Sitting of 17 May 1977

Preamble
The House met at half-past Two o'clock

PRAYERS
[Mr. SPEAKER in the Chair]
Mr. Speaker: Before I instruct the Clerk to read the titles of Private Bills, I draw the attention of the House to the fact that Private Business has been printed on the Order Paper immediately before the Orders of the Day and not, as is customary, before Questions.

PRIVATE BUSINESS

  AUSTRALIA AND NEW ZEALAND BANKING GROUP BILL
  Order read for consideration of Lords amendments.
  Lords amendments to be considered upon Thursday.

  LONDON HYDRAULIC POWER BILL
  Order for consideration read.
  To be considered upon Thursday.

  WEST MIDLANDS COUNTY COUNCIL BILL [Lords]
  Order for Second Reading read.
  To be read a Second time upon Thursday.

ORAL ANSWERS TO QUESTIONS
  EDUCATION AND SCIENCE

    Green Paper
    Mr. MacGregorasked the Secretary of State for Education and Science when she expects to publish her Green Paper on education.
    Mr. Bryan Daviesasked the Secretary of State for Education and Science when she intends to publish the Green Paper incorporating conclusions on the great debate on education.
    The Secretary of State for Education and Science and Paymaster-General (Mrs. Shirley Williams): I have been much encouraged by the interest shown by all sections of the community in the issues discussed during the recent debate. The series of consultations with organisations and individuals has now been completed, and I hope that the Green Paper will be published later this summer.
    Mr. MacGregor: Does the Secretary of State agree with the general desire to achieve a closer relationship between the education system and industry? Does she accept that one of the difficulties is that so few teachers have real and practical working experience of the outside world? Will the Green Paper take up and deal with the suggestion that entrants to the teaching profession should have a period outside the teaching profession before they take up their jobs?
    Mrs. Williams: That matter has been discussed in the consultations with various organisations following the regional conferences. In addition, there are a number of schemes to give serving teachers a period of experience in industry, although it is brief.
    Mr. Davies: Has my right hon. Friend reached the conclusion that the country can ill afford the present degree of diversity in local authority arrangements, in terms both of the records of student progress within schools and of the diversity of the curriculum, bearing in mind the increased mobility of parents?
    Mrs. Williams: My hon. Friend has moved into the most difficult area of all.

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    There is no doubt that some of the diversity and innovation that decentralisation makes possible is very valuable. The Green Paper will address itself to the problems of mobility and to how those problems can be solved without abandoning the decentralised system.
    Mr. St. John-Stevas: May I congratulate the Secretary of State on making off with another article of Opposition educational clothing in her proposed conference on comprehensive schools at York? I hope that the shortcomings and achievements of these schools will be highlighted in the Green Paper. May I also express the hope that we shall have an announcement in the Green Paper about a return to national standards of literacy and numeracy? I hope that we shall have the opportunity of an early debate soon after the publication of the Green Paper.
    Mrs. Williams: I am a daily reader of the Labour Party manifesto but I am not so frequent a reader of the Conservative programme. On 17th September, the day after I was appointed Secretary of State, I announced to the assembled Press my intention to hold a conference on comprehensive schools. I was not aware at that time that it was Conservative policy to do so. I suspect that it was not. My conference is to be about the best practices in comprehensive schools with a view to extending them everywhere. The Tory Party conference, as I understand it, is to inquire into whether there should be comprehensive schools. It will therefore serve a different purpose.

    School Transport
    Mr. Luceasked the Secretary of State for Education and Science if she plans to make a statement on school transport.
    The Under-Secretary of State for Education and Science (Miss Margaret Jackson): My right hon. Friend is considering with the local authority associations what changes might be made in the present unsatisfactory arrangements for school transport.
    Mr. Luce: Does the Minister realise that many parents living within the statutory limits, or just within them, are facing grave problems as transport costs increase? Is she aware that parents in rural areas are especially affected? Does
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    she accept that there has been too long a delay? When will she be prepared to devise a satisfactory scheme?
    Miss Jackson: I am aware of the problems facing parents in these areas and I am anxious to see them resolved. The local authorities see administrative difficulties in any new scheme for change. At present we are exploring with them to see how they might most easily be resolved.

    Parliamentary Democracy
    Mr. Martenasked the Secretary of State for Education and Science if she will take steps to encourage the study of parliamentary democracy within educational establishments.
    The Minister of State, Department of Education and Science (Mr. Gordon Oakes): I regard it as important in a democratic society that young people should be given a clear understanding of the functions of central and local government and of the part played by Parliament and other elected assemblies in the government of the country. It is, however, for the local education authorities and the schools and colleges themselves to consider what provision should be made for such studies.
    Mr. Marten: As parliamentary democracy, for all its faults, is something that we have to preserve, particularly as it is likely to come under increasing attack. I think, in the years ahead, will not the Secretary of State see to it that more effort is put into this subject in educational establishments, particularly bringing out the fact that Parliament should dominate the Government of the day?
    Mr. Oakes: I repeat that this is primarily—and I believe that the hon. Gentleman would agree that it ought to be primarily—for the local education authorities and the schools themselves. But the Politics Association has devoted much attention to this matter. We have given a small pump-priming grant to it for this purpose.
    Mr. Rathbone: I wonder whether the Minister has thought of expanding that activity to include specifically education on the operations of the Assembly, the Commission and the other bodies of the European Economic Community.
    Mr. Oakes: I am not certain that that would be so acceptable to the hon. Gentleman's hon. Friend, the hon. Member for Banbury (Mr. Marten), but I agree with the hon. Gentleman.

    Oxfordshire
    Mr. Hurdasked the Secretary of State for Education and Science what reply she has made to representations from the National Union of Teachers about the level of education spending in Oxfordshire.
    Mrs. Shirley Williams: The level of education spending in Oxfordshire is a matter for the local authority to determine, and it is to the authority that the NUT's recent representations have, quite properly, been made. I understand that a meeting took place last month between members of the National Union of Teachers and representatives of the Oxfordshire authority.
    Mr. Hurd:Does the Secretary of State accept, however, that a certain confusion has been created in the county by the contrast between her informal remarks—I think on two occasions during the last year—about the need to maintain education spending in Oxfordshire and the action of her colleague the Secretary of State for the Environment, which has forced the county council, through the rate support grant, not only to introduce substantial economies but to raise the rates by 40 per cent. more than the national average? Will she now use her influence to dissuade the teaching profession from taking strike or other action, which would only harm the service that it is trying to protect?
    Mrs. Williams: The hon. Gentleman will know that I have made clear on more than one occasion that the Government would regard the very highest priority in local government expenditure on education as being the maintenance of pupil-teacher ratios. In the last few weeks Oxfordshire has, in practice, found another £250,000, which arose unexpectedly as a result of a mis-estimate of the effect of the Burnham negotiations for teachers, with the result that a substantial number will be able to be retained. I hope that it will be possible
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    to retain more of those at present under threat.
    Mr. Flannery: Does my right hon. Friend agree that at a time of very severe cuts in public expenditure, and more especially in education, many authorities—Tory authorities in particular—are going far beyond what they should do? Will she therefore take steps to try to curb them from carrying out these cuts in order to help other aspects of conduct by taking more and more money from education?
    Mrs. Williams: I follow my hon. Friend by saying that I am worried by the fact that in some local authority areas education does not have the priority that I believe it should have. That is particularly true where there is what is sometimes called corporate management. However, the Government have made it as clear as they can that their first priority is the maintenance of the pupil-teacher ratios, and that will continue to be their position.
    Mr. Marten: Is the right hon. Lady aware that for several months before the recent county council elections the teachers attracted headlines in all the local newspapers attacking Oxfordshire County Council and that when the results of the elections were declared it was clear that that campaign had had no effect, because the Conservatives won 61 out of the 69 seats in the county?
    Dr. Boyson: Is the Secretary of State aware that if there are cuts in Oxfordshire most people will consider that they are due to the results of her Government's policies on the rate support grant, which this year was cut in Oxfordshire by 8 per cent., as compared with 4½per cent. for the rest of the country? For the last three years Oxfordshire County Council has done worse than any other authority in this respect, due to her Government trying to move money from Conservative-controlled country authorities to the Labour-controlled city authorities.
    Mrs. Williams: I would take the hon. Gentleman's strictures a little more seriously if it were not the case that there had been a very substantial increase in local authority expenditure for independent places, for no good reason that I can discover.

