, its own natural gas such as we have in the United Kingdom, which they would find very useful. I shall not delay the House any further.
4.9 p.m.
Lord MELCHETT: My Lords, if I may first take the last point on the question of natural gas, this is one of the possibilities that has been mooted in the context of the British Gas Corporation's study team which, as I said in my opening remarks, will be shortly submitting its final report on the Northern Ireland gas industry to the Secretary of State, and I think it would be wise to await the receipt of that report before making any comments. Desirable as it would be for Northern Ireland to have a supply of natural gas, I am afraid that there is not much that any of us can do about it if there is no natural gas there. There have been suggestions made about piping natural gas across the Irish Sea to Northern Ireland, but how practicable or feasible that is I honestly do not know. It is one of the aspects on which the study team will no doubt be commenting, if they think it worth while.
The noble Viscount also asked me about metrication. I do not have any figures on cost, but would make the point that the powers given in the order are only enabling powers; they do not provide for the undertakers necessarily to introduce metrication, but if any figures on costs are available I will certainly let the noble Viscount know. I rather doubt, however, whether anybody has yet got that far.
The first point which the noble Viscount raised with me was the question of public inquiries. My understanding is that the order, as the noble Viscount has pointed out, is mainly consolidation, with the exception of the few modifications which I mentioned in my opening remarks. Public inquiries are catered for in exactly the same way as previously; they are

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provided for in the order. I do not have with me the reference, but I can give the noble Viscount an assurance that public inquiries are provided for. If the noble Viscount would like me to let him know at exactly what point in the order this provision is to he found, I could no doubt do so afterwards.
On Question, Motion agreed to.

APPROPRIATION (NORTHERN IRELAND) ORDER 1977
4.11 p.m.
Lord MELCHETT Lord MELCHETT rose to move, That the draft Appropriation (Northern Ireland) Order 1977, laid before the House on 1st March, be approved. The noble Lord said: My Lords, I beg to move that this draft order be approved. This order, the first this year in the annual cycle of orders appropriating funds for services administered by Northern Ireland Departments, serves two purposes. The first of these is to appropriate the Spring and further Spring Supplementary Estimates for the current year. Copies of the Supplementary Estimates volumes are available in the Library and provide details of the services for which additional provision is now sought. I should, however, like to say a few words about the main elements of these Estimates.
The sum total of the additional provision required is some £48·4 million. This brings the total Estimates for this financial year to £1,147·7 million, which is some £119·3 million, or 11·6 per cent., more than the total voted for 1975–76. The bulk of the amount now sought is accounted for by pay awards and increased costs. Any real increases in public expenditure have been more than offset by real decreases in other programmes. Major real increases include £6·5 million required for payments under the Meat Industry Employment Schemes. Without these payments, the further devaluation of the Irish Republic's Green Pound in October 1976 would have had a serious effect on throughput in Northern Ireland's meat processing plants. Two million pounds is needed to meet the cost of final payments under the Special Land Improvement Scheme, and a further £2 million is needed for new construction and maintenance work on roads and bridges.
The second purpose of the order is to appropriate the sums required on account for 1977–78 to provide Northern Ireland Departments with funds until after the main Estimates have been published, and appropriation of the balance of the funds required has been approved by Parliament. The sums required on account have, as usual, been calculated on the basis of 45 per cent. of the total voted provision for the current year, the amount required on account for 1977–78 being £502·6 million.
This order has been considered by another place. I have outlined in this brief summary the general nature of its content, and I shall certainly do my best to answer any questions on the order which noble Lords may wish to raise. I beg to move.
Moved, That the draft Appropriation (Northern Ireland) Order 1977, laid before the House on 1st March, be approved. —(Lord Melchett.)
Lord BELSTEAD: My Lords, I should like to thank the noble Lord, Lord Melchett, for his explanation of the order. It is an important order because, as the noble Lord has explained, it appropriates not only the spring and further spring Supplementary Estimates for this financial year, but also the sums needed for 1977–78 until after the main Estimates for the next financial year are published. I shall not raise at any length the matter of housing, even though it is dealt with in the order, because an opportunity for doing this was offered last week on another Northern Ireland order. However, I should like to welcome I' hat was said in another place about Belfast building and redevelopment.
I see from yesterday's newspapers a report that the Government are intending to tackle with even greater determination the problem of improving existing homes in Belfast. This must surely be right in Northern Ireland where, as I understand it, the population is no longer expanding very much, and where the House Condition Survey has revealed that approximately 300,000 people are living in unfit houses and that as many as 300,000 people are living in houses which are lacking at least one basic amenity.
My only question is whether the Northern Ireland Housing Executive will be able to spend the sums which are to be allocated.

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As I understood the Minister's Statement in another place, an annual average rate of over £25 million is to be allocated to new building, redevelopment and rehabilitation and to support housing associations. Obviously, the lion's share of that amount will go to the Executive. The Executive admitted in its annual report for 1975–76 that it had not been able recently to spend its allocation of money for capital expenditure. I realise that there are security reasons for this, but I must express the hope that the Northern Ireland Housing Executive will be able to implement the policy to tackle bad housing conditions in Belfast and that it will be able to fully utilise the allocations which are being made to it for this task.
The noble Lord, Lord Melchett, mentioned the £6·5 million which is required to meet payments under the Meat Industry Employment Scheme, and that reminds us of the Serious aspect of the Green Pound differential so far as Northern Ireland agriculture is concerned. I have welcomed this scheme in the past. It would appear to be the only way in which the Northern Ireland meat plants can continue to operate at anything like full capacity. However, I must put this question, which I admit I have asked before: What is the future of the scheme? Is it the Government's policy that the scheme will continue to run for so long as the existing Green Pound differential is maintained? This is not the moment to discuss the rights and wrongs of the effect of the value of the Green Pound so far as producers are concerned. Indeed, I believe that this question was touched on in a debate in this House only yesterday. However, it is obviously important for it to be known whether this method of support will continue while it is still needed.
The noble Lord, again because he was keeping his opening remarks brief, did not mention Harland and Wolff specifically. However, Class II of the order provides for selective assistance to industry and shipbuilding. I noticed that when the Statement announcing the £65 million allocation to British Shipbuilding was made about three weeks ago, Harland and Wolff was specifically mentioned as being excluded from that allocation. If one looks at the order, there is a sum of over £41 million recorded for selective assistance to industry and shipbuilding in the next financial year. Could the noble Lord tell
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the House how much of this assistance is destined for Harland and Wolff; for what purposes, and whether those purposes are in line with the aims and objects for which the £65 million to British Shipbuilding has been allocated?
I do not need to emphasise the importance of Harland and Wolff to employment in Northern Ireland, where unemployment is now running at 10·7 per cent. This is far the highest rate of unemployment in Northern Ireland since the war. Therefore I should like further to ask whether Harland and Wolff have any future shipbuilding contracts at all, bearing in mind that the £65 million has been allocated to British Shipbuilding precisely to try to attract new orders, and whether there may be any possibility of a defence contract for the yard.
The noble Lord's speech did not mention specifically the Quigley Report. Even though the report may seem to fall outside the order, I gave notice to the noble Lord that T might ask a question or two about it. The House may remember that this report is of some significance because, published last autumn, it is a development survey—I do not think one would call it a development plan—for the Northern Ireland economy, and was prepared by the Civil Service, not by outside consultants or an independent committee. I accept that there are aspects of the report upon which the Government may not be ready to comment and, indeed, with which they may disagree. I would have thought that by now the Government could have made some statement about the three Quigley proposals the Committee listed in order of priority as being of particular importance.
The first of those proposals was to reduce energy costs to industry, and, of course, my noble friend and the noble Lord opposite have been talking precisely about the gas industry only a moment or two ago. The noble Lord in his speech mentioned that due to price restraint sums of money are going to be needed to he appropriated for payments to both Northern Ireland gas and electricity undertakings. This form of support is all very well—I think it is obviously necessary—but with the exceptionally high costs of energy in Northern Ireland it is not really a solution to the problem, and this, of course, is why my noble friend Lord Long asked the question about natural gas. I hope that

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the noble Lord, Lord Melchett, may be able today to give us some news about what is called the Shepherd Report on the Northern Ireland electricity industry which seems to have taken an unconscionable time acoming. My noble friend has put his questions about cost problems of the Northern Ireland gas industry, and I will leave that industry at that.
The second of the three Quigley proposals, the noble Lord may remember, was the need for blue chip industries to be attracted to black spots in Northern Ireland. I understand that private as well as public investment in Northern Ireland industry and commerce is continuing to hold up quite well—I think Ministers are to be very much congratulated if this is the case—despite the dangers to plant and the dangers to businessmen in Northern Ireland. But it would be interesting to hear whether the recommendation for establishing sound firms in difficult areas is making any significant headway. The third Quigley recommendation, which really falls totally outside this order, was for a tax holiday on export profits, a method of rewarding success. I have put that point to the Government before, and doubtless they have not lost sight of it.
Finally, my Lords, I should like, if I may, to turn to Class VIII of Part II of this order, which appropriates just under £5 million for "youth, sports and allied services and community relations". I should like to ask specifically about the building of sport centres and youth clubs. I do not think it needs very much imagination to see that sporting facilities are a significant part of the policy to try to lead the Province to normality and peace. As I remember it, Northern Ireland had plans to build either five or seven large strategically placed sports centres. Three of them were to be in Antrim, Newtownard and Craigavon; but I regret to say I forget where the others were to be. I remember visiting the Antrim centre and, with its marvellous facilities and set in a very pleasant place, it was a sight for sore eyes. I would be interested to hear how completion of these main centres has progressed.
In addition, there are two other kinds of centre or club. One is the community hall, something with which noble Lords
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will be familiar in towns and villages in Great Britain, financed partly voluntarily and partly by grant aid from the Government. In Northern Ireland, where rural isolation is a very real factor, community centres are again a way of integrating the community and providing a focus for community life. I remember very well a place on the West side of Strangford Lough, Killyleagh, which is a beautiful centre for sailing; the noble Lord obviously knows it. Very nice it is, if one happens to be in a boat or happens to have transport, one's own car, and can get to and from that little market town. But, if one is stuck in Killyleagh, there was, and I expect there still may be, no community centre of any kind at all. I should like to know what kind of grant aid budget exists in Northern Ireland for these projects, because a percentage of grant aid can make all the difference between a project being successfully completed and a project not being started at all.
Finally, there are those clubs or centres which, as the noble Lord will, I am sure, know, are urgently needed in such places as Belfast or Londonderry where the security situation is particularly bad. Frequently the Security Forces will take a visitor to a selected spot and will say, "If only there was a youth club there now, many of our troubles in this particular area would be over as far as young people are concerned." The problem with such projects is that they are always needed urgently and they simply cannot queue up and wait their place in a future year's grant aid programme. It was a weakness of the grant aid arrangements in Northern Ireland that there was no separate grant programme for urgent projects connected with the security situation. I am not saying that they were not attended to, but so far as I know there was no separate programme. But now that education and community relations are under one budget I would have hoped that it might be possible for an overall look to be taken at the community projects problem, and those with particularly urgent needs given a separate slice of the Department of Education budget. Those are the only questions I have to ask on this order. Doubtless we shall be having another opportunity later in the year when the firm Estimates for the forthcoming financial year will be presented by the Government. Meanwhile,

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I certainly give my support to the passage of this order.
4.27 p.m.
Lord MELCHETT: My Lords, I am very grateful to the noble Lord, Lord Belstead, for giving his support to this important order and for giving me notice of some of the points he was to raise this afternoon. As he has said, we spent some time recently discussing housing, and particularly the new housing drive in Belfast. I should like to make two points on that. First, I think it is particularly noticeable how widely welcome throughout Northern Ireland is the new emphasis which my honourable friend, the Parliamentary Under—Secretary of State with responsibility for the Department of the Environment, is giving to housing in central Belfast. This is obviously an extremely encouraging sign. The noble Lord raised the problem of the ability of the housing executive to spend all the money that is available; and that is, of course, a real problem, particularly in a city like Belfast with the appalling difficulties that face those contractors who are building in certain parts of the city. My honourable friend, as the noble Lord will know, is chairing a steering committee on housing in Belfast, and it is very much hoped that that committee, with representatives of all those agencies involved, will give some assistance to the housing executive, giving them the necessary impetus and drive which will undoubtedly be needed to make an impact on the appalling problems that exist.
The noble Lord then asked me about the meat industry employment scheme and about the future of that scheme. I certainly agree with him about the importance of that scheme, and I am grateful for his acknowledgment that this is the best way of meeting what is for Northern Ireland an extremely serious problem. My right honourable friend the Secretary of State is not yet in a position to make an announcement about the operation of the scheme after 31st March 1977. He is studying the conclusions of an independent examination of the scheme which has recently been presented to him by outside consultants. An announcement about the future of this scheme will be made at the earliest opportunity. I certainly know that my right honourable friend is aware of the urgency
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of making an announcement about the future of this scheme.
The noble Lord also asked about Harland and Wolff. May I say, first of all, that the company is working through its order book in an exemplary fashion and maintaining its good record of industrial relations and productivity. The management and the workforce have contributed a great deal to the yard's creditable performance in difficult circumstances. The noble Lord asked me about the amount of £41 million which is mentioned in the Estimates for assistance to industry and shipbuilding, and asked how much of that would be available to Harland and Wolff. I regret to say that I do not have a definite answer on that at this moment, but I will write to the noble Lord. This very much depends on the orders that may come to Harland and Wolff. The Government are determined that if viable orders come forward, Harland and Wolff will receive any help it needs in order to secure those orders. It is a matter of reacting to the orders. Inquiries about possible future orders have been received, but at this stage I am afraid it is not possible, nor would it be right, for me to divulge details of the commercial negotiations which are taking place.
Lord BELSTEAD: My Lords, I did not give the noble Lord notice of my question on Harland and Wolff. Perhaps he could write to me on it, as that would be the most useful way of dealing with it. I want to make my question absolutely clear. As I understood the Government's Statement some three weeks ago, the £65 million for British Shipbuilding is to be used to try to attract new orders. That was its purpose. Perhaps I could receive advice in a letter—if the Government are able to divulge the sum of money from the £41 million that will go to Harland and Wolff—as to whether it will be for the same purpose. The crucial question for Harland and Wolff is whether they will be able to obtain new orders.
Lord MELCHETT: My Lords, I certainly agree with the noble Lord that that is the crucial question. I take his point and shall certainly write to him about it. I only wish that I knew the answer to that crucial question, as do many others in Northern Ireland. The noble Lord then

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asked me about the Quigley Report and what progress had been made on consideration of its recommendations. As the noble Lord knows, the report was published on 18th October and since then it has been widely circulated both within and outside the Government. As the noble Lord indicated, it is not a policy document; it sets out a series of options for the Government's consideration. A wide variety of organisations, including those representing both sides of industry, have been consulted and have recently expressed their views about the report. Those views are now being considered together with the report.
I take note of what the noble Lord said about three of the main recommendations, particularly the one about reducing energy costs to industry. As he will be aware, there are fairly heavy public expenditure implications in almost all the recommendations of the Quigley Report. That is something which we must bear very carefully in mind when deciding what, if anything, the Government can do to meet the recommendations. My right honourable friend the Secretary of State intends to ask the Economic Council, which will shortly be reconstituted, to examine the report as one of its first major tasks. Some of the possibilities advanced by the report have public expenditure implications and others are of a long—term nature. All will have to be carefully evaluated in the light of public expenditure constraints. However, in the meantime I assure the noble Lord that all Ministers in the Northern Ireland Office are acutely aware of the importance of maintaining employment and encouraging new investment. My honourable friend the Minister of State is currently in the United States on just such a mission. I am sure that he will be successful.
The record of private investment and of industry in Northern Ireland has been extremely encouraging, given the appallingly difficult circumstances—not only those circumstances peculiar to Northern Ireland but also, as I was aware in my days at the Department of Industry, the enormous difficulties in a period of economic recession in attracting any industry to any area in the United Kingdom. Given that background, we have done extraordinarily well in maintaining the number of jobs in Northern
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Ireland that we have managed to maintain, in keeping the Northern Ireland equivalent of the regional employment premium, which has undoubtedly saved a large number of jobs in Northern Ireland and in attracting a number of new companies, particularly those from abroad, to Northern Ireland in recent years.
Finally, the noble Lord asked me about the youth and community services in Northern Ireland. It would take me a long time to tell the noble Lord all that is taking place, because an enormous amount is happening in the youth, community and sporting sectors, all of which fall within the ambit of the Department of Education. However, the community services and sporting provision are the direct responsibility of district councils.
Viscount AMORY: My Lords, I should like to ask the noble Lord one question. My noble friend Lord Belstead very rightly placed emphasis on help for community halls, youth clubs, et cetera. Can the noble Lord assure us not only that he will think in terms of the very large—scale, modern, highly—equipped, luxurious new centres, which are not always the ones that attract the most loyalty and interest, but that he will also divert a reasonable part of the possible aid to the much smaller, more modest and intimate and what might be called in some cases more old—fashioned youth clubs and community centres? I believe that they are enormously worthy of support as well as the large modern enterprises.
Lord MELCHETT: My Lords, the noble Viscount should have been at a conference which I attended two weeks ago at Portrush in Northern Ireland where exactly that point of view was expressed. It was a conference on the youth service in Northern Ireland held by the Youth Committee. No doubt when that committee comes to me with its recommendations for the future of the youth service in Northern Ireland, that will be one of the points it will make. It is indeed a matter of which the Department of Education is already well seized.
The noble Lord, Lord Belstead, asked me about the expenditure on leisure centres, which are at the other end of the scale—a very large and very expensive

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facility. As the noble Lord said, significant progress has been made in Northern Ireland. In Belfast, the programme has temporarily been reduced to four centres—those at Andersonstown, Connswater, Shankill and Maysfield. The other three centres which were proposed at Ballysillan, Bog Meadows and Whiterock have had to be deferred. We have made a policy decision not to proceed with any large—scale leisure centres outside Belfast in the immediate future.
As I think I intimated when discussing an order recently, I very much hope that shortly we shall see the sort of switch in emphasis that has already occurred on the housing front in my two areas of responsibility in Northern Ireland; namely, education, health and social services. If such a switch takes place, it may be that there will be encouraging news for some of the deferred projects in Belfast, including the leisure centres. I hope to make a statement about that in the reasonably near future.
The four centres that have been opened are at Antrim, Enniskillen, Craigavon and Londonderry and major centres at Newtownabbey and Maysfield will be opening their doors in the near future. Work is going ahead satisfactorily at Carrickfergus, Andersonstown and Connswater and work is shortly due to start on the leisure centre at Shankill.
I shall give the noble Lords an idea of the priority which we are giving to this expenditure on both the small and the large—scale projects. On the youth side, about 60 major building schemes, costing £2 million will be completed in the 1970s and at present work is in progress on 18 voluntary building schemes and 13 board schemes, costing in all about £1·75 million. Seventeen new community centres will be opening in Northern Ireland in 1977 and the number of people employed, which is equally if not more important in some areas than the provision of new buildings, has increased substantially in the youth service in recent years. I hope that we can take some new initiatives on the community worker's front in the near future as well.
In 1975–76 expenditure on sport and recreation was nearly £2½million and it is estimated that £2,600,000 will be spent in the financial year 1976–77; estimated
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expenditure for 1977–78 is £3,400,000. Expenditure on the youth service has trebled in three years in Northern Ireland. I hope that noble Lords will appreciate that an enormous amount is being done. I wish I could take up more of your Lordships' time to give further details. On the whole, the youth service, community service and sporting facilities in Northern Ireland are receiving priority. My concern is to ensure that priority is given to those areas that are most in need of the facilities and help that those services can provide.
On Question, Motion agreed to.