    Colleges of Education (Ponteland and Fenham)
    Mr. Beithasked the Secretary of State for Education and Science whether she has completed her consideration of the recent representations she has received about the future of the Northumberland College of Education at Ponteland and St. Mary's College of Education, Fenham.
    Mr. Oakes: No, Sir. My right hon. Friend intends to consider together all the representations about the future of these and other colleges when the process of consultation with local authorities and other bodies is completed. She hopes to announce her decisions on them in June.
    Mr. Beith: Can the hon. Gentleman assure us that his right hon. Friend takes into account the considerable documentary evidence about educational deprivation in the North-East which has been presented by one of the colleges? Will he consider how much worse the situation could be if the services of these two colleges to local State and Catholic schools were withdrawn? Will the Secretary of State do her best to ensure that even with the reduced intake these two colleges have a future rôle?
    Mr. Oakes: We shall take account of the evidence arriving from many deputations—I have seen 27 so far, with five to come—as well as documentary evidence. We shall look at both of the colleges in the North-East and give them due consideration. We shall give them the same consideration as is given to all colleges in the country.
    Sir W. Elliott: Will the hon. Gentleman accept from one who accompanied one of the many deputations that my particular deputation was very grateful to him for his courtesy and the consideration he showed? Will he further continue to consider, as I know he has done so far, the importance of maintaining the one Roman Catholic teaching college—the training college at Fenham—in the North-East? Will he recognise, through his efforts—I know that he is making them to the best of his ability—to maintain this college of education, the importance of religious teaching in schools?
    Mr. Oakes: I am grateful for what the hon. Gentleman has said. I do my best with the delegations and I shall bear in
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    mind that the removal of this college would remove a Catholic teacher training college from the whole of the North-East. However, I do not think that the House would expect me to prejudge what my right hon. Friend will be saying in one month's time.

    Research
    Mr. Macfarlaneasked the Secretary of State for Education and Science when she last met the Chairman of the Advisory Board for the Research Councils.
    Mrs. Shirley Williams: I had a full discussion with Sir Frederick Stewart on 21st April.
    Mr. Macfarlane: Is the Secretary of State aware of the continuing widespread concern at the further cuts in the science budget for the year 1977–78, to the tune of some 3 per cent.? Is it not doubly unfortunate that these cuts coincide with an increase in the number of science students and an increase in the potential for high energy physics?
    Mrs. Williams: Let me say right away that there has been, as the hon. Gentleman will know, a considerable shift in the pattern of expenditure by the research councils, and I am satisfied that they have increased their expenditure on students, for the reasons that the hon. Gentleman has given. I might also add that I understand that the Royal Society is shortly to mount a series of schemes to support teams of scientists working on new projects, in particular including able young scientists who might otherwise not have an opportunity. However, I shall keep the closest possible eye on this matter, because I believe that it is very important to give our able young scientists opportunities in the future.

    Teachers' Meals
    Mr. Rathboneasked the Secretary of State for Education and Science what steps she is considering to reduce the £23 million cost of subsidising teachers' meals in schools.
    Miss Margaret Jackson: Teachers exercising supervision during the midday break perform a valuable service and it would be wrong to consider in isolation the cost of subsidising their meals. The consultative document sent to local authority and teacher associations, among

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    others, invited suggestions and comments by the end of May on how economies in the school meals service could best be made. It is our intention to offer guidance to local education authorities in the light of the response to this document, probably towards the end of the summer.
    Mr. Rathbone: I welcome the prospect of guidance, which will save an enormous amount of money which is so desperately wanted for other parts of the education system. However, could not the Minister give this a bit of a heave, because every week that goes by more and more money is wasted down this particular gullet? Is she aware that this point has been raised with me not only by those who wish to see greater expenditure in other parts of the education system but by others, including teachers, who think that this is unnecessary benevolence on their part?
    Miss Jackson: I know that there are those who contest the need for the school meals service still to exist. I do not agree with them. If the cost of providing school meals, which I think are necessary, were transferred from our budget elsewhere—
    Mr. Rathbone: Teachers' meals.
    Miss Jackson: If teachers are performing duties, they have a right under the 1968 agreement to receive a meal. We do not question that right. However, we like to be assured that the agreement is being kept in the spirit as well as in the letter.
    Mr. Flannery: Does my hon. Friend agree that school meals are an important social service and that they are increasingly regarded by many educationists as not being in the sphere of education at all, there being an attempt to withdraw them from education and make them a real social service? Will she take note that many people are deeply worried about the future increased charges for school meals, which could prevent many children from having a meal at midday?
    Miss Jackson: I am aware of the suggestion that the school meals budget should be transferred to a a different Department. I do not think that that would automatically lead to an increase in the money available generally for education. Like my hon. Friend I regret
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    that we have been forced to raise the price of the meal, but it is still heavily subsidised.
    Mr Peter Bottomley: If the money is to be allocated to anyone, would it not be better if it were allocated to the parents, who would then be able to decide whether to feed their children at breakfast, at teatime and during the holidays rather than having school meals during term time?
    Miss Jackson: Perhaps the hon. Gentleman has not taken the point on board—namely, that school meals are provided on school premises to allow children to be fed while they are at school. Merely to give money to the parents is not a way round that problem.
    Mr. St. John-Stevas: Will the hon. Lady bear in mind that, although these meals are technically free to teachers, the teachers receive them in return for supervising the children's breaks? If the teachers withdrew their services in this respect we should be involved in heavy additional expenses or we should have to abandon the school meals service.
    Miss Jackson: I said that.