JOB RELEASE BILL
4.40 p.m.
Lord WALLACE of COSLANY: My Lords, I beg to move that the Job Release Bill be now read a second time. The purpose of the Bill is to give the Secretary of State statutory authority for expenditure on job release schemes. Its immediate aim is to provide such authority for the scheme which is already in operation and which for the time being is being financed under the Appropriation Act. The job release scheme is one part of the Government's programme of selective employment measures. Noble Lords will remember that we debated the programme only last week, and I then touched only briefly on the subject of job release because we were to deal with the Second Reading today. Therefore, today I have the opportunity to deal with it more fully.
The aim of the scheme is to help older workers nearing statutory pensionable age to leave their jobs early and to release jobs for the younger unemployed, and to reduce the competition for jobs among unemployed people by encouraging older workers without jobs to leave the labour market. Job release is a new initiative in this country and it is indeed true to say that we are among the pioneers. I believe Belgium is the only other country which is trying it at the present time, although I would add that in the debate which was held in January in the Council of Europe, in which I took part, this was one of the recommendations made to the Council of Ministers.
The scheme now in operation began on 3rd January 1977 and lasts for six months

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until the end of June. It offers a tax free allowance of £23 a week to people in full-time jobs who are within one year of statutory pensionable age—in practice, men of 64 and women of 59—and who undertake to leave paid employment and not to seek work, although they will not be disqualified from receiving the allowance if they have small earnings of not more than £4 a week.
The applicant's employer must agree to release him and to recruit instead from the unemployed register another worker who otherwise would not have been recruited. The new worker need not necessarily be for the same job; there is no requirement for a direct replacement. When people leave an employer there may be room for internal promotions or transfers to fill the immediate gap. What is important is that a vacancy is created somewhere in the firm and that it is filled by a registered unemployed person. It is worthy of note—and I emphasise this strongly—that the scheme is entirely voluntary for the worker and employer. Unemployed people in the same age group may also apply for the allowance. In doing that there is no reason for distinguishing between employed and unemployed people. The point of the scheme is to reduce the overall number of people competing for jobs.
If we want to look at it in another way, in social rather than economic terms, it seems right on equity grounds to include the unemployed: to exclude them would be to put them at a double disadvantage. The scheme operates in the assisted areas where more than half the total area of unemployment is to be found. There are two reasons for this limitation: first, there is the obvious question of cost, which has forced the Government to restrict the scheme. Secondly, it seems sensible with a new initiative to begin on a relatively limited basis while focussing on an area of greatest need. I must say however that the response to the scheme has so far been less than we had hoped. Noble Lords will have seen in the Explanatory and Financial Memorandum to the Bill the estimated take-up upon which the projected costs of the scheme was based. Of course estimates for an entirely new scheme are difficult to make.
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Up to 18th March there have been almost 12,000 applications of which about 10,000 have been approved, about 3,000 from employed people and 7,000 from unemployed people. More publicity is being given to job release in an effort to include the take-up and particularly to ensure that all in employment who are eligible are aware of the scheme. Television advertisements are being used and my right honourable friend has written to the major employers in the country and I know he would like me to repeat his message today: we hope all employers will do all they can to publicise the scheme to their workpeople.
I turn now to the provisions of the Bill. I make no apology however for having spent a little time in describing the scheme since I believe it is the best way of explaining what the Bill is really intended to achieve. It expresses its intentions in very few words. This is an enabling Bill which provides statutory authority for expenditure by the Secretary of State on job release schemes which meet the criteria mentioned in the Bill. These are, first, that allowances under job release schemes may be paid on only a temporary basis; secondly, that allowances may be payable only to a particular group of persons—those approaching pensionable age—and thirdly, that schemes must be for a specific purpose; that is, creating job vacancies and otherwise mitigating the effects of high unemployment. These three factors define the purpose of job release schemes in the circumstances in which they operate. They create a clear statutory framework within which the Secretary of State can adjust the conditions of schemes rapidly in the light of experience and to suit current needs.
I have said that the schemes under the Bill must be temporary. They would cease to exist when unemployment falls to a more reasonable level, but we are anxious to provide that should unemployment rise to an unacceptable degree it will be possible for a job release scheme to be mounted again. So the authority of the Bill will operate for a period initially of 18 months but the authority must be renewed either at the end of 18 months or at some later date for periods of up to a year at a time. Renewals will be by means of a Statutory Instrument, subject to Affirmative Resolution in another place.

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The Bill also provides a safeguard from the effects of sex discrimination legislation for job release schemes in which eligibility is defined by reference to the time at which a person reaches pensionable age. We do not believe that the present scheme is in practice discriminatory. It pays the same rate of allowance to all successful applicants for the same period of time but, while the statutory pensionable age differs for men and women, job release schemes must take account of that fact. There is no other practical way of running them. However, we were anxious not to put those operating the scheme, and more particularly employers participating, at any kind of risk. That is why the safeguard is in the Bill.
The Job Release Bill is a necessary measure designed to provide authority for expenditure on a scheme already included in the Government's programme of employment measures. The scheme seeks to create permanent full-time jobs for some of the unemployed and particularly for our younger unemployed people. There can be no question as to the merit of that aid. The scheme is a valuable part of the Government's selective programme and one which we must all hope will have an increasing impact in the months ahead. We also hope of course that the need for such schemes will disappear, but in the meantime it is right to arm ourselves with the powers that we need to tackle the effects of high unemployment.
Viscount AMORY: My Lords, I think the noble Lord said just now that the service would be available in only assisted areas. I wonder whether he can correct my ignorance: are assisted areas what used to be known as "special areas", or are they in a different category altogether?
Lord WALLACE of COSLANY: My Lords, I would say that it is more or less the same thing. It is in areas of very high unemployment where special measures have to be taken. So we can more or less say that it is the same thing.
Viscount AMORY: My Lords, I was wondering whether there was an element of flexibility in this, because the boundaries of the old special areas are clearly defined and other services are available where there is a little more flexibility than this, and
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account is taken of the local level of unemployment rather than statutory boundaries.
Lord WALLACE of COSLANY: My Lords, I hope that the noble Viscount will give me an opportunity to give him a more adequate reply when I come to wind up the debate, which I shall endeavour to do. I beg to move.
Moved, That the Bill be now read 2ª.—(Lord Wallace of Coslany.)
4.51 p.m.
The Earl of MANSFIELD: My Lords, I should like to thank the noble Lord, Lord Wallace of Coslany, for introducing this Bill to your Lordships and for introducing it so succinctly. If he did not get his final sentences quite right, no doubt the Official Box will put him right when he replies to the debate. Any efforts on the part of this Government to bring down the present intolerably high level of unemployment will be welcomed, and to that end I am sure that noble Lords on this side of the House will extend a welcome to this modest measure. Nevertheless, the Bill represents one more of a number of selective schemes which are now in operation. They have this in common: they all relate to different conditions and for different periods of time but they all go to alleviate unemployment in one form or another. Among them, I suppose, are the training opportunities scheme, the job creation programme, the youth employment subsidy, and of course there are others.
I did not take part in the debate last week in which, as I understand it, the noble Lord, Lord Wallace, made his debut from the Dispatch Box, and it may be that all these questions have been answered. So far as I am concerned, I believe that a Manpower Services Commission Working Party is presently inquiring into the effectiveness of all these measures to help the unemployed. One wonders, first, when the Working Party is likely to report, and secondly, once it has reported, whether each House will be given an opportunity of debating that report.
The thought must occur, and the question be asked, whether we are diffusing our effort and, indeed, our money in too

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many different directions at once. Are we spreading what funds are available in the right concentration in the right direction? That is something to which I have no doubt noble Lords will wish to return.
So far as this Bill is concerned, during its passage through the other place a number of welcome Amendments were made limiting the operation of the scheme to a specific period, as the noble Lord told us, and making any further extension subject to an Affirmative Resolution of the other place. In the Memorandum to the Bill the Government state that they expect the number of applications over this three-year period to amount to no fewer than 78,000. Additional staff numbering no fewer than 150 would be taken on in the first six months.
As to that, and pausing there, if my researches are correct the scheme was announced in September 1976 and applications were invited in November 1976. The scheme actually started on 4th January this year but, as the noble Lord has told us, up to the 18th of this month, only 10,000 applications have been approved. Therefore, one wonders whether the 150 have now been taken on. It is six months and more since the scheme was announced, but less than that since it came into operation. If so, what are the 150 doing? On the evidence of the noble Lord, the work rate so far has not been exactly onerous. The ratio—so far as I was able to work out rather rapidly—remains the same as when the scheme came into operation; that is to say, only three applications from employed persons to no fewer than seven applications from unemployed persons.
The general idea of inducing people to give up their jobs when they are near retirement age and to make way for somebody else who is unemployed, is excellent. It is the cascade principle because, as the noble Lord pointed out, the person who gives up does not have to replace somebody on the unemployment register. Nevertheless, so far as unemployed people are concerend, as I understand it the position would be that they will be paid approximately the same by way of benefit as they would be paid if they had remained on the unemployment register, with this considerable difference: not only
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will they be relieved of any obligation to seek employment, but in fact they are positively prevented from so doing.
If one was being cynical about this, one would say that this was a matter of playing with statistics, so that the individual who previously had been paid for being on one register was now going to be paid the same sum for being on another register. If the Government were to try to claim that this is reducing the unemployment statistics, one would be entitled to point a finger, and even possibly utter a guffaw. However, I accept the Government's contention that this is not the object of the enterprise. But I am bound to say that it is difficult to see how, by taking out a few of the more elderly unemployed, it will reduce the number of unemployed as a whole.
As I understand the position, the vast bulk of the unemployed are in fact school-leaving teenagers, and they will not really be in competition with the elderly unemployed. Further, what about part-time employment? As I understand the noble Lord, a person who is in a job can, under this scheme, seek employment of some kind and take the remuneration if it amounts to no more than £4 a week. I think I understood the noble Lord correctly when he said that. One does not know whether that is averaged out, or how the figure is arrived at.
There are many people who approach retirement age who are full of vigour and well able, and indeed desirous, of holding down some part-time light employment which would he totally unsuitable for somebody who is younger and fitter. The tourist industry, in which I have considerable interest, is very much a case in point. One wonders how the Government arrived at the figure of £4. I should have thought that this is something which could be kept under review. I would hope that it would be extended, or at least uplifted, to a figure considerably higher than £4.
As I say, these people are quite able to do a light job, and I suggest that with productivity on a national scale being as low as it is they should not be prevented from doing so. By the endorsement on top of the Bill we are constrained in our approach to it and in the way in which we deal with it, but as I said at the beginning it is a modest Bill with modest aims and we must all hope that it succeeds.
5 p.m.
Lord ROCHESTER: My Lords, we on these Benches are happy to give general support to the main purpose of the Bill as set out in Clause 1—that is, to pay temporary allowances to people approaching pensionable age so as to create job vacancies and to mitigate the effects of unemployment. But of course the Bill does nothing to create employment opportunities; and, as my noble friends and I never tire from saying, that cannot happen unless there is improved profitability, higher relative rewards for skill and responsibility, and improved training facilities in industry leading to an increase in the rate at which goods and services are produced for the benefit of the community. We understand why the Bill has had to be drafted in general terms that allow considerable flexibility, so that under it new temporary job release schemes can be introduced—for example, to cover non-assisted as well as assisted areas—and I think the noble Lord, Lord Wallace of Coslany, will find the answer to the question raised by the noble Viscount, Lord Amory, on the back of the excellent pamphlet about the job release scheme which defines assisted areas in clear terms.
We regard it as quite essential that any schemes of this kind should be subject to adequate Parliamentary control and for this reason we particularly welcome Clause 1(3) and (4) under which, as I understand the position, if the Government wish to continue to pay allowances for longer than 18 months, with permitted extensions of up to 12 months, this must first be approved, as the noble Earl, Lord Mansfield, reminded us, by an Affirmative Resolution of the House of Commons. I notice that in Committee in another place two weeks ago the Minister gave the further assurance that any changes in job release schemes would be the subject of a Government announcement which could be questioned, and this, too, we welcome.
It is because we support the main purpose of the Bill that, like Lord Mansfield, I was disturbed to hear from the Minister (if I have the figures right) that, of about 10,000 people whose applications to take advantage of the present scheme had been approved by 18th March, as many as 7,000, or 70 per cent., were registered as unemployed. At a time like the present
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there is of course an understandable temptation for any Government to make use of this kind of scheme simply to reduce the number of people unemployed. But the main objective of such schemes, as the title of the Bill makes plain, is to encourage as many people as possible who are employed to retire early so as to create the maximum number of vacancies for younger people who are unemployed.
The position now appears to be that it is proving more advantageous for someone who is unemployed to claim this new form of benefit—which may, under the existing job release scheme, in some cases be worth a little more than unemployment benefit—than it is for someone who is employed to have his weekly income reduced to less than that which he is already receiving. I should be grateful if, when Lord Wallace replies, he would say whether, and if so how, the Government propose to alter the balance of the scheme so that it gives more encouragement to employed people to retire early. I was able informally to give the noble Lord notice that I would ask this question.
It would also be helpful for us to know whether the Government are prepared to entertain the idea of gradually reducing the minimum age of qualification for job release below 64 for men and 59 for women, depending obviously on the general employment position, which we hope must improve, on the extent to which the present scheme is used, and, particularly of course in these stringent times, on how much it actually costs to run schemes of this kind in practice.
I understand, further, that one of the difficulties about getting enough people who are now in employment to take this tax-free allowance of £23 a week, is that they fear this might have an adverse effect on their occupational pension. Is the Minister in a position to give us any further information on whether this particular obstacle has now been overcome, or what are the prospects for overcoming it? Subject to those doubts, we are happy to support the Bill in principle.
5.6 p.m.
Lord WALLACE of COSLANY: My Lords, I have received a number of questions about this short Bill and I will

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endeavour to answer them. At the outset, however, I wish to correct a statement made by the noble Earl, Lord Mansfield. If I understood him aright, he said that the vast bulk of those unemployed were teenage people. Actually, that is not quite true. Do I see the noble Earl wishing to interrupt?
The Earl of MANSFIELD: Not in so many words, my Lords.
Lord WALLACE of COSLANY: I am not quite sure what that means, my Lords, so I will give Lord Mansfield the figures and they may provide him with further food for thought. Only 31,596 school-leavers are involved in a total of 1,328,382. They are the provisional figures for March 1977.
This has been a short but constructive debate. We have had support for the Bill from the Benches opposite, with a certain amount of criticism and a certain amount of inquiry, and that is very welcome indeed. Although it is a small Bill, its importance should not be underestimated. It is an imaginative way of approaching a major social and economic problem. The Bill sets out to create a flexible framework within which job release schemes can be adapted to meet the needs of the time.
Lord Mansfield mentioned the report of the Manpower Services Working Party. This matter came up last Wednesday but I will repeat what I said then. The report of the Manpower Services Working Party is expected very shortly. In another place my right honourable friend is making arrangements, subject to certain considerations—others now having been added—to have a debate on it, and, as I said previously, although I cannot arrange Government business here (I have no responsibility for that) I am hopeful that we, too, will have such a debate.
The noble Earl then mentioned the question of staff. The estimate of 150 staff related to the estimated total of applications; we have certainly not taken on the whole of the 150 at the start. The staff increase is in direct proportion to the number of applicants coming forward. In other words, the gearing in terms of taking up staff will, as I said, be related to the number of applicants coming forward.
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I appreciate that there is a great deal of criticism about unemployed people coming into the scheme and I frankly admit that it is out of balance at the moment; that is a fact and we admit it. However, the main point on which we wish to concentrate, and to which we wish to give greater publicity, is the attraction to the scheme of people who are in employment, who are getting within reasonable reach of retirement, and who are than at least given an opportunity to retire early, if they so wish, on a tax-free £23—which is not too bad considering all the circumstances—and that in turn will release jobs for others. What is needed is publicity, the co-operation of the employers, and all of us doing the best we can to put over the impact of the scheme.
The £4 limit has been mentioned by, I think, the noble Lord, Lord Rochester. The Government agreed during the progress of the Bill in another place to introduce a rule allowing people in job release to earn up to £4 a week without losing the allowance. This was in response to pressure from the Conservative Benches. It was represented that we should not prevent people from taking up part-time jobs for a few hours a week. The level of £4 was suggested by the Conservative Benches and was accepted by the Government, and it is the disregard of earnings which allowed people, if necessary, to apply for supplementary benefit, dependent on the circumstances of the individual affected.
The noble Lord, Lord Rochester, in a very constructive contribution, suggested that we should possibly consider altering the balance of the scheme. The balance of the scheme will be altered if we are successful in persuading more employed people to accept it. On the question of gradually reducing age the noble Lord raised a very difficult point—that it should be reduced further still. But the cost is considerable, and at present there is no question of considering that aspect. In any case, there are pressures about in political circles for altering the pension age, and that would have some effect on the scheme.
Certainly the question of occupational pensions can give rise to some concern, but for the people involved there need be no concern whatever. First, the amount of the job release allowance payable to an

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individual is not affected by any occupational pension to which he or she is entitled. The allowance is £23 a week in all cases. Whether it will have any effect upon a person's entitlement depends entirely on the occupational scheme in which the person is involved, but, generally speaking, an occupational pension payable to a person is not affected by the £23 a week allowance. The noble Viscount, Lord Amory, mentioned—
Baroness SEEAR: My Lords, I do not speak for my noble friend, but this is really a very important point, because if one is in an occupational pension scheme and one is retiring early, then for the rest of one's life one's pension is reduced because one has fewer years of service. Does this count as retirement? I am not a bit surprised that people are not taking it, if they do not get the same pension as they would have got had they retired at age 65. One may go a year early. But the years of service are the years until one leaves, and the calculation for the rest of one's life, if one gets, say, one-sixtieth, is one-sixtieth multiplied by the number of years that one is at work. That number of years at work is reduced, and therefore the pension for the rest of of one's life is less.
Lord WALLACE of COSLANY: My Lords, it depends on the terms of any individual occupational pension scheme. In some schemes one can retire at 60, in some at 64, in some at 65, and so on. It is entirely related to whatever scheme is in operation. The point is that this is a voluntary scheme and the person must decide for himself whether or not it is a financial advantage, affecting the occupational pension, to take the scheme. The person concerned must reach that decision. It is the right of the individual to decide. He must decide in the light of the scheme and of his occupational pension whether to take it on. But, certainly, if he receives an occupational pension, his occupational pension is not affected or reduced. He keeps that money, and that is that.
The noble Viscount, Lord Amory, mentioned the assisted areas. The assisted areas include the intermediate development and special development areas; that is, Scotland, Northern Region, Yorkshire, Humberside, Wales and the North West. The areas are specified in
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Section 6 of the Industry Act 1972, and in effect they contain about 40 per cent. of the labour force and about 52½per cent. of the unemployed. That is why, necessarily in the first instance, we have been selective in introducing the scheme in those areas—
Viscount AMORY: My Lords, I thank the noble Lord for that information. On my way out the noble Lord, Lord Rochester, slipped me a pamphlet which I think gave me that answer. I wonder whether any consideration is being given to making the boundaries of those assisted areas a little more flexible? I ask this because very often there are pockets of heavy unemployment just outside the boundaries. I wonder whether continuous consideration is being given to local revisions of boundaries in the light of the changing volume of unemployment?
Lord WALLACE of COSLANY: My Lords, the short answer to the noble Viscount is that the scheme itself is under consideration all the time, and the particular points that he has raised would be considered. If the noble Viscount requires further assurance I can certainly get information for him and will write to him in due course. I do not think that there are any more points that I have to answer at present.
I want to conclude by reminding your Lordships once more of the context in which we are debating the Bill. None of us is complacent about the level of unemployment. The Government have mounted a massive programme to reduce its impact, but it is still intolerably high, despite the welcome reduction that again has been announced this morning. Job release is a measure which has the potential to reduce the impact even further, and I hope that the 10,000 or more workers and unemployed who have taken advantage of it will soon be joined by others. It is a straightforward scheme without any complicated rules to deter the applicant. I hope that people will take a good look at it, that people will publicise it, and that they will appreciate that there is something to offer in the scheme which is before them. It is open for another three months, to the end of June, and then the Government will be reviewing its future. But it is highly desirable that we have such schemes in operation at the

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present time. Small as they might be, they are in fact assisting a number of people in a situation which some of us understand only too bitterly from our experiences in the past.
On Question, Bill read 2ª; Committee negatived.