    Secondary Education (Selection)
    Mr. Thorneasked the Secretary of State for Education and Science what percentage of local education authorities are now operating selection-free secondary education.
    Miss Margaret Jackson: There are 22 local education authorities, about 23 per cent., in England which no longer operate any selection process whatsoever for entry to their secondary schools. Another 19 per cent. have no selection for maintained secondary schools, and a further 57 per cent. are partially reorganised on non-selective lines.
    Mr. Thorne: Although this may represent an improvement over the position of a few years ago, is my hon. Friend seeking any additional powers from the House to ensure that the aim of the Government of establishing non-selective secondary education is achieved?
    Miss Jackson: At present we are seeking to exercise the powers that we have.
    Mrs. Kellett-Bowman: Will the hon. Lady take note of the fact that the county

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    council which wrote to her regarding the establishment of a sixth form college in Lancashire, which published the letter the day before the county council elections, was soundly beaten when the citizens of Lancashire made their views clearly known on this aspect, which relates to the Question but more particularly to Question 10, for which the hon. Member concerned was not present?
    Mr. Noble: Will my hon. Friend bear in mind the words of the hon. Member for Brent, North (Dr. Boyson) in 1972 when writing in the Black Paper "Crisis in Education", when he acknowledged that grammar schools and comprehensive schools could not exist side by side? Is she aware that the hon. Gentleman wrote that in those circumstances comprehensive schools were little better than secondary modern schools? Will she press ahead to ensure that we have a comprehensive system rather than comprehensive schools with the best creamed off from them?
    Miss Jackson: I entirely agree with my hon. Friend. That is one article of the hon. Gentleman's clothing that we are pleased about.
    Mr. Forman: Does the hon. Lady accept that selection within schools will be inevitable for as far ahead as we can see, even if there is not selection between schools? Will she give an undertaking that none of the schemes of enforced comprehensivisation will be allowed to damage the good schools still in existence?
    Miss Jackson: It is our intention not to damage any schools but to make all schools thoroughly good and satisfactory. I do not accept that selection within schools is an automatic necessity.
    Mr. Ward: Does the list of authorities include counties such as Cambridgeshire which, while having largely non-selective systems of their own, still take places at independent schools? Does that not mean that further action is required by my right hon. and hon. Friends?
    Miss Jackson: As I think my hon. Friend knows, this is a matter that we are dealing with in another way under Section 5 of the Education Act 1976. We are asking local authorities to justify their need for places at independent schools.

    Engineering
    Dr. Hampsonasked the Secretary of State for Education and Science what steps she is taking to encourage the study of engineering at school and in further education institutions.
    Mr. Oakes: My right hon. Friend is altering the awards arrangements and is examining the possibility of a scholarships scheme with the aim of attracting more able students into engineering and other courses of value to industry. The University Grants Committee, the Council for National Academic Awards and the Technician Education Council are reviewing the structure and content of engineering courses with the needs of students and industry in mind. In the schools my right hon. Friend attaches greater importance to improving the teaching of mathematics and physics than to the development of engineering as a separate subject.
    Dr. Hampson: Is the hon. Gentleman aware that for several months both myself and members of his own party have been trying to get the Secretary of State and Ministers in the Department of Industry to release to hon. Members the most effective document and the best analysis of the problem, which is the result of a joint working party from various Departments on education, industry and management? Will he explain why, given the great debate, only Members of Parliament seem to be excluded from seeing the document, which is not secret in any sense as so many others have access to it? Will the hon. Gentleman at least release the statistical appendices so that we may see the terms of reference and hard information, which will enable us to debate effectively what he is doing?
    Mr. Oakes: The document is to be published. I welcome the initiative that the hon. Gentleman is taking. This is not a party political matter but is something the nation needs.
    Mr. Pavitt: Is my hon. Friend aware that in recent years in areas of inner city deprivation, such as Brent, South, where there are excellent schools of engineering, a large gap has grown between the apprenticeship schemes offered locally by engineering firms and

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    the graduates who emerge from the colleges? Will my hon. Friend have discussions with Ministers in other Departments in an attempt to bridge the gap between what is done in the education sector and what is being done in apprenticeship schemes in engineering factories?
    Mr. Oakes: I think that the number of vacancies is more a matter for my right hon. Friend the Secretary of State for Employment. However, I appreciate the point that my hon. Friend makes. Steps are being taken both nationally and at local level to ensure that the gap is narrowed.
    Mr. Nelson: In view of the importance of encouraging better attitudes to engineering among students in higher education, is the hon. Gentleman satisfied that the priority given by the Science Research Council to the sponsoring of engineering exercises and research projects in universities is sufficient compared with other scientific projects?
    Mr. Oakes: Yes, I am satisfied, but we are always looking at ways in which the links between universities, polytechnics, schools and industry, especially in respect of engineering, can be strengthend.
    Dr. Bray: Does my hon. Friend agree that the greatest scope for increasing both the numbers and the quality of recruitment to the engineering profession lies with girls? Is he aware that there is still a great deal of prejudice, both in industry and schools, against the adoption of engineering by girls as a profession?
    Mr. Oakes: I think that there is prejudice, and it worries me. One of the difficulties, too, is that girls do not realise the possibilities that may well be open to them in the engineering professions in future. That is something in which there should be co-operation between industry and education.
    Mr. Nicholas Winterton: Is the Minister aware that the Engineering Employers' Federation is gravely concerned about the lack of knowledge and interest in secondary schools concerning engineering and commerce? Although the federation recognises that it could have done more to bridge the gap and to improve knowledge, may I ask whether the Minister accepts that it would be a good thing if teachers could get out into industry
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    and commerce as part of their course before qualifying as teachers so that they do not go straight from school to college and from college back to school?
    Mr. Oakes: In reply to a previous Question my right hon. Friend agreed that the more experience a teacher can have, the better. This is one of the aspects that will be discussed in the Green Paper.

    Teaching Companies
    Mr. Nelsonasked the Secretary of State for Education and Science what steps she is taking to increase the number of teaching companies.
    Mrs. Shirley Williams: The Science Research Council and the Department of Industry have already launched five programmes and two more will be announced shortly. At least six universities and polytechnics are preparing further proposals in co-operation with interested companies.
    Mr. Nelson: I am grateful for that answer. While one welcomes any encouragement which can be given to these schemes, does not the right hon. Lady feel that the five pilot schemes already undertaken will do little more than pay lip service to the real need for a better understanding among students in higher education of the problems and aspirations of industry? In particular, will she now consider having discussions with and giving encouragement to a wider range of companies than the five which are undertaking the schemes, so that, if the pilot schemes should prove successful at a later stage, teaching companies can be created on a wider scale much more quickly?
    Mrs. Williams: I said that two more would be introduced shortly. The present intention is to launch four new programmes each year. Since consultations on the scheme were completed only last year, that is not an unreasonable rate of progress. Obviously, we hope to learn something from the schemes now in practice. In addition to this scheme, there are also Science Research Council awards made jointly with industry and there is the discussion on the industrial scholarship scheme that we have talked about on another occasion.
    Mr. Costain: Will the right hon. Lady help the House and tell those such as myself who are ignorant what a teaching company is? Is it a name gimmick or does it really mean something?
    Mrs. Williams: I think that the closest parallel would be with something like a teaching hospital. The idea is that, as part of the course of study, a young man or woman at university or at a polytechnic will engage in work at his or her own level within a firm, so that he or she can see in practice how research is applied.
    Mr. Loyden: Would not my right hon. Friend agree that, while it is important to develop and encourage engineering in our universities and colleges, we need to maintain the present balance, because the philosophy of the Conservative Party, which is clear from its statement—
    Mr. Speaker: Order. It was only last week that the House asked me to see that questions were more relevant. That was a supplementary question on the previous Question, was it not? We are dealing with teaching companies now.
    Mr. Loyden: Yes, Sir. The question of teaching companies is still related somewhat to the matter that I am raising, which is that the Secretary of State should take the opportunity to say that the balance in education between the humanities and engineering should be maintained, instead of accepting the philosophy of the party opposite and going in one direction.
    Mr. John Ellis: With teaching companies.
    Mr. Loyden: With teaching companies.
    Mrs. Williams: My hon. Friend's ingenuity is a tribute to his education. The teaching company is concerned with those who are already choosing to study engineering and management. Its purpose is to make their studies much more directed to the real world, which I think is not a point of disagreement between the parties.

    Rising Fives
    Mr. George Rodgersasked the Secretary of State for Education and Science if she will advise local education authorities to make maximum provision
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    for the admission of rising-five children to primary and infant schools.
    Miss Margaret Jackson: It is for local education authorities to decide how to use their statutory powers to provide education for children below compulsory school age. But we have already advised authorities that rising fives may be admitted where there would otherwise be vacant places and the extra call on resources is insignificant.
    Mr. Rodgers: Is my hon. Friend aware that the Conservative-controlled Lancashire County Council is severely restricting the entry of rising fives, not on the ground that there is a shortage of accommodation or of teaching staff but to save a paltry sum in the provision of school meals? Is she further aware that the same authority is allocating £3 million towards the upkeep of private schools within the county? Does she not think that that is disgraceful?
    Miss Jackson: As my hon. Friend knows, we have already expressed our disapproval of unnecessary take-up of places at independent schools. I was not aware of the grounds advanced for Lancashire's policy on rising fives. I am grateful to my hon. Friend for the information.
    Mr. Noble: Is my hon. Friend prepared to put further pressure on Lancashire County Council? After all, in many areas of Lancashire not only are children who are rising five not taken into schools—they are even being turned away now—but there is a severe shortage of nursery school places. This is placing a severe burden on working mothers as well as depriving young children of worthwhile education.
    Miss Jackson: I shall make some inquiries about my hon. Friend's comments. As he knows, it is a matter for the local authority concerned on what grounds and to what degree it admits children, even where there is a shortage of nursery school places. But I shall look further into the matter.
    Mr. Alan Clark: Would it not be a good idea, while we are on the subject of advising local authorities, if the Minister had a word with the Minister for Housing and Construction so that there

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    could be a synchronisation of housing plans and the building of primary schools, which are a necessary adjunct to such expansion?
    Miss Jackson: There is such a synchronisation.
    Miss Joan Lestor: Is my hon. Friend aware that the failure of the expansion of nursery schools, plus the halt in the admission of rising fives in many local authority areas, coupled with the failure to expand the provision of day care for children, means that we shall see a mushrooming of private provision for all sections of pre-school children? Does she not think that it would be a good idea if the DHSS and the DES got together on an integrated service for the pre-school child?
    Miss Jackson: It has for some time been the intention of both the DHSS and my own Department to make some joint provision, and we are discussing such matters at the moment. However, I must remind my hon. Friend that over 50 per cent. of four-year-olds were receiving some form of educational provision in January last year, the latest date for which figures are available.

    Student Grants
    Mr. Gwilym Robertsasked the Secretary of State for Education and Science what are the latest figures available for the numbers of students who receive mandatory and discretionary grants; how this proportion has changed over a recent convenient period; and what steps she is taking to make a higher proportion of grants mandatory.
    Mr. Oakes: In 1975–76 there were about 56,000 discretionary major awards and 324,000 mandatory awards. In 1970–71 the comparable figures were 66,000 and 294,000 respectively. My Department, in conjunction with the local authority associations, will shortly be making a survey of local authority practice with regard to discretionary awards and my right hon. Friend will review the position when the results are known.
    Mr. Roberts: Does my hon. Friend accept that, although the whole House welcomes the steps which the Government are taking, there is now an urgent need to tighten up on the provision of
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    discretionary awards and that thousands of students or would-be students are already fearful of what will happen with the election of so many Tory-controlled county councils, which will be very unwilling to give some of these much-needed discretionary awards?
    Mr. Oakes: I appreciate the need for urgency. As I have told the House, we are having a survey. Before action is taken, we must know the facts, and we are expecting to know those facts during this summer.
    Mr. Nicholas Winterton: Is the Minister a strong supporter of the Open University? If he is, is he aware that, because of the heavy cut-back in public expenditure and the pruning of expenditure which local authorities have had to undertake on the Government's instructions, the Open University is suffering and that many people who rightly seek discretionary grants are unable to get them because the counties do not have the money?
    Mr. Oakes:I am a great supporter of the Open University. I am somewhat surprised that the hon. Gentleman is a great supporter of increased public expenditure.
    Mr. Nicholas Winterton: That is no answer.
    Mr. Raphael Tuck: Can my hon. Friend or anyone else explain to me how it is that the Conservative Party, while advocating and pressing for enormous cuts in expenditure, gets very annoyed when we make any cuts in expenditure?

    Training Opportunities
    Mr. Maddenasked the Secretary of State for Education and Science if she is satisfied with the training opportunities in further education establishments.
    Mr. Oakes: Yes. The further education service provides a wide and flexible range of courses in response to the country's economic needs and the needs of the individual.
    Mr. Madden: What discussions are going on between the DES, the Department of Employment and the Training Services Agency to expand the training opportunities at colleges of further education, particularly in such areas as Calderdale in West Yorkshire, where

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    there is no skillcentre in the immediate vicinity?
    Mr. Oakes: Discussions are going on between both Departments. As for Calderdale itself, if my hon. Friend will write to me I shall be able to explain the position more fully to him.
    Mr. Marten: What is the present position of pupils between the ages of 15 and 16 who are no longer benefiting from time at secondary school? Are they now allowed to go to a college of further education to complete a further year of their education?
    Mr. Oakes: No, Sir. There are link courses between schools and colleges of further education, and very valuable they are, but for full-time education in a college of further education a pupil needs to be 16.