PATENTS BILL [H.L.]
5.19 p.m.
Lord ORAM: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do again resolve itself into Committee.—(Lord Oram.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Lord MAYBRAY-KING in the Chair.]
Clause 90 [The Patents Court]:
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 321:
Page 72, line 41, at end insert ("and two scientific advisers appointed by the Lord Chancellor.").
The noble Earl said: Perhaps I may move Amendments Nos. 321 and 322 in order to ask the Government some questions and because they raise a matter which affects Amendment No. 326A, which I shall be moving presently. This is setting up an entirely new court, and I understand the intention is that it will be a court in the full sense of the word—that it will be part of the High Court, that it will sit as a single judge and that appeals will be made in the ordinary way to the Court of Appeal. In subsection (4) there is provision for scientific advisers to be appointed. I understand these have very rarely been appointed in the past. Can the Government tell us their intention? When is it intended that these scientific advisers will be appointed, and who will be selected?
The Amendment goes rather far, perhaps, in saying that they should be appointed on all occasions and, so to speak, form a permanent part of the court. The object is that the increasing complexity of many patent cases may make this desirable and that this provision
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should add to the confidence of industry in using the patent court, which is very important because we wish in every way, I think, to encourage new steps which will help and can be used in the application of industry. Indeed, if there is confidence in industry it is unlikely that so many actions will run from the patent court to the appeal court. If the noble and learned Lord can answer those questions, as to what the proposals are in using subsection (4) with regard to scientific advisers, I should be very grateful, and I think it might be of general interest. I beg to move.
Lord CAWLEY: I have had some experience of scientific advisers. I think the last occasion was in the colour television case, where a Court of Appeal had a scientific adviser—and he was in fact made an honorary bencher of Lincoln's Inn for the duration of the proceedings in order that he may lunch with his fellow judges. I think that this Amendment certainly does not achieve what it is meant to achieve. It suggests that two scientific advisers should be permanent officials and that such advisers should not be appointed for individual cases. I think that would be most disastrous, because you must have somebody who knows something about the special line concerned. In the colour television case they found great difficulty in finding anyone who was not biased in some way or connected with either side. In the end they found an official of the BBC who was persona grata to both sides, and I think he was of the greatest assistance to the Court of Appeal. I think it would be a pity to have any permanent officials, and very much better if we carried on as we do now. I think that whenever the court thinks they need somebody to help them, then these officials should be appointed, but that there should be no permanent officials.
The LORD CHANCELLOR (Lord Elwyn-Jones): I am most grateful to the noble Lord, Lord Cawley, who has spoken to this Amendment, and to the noble Earl, Lord Selkirk, for introducing it in the absence of my noble friend Lord Brown. Certainly, as I think I said on Second Reading, it is the intention that, where it would be advantageous to the court to receive the help of a scientific adviser, that should be done; and I respectfully agree with what the noble

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Lord, Lord Cawley, has just said, that a panel of permanent experts really would not meet the bill because, in view of the enormously wide range of expertise that now falls for consideration in patent matters, it is much better to have ad hoc an expert in the particular field to assist the court.
What the Government have in mind—and, indeed, I have already put it in train —is that there should be a rule of court requiring that the question of appointing a scientific adviser should always be considered, and should have to be considered, on the summons for directions. That will concentrate the minds of all concerned to the question whether that would be valuable in the particular case—clearly one does not want a scientific adviser in all cases—and I am happy to say that the Supreme Court Rule Committee has already approved of that proposed change and that it will enter into force in a few weeks' time. I think that the concern that noble Lords have expressed will be met by that machinery. I am not precisely clear in my mind who would appoint the scientific adviser, or invite him to serve. Whether it would be the court or myself, I do not know; but perhaps I can look into that and let the noble Earl know the answer to that question. In the light of what I have said, I hope that the noble Earl will feel disposed to withdraw the Amendment.
Lord LLOYD of KILGERRAN: Before the noble and learned Lord sits down I should like to draw his attention to a matter which is causing me a little anxiety, and that is the White Paper on Patent Law Reform. On page 6, chapter 4 deals with the court and appeals. This is a Government White Paper which starts off this section in relation to appeals in patent matters by saying quite explicitly:
"The existing arrangements for dealing with disputes over patents and appeals from Patent Office decisions are unsatisfactory".
That is the first sentence. Then, later on, in paragraph 23 it is said:
"With these various viewpoints in mind, the Government thinks it right to consider establishing a new court which would not be part of the High Court".
It seems to me that the recommendation of this specialist committee was that the court dealing with many of these disputes
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should not be part of the High Court; and during the Second Reading debate I quoted from various judges who said that disputes on patent matters should not go to the High Court but should go to some other sort of tribunal or commission.
I fully realise that the two patent judges in the High Court who have been dealing with patent disputes in recent years, and of course the first patent judge, the late Mr.Justice Lloyd-Jacob, whom I knew very well, have done a great service to industry by the way in which they have conducted these appeals in the Chancery court in relation to patent matters, and I hope that nothing that I say will in any way be considered to be decrying the great work done by the three judges to whom I have made reference. But, for some reason or other unknown to me, the jurisdiction for dealing with patent disputes is to be in the High Court, which is against the view of the White Paper of only a few months ago; whereas, as I have said on many occasions in your Lordships' House, what is required, particularly by the individual inventor and also by the small firm, is a sort of robust action in dealing with these things.
Therefore, I am under two difficulties. I do not quite understand why there has been this reluctance to start to use a court other than in the High Court for these disputes, as recommended in the Government White Paper; and, also, why it is that there is so little practical sympathy—and I regret to put it so positively—for the views I have put forward that small firms and individuals should have the opportunity, if they so desire, to get the matter dealt with robustly before some kind of commission or some kind of court other than the High Court. I fully realise the legal problems involved, but it seems to me that it would not be beyond the wit of the Government to consider this question of the expense to small firms and inventors in relation to getting their disputes settled.
I am grateful for the long letter I received from the noble and learned Lord in regard to the difficulties of setting up a tribunal. If I may tell him again, it was entirely my fault that he has misunderstood what I said when I referred to the Royal Commission on awards to inventors set

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up after the last war. That Commission was able to make not only ex gratia awards to inventors who had no rights but also replaced the High Court in relation to patent actions against the Crown under Section 29 of the Patents Act then in force. This Commission was in a position, by agreement, to deal expeditiously with patent claims that would have gone to the Court in the normal way but which the Government at the time decided, because they would be too expensive, should go to the Royal Commission. I am sorry to have spent so much time on this but it seems to me to be a matter which concerns small firms— and by "small firms" I mean firms with under 1,000 employees—and individual inventors.
The LORD CHANCELLOR: The noble Lord has robustly revived his plea for a tribunal to deal with these matters and, with great skill, he has managed to do so on an Amendment dealing with a different matter. I forgive him for that; and I will certainly look again at the point he has made, particularly in relation to the correspondence which we have had in regard to the matter of tribunals. The reason why it was originally proposed that the patents court should not be part of the High Court was to overcome difficulties over the right of audience for patent agents. But that difficulty, happily, did not materialise; so the way was clear for appeals from the comptroller to go to the High Court. That was the recommendation of the Banks Committee.
I agree that there is some slight departure from the White Paper. It did not commit the Government to a mixed court but, certainly, it said the Government would consider it. We have considered it in the light of discussions and we have decided to follow the Banks proposals. For the reasons we have canvassed, I, frankly, do not think the small inventor will be prejudiced by this change; but, as I have said, with great respect, the point is slightly removed from the Amendment we are discussing and I pass the Floor, if I may, to the noble Earl, Lord Selkirk.
The Earl of SELKIRK: I thank the noble and learned Lord for what he has said. So far as I understand the procedure he has outlined, it means, in effect, that in every case where it seems that a scientific
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adviser is either desirable or helpful to the court this matter will be considered and no doubt a proper appointment will be made. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 90 agreed to.
Clause 91 [Appeals from the comptroller]:
5.34 p.m.
Lord LYELL Lord LYELL moved Amendment No. 324:
Page 73, line 17, leave out paragraph (b).
The noble Lord said: We now come to Clause 91 which is concerned with appeals from the comptroller. Clause 12 of the Bill—we discussed it during the first session of the Committee, stage—deals with the cases of patents which are called "divided out." This appears to mean that there are two inventions which are contained in one particular patent application. Where this is so, the date of filing an application is to be taken as the earliest date on which the applicant's documents for filing comply with certain particulars. The filing date of the application is of the utmost importance because, under Clause 5 of the Bill, the filing date is the priority date for the invention; and, of course, upon the priority date rests the criterion for novelty.
Because so much depends upon the priority date, we are strongly of the opinion that an appeal to the court should be allowed from a decision of the comptroller when he is acting under Clause 12. The real anxiety for an applicant will arise from Clause 12(4), from which we see that it is a matter of great importance to the applicant that a "divided out" application should be able to claim the priority date of the earlier application. If the comptroller decides against an applicant where an earlier priority date is at issue, we think it is surely right (with so much depending upon the decision of the comptroller) to allow an appeal to the Patents Court as it is to be set up. That is the effect of the Amendment. I beg to move.
The LORD CHANCELLOR: I fully sympathise with the purpose and intent behind this Amendment. I agree that a

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decision under Clause 12 could affect, and will affect, the priority date of a patent application and that that may have (as the noble Lord has pointed out) very important consequences for the applicant. What troubled us was that the decisions which the comptroller will be taking under Clause 12 are largely administrative acts not involving the exercise of any judicial discretion. At this moment, I do not see how the absence of a right of appeal could cause hardship.
But I think that I have no confidence in what I have just said on those two points. Accordingly, if the noble Lord is content to let the matter be further considered and not to press it at this stage, I certainly would be very happy to consider it. In the light of my own self-criticism it may be that at the end of the day I shall either let him again put down the Amendment on Report or may move it myself. If I could have another look at it I should be grateful.
Lord LYELL: It is gratifying to start our proceedings on this fifth day in Committee with such a kind welcome for this Amendment. We are grateful for the way in which the noble and learned Lord has received it. It contains some points which we felt were of importance and could arouse some hostility and, indeed, induce some hardship with an applicant. We shall be pleased to allow the noble and learned Lord to take further consultations. With that I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): Amendments Nos. 325 and 326 on the Marshalled List are substituted by manuscript Amendments Nos. 325A and 326B.
Lord LYELL Lord LYELL moved Amendment No. 325A:
Page 73, line 39, leave out ("34, 70 or 71") and insert ("15, 17, 24, 34, 37, 70, 71 or 72").
The noble Lord said: I beg to move this Amendment and would apologise to the Committee for an oversight. The noble Lord, Lord Oram, wrote to me and suggested that while the Government might see their way to considering the original
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Amendment (No. 325) there was one particular clause that they felt could also be added to this list. This was Clause 17. I was a trifle remiss in adding this particular clause to the list.
However, with that I hope I may pass on to looking at the object and effect of the Amendment. Clause 91(3) prevents two separate levels of appeal from a decision of the comptroller. We presume this is in the interests of keeping legal patent proceedings down to the minimum cost and seeing that they may proceed as cheaply as possible. However, we see that Clause 91 provides two exceptions to this general prohibition. Paragraph (a) gives an absolute right of appeal under certain clauses of the Bill: Clauses 7, 34, 70 or 71. We also find under paragraph (b) a further appeal will be allowed if a decision by the comptroller seems to be or is wrong in law. Even then an appeal is only allowed by leave of the Patents Court, or indeed the Court of Appeal.
We see the effect of this particular Amendment as being twofold: first, the four clauses that have been chosen to give an absolute right of appeal concern important legal issues affecting what we term basic rights. These four clauses which are at present in the Bill at line 39 on page 73 should be supplemented using what we hope are the same criteria. We hope that this is the effect of Amendment No. 325A. The second effect of the Amendment is that we believe that the leave of the court should be necessary even for the right of appeal provided by subsection 3(a) in this clause. This would be the effect of Amendment No. 326B to which I will be coming. I beg to move Amendment No. 325A.
5.42 p.m.
The LORD CHANCELLOR: It may be convenient for me to indicate at once that we propose to accept these Amendments. I am most grateful to the noble Lord for putting them down. We had already accepted in principle Amendments Nos. 325 and 326, which have now been withdrawn in place of the changed draft which is now before the Committee. We share the view of the noble Lord that a right of appeal on fact or law should not be restricted to cases where the comptroller's decision was given under Clauses 7, 34, 70 or 71. But, at the same time,

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since we are dealing here with proceedings which originated before the comptroller, it is desirable to avoid an undue proliferation of further appeals to the Court of Appeal. But the requirement of leave in every case should secure this. In the circumstances, I am very happy to accept these Amendments.
Lord LLOYD of KILGERRAN: Before the noble and learned Lord sits down, I have not yet spoken to this Amendment because I wanted to listen to what the noble and learned Lord had to say.
The LORD CHANCELLOR: I was not seeking to obstruct the noble Lord; I thought he would like to know that I was agreeing to accept the Amendments.
Lord LLOYD of KILGERRAN: I am much obliged. This Amendment relates to Clause 37. So far as I understand it, this is the clause which deals with the award of compensation to an employee who has a patent and feels he ought to have some compensation. There should be a finality in regard to this kind of appeal from an employee, and indeed I had considered whether an Amendment should not have been put into the previous clause to say that there should be no appeal from the decision of the Comptroller General when he was deciding what award should be paid to an employee. My reason for that would be that there should be that finality in the consideration of what award should be paid to the employee. If the Comptroller General realised that there was no appeal available, that would probably assist him in relation to the realisation of his jurisdiction. I wonder whether, therefore, the Government would consider at least deleting the reference to Clause 37 in the present Amendment, or giving consideration to the question whether or not there should be this appeal as of right to the Court of Appeal in relation to Clause 37.
Lord BELSTEAD: On behalf of my noble friend, may I say that it is not as of right. Amendments Nos. 325A and 326B have been at pains to make it clear that both will depend on leave being given.
Lord LLOYD of KILGERRAN: I am grateful to the noble Lord, Lord Belstead. What I meant to say was that it should not
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be put into the Bill that there was a possibility, even by leave, of getting an appeal.
The LORD CHANCELLOR: That is a matter of opinion that we considered when we were dealing with the compensation provisions. I would have thought that the amount of the award and the grounds on which the award is made, were matters which could in a given case, subject to leave being granted, be very appropriate indeed for appeal. I should be unhappy if that class of case was excluded While it would concentrate the mind of the comptroller wonderfully to realise that he is giving a final decision and, to that extent, is infallible, somebody once said about the House of Lords and its decisions that they are not final because they are infallible but infallible because they are final. While the comptroller's mind would be concentrated, realising his was a final decision, I do not think that the litigant, feeling that he had suffered an injustice, would obtain great comfort from the thought that at least the comptroller knew his decision was final. I do not think I approve of the denial of the right of appeal in an appropriate case, as the noble Lord pointed out, where leave to appeal is granted.
Lord LYELL: I hope that the noble Lord, Lord Lloyd of Kilgerran, is not too concerned about Clause 37. I appreciate his professional interest and knowledge in these matters. I wonder whether he would agree with me that there would be two sides to an appeal under Clause 37. I hope an employee inventor who felt aggrieved would have a right of appeal, again where the court felt that there were grounds for dispute, and should then be given leave.
Lord LLOYD of KILGERRAN: When the noble Lord talks about the employee having a right of appeal, in my experience that right of appeal is very much limited by the cost of such an appeal. My appeals to the Committee have been to try to reduce the amount of costs in these matters which will he involved to the employee. It is all very well to say that an employee can take the case to the House of Lords; but there is no legal aid for the employee and therefore the cost to him is a serious handicap.
Lord LYELL: I take the point. I wonder what would be the difference in taking an appeal to the comptroller and on. But the noble Lord, Lord Lloyd, will know these things, I am sure, as do the people who are involved in these matters in their professional life.
Lord LLOYD of KILGERRAN: If the noble Lord, Lord Lyell, wants advice about costs, I may be able to tell him privately. It involves thousands of pounds in disputes on patent matters. I feel that employees ought to be assisted in some way to avoid these heavy costs being incurred or threatened to them and thus depriving them of justice.
Lord LYELL: I think probably we should discuss the details and the figures at a later stage, and not during the Committee stage. I hope the noble Lord, Lord Lloyd, will accept that we have gone far enough along the channel today. I should like to say to the noble and learned Lord who sits on the Woolsack that we are most grateful to him for indicating that our Amendment attempts to fit the case. I am also grateful to the noble Lord, Lord Oram, who indicated that this would be broadly acceptable.
On Question, Amendment agreed to.
The DEPUTY CHAIRMAN of COMMITTEES (Baroness Wootton of Abinger): I now call Amendment No. 326B, which is substituted for Amendment No. 326.
Lord LYELL Lord LYELL moved Amendment No. 326B:
Page 74, line 1, leave out ("on that ground") and insert ("under this section").
The noble Lord said: I have already spoken to this Amendment. I beg to move.
On Question, Amendment agreed to.
5.52 p.m.
The Earl of SELKIRK The Earl of SELKIRK moved Amendment No. 326A:
Page 74, line 4, leave out subsection (4) and insert—
("(4) An appeal shall lie to a single judge of the Court of Session from any decision of the comptroller in proceedings under subsection (5) below, except any decision mentioned in paragraphs (a) to (f) of subsection (1) above.
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(5) In any proceedings before the comptroller under this Act, the comptroller shall hold the hearing in Scotland where either:—

(a) both parties have their place of business in Scotland; or

(b) the patentee has his residence or place of business in Scotland.

(6) The Lord President of the Court of Session shall make rules for the hearings of appeals by the Court of Session.").
The noble Earl said: We now come to the application of this new court for Scotland and I think, by any conceivable standards, what is written into the Bill is totally inadequate. It says three things. The first is that appeals from the comptroller will be taken to the Court of Session and, secondly, that they will not be taken in the sheriff court, except for incidental procedure; thirdly, that the assessors may be paid. Nothing else is put in; no powers are given to the Lord President of the Court of Session to make regulations. In fact, there is no real explanation of how the Government propose this shall work. I hope the Government will give some indication of how they expect this to be conducted.
I should like to ask one or two specific questions as to what it is the Government have in mind. First, are appeals from the comptroller to be taken by a single judge? I should have thought so, and that the general procedure laid down in England would here be followed. What is to be the position of the assessors? So far as I can see, one may pay them but there is no means of appointing them. I wonder whether that does not require to be looked at again. Finally, the Explanatory Memorandum says that hearings will be taken in Scotland for cases affecting Scotland; but there is no reference at all to that in the Bill. My Amendment suggests that the comptroller should sit in Scotland—and he has not sat in Scotland very often, I believe—where both parties are resident in Scotland or where the patentee or the claimant of the patentee is resident in Scotland. That is what the Amendment says, and I very much hope the Government will be able to agree to it, at least in principle.
One other important matter is whether the Government propose to put a filing office in Scotland. The noble and learned Lord, Lord McCluskey, said the other day that it does not require statutory authority but it is a matter of administration. This

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is a matter where time and expense can be of very real significance and importance. I am informed that in many European countries the filing offices are dispersed round the country and there seems no reason at all why that should not equally be the case in Scotland. It would not be a very great matter to have an office of this character set up, for example, somewhere in the Department of Trade offices in Glasgow.
I should be very grateful if the noble and learned Lord could explain what sort of arrangement is proposed for Scotland and on whom it is desired to put the responsibilities. I do not propose to press the Amendment but I think we ought to have a full explanation of the sort of organisation which is envisaged, and not just these very brief and totally unsatisfactory suggestions which are made in the Bill. Incidentally, I would suggest that subsection (4) would fall very much better under the next clause, Clause 92, with which it appears to me to be far more closely connected. I beg to move.
5.56 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): Perhaps the Committee would allow me to take the Amendment, first of all, in its own terms and then come back to the criticisms made by the noble Earl, Lord Selkirk. The Amendment, as we see, would require the comptroller to hold hearings in Scotland in cases where the parties are resident or have a place of business there. These are certainly factors which ought to be taken into account by the comptroller when fixing the venue. But we suggest they are not the only factors which may need to be considered. Others are the convenience of the patent agents involved and that of the expert witnesses; the expense which would or might be occasioned by all these people and the hearing officer having to travel to and stay in Scotland for the duration of a hearing.
Sometimes, as I think that practitioners here could confirm, there is a degree of urgency involved. I understand that sometimes a hearing has to take place at very short notice indeed. Perhaps most important of all are the wishes of the parties, because although they fulfil the
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qualifications envisaged in the Amendment, they may wish to appear before the comptroller in London and not to have the proceedings in Scotland, for whatever reason. So there is the need to take into account all these other factors. However, I should like to acknowledge that the Amendment has concentrated the Government's mind upon these matters in a way which perhaps it had not been concentrated before. There is the need to take account of all those factors and also the representations which the Government have received from various bodies in Scotland. All these things have led the Government to the view that further consideration needs to be given to the whole clause.
To that extent, I acknowledge the force of the criticisms that have been made, and indeed the Government are now giving the consideration to these matters which has been rendered necessary by the observations which have been made and by the observations which have fallen from the noble Earl. I can, however, say this in general: the comptroller has always been willing to sit in Scotland, and remains willing to conduct hearings there. Indeed, I can go further and give an undertaking that he will do so whenever the circumstances are appropriate, although I would not want to be driven too hard as to what would constitute "appropriate circumstances".
We must also note that under the present Bill the number of cases in which the comptroller can sit in Scotland has been substantially enlarged, compared with those under which he could sit under the 1949 Act. Under that Act, it was only under Sections 55 and 56 that hearings could be directed to take place in Scotland. The Bill extends his discretion to make such an order.
The noble Earl mentioned specifically the question of the single judge. The question as to whether an appeal should be taken by a single judge or by more than one judge is, as the noble Earl will appreciate, a matter which the Court of Session itself should regulate, because that court controls and regulates its own procedure. The Lord President of the Court of Session has confirmed that in his view the Bill should provide merely for an appeal to the Court of Session—I think that is fairly usual—and that rules of court should

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provide that the appeal will be heard by an Outer House Judge—that is, a single judge of the Court of Session. The Lord President has confirmed that the court is willing to make rules to that effect, and express provision for it in the Bill is therefore unnecessary.
In relation to the matter of the assessor, I think the noble Earl will see that provision for that is made in Clause 92(3):
"The remuneration of any assessor appointed to assist the court in proceedings under this Act in the Court of Session shall be determined by the Lord President of the Court of Session with the consent of the Minister…",
and so on. One of the matters which the Government have to reconsider is this question of what feature of a case, or of the parties to it, should determine whether that case ought to be heard in Scotland, and what the noble Earl has said will be taken into account.
I think that I should say this in relation to the Amendment. The proposed new subsection (6) is unnecessary in the light of what I have said, because of course the Court of Session has power to regulate its own procedure, which is conferred by Section 16 of the Administration of Justice (Scotland) Act 1933. It can make the necessary rules under that Act, and accordingly the new subsection (6) is unnecessary. The noble Earl raised one other matter; that is, the question of having a filing office in Scotland. I do not think that that arises directly out of this Amendment, but the noble Earl will perhaps appreciate that the matter of filing documents in places other than London is not a peculiarly Scottish point. It affects other cities—for example, Liverpool—and I do not know that one can necessarily say that communications are any better between regional centres in England and London, on the one hand, than they are between Glasgow or Edinburgh and London, on the other. The same applies, of course, to places as remote from London, in terms of travel time and expense of travel, as Newcastle.
The Patent Office in fact accepts business by post and, in practice, that means that a document which is posted, whether in Glasgow, Newcastle or Liverpool, will be treated as having been filed in the Patent Office on the day after posting. Therefore, there is a delay of only one day. I think the noble Earl will
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appreciate that if one set up a filing office, or more than one, in Scotland, there would be pressure to set up similar offices in other regional centres, and the expense would be out of all proportion to the benefit that might be gained. I give that reply in the hope that it is a satisfactory one, although I do not think that it arises directly out of this Amendment. Subject, however, to those comments, the Government are certainly considering both what the noble Earl has said and the representations which they have received.
The Earl of SELKIRK: I am very grateful to the noble and learned Lord for what he has said. Of course, the argument about Liverpool is always before anyone's mind and we are discussing a much wider sphere. But the fact is that Liverpool is less expensive than Glasgow and, on the whole, travel to Liverpool is quicker than to Glasgow. Therefore, it is that much more difficult, in terms of cost and time, to do things in Glasgow than in Liverpool. I agree that there is a marginal element, and I would not contradict that for a moment.
But may I ask the noble and learned Lord whether he would consider putting subsection (4) of Clause 91 into Clause 92, and making the one clause deal with the Scottish application of this Bill? It seems to me to be tied on to the end of Clause 91, but it has very little to do with it. I leave it with him and will withdraw this Amendment, in the hope that something will be put forward which deals a little more specifically with this subject. But I should have thought—and I believe that the noble and learned Lord acknowledged it—that the wishes of the parties should be the predominant factor. I would not say that the patent agents stand first here, because they want to have everything where they are working. They would not necessarily consider the cost to other people. I would ask the noble and learned Lord to consider that point very carefully. Unless he wishes to say anything more, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 91, as amended, agreed to.
Clause 92 [Proceedings in Scotland]:
6.4 p.m.
Lord McCLUSKEY Lord McCLUSKEY moved Amendment No. 327:
Page 74, line 14, leave out subsection (2).
The noble and learned Lord said: This Amendment deletes what seems to be an unnecessary provision. I can say briefly that subsection (1) of this clause confers exclusive jurisdiction in patent proceedings in Scotland upon the Court of Session, and that it follows from that that there is no need to make additional provision expressly excluding jurisdiction which the sheriff court might otherwise have been thought to possess. I think that that enables me to answer in this visit to the Dispatch Box the point about the sheriff court which the noble Earl made in relation to the previous Amendment. I beg to move.
Lord LYELL: Can the noble and learned Lord explain to me Section 7 of the Sheriff Courts (Scotland) Act 1907, and Section 31 of the Sheriff Courts (Scotland) Act 1971? I wondered what was their importance. Perhaps the noble and learned Lord can also explain the significance of the words,
"…except in relation to questions which are incidental to the issue in proceedings which are otherwise competent there",
in subsection (1).
Lord McCLUSKEY: It will not surprise the noble Lord to know that I do not carry them in my head, nor have I thought it prudent to carry them into the House today. I came to the view that it was unnecessary for them to be there and subsection (2) was to be deleted. I am afraid I did not think that the noble Lord would be so searching as to ask me why they were there, so I cannot give him an explanation. But the question is deserving of an answer, and I will write to the noble Lord and explain how we made the error in the first place.
Lord LYELL: I thank the noble and learned Lord and beg him not to go into too much detail. A very brief explanation would certainly satisfy me.
Lord McCLUSKEY: That is exactly what I had in mind.
On Question, Amendment agreed to.
Clause 92, as amended, agreed to.
Clauses 93 and 94 agreed to.
Clause 95 [Exercise of comptroller's discretionary powers.]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 327A:
Page 74, line 38, at beginning insert ("Without prejudice to any rule of law,").
The noble and learned Lord said: I am comforted by the fact that my noble and learned friend the Solicitor-General cannot, off the cuff, tell us what are the provisions of Section 7 of the Sheriff Courts (Scotland) Act 1907 and Section 31 of the Sheriff Courts (Scotland) Act 1971. It gives me great comfort to realise that, like myself, his memory is fallible on these important matters.
Clause 95, with which we are now dealing, imposes on the comptroller a specific duty to hear a party to a proceeding before exercising his discretion adversely. It seemed to the Government that this might be thought to be overriding the common law rules of natural justice, of which audi alteram partem—the right of each party to be heard—is a mere example, but a very important one. We think it prudent, lest it be thought that, because this has been specifically identified, the other relevant rules of natural justice do not operate. But, of course, that is far from our intention. The rules of natural justice will continue to apply, and the Amendment seeks to make this plain by adding the words, "Without prejudice to any rule of law" at the beginning of this clause. I beg to move.
On Question, Amendment agreed to.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 328:
Page 74, line 38, after ("shall") insert (",before exercising his discretion or giving a decision or determining a question,").
The noble Lord said: With this Amendment, I should also like to speak to Amendments Nos. 331 and 332. I am not sure whether the words "exercising…any discretion" in this clause cover the words which my noble friends and I would like to insert into the Bill by Amendment No. 328. But on the assumption that this is not the case, we think that Clause 95 ought to be wider in scope, in that any

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party to a proceeding should have the right to put its case, whether the proceedings require the comptroller to exercise his discretion, to give a decision or to determine a question.
An example of what I have in mind is whether the employer and the employee have the right to appear before the comptroller when he is deciding under Clause 37 whether compensation should be awarded to that employee for his invention. That would, presumably, be giving a decision. Then there is the kind of case where there is a right for the employer and the employee to be heard under Clause 38, and the comptroller determines the question of what is the fair share of the benefit from an invention to which the employee is entitled. An example of exercising his discretion might be in Clause 26(4), where the comptroller shall, subject to conditions, restore a lapsed patent by order which may be subject to such conditions as the comptroller thinks fit.
Acceptance of these Amendments would make it clear, I think, that under Clauses 37 and 38 in particular the parties concerned have an opportunity of being heard. Anyway, that is perhaps the clearest example of the practical effect of these Amendments. Perhaps I ought to add that if, by any chance, these Amendments are acceptable in principle to the Government, they may feel that the placing of Amendment No. 331 in the clause does not make for very polished English. If I am told that the Government would prefer to redraft, I will, of course, accept such advice. I beg to move.
The LORD CHANCELLOR: I do not think that there is a great deal between noble Lords opposite and the Government on this question. Clearly the result we are seeking to achieve is that the comptoller shall hold a proper hearing and give interested parties an opportunity to put forward their views in the circumstances in which it would be appropriate for that to be done, and for the comptroller to see that this is done before embarking upon a particular course of action. The only difference between us is that, as at present advised, the Government believe, particularly in the light of the acceptance of Amendment No. 327A, that the present wording of Clause 25 will achieve the result that is being sought.
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We are a little apprehensive about extending the wording of the clause as is proposed in these Amendments. They might result in the comptroller being required to hold a hearing before performing what might be a purely administrative act, and clearly that is not what noble Lords have in mind. In particular, Amendment No. 331 would require the comptroller, before coming to any decision, to anticipate who might be liable to be adversely affected by it and this, I venture to think, would be a difficult, indeed an almost impossible task.
Although I am very willing to look again at the matter I do not think, with great respect, that these Amendments will give to parties to proceedings any right that they do not already have under the clause as it is now worded. On this occasion I do not think that the change proposed would be helpful to those who will be directly concerned.
Lord BELSTEAD: I am grateful to the noble and learned Lord for his advice, and I should like to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.14 p.m.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 329:
Page 74, line 38, after ("give") insert ("to").
The noble Lord said: Perhaps I may move Amendment No. 329 and speak at the same time to Amendment No. 330. We feel that these Amendments improve the drafting, but if the Government do not feel that this is so we shall, of course, accept their advice. I beg to move.
The LORD CHANCELLOR: I am sorry to sound adamant, which I do not think anybody is on the kind of matters which we are discussing; but I do not think that the Amendments would help. I am afraid that the same criticisms as I had to make before apply to these two Amendments.
Lord BELSTEAD: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 95, as amended, agreed to.
Clause 96 [Right of audience in, and privilege of communications for, certain proceedings]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 332A:
Page 75, line 1, leave out from beginning to first ("any") in line 3.
The noble and learned Lord said: In the Bill as it is now printed, Clause 96(1) confers upon solicitors and patent agents the right to appear and to be heard on behalf of any party to proceedings before the comptroller. For the avoidance of doubt, it is thought desirable to state that parties may also be represented in such proceedings, first by counsel and, secondly, by any other person whom they desire to represent them—as, indeed, is usual these days in tribunal proceedings. Amendments Nos. 332A and 332C seek to achieve that purpose. However, in order to prevent professional men who have been disqualified from practising as such from representing parties before the comptroller as "other persons", the words "subject to rules under Section 103 below" have been inserted. Rules will be made under that clause in due course excluding such people, who may, for instance, have been expelled from whatever professional organisation it may be, from acting as "other persons" and coming under the umbrella of that language. I think I have explained what the Amendments intend to achieve, and I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 332C:
Page 75, line 5, at end insert ("may appear before the comptroller in person or be represented by counsel or a solicitor (of any part of the United Kingdom) or a patent agent or, subject to rules under section 103 below, by any other person whom he desires to represent him").
On Question, Amendment agreed to.
6.19 p.m.
The Earl of HALSBURY The Earl of HALSBURY moved Amendment No. 333:
Page 75, line 9, leave out subsection (3).
The noble Earl said: I move the Amendment which stands in my name with some diffidence, as I am well aware that the cobbler should stick to his last. This is a purely legal point and I am not a lawyer. However, I have done my best
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to assure myself that I would not be wasting the time of the Committee in putting forward this Amendment. In brief, Halsbury has consulted Halsbury and has also taken counsel's opinion. I am concerned simply with the precedent involved in seeking to regulate by Statute the right of audience in what is to be a branch of the High Court. The Supreme Court of Jurisdiction Act has been acted and re—enacted three times altogether—in 1873, 1875 and 1925—and one section has survived for over 100 years. I have the wording of that section here but I will not read it, because "legalese" delivered viva voce tends to be a trifle opaque. It is the section which, as it were, does the minimum amount of regulating these matters by Statute. Save in so far as the Act itself moderates the procedure in court, it leaves everything else unchanged and states that the rules and regulations of court and procedures in court shall be the same as they were before the Act came into force. I am advised that no other Statute has regulated these matters and that they lie within the jurisdiction of the courts themselves because right of audience was not one of the matters which was dealt with by that section of the Supreme Court of Jurisdiction Act.
It is important not to confuse procedure under the various Patents Acts—we have one per generation—with this matter of a precedent. Prior to 1932, an appeal from the comptroller of the Patent Office lay to the law officers of the Crown, which by custom meant the Solicitor General. This was terminated by the Patents Act of 1832 which set up the Patents Appeal Tribunal under a judge of the High Court but it was not itself a branch or a division of the High Court. The Act of 1949 perpetuated the Patents Appeal Tribunal, but enacted Section 8 which gave this tribunal power to make rules and regulations binding upon itself. In 1972 it produced rule No. 9 which gave right of audience to parties in person, to solicitors, to patent agents and to counsel representing them, and although it did this under regulations provided under a Patents Act this is not a precedent for procedure under a superior court. Though I have no doubt it is desirable that the procedure which has been followed in the Patents Appeal Tribunal should by some means or other be extended to the court that is now going to be set up, I have doubts

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about whether we ought to indulge in a precedent on this matter if an alternative can be found.
I believe that there is an alternative, because in 1971 the Courts Act set up the Crown Court and there was then a good deal of legal argument as to how the right of audience should be regulated in the Crown Court. I believe wisely, the matter was placed under the jurisdiction of the Lord Chancellor and he was free to exercise his jurisdiction, subject to a rather general directive which told him to have account of the scarcity of counsel in any district where his jurisdiction was invoked, and also that popular favourite "the common good", and other matters of a similar character.
I believe there we have a precedent for how this matter might be regulated, because a fortiori the Lord Chancellor surely should have more authority over his own court, if authority were necessary, than is provided by Statute over the Crown Court. While I do not for one moment dispute that something of this kind must be accepted as a rule of procedure, I do query this particular way of going about it as a precedent.
It may well be that in his reply the noble and learned Lord will be able to reassure me on this point. He may tell me that it is not a precedent. He may be able to quote a Statute in which we regulated this matter by Statute before. Alternatively, he may say that he considers it to be a precedent but a rather good one; or he may say that my suggestion that the matter should come under the jurisdiction of the Lord Chancellor would be rather burdensome for the Lord Chancellor, who already has as many duties as anyone could reasonably be expected to undertake.
I shall not press this Amendment, although I think it proper to have raised these matters and I shall be most interested to hear what the noble and learned Lord says in reply. There are two other Amendments later on the Marshalled List which are consequential on this Amendment, and I ask your Lordships' permission to refer to them. They are Nos. 341 and 342. This results from Clause 102(5) making a cross-reference to the clause which I propose to delete by this Amendment. If this were deleted it would then be necessary to amend those, because they refer to it.
In addition, when it has been deleted, it turns out that Clause 102(5) is a reworded version of Section 88(4) of the 1949 Patents Act and it is not clear why this section needs rewording. Is it intended to extend or to limit the scope of the old Section 88(4) or not? Therefore, to some extent I have restored the wording of the old Patents Act and the noble and learned Lord, Lord McCluskey, will remember that last week he told me that if I could persuade the Government to reconsider this present Amendment he would also reconsider Amendment No. 312, which corresponds to the European counterpart of Clause 102(5).
I do not intend to press this Amendment. I hope very much that the noble and learned Lord will assure me that he will take this matter under review, in which case I shall be happy to withdraw the Amendment standing in my name and not to move Amendments Nos. 341 and 342. I beg to move.
The LORD CHANCELLOR: The noble Earl, if I may say so, could hardly have gone to a more impeccable source than Halsbury's Laws of England for guidance upon this matter. The history of this point is a curious one. For many years patent agents and solicitors have enjoyed rights of audience on appeals from the comptroller and until 1932 those appeals, I am fascinated to learn, were heard by the Law Officers and now, as the noble Earl has said, by the Solicitor-General, who I understand was paid an adequate fee for each such hearing, which no doubt was some relief from the shock of having to undertake the responsibility.
From 1932 onwards the appeals have been heard by the Patents Appeal Tribunal, and Section 85(6) of the Patents Act 1949 reproduced a provision in the Patents and Designs Act of 1932 which conferred—therefore statutorily—a right of audience before the tribunal upon those who before 1st November 1932 had been entitled to appear before the Law Officers. Unfortunately, Section 85(6) was, I am instructed, inadvertently repealed by the Administration of Justice Act 1970, for which I do not think I had any responsibility, but I do not want to make a political point on that! Since then, patent agents and solicitors have been authorised to appear and to be heard by the tribunal under its rules. It is the case

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that the Chartered Institute of Patent Agents is particularly keen to see the restoration of its members' statutory right, and we do not think it is unreasonable to meet their wishes in this regard.
From the passing of the 1932 Act, which established appeals to the Patent Appeal Tribunal, patent agents and solicitors have enjoyed that statutory right of audience before the Patents Appeal Tribunal. In that time, I think it is the case that many of them have gained valuable experience in the presentation of those appeals and I am not aware that any complaints about their competence have been received.
As the noble Earl has indicated, the right to appeal to the tribunal is now being replaced with the right of appeal to the new Patents Court, and we feel that patent agents and solicitors should enjoy the same statutory right of audience on appeals to the Patents Court as they have enjoyed before the corresponding institutions under the antecedent legislation for many years now. I am comforted to be informed that neither the Bar Council nor the Law Society object to what is proposed in the Bill. Accordingly, while I have been able to point to a statutory precedent and can reassure the noble Earl that the professions directly affected are happy with what is proposed in the Bill, I hope the noble Earl will now feel reassured.
The Earl of HALSBURY: The noble and learned Lord has given me one of the assurances for which I asked because he has said that it is a precedent and he thinks it is a good one. Who am Ito say that I know better than the noble and learned Lord on this occasion I am happy to withdraw the Amendment and not to move Amendments Nos. 341 and 342. I thank the noble and learned Lord for his reply.
Amendment, by leave, withdrawn.
6.30 p.m.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 334:
Page 75, line 12, at end insert ("and a patent agent shall have a like right in respect of appeals under section 91(4) above").
The noble Lord said: This Amendment would confer on patent agents and solicitors the same right to appear and to
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be heard before the Court of Session in Scotland on an appeal from a decision of the comptroller as is provided under Clause 96 (3). The only difference is that in England and Wales the appeal is to the Patents Court whereas in Scotland the appeal would be to the Court of Session. I beg to move.
Lord McCLUSKEY: I think the noble Lord, Lord Belstead, is endeavouring to have us believe, by the brevity of the presentation, that the point is so obvious that it must carry the day. I have, with regret, to inform him that the Government cannot accept this Amendment. As has just been said in the debate on the previous Amendment, it is true that for many years past patent agents have enjoyed a right of audience before the Patents Appeal Tribunal which sits for English and Welsh cases. They have thus, no doubt, gained over these years considerable experience in the conduct of patent litigation on appeal. The same, however, cannot be said in regard to Scotland. In a sense we are perhaps shadow boxing in relation to the past here, because the Scottish Appeal Tribunal provided for in Section 86 of the 1949 Act has never been constituted, and, of course, it follows, therefore, that there have never been any appeals from it to the Court of Session. Scottish patent agents and solicitors have, therefore, never been able to obtain in Scotland the experience equivalent to that obtained by their counterparts South of the Border.
I think I must go further than that. This Amendment would introduce a startlingly new departure into the practice and procedures of the Court of Session, a court established some time ago; namely, 1532. The only persons who can plead in this Court, apart from party litigants in person, are advocates, who as such are members of the Faculty of Advocates, and the monopoly right which they enjoy puts the advocate under a heavy duty; indeed, his duty to the Court prevails over his duty to his client, and that principle lies at the root of the administration of justice in the Supreme Court in Scotland. It has grown and been firmly established over the centuries and it is not to be lightly interfered with. I would, therefore, for that reason and for the reason earlier given, say to the noble Lord that this is not an Amendment which we can accept.