    Gifted Children
    Mr. Hodgsonasked the Secretary of State for Education and Science what proposals she has for encouraging the development of gifted children.
    Miss Margaret Jackson: I am concerned that everything possible should be done to identify and meet the special needs of these children, but there is nothing that I can add at present to the answer I gave to the Question from the hon. Member on 15th March.
    Mr. Hodgson: Does not the Minister agree that the Government's failure to announce a specific programme to help gifted children confirms our view that the Government are primarily interested in keeping down education expenditure rather than increasing it?
    Miss Jackson: No, I do not accept that. It is a singularly silly remark, particularly as I recently told the hon. Gentleman that a special working party was considering the problem of gifted children. We expect it to report in May and we are expecting to have a conference on this subject in November.
    Mr. Pavitt: Will my hon. Friend explain how it is that when we measure the achievements of gifted children by the numbers admitted to Oxford or Cambridge, or eventually to the Foreign Office, so many gifted children seem to
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    have gone to publc schools rather than to State schools?
    Miss Jackson: I think my hon. Friend is pointing to the conflict that is present in people's minds between children who have genuine intellectual gifts—who are about 2 per cent. of the population—and those who are intellectually privileged.
    Mr. Cormack: Would the Minister care to define the term "gifted children" and tell us where gifts begin and where gifts end?
    Miss Jackson: As the hon. Member may know, there is a substantial body at work on this subject which defines what it regards as outstandingly gifted, and it is generally acknowledged that there is on the whole only a small percentage of such children in the population.
    Mr. Flannery: Will my hon. Friend accept from me that the term "gifted children" as used by the Conservative Party refers tot he elitism that Conservatives have always practised? Does she not agree that in comprehensive schools the teacher-pupil ratio is very good at the topmost level and that there is remarkable scope in the education of our gifted children even to the point where some of them become ambassadors, for instance?

    Tameside (Legal Costs)
    Mr. Gowasked the Secretary of State for Education and Science whether the total cost to public funds of the legal proceedings in the Tameside case are yet known; and if she will make a statement.
    Miss Margaret Jackson: The costs have not yet been determined. The matter is still under negotiation between the Treasury Solicitor's Department and the legal representatives of the Tameside local authority.
    Mr. GowIs it not clear that the total cost of these proceedings is in excess of £25,000? Since in the judgment of the House of Lords it was stated that the predecessor of the right hon. Lady had misdirected himself fundamentally, ought not the costs to be paid by the Minister personally?
    Miss Jackson: It is not my understanding that it is yet known what the costs are,

    227
    and I therefore cannot comment on the hon. Gentleman's observations.
    Dr. Boyson: Is the Minister aware that this huge cost to the Exchequer, which could be better spent on books and stationery in schools thoughout the country, was caused not by anything that Tames-side did but because Tameside was sued by the Department on wrong legal advice?
    Miss Jackson: No, I do not accept that.

    Parental Contracts
    Mr. Lawrenceasked the Secretary of State for Education and Science what representations she has received about her proposal that there should be a form of written contract between each parent and the school which its child attends.
    Mrs. Shirley Williams: What I had in mind was not a contract as a legally enforceable document but an undertaking on both sides. My Department has so far received 11 letters from members of the public, and comments have also been made by various educational organisations.
    Mr. Lawrence: Will the right hon. Lady admit that the proposal is quite absurd and that the deafening silence that we have received about that proposal since it was made now means that it is dead and buried?
    Mrs. Williams: The proposal is not absurd. Something similar exists in other Western European countries, and it is extremely important to get a much closer relationship between parents and the schools. Until this moment, I did not think that this was a party matter.

    GCE Examinations
    Mr. Banksasked the Secretary of State for Education and Science whether she is satisfied with the present grading system for passes of O-level examinations.
    Miss Margaret Jackson: The conduct of public examinations is in general a matter for the independent examining boards. The Schools Council is, however, responsible for advising the Secretary of State on major questions of examinations policy, as for example when changes in the grading system are envisaged. The present O-level grading system was introduced in 1975, on the Council's recommendation, and while
    228
    there may initially have been some misunderstanding of the new grades among employers and others I know of no reason to suppose that this is still the case.
    Mr. Banks: I thank the Minister for that reply. Is she not aware that many industrialists are confused by the various grades of O-level examination? Would it not be better for there to be a standard O-level examination to denote average accomplishment?
    Miss Jackson: I doubt whether that proposal would be educationally supported. In any case, it is open to industrialists to ascertain what is the usual standard attained by these grades.
    Mr. Speaker: Questions to the Prime Minister.
    Mr. Lipton: On a point of order, Mr. Speaker. Would you be good enough to use your influence with the Prime Minister to place in the Library every Tuesday and Thursday a list of his engagements, so that we can get rid of a lot of this rubbish on the Order Paper?
    Mr. Speaker: I shall undertake that if the hon. Gentleman undertakes to raise his points of order in future at the end of Questions.

  OVERSEAS REPRESENTATION
  Mr. Maddenasked the Prime Minister whether he has received the report of the CPRS on overseas representation.
  The Prime Minister (Mr. James Callaghan): The report is still in draft. I expect to receive it shortly.
  Mr. Madden: When my right hon. Friend receives the report, will he give an assurance that, whatever response he makes to the rumoured recommendation that we should streamline our overseas representation, he will resist any recommendations to reduce the BBC Overseas Service, which many believe to be a most effective means of transmitting Britain's point of view and which is also most helpful in giving impartial information to those who are living under régimes where censorship of the news is a practice?
  The Prime Minister: I have not yet seen the report and, therefore, I am not

  229
  aware whether it contains any recommendations of that nature. I would say to my hon. Friend that from my previous experience as Foreign and Commonwealth Secretary I know that the Overseas Service of the BBC is very much valued and is listened to by a variety of overseas leaders in other countries. We should therefore have to give serious consideration before it was cut down.
  Mr. Michael Morris: Is the Prime Minister aware that rumour has it that the report criticises the cut-back in the British Overseas Trade Board's activities? Does he not agree that it makes nonsense to cut back this service if, as he has stated in the House, exports are a priority?
  The Prime Minister: Again, I must say that these are rumours and that I do not know what the report contains. It would be better to read it and see what case is made, if any is made, about the overseas trade service and its future.
  Mr. Carter-Jones: Will my right hon. Friend mind if I twist the Question and link it to Question No. Q1 and ask—
  Mr. Speaker: Order. Only last week the House asked me to see that supplementary questions were relevant to the Question on the Order Paper.
  Mr. Carter-Jones: This is relevant, Mr. Speaker. Has my right hon. Friend received representations from overseas people that, maybe when he goes home at night to his home and his wife, he should route himself via the Phipps Ward of the South-Western Hospital and see there what can be done for disabled persons from overseas?
  Mr. Speaker: That is a blatant example of where the House has asked me to see that questions are relevant.