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I think he would also appreciate that to make such a departure would require the most intensive consultation with the interests involved, and of course no such consultation has been possible because of the appearance of this Amendment at this time.
Lord BELSTEAD: I am grateful to the noble and learned Lord for his reply. He has indeed assisted laymen like myself during these days of Committee stage; five different days we have had and there is going to be a sixth, and I suppose on the seventh we all rest. I was intrigued with the reply. Certainly in the cold grey North the noble and learned Lord, although kindly here, rules with a rod of iron. There is the Patent Appeal Tribunal which was set up in 1949 and apparently has never been constituted, and there is no provision apparently for fairly urgent consultations. But let us hope that when everything is put right and power is more devolved than it has been in the past all these things will be more easily regulated in Scotland.
The one point the noble Lord made which I must confess I expected was that this would be a startlingly new departure in the procedures of the Court of Session, which had, after all, been established since 1532. When I told somebody a short time ago that I intended to move this Amendment, the advice I received was that it would not be accepted because it would not be right to interfere with Scottish law. So, with that warning, which I should have heeded, and with the noble Lord's reply ringing in my ears, I beg leave to withdraw the Amendment.
Lord McCLUSKEY: Before the noble Lord sits down, may I, in order not to be wholly negative, and also to save myself having to write a letter, and with the permission of the Committee, say that the sections of the Sheriff Courts Act which I was asked about earlier provide that all cases competent to that court not exceeding £50—the figure was subsequently raised to £250—should be brought in that court only, and not subject to review by the Court of Session. That is what the sections I was asked about provide for.
Lord LYELL: I am grateful to the noble and learned Lord. That is two sections, Section 7 and the other section.
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They were separated by something like 64 years.
Lord McCLUSKEY: That was the rate of inflation in those days. The £50 figure was in 1907 and the £250 in 1971.
Amendment, by leave, withdrawn.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 334A:
Page 75, leave out lines 13 to 37.
The noble and learned Lord said: It may be convenient for your Lordships to consider this Amendment with Amendments Nos. 336A and 336B. These Amendments deal with the question of privilege for communications with solicitors and patent agents relating to patent proceedings, and, therefore, they have a certain technicality. Section 15 of the Civil Evidence Act 1968 provides for patent agents to enjoy the same privilege of refusing to disclose the contents of communications made in relation to patent proceedings as solicitors enjoy in relation to communications made in the course of litigation. With the advent of the European and Community Patent Conventions, patent agents will find themselves making and receiving communications also in respect of proceedings before the European Court of Justice and the European Patent Office, and it is clearly desirable, therefore, that they should also be privileged in respect of those communications. But under Section 15 of the Civil Evidence Act the privilege which they enjoy is equated with that enjoyed by solicitors, and, unhappily, doubt exists in some quarters as to whether proceedings before the European Patent Office would qualify as proceedings for the purposes of the Common Law rule about privilege. That means that before the solicitors' privilege is conferred on patent agents, it is very necessary to find out and define the solicitors' privilege in that respect.
Moreover, the reason why doubt exists as to whether proceedings before the European Patent Office do so qualify, is that they are concerned with the examination of scientific information which is presented by scientists and assessed by scientists, and that is somewhat different from the privilege enjoyed in respect of legal communications, which are distinguished from other kinds of professional advice in that they are concerned

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exclusively with rights and liabilities enforceable in law; that is to say, in the ultimate resort in litigation in the courts or before an administrative tribunal. Equally, the examination and search proceedings carried out in the United Kingdom Patent Office by the comptroller and his staff are of the same nature.
Accordingly, the first of the two new clauses we are considering seeks to redefine the privilege which solicitors enjoy in respect of communications relating to patent proceedings. Subsection (1) extends the privilege to communications made for the purpose of
"any pending or contemplated proceedings before the comptroller"
under the Bill, then the 1949 Act,
"or any of the relevant conventions or proceedings before the European Court or the European Patent Office under any of those conventions"
The relevant conventions are defined in subsection (2) as meaning the European Patent Convention, the Community Patent Convention and the Patent Co-operation Treaty.
Neither of these proposed new clauses will, as drafted, extend to Scotland. The Scottish courts have their own common law rules about privilege, and discussions are proceeding as to whether it will be necessary to introduce any extension similar to that contained in either of the first or second new clauses into Scottish law. If on further study such extension is found to be necessary, appropriate Amendments will be moved at the Report stage.
The second proposed new clause deals with privilege for communications with patent agents relating to patent proceedings and is intended to ensure that patent agents enjoy the same privilege in relation to communications made for the purpose of any pending or contemplated patent proceedings as solicitors enjoy in relation to communications made in aid of litigation. The new clause extends the protection so given to proceedings before the comptroller as well as to those before the court, and also extends it to communications for the purpose of proceedings before the European Court of Justice or the European Patent Office in all cases, whether contested or uncontested. For the removal of doubt, the expression, "patent proceedings", is defined as including an application for a patent.
Subsection (5) of the second new clause repeals Section 15 of the Civil Evidence Act 1968 and Section 11 of the corresponding Northern Irish Statute, neither of which will be required when the two new clauses become law. The two new clauses subsume Amendments Nos. 335 and 336, which were set down by the noble Lords, Lord Lyell, Lord Belstead and Lord Cawley. In the light of what I have said, I hope that the noble Lord, Lord Lyell, and his colleagues will accept that these points have now adequately been taken care of in these rather lengthy but necessary Amendments. I beg to move.
Lord LYELL: In view of what the noble and learned Lord has been kind enough to say—indeed, he has explained these two new clauses in considerable detail—my colleagues and I would certainly not wish to pass any comments or to say much against the noble and learned Lord. We want to read what he has said and give further study to the new clause.
However, perhaps I may raise one small point. We understood that Amendment No. 335 had been met by the provisions in Amendment No. 336A, but that Amendment No. 336, which we had intended to move and to seek an answer to from the noble and learned Lord, was germane to privilege for communications, not as in Amendment No. 336A with solicitors or in Amendment No. 336B with patent agents, but between the comptroller and the Patent Court in the specific cases of infringement hearings. We believe that the Amendment that we propose was covered by Amendment No. 271, which we moved earlier. Indeed, the noble Lord, Lord Oram, said that the Government would accept this in principle. We were quite happy to accept that at the time; we are quite happy to accept it today. However, there was this lacuna—this gap—which existed, and that would have been the purpose of moving Amendment No. 336.
In view of the clear and lucid way in which the noble and learned Lord has put his three Amendments, including the two major new clauses, we do not seek to move either Amendment No. 335 or Amendment No. 336. We thank him for moving the two new clauses and we should like to study them.
On Question, Amendment agreed to.
Clause 96, as amended, agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 336A:
After Clause 96, insert the following new clause:
Extension of privilege for communications with solicitors relating to patent proceedings
.—(1) It is hereby declared that the rule of law which confers privilege from disclosure in legal proceedings in respect of communications made with a solicitor or a person acting on his behalf, or in relation to information obtained or supplied for submission to a solicitor or a person acting on his behalf, for the purpose of any pending or contemplated proceedings before a court in the United Kingdom extends to such communications so made for the purpose of any pending or contemplated proceedings before the comptroller under this Act, the 1949 Act or any of the relevant conventions or proceedings before the European Court or the European Patent Office under any of those conventions.
(2) In this section—
"legal proceedings" includes proceedings before the comptroller;
the references to legal proceedings and pending or contemplated proceedings include references to applications for a patent or a European patent and to international applications for a patent; and
"the relevant conventions" means the European Patent Convention, the Community Patent Convention and the Patent Co-operation Treaty.
(3) This section shall not extend to Scotland.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 336B:
After Clause 96, insert the following new clause:
Privilege for communications with patent agents relating to patent proceedings
.—(1) This section applies to any communication made for the purpose of any pending or contemplated patent proceedings, being either—

(a) a communication between the patent agent of a party to those proceedings and that party or any other person; or

(b) a communication between a party to those proceedings and a person other than his patent agent made for the purpose of obtaining, or in response to a request for, information which that party is seeking for the purpose of submitting it to his patent agent.

(2) For the purposes of subsection (1) above a communication made by or to a person acting—

(i) on behalf of a patent agent; or

(ii) on behalf of a party to any pending or contemplated proceedings,

shall be treated as made by or to that patent agent or party, as the case may be.
(3) In any legal proceedings other than criminal proceedings a communication to which
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this section applies shall be privileged from disclosure in like manner as if any proceedings before the comptroller, the European Court or the European Patent Office for the purpose of which the communication was made were proceedings before the court (within the meaning of this Act) and the patent agent in question had been the solicitor of the party concerned.
(4) In this section—
"legal proceedings" includes proceedings before the comptroller;
"patent agent" means an individual registered as a patent agent in the register of patent agents, a company lawfully practising as a patent agent in the United Kingdom or an individual who satisfies the condition mentioned in section 78(1) above;
"patent proceedings" means proceedings under this Act, the 1949 Act or any of the relevant conventions before the court, the comptroller, the European Court or the European Patent Office, whether contested or uncontested and including an application for a patent;
"party", in relation to any contemplated proceedings, means a prospective party to the proceedings; and
"the relevant conventions" means the European Patent Convention, the Community Patent Convention and the Patent Co-operation Treaty"
(5) Section 15 of the Civil Evidence Act 1968 and section 11 of the Civil Evidence Act (Northern Ireland) 1971 (which make provision corresponding to that made by this section shall cease to have effect.
(6) This section shall not extend to Scotland.
On Question, Amendment agreed to.
Clause 97 [Costs and expenses]:
6.45 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 337:
Page 75, line 39, after ("Act") insert (",save in respect of proceedings relating to sections 36 to 40 above,").
The noble Lord said: Clause 97 gives powers to the Comptroller-General in his discretion to award costs to either parties and, in Scotland, expenses. The purpose of my Amendment is to limit his powers in relation to his jurisdiction for dealing with employee inventors who have patents under Clauses 36 to 40. My Amendment is to ensure that an employee who makes a claim to the Comptroller-General should be aware at the outset that he cannot recover his costs and also be assured that no costs can be awarded against him. It seems to me proper that under Clauses 36 to 40 the employee should not be prevented, because of the fear of costs being awarded against him—the costs could be quite heavy for him—from coming to court

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knowing that he can present his case, that he will have to pay his own expenses and that there shall be no award of costs against him or on his behalf in the course of the hearing.
There are precedents for this kind of action. When an employee is dismissed he can go to the appropriate tribunal and claim that he has been unfairly dismissed. In those circumstances, as I understand it, he has no costs to pay. He knows that he will not have costs awarded against him in the proceedings for unfair dismissal. Therefore, the purpose of my Amendment is that in proceedings before the Comptroller-General if an employee believes, having a patent, that he is entitled to some other rights in respect of that patent as against the employer, then in the discretion of the Comptroller no costs should be awarded against him. I beg to move.
Lord CAWLEY: Can the noble and learned Lord tell me whether, under this clause, the comptroller would have to award costs in accordance with the principles that are observed in the High Court or whether it would be entirely at large?
The LORD CHANCELLOR: I would anticipate that the costs would be at the discretion of the comptroller. I am not quite sure whether that would amount to saying that the costs would be at large, but certainly the discretion would be left to the comptroller to award costs as he thought fit. These might be circumstances, similar to the award of costs in county courts, where the exercise of discretion might result in the reduction in an amount of costs which might in other circumstances be available or the denial of costs altogether. I should have thought that the discretion is as wide as that.
The noble Lord, Lord Lloyd of Kilgerran, thinks that, in any event, in proceedings between employers and employees over claims for compensation there should be no power to award costs at all. Although he believes that the effect would be protective of the employee, which is what he wants, I doubt that very much. On the contrary, there might well be a case where it would be perfectly proper for his costs to be paid for by the employer. By removing the presence of any
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discretion to award costs, the noble Lord's formula might well result in the richer party being able to abuse his greatest strengths and his position. I think that the protection of the employee is best reserved and preserved by retaining the comptrollers' discretion. Perhaps the noble Lord would like to consider that again.
There could also, of course, be circumstances—I hope it will never arise—where the applicant is a vexatious litigant. It is the case that both industrial tribunals and the Employment Appeal Tribunal can award costs against a vexatious litigant. It is about the only protection that they might have against them, unless the Attorney-General could intervene and possibly have them declared vexatious litigants; but I do not think one can do that in regard to subordinate tribunals. I did it many a time in respect of vexatious litigants in the High Court and remarkable proceedings they were too, because they were naturally fiercely contested by the vexatious litigants. I think, on the whole, that justice would be more fairly done by retaining a power of discretion in the comptroller. One can, I hope, rely upon him to see that the thing is exercised without oppression, and indeed in a way which, in a given case, would be more protective of the employee than leaving out the power.
6.52 p.m.
Lord LLOYD of KILGERRAN: I am grateful to the noble and learned Lord for his comments, and indeed interested that one of the reasons he has given for the fact that my proposed Amendment is probably not suitable is that the employee requires protection against an employer. Frankly, I had not thought that a situation of that kind would arise very acutely in the circumstances of Clauses 36 and 40. I should have thought that there would be a lot of discussion before any matter came to the court, the employee would be fully aware of the situation, and that the situation would have been clarified as to the view of the employer in court.
As to the vexatious litigant, I realise that vexatious litigants are to be dealt with. But it seems to me a pity that the position of an employee inventor is to be allied with that of a vexatious litigant.

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Of course, employees can be a nuisance. We realise that. But the attitude of many employers is that the employee should, wherever possible, be prevented from opening his mouth in support of his case, and a lot of injustice is being done to employees. Having regard to what the noble and learned Lord has said, I shall reconsider the matter again and withdraw my Amendment at this stage.
Amendment, by leave, withdrawn.
6.54 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 338A:
Page 76, line 7, leave out ("costs") and insert ("expenses").
The noble and Learned Lord said: Your Lordships will observe that Clause 97(1) permits the comptroller in proceedings held by him in England and Wales to award costs, and in proceedings in Scotland to award expenses. Expenses is the Scottish term, as I understand it—and I have the distinguished authority of the Solicitor General behind me—for costs.
Subsection (2) deals with the enforcement of such an award of costs in England and Wales. Subsection (3) is intended to deal with enforcement in Scotland of awards of expenses, but again it incorrectly refers to costs. The Government's Amendment No. 338A substitutes the correct term. There is an Amendment put down by noble Lords opposite which would leave the subsection referring to costs and expenses, but I do not think that that would resolve the dilemma. I think that, on the whole, Amendment No. 338A probably puts the matter right, whereas Amendment No. 339, if I may say so with great respect, perhaps even adds to the confusion which I have no doubt already caused in trying to explain this Amendment. I beg to move.
Lord LYELL: We are grateful for the explanation of the noble and learned Lord, and indeed for the signs and motions of assent which came from behind the noble and learned Lord in the course of his explaining to us the moving of Amendment No. 338A. I was about to say, "But we, on our side, got there first", but it took the clear exposition of the noble and learned Lord to point out that our Amendment will add further to the confusion. We are grateful to the noble and
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learned Lord for pointing out on this occasion a point of substance in Scottish law, and we look forward to plenty more expositions of Scottish law from the noble and learned Lord.
On Question, Amendment agreed to.
Clause 97, as amended, agreed to.
6.58 p.m.
Lord LYELL Lord LYELL moved Amendment No. 340:
After Clause 97, insert the following new clause:
Evidence before comptroller
—(1) Subject to rules, the evidence to be given in any proceedings before the comptroller under this Act may be given by affidavit or statutory declaration, but the comptroller may if he thinks fit in any particular case take oral evidence in lieu of or in addition to such evidence as aforesaid and may allow any witness to be cross-examined on his affidavit or declaration.
(2) Subject to rules, the comptroller shall, in respect of the examination of witnesses on oath and the discovery and production of documents have all the powers of a judge of the Supreme Court, and the rules applicable to the attendance of witnesses in proceedings before such a judge shall apply to the attendance of witnesses in proceedings before the comptroller.
The noble Lord said: Amendment No. 340 seeks to insert a small new clause. We hope that it corresponds, and indeed we intend it to, with Section 83 of the existing 1949 Act, except that subsection (2) of our new clause provides for the comptroller to have the same powers as a judge of the High Court or, might I suggest to the noble and learned Lord and to the Solicitor-General, possibly an equivalent court in Scotland, whereas the 1949 Act referred to an official referee of the Supreme Court.
We believe it is appropriate to give the comptroller the powers of a High Court judge because of the increase in the comptroller's powers under the Bill. Of course, if we look forward in the Bill to Clause 112(2)(d) we find that there are rights for the comptrollers to rule on questions dealing with evidence and also the compulsion of witnesses, and finally with the discovery and the production of documents. It does not seem to us clear that such rules will allow witnesses to be subpoenaed to appear before the comptroller, and we understand that this is the present practice so far as patent law is concerned. We hope that the new

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clause that we are proposing here will meet the case and will so provide. I beg to move.
The LORD CHANCELLOR: The noble Lord, Lord Lyell, has identified Clause 112(2)(d), and I am advised that that is adequate to deal with the situation which the new clause contemplates. It confers powers on the Secretary of State to make rules regulating the mode of giving evidence in any such proceeding and empowers the comptroller to compel the attendance of witnesses and the discovery and production of documents. I am advised that the words "regulating the mode of giving evidence" which appear in the provision are adequate and wide enough to allow evidence to be given by affidavit or statutory declaration, or for the examination of witnesses on oath, and enable all the normal procedures relating to the summoning and attendance of witnesses and how they should give evidence and so on, to be covered. With respect, therefore, I suggest that the Amendment is unnecessary.
Lord LYELL: We are grateful to the noble and learned Lord for reassuring us that Clause 112(2)(d) gives the comptroller the powers which we seek to give him by the new clause, and particularly by subsection (2). In the comments I made I referred to "subpoena-ing". I presume that has the same meaning as compelling witnesses to attend and somehow extracting information from witnesses. In Clause 112(2)(d) there is reference to dealing with evidence, the compelling of witnesses and the discovery and production of documents, all of which are somewhat terrifying terms to the average layman like myself. Nevertheless, we are grateful to the noble and learned Lord for assuring us that the provision as drafted covers what we thought to be a gap in the Bill and, with his assurance, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 98 agreed to.
Clause 99 [Unauthorised claim of patent rights]:
7.3 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 340A:
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Page 77, line 6, at end insert ("(or does not continue to be made)").
The noble and learned Lord said: Clause 99(1) makes it an offence falsely to represent that goods disposed of are patented. This provision is also found in the 1949 Act and is intended to protect the public against misleading information. It is recognised, however, that when a patent expires or is revoked, the patentee may well have unsold articles marked with some indication that they are patented, or may have difficulty in immediately preventing the manufacture of goods so marked. Clause 99(3) makes provision for such cases, but could be construed as covering only the case where the goods were made before the expiry of the relevant patent. The intention, however, is to cover not only that case but the case where the marked goods were made after the expiry of the patent, and that is the purpose and effect of the Amendment.
On Question, Amendment agreed to.
Clause 99, as amended, agreed to.
Clauses 100 and 101 agreed to.
Clause 102 [Restrictions on practice as patent agent]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 342C:
Page 79, line 1, leave out subsection (7) and insert—
"(7) For Article 23(2)(d) of the Solicitors (Northern Ireland) Order 1976 there shall be substituted the following paragraph—
"(d) a patent agent within the meaning of the Patents Act 1977 preparing, for use in proceedings under that Act defined in the former Act) or on appeal under either of those Acts to the Patents Court or the Court of Session from the comptroller, any document other than a deed;"."
The noble and learned Lord said: This Amendment makes two changes. First, it deletes the existing subsection (7). Hitherto, the practice of patent agency in the United Kingdom has been confined to British subjects. We are now obliged to extend the right to practice to all citizens of Community States, and this is the effect of subsection (7) of Clause 102 as drafted. But on further consideration, the Government are of the opinion that the existence of a nationality qualification for practice as a patent agent in the United Kingdom can no longer be justified at a time when