  PRIME MINISTER (SPEECH)
  Mr. Pattieasked the Prime Minister whether he will place in the Library a manuscript of his remarks on inflation made in Tunbridge Wells on 30th April 1977.
  The Prime Minister: I did so on 2nd May.
  Mr. Pattie: Does the Prime Minister recall that in that speech he said:
  230
  "We are now winning the battle against inflation"?
  As inflation, on the Chancellor's formula, was 8·4 per cent. in September 1974 and after two and a half years this Government had got inflation up to 19·9 per cent., why should anyone believe him?
  The Prime Minister: I do not know whether that question is worth answering. Any question which ends "Why should anyone believe him" hardly deserves an answer, because no one would believe it anyway. Therefore, I wonder why I should bother to reply. The answer I have given regularly is that the forecasts and the policies that have been carried through show that there will be a turndown in the rate of inflation, which will continue during the second half of this year and the first quarter of next year. That is a forecast that I accept because it is genuinely based. I invite the hon. Gentleman to believe it, too.
  Mr. Ron Thomas: Does my right hon. Friend agree that two of the major factors in inflation are Britain's membership of the Common Market and the devaluation of sterling? Will he therefore issue an ultimatum to the Common Market that unless it scraps the CAP Britain will get out? Will he comment on the Bank of England's handling of sterling, because it is refusing to allow it to reach a higher level than it is at the moment?
  The Prime Minister: No, I do not think that I can comment on the last part of the question. I believe that that would take too long. We cannot deal with an important issue of policy of that sort in answer to a supplementary question. The answer to the second part is "No", because I do not believe that delivering an ultimatum to the Common Market in that sense would serve any particular purpose.
  Mr. Michael Latham: Was not my hon. Friend's point about not believing the Prime Minister a perfectly fair one, since the performance of the Chancellor of the Exchequer and other Ministers on inflation has been a long series of terminological inexactitudes?
  The Prime Minister: Inflation is declining and will continue to decline. Since the period of the pay policy—and I take it that, whatever they may think about the future, the Conservatives accept these

  231
  figures, which I have explained on a number of occasions—[Interruption.] It makes me wonder whether the Conservatives ever listen. Because of the events last autumn, we are in a period of a temporary bump—
  Mr. Fell: Three years.
  The Prime Minister: A bump can go both ways. If I were to hit the hon. Gentleman, he would quickly become concave, but he could equally become convex. There is no reason to doubt that if the forecasts are borne out—and no one has cast doubt on them yet—inflation will turn down. We should not discourage the people, nor should we discourage the negotiations which are going on about the future of pay policy. The future of all the country is bound up in winning this battle. The Government have taken some tough decisions on it which have resulted in considerable loss of popularity. That we have to with-stand. But I see no reason why the Opposition should not admit that these policies are necessary if the country is to avoid hyper-inflation, and I should be glad if they were to do that once in a while.
  Mr. Anderson: Does my right hon. Friend agree that the large number of frenetic attacks recently by the Opposition suggest that they at least accept that the turn-round is coming?
  The Prime Minister: It is worth noting that last Friday there was published news of record trade figures, although it did not receive too much space in some portions of the Press. The whole House will welcome the surplus of £111 million on current account. That turn has come sooner than was anticipated and it follows a surplus and a small deficit in the previous two months. In the last quarter, therefore, this country has been running a surplus on its balance of payments. This is associated with considerable strength of sterling and follows a fall in interest rates which was followed by a reduction in mortgage interest rates. Let us acknowledge some of the things that are going right.
  Sir David Renton: Is the Prime Minister aware that in each of the last three years the Prime Minister of the day or the
  232
  Chancellor of the Exchequer—or both—has given the House and the country an indication that inflation would fall, but that it did not fall in any of those three years? Why should the right hon. Gentleman's statement today be accepted more readily than the statements made previously?
  The Prime Minister: I think that the right hon. and learned Gentleman is incorrect in his recollection. The rate of inflation was halved between 1975 and 1976 and I would hope that it might be halved again. I am not sure whether it will be. If the right hon. and learned Gentleman does not wish to believe the forecasts, that is his right, but let us wait and see what happens.
  Mr. Pardoe: Does the Prime Minister accept that, even for those of us who hope that the rate of inflation is falling, forecasts of the rate of inflation are an extraordinarily chancy business? Is he aware that a fall is by no means as certain as he indicated this afternoon? Would he say that unless the Government are successful in obtaining a severe and stringent pay policy his forecasts will inevitably be proved wrong? Are the Government doing anything like enough to obtain that pay policy?
  The Prime Minister: I would put it the other way round and say that a further round of pay policy will help us to get inflation down. I would not put it the way the hon. Gentleman does, namely, that if we do not get it, everything has failed.
  Mr. Skinner: That is nearer the correct line.
  The Prime Minister: I am very happy to find myself in agreement with my hon. Friend. I described what I believe to be the real position. The impact of the current pay policy under phase 2 will be felt during the second half of this year and the first part of 1978, because agreements are only now being entered into and these will last until May 1978. If sterling maintains its strength with the policies we are following, I can say with a reasonable degree of confidence that the forecasts are acceptable. I do not rely on them, but it is fair to say that I hope they will come true.

  WEST MIDLANDS
  Mr. Hodgsonasked the Prime Minister when he next plans to visit the West Midlands.
  The Prime Minister: I have at present no plans to do so.
  Mr. Hodgson: Since the Prime Minister cannot visit the West Midlands, will he explain to the people there the logic of his Government's position whereby one set of people—the judiciary—are criticised for carrying out their duties while another set of people—the Post Office workers—are to be legally exempted from the consequences of failing to carry out theirs?
  The Prime Minister: I am not aware of any criticism of Her Majesty's judges. I understand that there was a historical exegesis which my right hon. Friend the Leader of the House entered into when addressing a trade union conference. Frankly, I do not think that he went far enough. He should have said something like this: that the
  "trade union organisations",
  were
  "being enmeshed, harassed, worried and checked at ever step and at every turn by all kinds of legal decisions".
  If only my right hon. Friend had used Sir Winston Churchill's language, I might have been more in agreement with him.
  Mr. Robinson: Is my right hon. Friend aware that many Labour Members will be disappointed that he has no plans to visit the West Midlands? Is he further aware that we need an urgent and positive approval of British Leyland's plans, including the new Mini, in the interests of the economy both of the West Midlands and of the United Kingdom as a whole?
  The Prime Minister: I am well aware of the importance of British Leyland's investment future. I understand that the matter is now being studied, but I am not aware of the exact position that discussions have reached. I shall, however, convey my hon. Friend's comments to my right hon. Friend the Secretary of State for Industry.
  Mrs. Thatcher: May I return to the supplementary question asked by my hon.
  234
  Friend the Member for Walsall, North (Mr. Hodgson)? I do not know which reports the Prime Minister has read, but is he not aware that, according to some which purport to be verbatim, the Lord President's remarks went further even than the question of the trade unions? I shall paraphrase what he said since I am not permitted by the rules of order to quote, but I intend to give an accurate representation of the words used. The right hon. Gentleman said that if the freedom of the people of this country had been left to the fairmindedness of judges, we should have precious little freedom in this country. That is meant to be a paraphrase from The Guardian. I believe it to be accurate and I believe that the comment should be wholly repudiated. It was a totally disgraceful remark to have made.
  The Prime Minister: I am satisfied, as one who has been a trade unionist all his life, that my right hon. Friend was referring to the attitude of judges to the trade union movement in the past. Let me remind the right hon. Lady, if she is unaware of the history, that after the repeal of the Combination Laws men were sentenced and transported to Australia, and that in the middle of the century there was a judgment by the courts—[HON. MEMBERS: "Which century?"] I am referring to the last century, which is what my right hon. Friend was referring to. In the middle of the nineteenth century there was a judgment by the courts which pretty well left it to any trade union official to abscond with the funds. There was the Taff Vale Railway case in 1901, and then there was the Osborne judgment. The right hon. Lady and the Conservative Party had better understand that the trade union movement knows where it stands on these matters.
  Mrs. Thatcher: Is the Prime Minister aware that I think his remarks will satisfy very few people in view of some of the other comments that have been made in the past by the Lord President in this House about Her Majesty's judges? Therefore, may I ask the Prime Minister whether he and every member of his Government have total confidence in the impartiality of the judges and value their total independence?
  The Prime Minister: The judges of today were not referred to by my right hon. Friend. [Interruption.] I shall answer the question in my own way and in my own time. As I said, my right hon. Friend did not refer to the judges of today in his remarks, and any attempt to try to suggest that he did is totally false. Anybody who knows the history of the trade union movement and the relation between it and the courts knows the situation. As to the position of today, my right hon. Friend was casting no reflection on judges at all. That was made clear by the Lord Chancellor in the House of Lords yesterday and I make it clear again today. This is really just another red herring—
  Mr. Raphael Tuck: It is a blue herring.
  The Prime Minister: But this is the sort of thing that we shall get more and more from now on.
  Mr. Powell: Does the Prime Minister agree that one of the most fruitful and important aspects of the sovereignty of this House is its right to alter the existing law as established by the decisions of the courts at any time? This is one reason why a Bill of Rights is incompatible with the free constitution of this country.
  The Prime Minister: Yes, I understand that, and I agree with the right hon. Member for Down, South (Mr. Powell). What was encased in the examples I quoted, and it is burned deep in the hearts of trade unionists who have been brought up in the movement, is that it has been Parliament that has had to be brought in on every occasion in order to deal with interpretations of the law that the judges have given.
  Several Hon. Members—
  Mr. Speaker: I shall call one more hon. Member.
  Mr. Mellish: I revert to the original Question. Will the Prime Minister have second thoughts and go to the West Midlands to discuss with those who voted Tory and who are employed in the car industry how it was possible to do so? It should be borne in mind that had it not been for a Labour Government there would not be a car industry at all in the West Midlands.
  The Prime Minister: Yes, I would be ready to do that if I went to the West Midlands. I would also point out that the present temporary hon. Member for Walsall, North (Mr. Hodgson) has a singular lack of understanding of the trade union movement.

HYDROGEN BOMBS (UNITED KINGDOM DEVELOPMENT)
Mr. Frank Allaun: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the Government's development of new hydrogen bombs".
In The Guardian today there is a report headed "UK H-Bomb Plans Go Ahead". It states that scientists at Aldermaston are working on a miniaturised H-bomb and a new Polaris warhead. In today's Daily Mail there is another report under the headline "Mulley Confirms New H-Bombs". In this report the Ministry refuses to confirm or deny reports that the Government are trying to beat the expected ban on all nuclear tests, including underground tests. This statement follows a report occupying the front page of yesterday's Daily Mail headed "The Secret H-Bomb Race—Britain Acts to Beat Carter Ban." It states that the test at Nevada of a highly advanced H-bomb prototype has been advanced by several months and is expected soon.
Presumably this test was to have been kept secret and was to have been made without previous announcement to the House, as with earlier tests. I wonder why it should be secret. There is, unfortunately, reason to believe that the British Government are, in fact, planning a further test explosion at Nevada. When the former Secretary of State, the right hon. Member for Barnsley (Mr. Mason), was asked for an assurance that there would be no more tests, he refused to give it.
The matter is urgent because the negotiations between President Carter and Mr. Brezhnev to stop all nuclear test explosions are now under way, and their prospects may well be damaged by such a test. Also, it undermines and conflicts

237
with President Carter's current declared aims.
The matter is also urgent because it is not now possible to put down a Question either to the Prime Minister or to the Secretary of State for Defence that will be answered for at least a month.
Finally, the matter is important. No issue that we discuss could be more important. It is vital that detente should be extended, and such a development of new nuclear weapons increases international tension and undermines the Non-Proliferation Treaty. A practical step towards stopping the fatal nuclear arms race is to stop testing. Prohibiting tests helps to prevent the invention, development and manufacture of new weaponry, because what is the value of a new weapon that cannot be tested?
This is important to every country, but particularly so to Britain, because we are a small thickly-populated territory. We are a sitting duck and could not use this suicide weapon because we should be wiped out in instant retaliation. [HON. MEMBERS: "Too Long."] Mr. Speaker controls the proceedings of the House—nobody else. I have sought to stick strictly to the rules of the Standing Order.
Also these plans, apart from contravening Labour Party policy, are contrary to the Government's election pledge that there would be no new generation of nuclear weapons. If we are not bent on such a course, why are we carrying out tests? Nuclear weapons are not like cheese; they do not need testing to see
whether they have gone stale. For these reasons and many others I ask for the Adjournment of the House.
Mr. Speaker: The hon. Member for Salford, East (Mr. Allaun) was good enough to give me notice before mid-day that he intended to move the Adjournment of the House under Standing Order No. 9.
The hon. Gentleman asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the Government's development of new hydrogen bombs".
As the House knows, it is for me to decide not the importance of the issue but whether an emergency debate should be granted. Under Standing Order No. 9, I am directed to take account of the several factors set out in the order but to give no reason for my decision.
I have listened carefully to what the hon. Member has said, but I have to rule that his submission does not fall within the provisions of the Standing Order, and, therefore, I cannot submit his application to the House.

STATUTORY INSTRUMENTS, &c.
Motion made, and Question put,
That the draft Pool Competitions Act 1971 (Continuance) Order 1977 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Snape.]
The House divided: Ayes 130, Noes 1.

Division No. 140]

AYES

[3.40 p.m.

Abse, Leo

Crowther, Stan (Rotherham)

Gould, Bryan

Anderson, Donald

Cryer, Bob

Gourlay, Harry

Armstrong, Ernest

Davies, Bryan (Enfield N)

Graham, Ted

Ashley, Jack

Davies, Ifor (Gower)

Grimond, Rt Hon J.

Ashton, Joe

Deakins, Eric

Grocott, Bruce

Atkinson, Norman

Dean, Joseph (Leeds West)

Harper, Joseph

Bagier, Gordon A. T.

Dempsey, James

Harrison, Walter (Wakefield)

Beith, A. J.

Doig, Peter

Hatton, Frank

Benn, Rt Hon Anthony Wedgwood

Dormand, J. D.