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the patent system is being internationalised. Secondly, the Amendment introduces a new subsection (7) which relates to an entirely different matter and corresponds to the old Clause 96(5). That is a purely drafting Amendment because it is thought that Clause 102 is a more appropriate bed for that provision to lie in, if that is not too unfortunate a metaphor.
Lord CAWLEY: I am grateful to the noble and learned Lord for the first part of the Amendment, which deals with a matter I raised on Second Reading. He has told us one reason for making this change, but the main reason is that the Government's right hand does not know what their left hand is doing, because this is contrary to the provisions of the Race Relations Act which passed through Parliament in December of last year. That, I think, is the main reason which makes the Amendment absolutely necessary.
On Question, Amendment agreed to.
Clause 102, as amended, agreed to.
Clause 103 [Power of comptroller to refuse to deal with certain agents]:
7.10 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 342B:
Page 79, line 29, at end insert—
("(3) Rules may authorise the comptroller to refuse to recognise as agent or other representative for the purpose of applying for European patents any person who does not satisfy the condition mentioned in section 78(1) above and does not fall within the exemption in subsection (2) of that section.").
The noble and learned Lord said: We get into alphabetical disorder again Clause 103, which corresponds to Section 89 of the 1949 Act, provides that the comptroller may refuse to deal with patent agents who for defined reasons are disqualified from acting as such. But as drafted the clause does not take account of the fact that when the Bill becomes law the Patent Office will act as a receiving office for European applications, and in consequence the comptroller should be authorised to refuse to deal with agents or other professional representatives who would not be entitled to act before the European Patent Office. The Amendment
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achieves this by providing the comptroller, in relation to European business with the power to refuse to deal with anyone who is not on the list of professional representatives maintained by the European office. That power, however, will not affect the exemption of Clause 78(2) of the Bill in respect of European business conducted by barristers, advocates and solicitors. I beg to move.
On Question, Amendment agreed to.
Clause 103, as amended, agreed to.
Clause 104 [Immunity of department as regards official acts]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 342D:
Page 79, line 36, leave out paragraph (b) and insert—
("(b) shall incur any liability by reason of or in connection with any examination or investigation required or authorised by this Act or any such treaty or convention, or any report or other proceedings consequent on any such examination or investigation.").
The noble and learned Lord said: The purpose of the Amendment is to confine the immunity which Clause 104 presently provides for official acts to what is strictly necessary for the proper functioning of the Department. It was never the intention to use Clause 104 as a universal whitewash for official acts, and I agree that the clause as it is now drafted is in excessively general terms. So we have looked again at Clause 104 in the light of the Amendment which was put down by noble Lords opposite, and we have now put down Amendment No. 342D which I hope meets the points to which the Amendment of noble Lords opposite was directed.
I am very grateful to noble Lords for raising this matter and I hope that they will accept the draft which I now propose. I think that it is a little better than the Amendment of the noble Lords in two ways. First, it does not take account of the fact that some of the examination and search processes are optional; for example, in Clause 14(7). Secondly, it fails to mention subsequent reports or other proceedings consequent on any examination or search which are protected by Section 11(3) of the 1949 Act. Accordingly I hone that in the circumstances noble Lords opposite will be disposed to accept the Amendment, which I beg to move.
Lord LYELL: Once gain we are very grateful to the noble and learned Lord, this time for pointing out that the Government Amendment No. 342D supersedes our Amendment and is clearly superior to it in this legal essence. We have no intention of moving our Amendment No. 343, which falls in alphabetical or numerical order.
Lord CAWLEY: I am very grateful to the noble and learned Lord for this Amendment. This concerns another matter that I raised on Second Reading, and I need not repeat what I said then.
On Question, Amendment agreed to.
Lord LYELL Lord LYELL moved Amendment No. 344:
Page 79, line 38, at end insert—
("(2) Where, by reason of an error or omission on the part of any officer of the Secretary of State, an act or step in relation to an application for a patent or any proceedings under this Act (not being proceedings in court) required to be done or taken within a certain period, whether prescribed by rules or otherwise specified, has not been so done or taken, the comptroller shall extend the period for doing the act or taking the step.").
The noble Lord said: We wish to move this Amendment because we hope it will help to mitigate any liability on the part of the Secretary of State, or indeed any officer of his, if time limits are extendable in the case of a mistake which might have been made by the Secretary of State or one of his officials. By "mistake" I have in mind a small or minor error, but one which could have more grave consequences. That is the entire object of the Amendment, and interestingly we find that it has a precedent in Section 160 of the current Patents Act which applies to Australia, and we think probably that it applies well there. For that reason I beg to move.
The LORD CHANCELLOR: I appreciate that the purpose of the Amendment is to provide applicants and patentees with a guarantee of redress if some official error or omission causes a time limit for doing something under the Act to be missed. However, the existing provision in the Patents Rules for the extension of time limits, which has worked very well in the past, will also appear in the rules under the new Act. It is true that extension of time limits under the provision is discretionary, but this gives
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flexibility in application. The new subsection which has now been proposed is therefore I think superfluous, and I hope that the noble Lord will accept what I have said regarding the rules covering the situation with which his Amendment seeks to deal.
Lord LYELL: I hope that the noble and learned Lord will accept that in the Amendment we were not attempting to give redress to any aggrieved party. The Amendment hopes to extend the time limits so that any possible passive redress may be given. We did not seek to open the door to any further litigation or to any further action by an aggrieved litigant, but the noble and learned Lord has indicated to us that rules will cover this point and that he believes that our Amendment is superfluous in this respect. Of course we take his guidance, but we would like to study what he has said.
The Lord CHANCELLOR: Perhaps the word "redress" is not a very happy one here. The power to extend the time limits is what I had in mind to refer to.
Lord LYELL: The noble and learned Lord took two barrels to this in his first reply, and we accept the right barrel—that it is just extending the time limit. Nevertheless, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 104, as amended, agreed to.
Clause 105 [Correction of errors in patents and applications]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 344A:
Page 79, line 41, leave out ("clerical error") and insert ("error of translation or transcription, clerical error or mistake").
The noble and learned Lord said: In relation to the correction of errors in patent documents, it is thought that the effect of Clause 105 would be the same as the corresponding provision in the European Patent Convention Rule 88. However, in order to remove any uncertainty on the point it is proposed to amend the wording of Clause 105 so as to bring within its scope all the defects specifically referred to in the European Patent Convention Rule 88, and this is

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what the Amendment does. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 344B:
Page 79, line 42, leave out ("in pursuance of") and insert ("in connection with").
The noble and learned Lord said: The purpose of this Amendment is to avoid the possibility that some documents filed at the Patent Office, although relevant to patent applications might not, on a strict interpretation of the words, be held to be in pursuance of those applications, and it would he undesirable if for that reason errors in the documents could not be corrected. So we propose to leave out "in pursuance of" and insert "in connection with". I beg to move.
On Question, Amendment agreed to.
Lord LYELL Lord LYELL moved Amendment No. 346:
Page 79, line 42, leave out ("in pursuance of such an application") and insert ("at the Patent Office, provided, in the case of an error which is not a clerical error, that both the mistake and the method of correcting it are obvious.").
The noble Lord said: Again, this Amendment goes considerably further than Amendment No. 344B, to which we have just agreed; but I would ask the noble and learned Lord, or indeed anyone on the Government Bench who could assist us, whether our Amendment, which goes beyond the earlier one in the case of a clerical error, a mistake and correcting this mistake as obvious, is superfluous or otiose, or whether our particular point has been covered by the noble and learned Lord's Amendment. We think that there is a good chance that it has been covered, but nevertheless we felt that our Amendment was a little more detailed, and we should be pleased to hear what the noble and learned Lord has to say. I beg to move.
The LORD CHANCELLOR: I wonder whether I can deal with this by saying that I shall be glad to look at the explanation which the noble Lord has given of this Amendment, and perhaps we can return to a consideration of it at a later stage.
Lord LYELL: I am most grateful to the noble and learned Lord, and, of course,
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given that assurance, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 105, as amended, agreed to.
Clause 106 [Information about patents applications and patents, and inspection of documents]:
7.22 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 346A:
Page 80, line 25, at end insert ("nor shall that subsection prevent the Secretary of State from inspecting or authorising the inspection of an application for a patent or any connected documents under section 19(6)(a) above").
The noble and learned Lord said: Clause 106(2) provides that the comptroller shall not publish documents or information about a patent application, without the applicant's consent, until that application has been published. Clause 106(3) makes exceptions to the generality of subsection (2), but it has failed to include the right of the Secretary of State to authorise the United Kingdom Atomic Energy Authority to inspect at any time applications containing information relating to atomic energy, as provided for in Clause 19(6)(a). That apparent inconsistency between the provisions of Clause 19, which the Committee has approved, and Clause 106 is removed by the Amendment. I beg to move.
On Question, Amendment agreed to.
Clause 106, as amended, agreed to.
Clause 107 [Loss or destruction of certificate of grant of patent]:
On Question, Whether Clause 107 shall stand part of the Bill?
The LORD CHANCELLOR: As noble Lords will know, a patent under the 1949 Act is defined as Letters Patent for an invention. These Letters Patent are granted under the Royal prerogative; they are themselves evidence of the grant of a patent, and that is why Section 80 of the 1949 Act provides that the comptroller may cause a duplicate of the patent to be sealed if he is satisfied that the original has been lost or destroyed or cannot be

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produced. A patent certificate under this Bill is not a document of title. Evidence of the grant of patent will in future be a certified extract from the Register of Patents, and therefore the issue by the comptroller of a duplicate certificate that a patent has been granted is a purely administrative matter. This clause is therefore unnecessary, and should be deleted.
Clause 107 disagreed to.
Clauses 108 to 110 agreed to.
Lord ORAM: I think this may be considered a useful point at which to change your Lordships' business, and I beg to move that the House be now resumed.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

SHEFFIELD AND SOUTH YORKSHIRE NAVIGATION
7.25 p.m.
Lord HARVINGTON Lord HARVINGTON rose to ask Her Majesty's Government whether they will review the case of the Sheffield and South Yorkshire Navigation in the light of their policy for commercial waterways and the duties laid down by the Transport Act 1968. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I should like to bring to your Lordships' notice this evening a matter of considerable importance in the transport field which I think is being and has been seriously neglected by successive Governments. I refer to the asset available to the country which consists of those inland waterways which have been under-utilised for freight purposes for many years. It is appreciated that, in the overall aspect of transport policy, freight carrying on inland waterways constitutes a very small percentage of the total transport resources. However, where such facilities exist they make a beneficial contribution to the area which they serve.
I would remind your Lordships, if I may, that in the Transport Act 1968 the inland waterways owned and managed by the British Waterways Board were divided into
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three categories; namely, commercial, cruising and remainder waterways. The Board were obliged to maintain each class of waterway to suitable standards for purposes commercial, recreational and amenity use. Unfortunately, the will of Parliament has been frustrated owing to the failure of successive Governments to provide the necessary finance, not only for ongoing maintenance of the system but for investing in its facilities. The result is that, over the years, growing arrears of maintenance have accumulated which, in 1970, the Board's engineers estimated at a sum of no less than £22½ The Administration previous to this present Government called in consulting engineers to give them a report on the accuracy of these figures. The Fraenkel Report has been prepared, but has not yet been published, and I am wondering whether the noble Baroness, when she comes to reply, will perhaps tell us why it has not been published, and when it will be published.
It is difficult to imagine how the Government can develop a national transport policy without taking into account the inland waterways' commercial use. The commercial waterways constitute important communication arteries leading to substantial river estuaries. In the North-East, these waterways are the Aire and Calder Navigation; the Sheffield and South Yorkshire Navigation, with which we are particularly concerned tonight; and the River Trent Navigation. They connect Leeds, Sheffield, Nottingham, Doncaster, Gainsborough and Rotherham with the Humber Estuary and the ports of Goole, Hull, Immingham and Grimsby. In the North-West, there is the Weaver Navigation connecting Northwich with Weston Point to the Manchester Ship Canal.
In the South-West, there are the Gloucester and Sharpness Canal and the River Severn Navigation linking Worcester and Gloucester with Sharpness Docks to the estuary of the River Severn. In London, the River Lee Navigation links Enfield with the Thames at Bow Creek. Brentford has an important depot near the junction of the Grand Union Canal with the River Thames. All these towns and cities are within a short distance of the motorway system. The present tonnage capacities of these waterways is broadly speaking as follows. The Gloucester to Sharpness capacity is for

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vessels of about 1,000 tonnes. The navigation with which we are concerned this evening, the South Yorkshire Navigation, has a capacity of from 500 to 700 tonnes. Most of the other waterways are that or rather below it; except for the part we are particularly concerned with this evening; that is, Doncaster to Rotherham, where only 90-tonnes vessels are possible. It is about this that we are really here tonight.
The total tonnage handled by the British Waterways Board in 1976 amounted to 6¼ million tonnes. Of this, 4·6 million tonnes was moved on the Board's waterways. Traffic actually moved on these waterways during the last two years has increased by over 600,000 tonnes, or 16 per cent. But this is not the whole story. It has been assessed that 50 million tonnes per annum are now being moved on all the inland waterways of the country. The Board also have important commercial depots at strategic points throughout the system. Their organisation provides for a freight service division which, despite the country's economic difficulties, has consistently turned in a profit on its operations.
The Board were encouraged by the Transport Act 1968 to think that a new era had dawned for inland waterways and have been keen to develop the system for the functions which Parliament has given them. However, despite many projects submitted to the Department of the Environment designed to improve the Board's commercial performance, very little attention has been given to the Board's request for that essential requirement, capital money. Indeed, the Government's attitude is summed up in the White Paper, The Government's Expenditure Plans, where it is indicated that provision for maintenance is kept at previous levels, pending the outcome of a joint review of long-term policy which the Board are conducting with the Department of the Environment as set out on page 56 of the White Paper. Under the chapter dealing with capital investment, it is stated (in page 119) that the long-term future of the Board is being considered as part of this over-all review of the water industry. Capital investment is confined to a figure of £2 million for 1976/77. This is the total amount of capital investment which appears in previous White Papers and is utterly insufficient to cover important commercial developments.
All White Papers on public expenditure indicate that no further investment or grant can be made available pending the review of the Board's future policy. These statements have been continually made since 1973 when the Board's undertaking was omitted from the Water Act of that year; and no such review has yet taken place. Instead, their undertaking is under constant threat of legislation or merger with another authority. The latest example is the Green Paper, A Review of the Water Industry in England and Wales—A Consultative Document, which your Lordships will remember came out just a year ago. This document advocated the merger of the British Waterways Board with a new body to be known as the National Water Authority.
My Lords, it is difficult to understand how the Government can contemplate the water industry being responsible for freight activities. One might as well expect the British Navy to bring commercial goods from Cape Town to London. It can only be concluded that the Government's intention is to let freight transport on inland waterways die by neglect; so that the Board's waterways will remain available only for recreational and land drainage purposes. How foolish it is to throw away the only paying means of nationalised transport in this country. What one is forced to believe is that the Government hope that if only nothing is done, this problem will go away. I can assure your Lordships and the Government that it will not go away because there are many resolute Members of this House and of the other place who are utterly determined to see that it never goes away.
I have expressed a little harshly about the Government. Perhaps the noble Baroness will allow me now to give a little "Thank you" to the Government for what they have done so recently in providing the money to repair those Lagan Locks on the Caledonian Canal which mean so much to our beloved Scottish brothers—and I say that with all the feeling in my heart—to the fishermen and to the numerous fleets of pleasure boats which operate on that waterway.
My Lords, when one considers the Government policy with regard to roads, an entirely different situation appears. The Department of the Environment were themselves, until recently, responsible

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for the construction of motorways. They had a vested interest in ensuring that motorways were built and maintained. To justify investment in a new road, only a 10 per cent. return was required, based on figures provided, until recently, by the same Department who produced the calculations for the waterways. The figures for the road relate only to past trends on all roads. No attempt is made to assess the likely utilisation of a proposed new road on a factual basis. Investment in waterways requires a 15 per cent. return supported by firm guarantees from future users of the system. This is what they say in Paper 5, Transport Policy—A Consultation Document, to which I referred a moment ago.
With regard to investment in British Rail, all infrastructure costs are written off to revenue account and grant aid. A Bill at present being considered in another place provides for increases in grant aid to British Rail. The British Waterways Board, therefore, feel that their position with regard to capital investment is most disadvantageous to them. They have to compete unfairly with a Government Department which has a direct interest in the project for which capital investment is required and with another nationalised industry which has favourable investment terms. In addition, the British Railways Act 1974 enables 50 per cent. grants to be made to industrialists to encourage them to make siding connections to the railways. No such facility is available to the British Waterways Board, the one nationalised authority on whose commercial undertakings a profit is shown. I hope that your Lordships will forgive me if I seek to emphasise this point; but I think it is something that the House will appreciate.
My Lords, despite these severe disadvantages, the British Waterways Board is still in business and has increased its tonnage for traffic moving by waterways in the last two years by 600,000 tonnes, or by 16 per cent. This has been done without investment. How much more could have been achieved if successive Governments had shown any vestige of interest! "Oh ye of little faith!" I can only assume that it is their intention to allow waterway commercial assets to die by default. If this is so, then I hope
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that the noble Baroness will be courageous and stand up and tell us so this evening.
The improvement scheme for the Sheffield and South Yorkshire Navigation is a very good example of the kind of investment which the Board consider will bring more traffic to the major inland waterways of the country, and which could eventually develop into a very profitable enterprise. It is fully supported by local authorities. I have in my hand a large sheaf of letters which have been sent to me by the county clerks of South Yorkshire from the chambers of commerce throughout the whole length of this waterway begging that the money be made available for this waterway to be improved. The improvement scheme is designed to provide a new trunk transport route for South Yorkshire, to link the industrial areas of Sheffield and Rotherham with the Humber ports. It will provide an attractive economic transport route for freight moving from between 400 and 700 tonne loads. Congestion will be reduced on existing roads, and it would be environmentally attractive, with low noise and low fume levels. My noble friend Lord Kinnoull will say something about what happens to these loads when they reach the estuarial waters, in explanation of how economic the whole project is bound to be.
Before submitting the scheme for approval, I am informed that the Board carried out their own marketing studies and engaged the services of international business consultants. I will not be guilty of naming them, for obvious reasons, my Lords. The consultants concluded that the additional traffic potential ranged from 1·5 million tonnes—that was their lower limit—to 2·4 million tonnes, which was the upper limit. The Board's submission is based on additional tonnage of the lower limit, 1·5 million tonnes only. Notwithstanding the passage of time, I understand that they remain confident that traffic of that order can be developed.
The additional annual cost of improving the waterway beyond the present standard would amount to £850,000, representing interest and depreciation on the investment. The maintenance costs would not increase. If no traffic was secured for the improved waterway, this would be the additional loss and is therefore the annual cost of the risk. It is only fair

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that I should state that. No one gets anywhere in this life unless they take at any rate some risk. When it is a calculated risk such as this, which is bound to produce a good result, I have no hesitation in standing up here and stating the matter quite fairly.
What is proposed is an improvement of the size of the locks and navigable channel between Doncaster and Rotherham, a distance of about 11 miles. The capital cost was originally assessed at £2 million in 1966. Oh would that the decision had been taken then! But with inflation, the cost is now near £8 million, still not a large sum when one considers the benefits which would accrue.
Nevertheless, although Parliament approved the work, the necessary money has not been made available because the percentage return shown by a discounted cash flow calculation is a few points below the level arbitrarily set for such an investment by Government. I understand that these calculations do produce, however, a return on the money rather better than that required to justify a new major road. I have already referred very briefly to the differing methods of assessing this sort of investment which cannot be regarded by anyone as sensible or acceptable. Why should investment in roads and railways infrastructure attract no interest when the British Waterways Board have to pay? Why is the decision criterion for roads so favourably different?
Because of such obtuse calculations, the nation is apparently to be denied the benefits which would accrue from greater use of our major inland waterways and rivers for commercial navigation. Of the options available, only improvement makes any sense. Note this carefully, my Lords: it provides an opportunity to eliminate the current financial loss, and from the market intelligence there is every prospect of that. Continuation without improvement necessitates expenditure of £2·5 million without any prospect of improving the earnings; indeed, the loss would be greater because all the commercial traffic would cease in a short time. Downgrading this waterway to a cruising length is only marginally better than the former due to the important fact that the estimated unavoidable cost of the waterways is only £47,000 perannum less.
The waterways cannot be eliminated —we have got them, like sex! The cheapest option will cost a great deal of money initially and annually thereafter. For a little extra the nation can have a commercial route with real prospects, which will play an important part in the transport scene as well as add a new dimension to the infrastructure in the area, which needs new industry and greater job opportunity. We are very dependent upon import and export trade, most of which travels by water at some stage. We are members of the EEC Community, and other member countries have for years been developing their inland navigation systems. Arising from that attitude, there has developed new shipping techniques which allow for differing sizes of navigations. All of this because transport of goods by water is invariably cheaper, less damaging to the environment, more saving in energy used per tonne moved, more economic as the volume of traffic moved increases and more able to cope with increased volumes without damaging valuable agricultural land. Underlying all these advantages is the fact that the major navigations are based on natural rivers, the containment of which calls for appreciable expenditure on bank protection and flood relief schemes which cannot be avoided. Surely, it must he sensible to seek to earn money by way of tolls charged on traffic moved to offset the underlying unavoidable costs.
My Lords, I have the greatest respect for those in the professions of accountancy or economics. Their advice is valuable, but they are not infallible. Indeed, the tasks of the Chancellor of the Exchequer would be easy if the advice he received was always correct. Is it not odd, therefore, that when Ministers receive advice on development proposals such as that for the improvement of the Sheffield and South Yorkshire Navigation, such advice should have to be considered absolutely precise? Is there in today's complex society no place for common sense, for judgment and perhaps a little faith? To turn down this improvement scheme for the sake of a few percentage points displays to me a lack of common sense, judgment and faith. Our forefathers made this country great by faith and by investment in matters to do with water and the seas. It is time that we again

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invested in improving our natural assets. The risk is not great: in fact it is a few percentage points in an economist's calculation. Ministers and Government should reconsider their present attitude and, by foregoing a few miles of motorway or the equivalent thereof, give the waterways the chance to prove their continuing worth in the years that lie ahead.
7.51 p.m.
Lord MOWBRAY and STOURTON: My Lords, we are all, I think, and particularly myself as a part-time Yorkshire-man, most grateful to my noble friend for introducing this very detailed and well-reasoned Question concerning this waterway system. The Question he has asked in the most moderate way, and he has put his case in a well-reasoned and detailed way. Your Lordships may not know that he is one of the most experienced users of rivers and canals in this country and in Europe. So your Lordships could not hope to have a more knowledgeable person putting this case tonight than the noble Lord, Lord Harvington. The noble Lord said he hoped that the noble Baroness would not find him too harsh in his statements. I think that the noble Baroness, sitting there robust and happy as always, knows that our personal affection for her does not stop our using harsh words about her Government's actions. I am sure she knows that no personal malice is involved.
Although this country's waterways account for only 0·1 per cent. of inland freight transport, we must not conclude that the subject of our discussion today is in the least bit insignificant. In the first place, given our present economic circumstances, we cannot disregard even the smallest percentage points when it comes to measurement of economic activity. We must hoard and cherish them the more. Secondly, waterways on the Continent of Europe play a very important role in freight transport. We must not neglect opportunities for future collaboration in this sector. Thirdly, given the world's energy outlook, it would be foolish to put all our eggs into one energy basket. Freight transport by water is highly economical in energy terms, and this is not a factor which we can afford to neglect.
Fourthly, whatever the national figures may or may not be, it would be wholly
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wrong to overlook the importance of the waterways we are considering today in the economic life of Yorkshire and the surrounding region. That importance is fully acknowledged by the South Yorkshire County Council. As I am sure the noble Baroness will agree, the transport policies which have been followed of late in South Yorkshire leave much to be desired. Indeed, the present South Yorkshire County Council have made a single-handed attempt to defy not only the exhortations of the Government but economic reality itself. They have persisted in a policy of wholly unrealistic revenue support levels against all advice from every quarter, in the midst of the worst economic crisis in our peacetime history. That is the more regrettable, in that had South Yorkshire used their available resources intelligently they would perhaps have been able to find the money for precisely the type of project we are considering today. But I have praise at least for the South Yorkshire council officers over their efforts on behalf of these waterways. They have produced a whole series of papers and reports which set out their case in clear and effective terms.
The 1968 Transport Act is the whole basis of transport policy, possibly, at the moment. Many of your Lordships will remember the lengthy and contentious debates which accompanied the passage of that Bill through this House, and the proceedings in another place were prolonged still further. Nearly a decade later, what is left to show for all that effort? What practical benefits does the user of transport today derive from those tremendous legislative efforts, supposedly undertaken on his behalf? I am not sure whether the noble Baroness might not secretly be only too grateful if the Government should founder in the next few days, in that it would release her from the necessity of venturing into the rather arid desert of her Party's transport legislation, and adding her bones to the whitening remains of her ministerial predecessors who have fallen while chasing the chimera of an integrated transport policy.
We on this side of the House are more than sceptical of the whole notion of an integrated transport policy. We suspect that the practical consequences of integration would be to remove decisions as regards transport planning even further

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from the user in the market place and put them even more into the control of rigid and monolithic bureaucracies. It is clearly desirable to achieve the optimum use of resources but, to this end, we much prefer a policy of co-ordination, as the noble Baroness will be aware, implying the intelligent and unbiased planning of transport priorities based on consumer choice.
It is my contention that in such planning we must not overlook the contribution which our waterways can make. It is too easy to fall into the habit of assuming that canals went out with the stagecoach and that their only value now is as a recreational facility. That assumption, my Lords, is regrettably widespread in this country, but it is certainly not shared by our major industrial competitors in the EEC. Measured by tonne kilometres, 5 per cent. of French freight transport travels by water and 8·5 per cent. of West German freight, as opposed, as I said earlier, to 0·l per cent. of freight in this country. Obviously, no one is suggesting that even the maximum conceivable development of these South Yorkshire waterways could enable the River Aire or the Selby Canal to rival the Rhine or the Rhone; but, especially in our present economic circumstances, we should be foolish to ignore their potential contribution—or indeed any potential contribution—to the efficient movement of freight transport.
A regrettable feature of the public expenditure cutbacks under this Government is that in the transport sector they have concentrated almost exclusively on investment and capital programmes, while Government subsidies to everyday expenditure have gone on increasing. We shall have to live with the consequences of those cutbacks, I fear, for quite some years to come—poor roads, overcrowded roads and run-down rail services. The quality of our vital transport infrastructure could make a major contribution to our economic recovery, but is lagging behind that of our EEC partners. In particular, our roads are already the most crowded in Europe.
Given that is so, can we really afford to neglect any part of the transport infrastructure which we do possess? That is especially true in the South Yorkshire region, which I know so well, where the whole industrial life of the area may well
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be revolutionised very shortly by the development of the Selby coalfield. That makes it even more important to secure efficient transport. Also, we have to remember that, although, as I have said, our rivers and canals cannot rival those on the Continent, the very existence of the latter has led to the development of large-scale barge traffic, much of which is potentially cross-North Sea and cross-Channel. We have the BACAT transport, by means of which one can put barges on catamarans and get them across the North Sea or the Channel. It is very important that we do not cut ourselves off from this traffic. This could be a significant factor in enabling us to maximise the economic opportunities which Community membership offers.
One point seemed to emerge from the papers—a point which was made very strongly by my noble friend Lord Harvington. It will cost almost £2 million a year just to keep these waterways going at all. In view of that, and in view of the anticipated increase in traffic, the arguments in favour of a modicum of additional expenditure become rather more important and make more sense than Government policy has been allowed to show so far. I shall look forward to hearing the Minister's reply to the factors which were so fully set out by my noble friend.
South Yorkshire County Council and the British Waterways Board have produced detailed papers setting out the case. I am sure that the noble Baroness and the Department have looked at copies of these papers, and have studied them very carefully. It is not for me to pass judgment on the detailed facts and figurings in these documents, but I found them very impressive and they seem to present a very serious case for increased Government investment in the South Yorkshire waterway network. In particular, the Waterways Board seemed to me to make out a very strong case for the project in terms of the projected rate of return which it might earn, which was mentioned by my noble friend with great persuasion. They also make great sense in terms of discounted cash flow, although obviously there are variable factors such as future traffic levels, or even the possibility of our EEC grant which, I suppose, has to remain speculative.

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What I hope the noble Baroness will do is to recognise the concern which exists in this House, and in Yorkshire, about the future of these waterways, and publish a full reply to the studies which have been produced by the Waterways Board and the county council. Of course, the noble Baroness may find certain problems in doing this. My information—and I shall be delighted if the noble Baroness can correct me on this—is that at present no one in the Ministry of Transport has responsibility for inland waterways. I referred earlier to my doubts about an integrated transport policy, and I really think that we have reached the height of absurdity when a Government, nationally committed to such a policy of integration of transport, leaves all responsibility for inland waterways to the Ministry of Sport.
The British Waterways Board are intent on making a contribution to the nation's freight transport resources. Surely they should be encouraged in this, and not wholly assimilated to pleasure craft and sailing schools. It may well be that these latter activities are, indeed, the most important aspect of our waterways today, but that is no reason for wholly disregarding the freight operations. I hope that the noble Baroness will find it possible in her speech to reassure this House, and the interested parties in this debate, that she has taken their case fully on board and that she will give her personal attention to the future of the South Yorkshire waterways and their urgent needs.
8.5 p.m.
Lord FEVERSHAM: My Lords, it is not my intention at this late hour to detain the House for long, but I should like to take this opportunity not only of congratulating the noble Lord, Lord Harvington, on raising this Question, but also of supporting him in his desire to press the Government to review the case of the Sheffield and South Yorkshire Navigation. I am also delighted to have heard the noble Lord, Lord Mowbray, from the Opposition Front Benches. Who knows? After tomorrow night's vote in another place, those of us in this House who are interested in the commercial possibilities of inland waterways may be addressing our questions to the noble Lord, and we will all be very encouraged by the speech which he has
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just made. It would be a pleasurable business to address this Question to the noble Lord.
However, we have to concern ourselves tonight with the Government that we have, although if you look at the record of successive Governments of every shape and colour, practically throughout this century, you will not find one which has produced a constructive policy towards the commercial use of our inland waterways. Therefore, I cannot really anticipate with any great excitement the reply which the noble Baroness will be making on behalf of the Government at the end of this short debate.
I have great sympathy for the noble Baroness. As has been pointed out, the country is in a desperate economic plight and it is essential to curb public expenditure. The Government are bound to ask whether at this time they can afford to finance improvements on the Sheffield and South Yorkshire Navigation. They will perhaps be tempted to push the matter on one side and say that a project of this nature should be put on ice until we have a better financial climate. Unfortunately, I think there is some urgency in this matter, because if no action is taken to develop the Sheffield and South Yorkshire Navigation along the lines recommended by the British Waterways Board, then even that commercial traffic which is operating on the canal at present will be lost. This is an important point, because one of the last chances open to us in this country to develop our navigable waterways for commercial use will then have gone.
No doubt there are those who regard our canals as dead to the possibilities of development for commercial carrying, and perhaps they would be delighted to see the last nails driven home into the coffin containing the corpse of what they regard as an outmoded transport system. One can only stress to such people the point that was made by the noble Lord, Lord Mowbray, that every other country in the European Economic Community has invested considerable efforts in the development of inland water transport. It is precisely because successive Governments in this country have not done the same that our commercial waterways are in such a derelict state, and why they do not present to some people an attractive

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alternative for inclusion in any transport policy in this country.
In Yorkshire, there exist exciting possibilities for water transport to play an important role in the transport infrastructure of the region, as the noble Lord, Lord Harvington, pointed out. It is not so many years ago that the broad canals in that region contributed valuable profits to the British Waterways Board. Unless some investment is made to update these waterways, we shall lose for ever the possibility of profitability in the region, with a consequent growing burden on public funds. We have a situation where the important industrial communities of South Yorkshire and West Yorkshire are served by waterways with great commercial potential. If that potential is not recognised, and the necessary investment made, then I believe that we will fail in taking an important step which needs to be taken in the regeneration of our great industrial centres, and upon such regeneration depends the future prosperity of our country.
In connection with the Question put by the noble Lord, Lord Harvington—and I think it is taking up a point also made by the noble Lord, Lord Mowbray—may I ask the Government what system exists in the Department of the Environment to advise the Government on matter concerning commercial navigation on our inland waterways? I know that the Transport Committee of the Inland Waterways Association, in their excellent report Barges to Juggernauts, recommended the setting up within the Department of a small division concerned with the development and planning of commercial waterways, along the lines of, but much smaller than, the commercial highways division. I believe that this excellent suggestion has not been adopted by the Government, and no doubt the noble Baroness will be able to enlighten us as to why not.
Finally, may I express the hope that the Government can give us at least some hope that they are prepared to look again at the matter of the Sheffield and South Yorkshire Navigation so that we do not lose this important asset. I am a Yorkshireman and I know that in Rotherham, Doncaster, Sheffield and throughout the South Yorkshire coalfield, people are expressing the same hope. We in Yorkshire hope that tonight the noble Baroness
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will not be in the business of driving nails into coffin lids.
8.10 p.m.
The Earl of KINNOULL: My Lords, I rise to support my noble friend this evening on his Question on the Sheffield and South Yorkshire Navigation and to congratulate him, as have others, on his most eloquent and powerful advocacy in setting the scene for this debate. As my noble friend on the Front Bench has said, it is no accident that my noble friend Lord Harvington should make such a distinguished speech on the subject for, if I may be so rude as to say so to him, I think he caught the bug over 25 years ago. Ever since then he has been a loyal Parliamentary friend of inland waterways, as well as an active and not undistinguished handler of boats. Indeed, I notice tonight that the noble Lord is flying a phantom bargee on his tiepin to cheer us all up, in the guise of the ex-Commodore of the Parliamentary Yacht Club.
As my noble friend and other noble Lords have said, the Sheffield and South Yorkshire Navigation Improvement Scheme is no new issue to the Government. It has been knocking around the corridors of successive Governments for almost 10 years, and with almost monotonous regularity it has been argued and shelved and reargued and reshelved. However, it has one unfortunate habit. As my noble friend has said, it simply does not go away. You cannot bury this canal. Indeed, the scheme which was thought up, I believe 10 years ago, at the then cost of £2 million, is now estimated to cost £8 million. Therefore we see that the cost of this scheme is growing bigger and bigger. To many people, and I suspect to the whole of the British Waterways Board, which has been tireless in its efforts to promote this scheme, it is a major test of whether the Government really value our 350 miles of commercial waterways. Do they see them as a relief for our congested roads? Do they see them as a help to employment in certain areas, particularly at present? Do they recognise that transport by barges can save our precious energy? Do they accept that a greater use of commercial waterways can have a dramatic effect on the environment of an area? All these points, as my noble friend has so ably

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put it, apply, in my opinion, to the Sheffield and South Yorkshire Navigation Scheme.
If the Government value the commercial waterways, the case for granting the £8 million—which one must remember is to be spread over three years—to this particular navigation is as gainful as any Government expenditure on transport is ever likely to be. As other noble Lords have said, one of the most impressive features of this issue is that to anyone who has sought information on the subject it is immediately noticeable that there is total unanimous support in the area for the scheme—besides, of course, the very strong case which the British Waterways Board has put forward.
We see the South Yorkshire County Council, who have included it in their draft structure plan and who stress the planning benefits to employment, industry and transport in their area. We see the Rotherham Borough Council who have in draft a most imaginative Rotherport scheme: a large terminal complex connecting water, rail and road. And we see the Doncaster Borough Council who have set aside 50 acres of land as a potential industrial estate immediately alongside the canal, and who have emphasised the present high unemployment in their area. We see local industry—the Chamber of Commerce—who have been examining very seriously ways and means of trying to raise £8 million. We see the carriers and the boatbuilders, who see this scheme as the advent of bringing back confidence and expanding business—not only home business but also exports. The carriers particularly see the BACAT system of barges as the new generation of waterborne commercial transport.
After the unhappy experience over one carrier who introduced this system about 18 months ago when it was blacked by unofficial union action, it would encourage carriers if tonight the noble Baroness could say whether the Government see a potential in the BACAT system for use on commercial waterways. I hope that in her reply the noble Baroness will be able to include something to that effect.
Beyond all this support we see unanimous local support; we see also the British Waterways Board recommending that the
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scheme should go ahead. What do we see as the latest Government answer to the scheme? As I understand it, the brief of the noble Baroness may well be an almost classical Whitehall stonewall answer: that the Government are investigating absorbing the British Waterways Board's responsibilities into an even mightier authority—a National Water Authority. From that we must presume that the Government wish not to tie the hands of this authority so that they can decide the issue. However, this reorganisation is, as I am sure the noble Baroness will admit, at least two years away; indeed, after tomorrow it may be even further away. What possible new evidence would this new authority—in fact, it is an existing authority—require to convince them of this case? Why waste another three years and allow the cost to escalate to perhaps £12 million or £15 million?
It has been a flavour of the debate so far that history has shown that when it comes to money all Governments are suspect in supporting inland waterways. I am delighted to have listened this evening with great care to my noble friend speaking from the Front Bench and giving the view of my Party. Nobody today, though, would be so unchivalrous as not to recognise that the Government are faced with a great dilemma in deciding what is urgent and what has priority in terms of the precious, limited funds which are available to the public sector. Equally, the Government would not be unchivalrous if they did not accept, from the various cost-effective studies made of this scheme by both their experts and outside experts, that this investment has a good chance of showing not only a dividend for transport and employment in the area, but also of resulting in a commercial operation.
My fear tonight is that, however hard the noble Baroness, Lady Stedman, tries —she does indeed try, and I have great faith in her sympathy—her brief will restrict her to saying that the Government have just voted £8 million this year towards the maintenance of inland waterways, and that at present any improvement in investment simply is not possible. If that is the case, may I ask the noble Baroness whether the Government have seriously considered a joint scheme with local authorities, local business and perhaps even an EEC loan to promote this

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scheme, and whether they would welcome an approach of that nature from the area. If the noble Baroness could say that tonight, at least it would be a positive contribution.
My noble friend's Question on this Navigation is extremely pertinent. It is particularly pertinent to the apathy shown by successive Governments to commercial waterways. It is interesting to note that on 14th October 1968, in col. 1154, the then noble and learned Lord Chancellor, Lord Gardiner, when replying, as the Minister responsible in this House, to the Third Reading debate on the Transport Bill, said:
"If I may humbly say so, I feel that all we waterways enthusiasts have done extremely well by this Bill".
I am sorry that the noble and learned Lord could not be present tonight, as I am sure he would have wished to be here. However, I hope that in her reply the noble Baroness will show that the hopes expressed then by the noble and learned Lord have not been thwarted, and that she will have an encouraging answer to make to my noble friend.
8.20 p.m.
Lady KINLOSS: My Lords, I see part of this waterway every time I come by train to your Lordships' House; just after leaving Selby I find myself looking out of the window waiting to cross it. Two weeks or so ago the sun was shining and a barge was gliding along. It was a lovely sight. Some little time later one sees the ALM with heavy lorries belching stinking smoke, and one remembers that there are only relatively few years' supply of oil left whereas the water in this navigation was there even before this part of Yorkshire was populated.
I know that in the debate this evening we are not concerned with aesthetic or purely environmental matters, but I cannot say how great a pleasure the British Waterways Board gives me by the way it keeps this navigation—a pleasure which I feel certain is shared by countless others. It is quite fortuitous that I live in Yorkshire. I have no monetary interests in any business connected with the Sheffield and South Yorkshire Navigation, but it is absurd to allow a good national asset to go to waste when it could provide much needed employment and at the
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same time lower the cost of transporting goods, once the initial outlay has been made. This may seem a small affair, but we are facing the twin evils of inflation and unemployment and every small action that we can take to alleviate them is surely worth the doing. There can be no universal remedy for these evils; we can only reduce them by chipping away bit by bit.
Seven years ago the British Waterways Board pioneered a new push-tow system which was a most exciting breakthrough. One push-tow barge can carry as much freight as seven lorries and up to three craft can be pushed at any one time. So, unless I have misunderstood, very roughly speaking—less the oil consumed by one specially designed tug—one has saved the fuel consumption of most of 21 lorries. If I could cut my household expenses to this degree—namely, by 21 times—I should be delighted and so, I venture to think, would quite a number of other noble Lords. I am not saying that the British Waterways Board is able to cut our domestic expenditure by 21 times, but it is quite evident that if it is allowed to carry out the Sheffield and South Yorkshire Navigation Improvement Scheme it will surely make some contribution towards it.
Both Government and Opposition know that they are guilty of having neglected this waterway. I should like to see both sides dressed in hair shirts. The Government are asking for quite impossible guarantees in the conditions for providing a grant to improve different sections of the navigation and to enlarge certain locks. The question that the Government are asking is the old, old question of the chicken and the egg—which came first? The Government are asking for guarantees of certain traffic, but firms can provide guarantees only if they can assure their clients that the waterway is capable of carrying the tonnage that they require. Surely, it is perfectly plain that it is impossible for the carriers of freight to give guarantees to their clients until they receive firm undertakings from the Government.
All I would ask from the noble Baroness, Lady Stedman, is that she should be willing to sit down and negotiate with interested parties. One company alone has already had firm inquiries for 250,000

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tonnes of carriage per annum on the Sheffield and South Yorkshire Navigation, conditional upon it being improved. But as sensible, cautious Yorkshiremen, they naturally have some uncertainty in their minds. It is a fact that they have not yet discussed the possibility of carriage on this section with their other major customers, and I am informed that unless something can be done the firm will eventually have to close with a loss of 250 jobs in an already depressed area. I need hardly say that I most warmly support the noble Lord, Lord Harvington, and hope that the Government will give the British Waterways Board all the support for which it hopes.
8.25 p.m.
Lord SOMERS: My Lords, at this time of night I am certainly not going to waste much time repeating what has been said by other noble Lords, and said probably a great deal better; but there are one or two points that I should like to emphasise. Your Lordships have heard of course that the waterways in this particular area form a very important system of commercial transport. However, like all other means of transport they need maintenance and, of course, that costs money; but on the whole it costs a great deal less than it does to maintain a major motorway.
Your Lordships have also heard that the cost of leaving the canal which we are discussing tonight in its present state will be £2·5 million; to put it into proper working order will cost £7·7 million. That is not a very great increase when we consider what the enormous returns will be. In fact, to my mind it will be an extremely good investment because a great many things can be transported much more cheaply by water than by road. For instance, liquid fuel can be transported by water for about a quarter of its transport cost by road.
Another important point that I think has not been mentioned tonight is the tremendous desirability of getting as much traffic off the roads as we can. I have tried it in the past by trying to upgrade the railways, without success. Now surely here is a chance to do so with real profit. There is another point. The traffic, as we have heard, which is con-
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veyed—or which could be conveyed—on this waterway, if it were put into proper working order, would be very largely for export and import, and the barges can easily cross the North Sea and make use of the excellent waterway systems in Europe. Surely that is an excellent way of making use of the assets which we have. We have these waterways. All that needs to be done to them is to put them in proper order and to spend a little money on them and get a great deal more money in return. My Lords, I really should not have spoken tonight. I apologise for not having put my name on the list. I forgot until it was too late. Therefore I shall not take up any more time.
8.29 p.m.
Lord DAVIES of LEEK: My Lords, I must apologise to the House, which, in its assiduity, has followed this debate. Due to the fact that the discussion on the Patents Bill finished earlier than I expected, I was 20 minutes adrift in coming in to what I considered to be an important debate. My second error—and I apologise to my noble Leader—was that I did not put down my name; but I have contributed to the commercial transport magazine on the canals for many years, and in the Stoke-on-Trent and the Potteries areas the canals are now being used commercially. The constructive and dynamic point put forward by the noble Lady, Lady Kinloss, about the work of 21 lorries being dragged along by one tug should make anyone who is a student of economics understand—although I am losing my faith in economists, especially at Brussels. I think we had better send psychiatrists there rather than economists.
We have reached an age in the history of transport where—forget the words "public ownership" or "nationalisation"—we should have a co-ordination of the whole of transport, rail, road, canal. This ridiculous system of accountancy, having fictitious competition between road and rail transport, is landing this country in one of the greatest economic puzzles it has ever had to face. Instead of growing more intelligent and using the artefacts of our forefathers, we are destroying them. If you are a fisherman—there are 3 million of them in this country, and I protect the beauty of their art and their craft—this would not interfere with

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you. There are stretches of canal that are quiescent, that are delightful and that enrich the soul of mankind. So I do not want the fishermen and the beauty-seekers to feel that the environment is destroyed by the gentle flowing along the canal of a commercial barge, beautifully described by the noble Lady, Lady Kinloss. I shall not speak for more than four minutes, so do not get worried.
There are three things I should like to spike down. First, we should reorganise our investment in transport. It is no excuse to say that, for this first-class Sheffield project, we could not, by a reorganisation of investment in transport, co-ordinate and find this small sum. Secondly, it is wicked of us to destroy the artefacts of centuries of canal engineering. I had the joy to represent a constituency in which Brindley was born. He could hardly read and write, and yet he was one of the finest canal engineers. We are throwing away efforts greater than the pyramids in workmanship, the wheelbarrow, sweat, muscle and blood of the navvies who built them. We throw it away as though it is useless. These new affiliates are now running modern society; they are a shock to mankind.
Finally, this needs an intelligent and constructive approach to the trades unions. It was sad to see the trade union question arising over that valuable, cheap transport of goods from across the North Sea. But I am quite certain that an intelligent British trades union movement would come to terms with, and an understanding of, canal transport if we make a point of approaching them. Last, but not least, I apologise to the noble Lord, Lord Harvington—under whose chairmanship I failed many times to get called in the other place—for not being in at the beginning of his speech, but may I say that I have done my best to support him this evening.
8.33 p.m.
Lord SEGAL: My Lords, as one who came in to listen to this debate with as near as possible to a completely open mind, I must confess I have been enormously impressed by the weight of argument put forward. I speak not with any intention of trying to contribute to the arguments, but I simply list the arguments we have heard. The total cost of £8 mil
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lion is equivalent to the construction of perhaps five or six miles of motorway, a motorway that will absorb possibly valuable agricultural land; the possibility of tolls on the traffic through the canals; the enormous potentialities of the Selby coalfield; the saving of fuel costs by the far more economical means of using canal transport; the diminution of the pollution of the environment, to which Lady Kinloss referred so admirably.
I would from these Benches plead with the noble Baroness not to dismiss this matter out of hand. We know what a strong case can be made from the Government Bench against the pleas so admirably advanced by Lord Harvington. It is easy to make a case against them. But if we believe in an integrated transport policy, as I am sure we all do from all sides of this House, how can we defend not an integrated policy but a monopolised transport policy, at the cost of our railway traffic, at the cost of our canals, and concentrate only on the development of road transport, with all the inherent disadvantages of which we are all of us so aware? I would from these Benches ask the noble Baroness to give this matter the earnest consideration which it deserves. If she is a free agent in this matter, as I profoundly hope she will be, I would ask her to give in to the pleas so eloquently urged on her from every side of this House.
Baroness WHITE: My Lords, owing to the rules laid down by the late Lord Addison, the constitutional validity of which I entirely appreciate, I am obliged to sit here in frustrated silence as I am a member of the British Waterways Board. But I think it is my duty to make it quite clear to my noble friend that, apart from the major matter of the accumulated neglect of maintenance on the entire canal system, there is really no subject about which the Board is more urgently concerned and more united than this question of the Sheffield and South Yorkshire canal.
8.36 p.m.
Baroness STEDMAN: My Lords, I, too, should like to thank the noble Lord, Lord Harvington, for drawing our attention to the Sheffield and South Yorkshire Navigation this evening, and to pay tribute to his special knowledge and to his extremely good advocacy, and that of the other noble

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Lords who have spoken with such obvious depth of feeling about the proposals which the British Waterways Board has put forward. Indeed, I feel that I must echo the words of my right honourable friend in another place, during a debate on the adjournment last May, when he spoke of the passion which this canal arouses and has aroused for more than a decade since the British Waterways Board first put its scheme forward in 1966.
My Lords, despite of listening to my noble friend Lord Davies' description of the quiescent and quiet canals he knows, I have a feeling that I am going to be in somewhat stormy and rough water this evening, and I have some difficult locks to get through on the way, both in front of me and behind me. I believe that I should start this evening by reminding your Lordships of the two important factors which were in the forefront of my right honourable friend's mind when he considered the British Waterways Board's scheme last year and which are still of prime importance today.
The first is the Government's general policy on the commercial use of inland waterways for the carriage of freight. This has been stated on a number of occasions, the most recent being in the Consultation Document on Transport Policy published in April of last year. The Government's policy is to encourage the transfer of freight from road to waterways wherever it is economically, socially and environmentally sensible and possible to do so. But the fact is that most of our inland waterways reflect their age in that today they are far too narrow to take the sort of large barges which now use the Rhine and comparable European waterways. We have in any event the great advantage of being an island, which means that coastal shipping fulfils for us much of the function that is performed by inland waterways on the Continent.
The noble Lord, Lord Mowbray, and the noble Earl, Lord Kinnoull, also mentioned the value of BACAT, and I must say that I regret that the service did not have sufficient time in which to try to demonstrate its worth. But again the BACAT barges are small, they are about 180 tonnes, and although they might be attractive in terms of the comparatively narrow and shallow United Kingdom
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waterways they are really out of scale with the European system of inland waterways, where the trend is towards barges of 1,300 tonnes or more. When my right honourable friend was appraising the British Waterways Board's scheme he was very concerned at the level of new traffic which it was expected that an improved waterway would attract. The financial return, which is so very important and to which I will come back, does depend upon this new traffic. The scheme for the Navigation must be viewed against the steady decline in commercial traffic on inland waterways.
The Earl of KINNOULL: My Lords, is the noble Baroness saying that the system which was withdrawn 18 months ago really was not viable because of its size?
Baroness STEDMAN: My Lords, it was not viable in the sense that it was expected that we might be able to take these barges or that they might come to us from the continental rivers which are so much wider and take much larger traffic than we are able to handle on our canals. When my right honourable friend was appraising the scheme, he was concerned at the level of new traffic which it was expected that an improved waterway would attract and the financial return, which depends on this new traffic. The scheme for the Navigation must be viewed against the steady decline in commercial traffic on inland waterways. Between 1969 and 1974 traffic fell by almost half. Twenty years ago it was five times as great as it is now. The reasons are clear. To some extent inland waterways face the same major difficulties which face the railways—that of inflexibility and lack of speed. They just cannot compete with road traffic's door-to-door service. There must be great uncertainty about the amount of traffic that would be attracted to an improved waterway.
My Lords, it is argued that if the improvements were carried out, new traffic would be attracted, and it is also argued that commercial undertakings will not all commit themselves in advance of seeing what facilities will be offered and at what price. Indeed, the noble Lord, Lord Harvington, referred to the letters of support from the chambers of commerce. However, one cannot always act on letters

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of support. They, being Yorkshiremen, obviously want to know what they will get for their money when the facilities are there. But the Government can only make a value judgment, and that is as true today as it was last year. My Department's officials made direct inquiries of major users as recently as last May to try to assess how much traffic might use this waterway. The result of these inquiries—and it remains our best estimate—was that new traffic would build up over five years to 1·15 million tonnes.
Before considering the implications of this estimate, I will turn to the other factor which my right honourable friend had in his mind when considering the scheme, and that, my Lords, as I am afraid it is so often at the present time, is finance. In spite of the glowing tributes which have been paid to the British Waterways Board, in 1975 it made a loss of £116,000 on freight services—that is, warehouses and terminal services, docks and freight carrying fleets—and the loss on maintaining and operating the commercial waterways was £2·2 million. The 1976 figures are not yet to hand, but we have no reason to believe that they are very much more optimistic than the ones we had in 1975. The total cost at 1975 prices of the British Waterways Board's scheme is £5·4 million and this includes a substantial amount for arrears of maintenance, most of which will be necessary even if there is no improvement to the waterway. So the net additional cost of the improvement scheme is likely to be £4·3 million.
A basic requirement of all public investment—and this scheme would require public investment as it would be financed by borrowing from the Exchequer—is that it should show a rate of return in excess of 10 per cent. in real terms for low risk projects and a higher rate of return for those projects with a greater element of risk. The uncertainty about the level of traffic on the Sheffield and South Yorkshire Navigation makes it a very high risk project, so the Government would have to look for a return of something above 10 per cent. So we were being asked to sanction expenditure of £4·3 million to finance an improvement programme which would see 1·15 million tonnes of new traffic on the Navigation after five years.
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My Lords, 1·15 million tonnes of new traffic over five years is not enough—even assuming very much higher toll charges than there are now—to produce an adequate return on an investment of £4·3 million. Even though allowance was made for the possible loss of existing traffic, if there is no improvement in the Navigation, even though allowance was made for environmental benefits, even though allowance was made for the possibility of additional benefits to users, it still proved impossible to anticipate a level of return above 10 per cent.
In the face of all this the Government's conclusion—and I assure noble Lords that it was a reluctant conclusion—was that it would not be right to commit resources to this scheme at a time when there were severe constraints on public expenditure and the pressure on limited resources was so acute.
Lord DAVIES of LEEK: My Lords, I apologise for interrupting the noble Baroness, but I do not know what computer computed that or who fed in the programme, because the social value of this has not been taken into account at all. If I were computing the programme I would have programmed the saving from 21 lorries which over the years are using millions of pounds worth of petrol and causing wear and tear to our roads and villages. I should have had that recomputed. To me that is absolute rubbishy accountancy.
Baroness STEDMAN: My Lords, if we take account of those 21 lorries, we must also take account of all the lorries that have to bring the freight to the 11 miles of the Sheffield and South Yorkshire Canal and then take it off at the other end. We looked at the environmental position, and I am sure that within that position we also looked at the social benefits of it. The decision made by the Government was not only about whether the scheme was feasible, but about the level of British Waterways Board's borrowing—if the scheme had been seen to be a sure-fire winner, then finance could have been forthcoming.
The noble Lord, Lord Harvington, referred to the Fraenkel Report and asked when it was likely to be published and see the light of day. The Fraenkel Report

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is now in the Department. Their overall estimates on maintenance at present-day prices are likely to be considerably in excess of the £22½ million which was quoted earlier by the noble Lord. Action on the Fraenkel Report and on the general question of financing the waterways is now being taken forward in the context of the discussions that we have in hand on the British Waterways Board's future. Ministers intend to make public the conclusions of the Fraenkel Report at about the same time as they publish the White Paper on the Review of the Water Industry. Tonight I am advised that that will be in the not too distant future and I take that to mean within a month or so.
However desirable it may be to put all the maintenance work in hand immediately—and the Sheffield and South Yorkshire Navigation's share of that on maintenance alone is £1·5 million—the current constraints on public spending are likely to make it difficult or even impossible to provide the money. The expenditure on maintenance of the waterways is met largely by Exchequer grant. The Exchequer grant for 1977 has already been agreed at £12 million. This includes an additional £600,000 found by Ministers to carry out the essential repairs on the Caledonian Canal and on the road bridges over the Weaver Navigation at Northwich in Cheshire. The Caledonian Canal project was mentioned by the noble Lord in passing. Therefore, there is no likelihood in our present condition of any additional grant being made at this time.
Several noble Lords have mentioned the possibility of alternative sources of finance. These include a partnership with local authorities, but no local authority has yet put its money where its suggestions have been. They include a partnership with industry and commerce; a loan from the European Investment Bank or a grant from the EEC Regional Development Fund. However, the question of the EEC grant is complicated and the essential point is that the competition for EEC grants, if anything, is even fiercer than for grants for projects within our own country. There are always far more applications than can be accepted. To stand a chance of getting accepted, the scheme, first, has to generate new employment; secondly, be in an area of high unemployment and, thirdly, be viable
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without taking such a grant into account. On the present facts the Sheffield and South Yorkshire Navigation is a doubtful starter on all three grounds. These suggestions, although they are important, anticipate agreement that the improvement scheme would be viable. Regrettably, that is not our opinion. We have still to be convinced that more traffic would be won. Without this, I suspect that hard-nosed councillors, businessmen, bankers and EEC Commissioners are unlikely "to be persuaded" to part with any hard cash.
Noble Lords have mentioned the Transport Act 1968 and the duty that it imposes on the British Waterways Board to maintain this "commercial waterway" at the standards necessary to permit the passage of craft which customarily used it before the Act was passed. So far as I am aware, the British Waterways Board is not in breach of its obligation, and although the Government are aware that standards of maintenance are poor, once again I am afraid that, however desirable it may be to improve standards quickly, the current constraints on public spending have made it impossible to provide the money. The British Waterways Board has the very difficult task of using its limited resources to the best advantage, and this may mean that essential, let alone desirable, works cannot be carried out as quickly as we would like; and the emphasis has to be on safety.
The noble Lord, Lord Harvington, has asked us to review the decision on the Sheffield and South Yorkshire Navigation. We can review the situation, and we shall do so if new factors can be presented to us. But restraint on public expenditure is still tight, and maybe even tighter than last year. We cannot do everything we should like to do; indeed, schemes which show a much more hopeful return than this have already had to be shelved. Therefore, to make such a review worthwhile any new evidence or new proposals must be of a really substantial nature.
The noble Lord, Lord Feversham, was good enough to advise me of the inquiries he was going to make about how and from whom we in the Department got our advice. The Government are advised by the Water Directorate, and they report direct to my right honourable friend on the

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commercial and the leisure use of waterways. This is normal Civil Service procedure. However, there is also an Inland Waterways Amenity Advisory Council which advises on cruising. They are a statutory body consisting of some 20 members and were set up under the Act.
The noble Lord, Lord Mowbray, wondered why the British Waterways Board's freight activities were under my right honourable friend the Minister of State at the Department of the Environment rather than my right honourable friend the Secretary of State for Transport. I think that we must acknowledge that save on a handful of river navigations the traditional transport role of waterways has gone for good. But, given the increasing amenity role and the interface with the water industry as regards land drainage, water supply, effluent disposal, the waterways "fit" better into Environment than into Transport. I think critics of my right honourable friend's responsibility for British Waterways Board forget his wider responsibility for the whole of the water industry.
I will not rise to the good natured jibes from the noble Lord opposite about my Party's future, except to say that I am reasonably confident that in some 25 hours from now this Government will still be the Government of this country and we will still be grappling with our financial situation, and, I guess, still being exhorted by noble Lords opposite who want to spend millions tonight and then to cut public expenditure. Noble Lords opposite, in or out of office, have to face facts, and they must decide whether they want to cut public expenditure or whether they want a Government to spend freely on all these desirable schemes.
In spite of my rather high feelings on that note, I assure noble Lords that if the merger of the British Waterways Board
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with the new National Water Authority goes ahead, then my right honourable friend the Minister of State has already said that he will specifically ask the National Water Authority to review the case of the Sheffield and South Yorkshire Navigation in the light of their own resources and priorities. If, in the meantime, noble Lords can produce in evidence something more substantial in regard to this being made a workable proposition, then we shall do what we can to review it and see whether it is possible.

  PARLIAMENTARY CONSTITUENCIES: ELECTORAL ROLLS
  PARLIAMENTARY CONSTITUENCIES: ELECTORAL ROLLS