Horam, John

Boyden, James (Bish Auck)

Douglas-Mann, Bruce

Hoyle, Doug (Nelson)

Bradley, Tom

Dunnett, Jack

Huckfield, Les

Butler, Mrs Joyce (Wood Green)

Ellis, John (Brigg & Scun)

Hughes, Mark (Durham)

Campbell, Ian

English, Michael

Hughes, Roy (Newport)

Canavan, Dennis

Evans, Ioan (Aberdare)

Hunter, Adam

Carmichael, Neil

Faulds, Andrew

Irving, Rt Hon S. (Dartford)

Carter-Jones, Lewis

Finsberg, Geoffrey

Jay, Rt Hon Douglas

Cartwright, John

Fletcher, Ted (Darlington)

Jenkins, Hugh (Putney)

Clemitson, Ivor

Foot, Rt Hon Michael

Jones, Barry (East Flint)

Cocks, Rt Hon Michael (Bristol S)

Forrester, John

Jones, Dan (Burnley)

Coleman, Donald

Freeson, Reginald

Judd, Frank

Cook, Robin F. (Edin C)

Freud, Clement

Kaufman, Gerald

Cox, Thomas (Tooting)

Garrett, John (Norwich S)

Kelley, Richard

Crawford, Douglas

Gilbert, Dr John

Kilroy-Silk, Robert

Crawshaw, Richard

Ginsburg, David

Lambie, David

Cronin, John

Glyn, Dr Alan

Lestor, Miss Joan (Eton & Slough)

Lewis, Kenneth (Rutland)

Pardoe, John

Tuck, Raphael

Lewis, Ron (Carlisle)

Park, George

Urwin, T. W.

Luard, Evan

Parry, Robert

Wainwright, Richard (Colne V)

McCartney, Hugh

Perry, Ernest

Walker, Terry (Kingswood)

McDonald, Dr Oonagh

Reid, George

Ward, Michael

McElhone, Frank

Roderick, Caerwyn

Warren, Kenneth

MacFarquhar, Roderick

Rodgers, George (Chorley)

Weetch, Ken

Marshall, Dr Edmund (Goole)

Rodgers, Rt Hon William (Stockton)

Welsh, Andrew

Mellish, Rt Hon Robert

Ross, Stephen (Isle of Wight)

White, Frank R. (Bury)

Mitchell, Austin Vernon (Grimsby)

Sedgemore, Brian

Whitlock, William

Morgan, Geraint

Sheldon, Rt Hon Robert

Williams, Alan Lee (Hornch'ch)

Morris, Alfred (Wythenshawe)

Sillars, James

Wilson, Alexander (Hamilton)

Morris, Charles R. (Openshaw)

Smith, John (N Lanarkshire)

Wilson, Gordon (Dundee E)

Mudd, David

Stallard, A. W.

Wilson, William (Coventry SE)

Newens, Stanley

Stewart, Rt Hon Donald

Wrigglesworth, Ian

Noble, Mike

Stewart, Rt Hon M. (Fulham)

Ogden, Eric

Strauss, Rt Hon G. R.

TELLERS FOR THE AYES:

Orme, Rt Hon Stanley

Taylor, Mrs Ann (Bolton W)

Mr. Peter Snape and

Page, Richard (Workington)

Thompson, George

Mr. Alf Bates.

Palmer, Arthur

Tinn, James

NOES

Thorne, Stan (Preston South)

TELLERS FOR THE NOES

Mr. Dennis Skinner and

Mr. George Cunningham.

Question accordingly agreed to.

BUSINESS OF THE HOUSE
Motion made, and Question put,
That, at this day's Sitting, Standing Order No. 3 (Exempted business) shall apply to the Motion relating to EEC Energy Policy with the substitution of Twelve o'clock or two hours after it has been entered upon, whichever is
240
the later, for the provisions in paragraph (1)(b) of the Standing Order.—[Mr. Snape.]
The House proceeded to a Division—
Mr. BATES and Mr. SNAPE were appointed Tellers for the Ayes, but no Member being willing to act as Teller for the Noes, Mr. SPEAKER declared that the Ayes had it.
Question accordingly agreed to.

GENERAL ELECTIONS (LIMITATION OF EXPENSES)
3.55 p.m.
Mr. Bruce Grocott: I beg to move,
That leave be given to bring in a Bill to limit expenditure by political parties and other organisations connected with general elections; to provide for the publication of income and expenditure of such organisations incurred in connection with general elections; and for connected purposes.
Most of the discussion about the finances of political parties in recent years has been concerned with their incomes. That is understandable in some respects, and the Houghton Report showed huge discrepancies in the incomes of political parties. In 1975 the income of the Conservative Party was about £6,290,000. That of the Labour Party was around £2,950,000, while that of the Liberals was about £863,000. It is right and proper that we should be concerned about the incomes of political parties, but in terms of the possible influence on voters expenditure is more important than income.
If we examine the expenditure of the political parties we find some strange anomalies in existing controls, particularly at General Elections. One anomaly, to which I particularly wish to draw the attention of the House, exists between the expenditure that can be made by candidates in their constituencies and the expenditure of the national party organisations.
It has long been accepted—for nearly 100 years—since the Corrupt and Illegal Practices Prevention Act of 1883—that there should be strict control over the expenditure by candidates in individual constituencies. As far as I know, nobody seriously objects to that. The need for that is self-evident. One cannot have a fair election in a constituency unless there are controls over the candidates' expenditure. At the same time, although we control local expenditure in constituencies, there is no control whatsoever over the amount that the parties and their supporting organisations can spend at a national level during a General Election campaign. This leads to all sorts of ludicrous anomalies.
In my own constituency it would mean, for example, that if an advertisement supporting the Conservative Party
242
appeared in the Tamworth Herald, it might be liable for declaration by the Tory candidate as part of his campaign to be elected in my constituency, because the Tamworth Herald circulates in that area. If, on the other hand, the advertisement appeared in the Daily Express or the Daily Mail, urging people to Conservative as part of that party's campaign, it would not be subject to any kind of control.
I can never understand why the Tory Party bothers to advertise in the Daily Express or the Daily Mail. It seems to me that the Tories get more than they could reasonably expect free. However, this is considered to be a normal part of a national election campaign. It is a serious anomaly about which the House should be concerned.
Another anomaly concerns the support and fringe organisations that back political parties. I am thinking here particularly of organisations such as Aims of Industry, which in 1974 had an income of £607,000, most of which was used for promoting the Tory cause in two General Elections. If this were done at a local level, if an organisation in a particular constituency threw large sums of money behind a particular candidate in the hope of getting him elected, that would obviously and unarguably be part of the candidate's election expenditure and be subject to controls. However, there is no control at national level over the expenditure that organisations such as Aims of Industry may use on behalf of particular political parties.
There are only two consistent positions that hon. Members can adopt in relation to the Bill. One of them is my view, which is that there should be controls both locally and nationally. The other attitude is that there should be no controls whatsoever. I should not like to hear anyone defending that point of view, although it is at least consistent.
The present position, whereby there are controls over candidates locally but no controls nationally, is absurd—particularly as, although some of us like to think a lot of our capacities at certain times, the outcome of a General Election is now universally recognised as being far more determined by the national expenditure and national campaign of the parties

243
than by individual campaigns in individual constituencies. We may regret that, but it is a fact. The swing is fairly consistent throughout the country and we know which seats are vulnerable if there is a swing to one party or the other.
I hope that the principle of controlling national expenditure is one that commends itself to the House. The only problem is how to do it. My proposal has at least the virtue of simplicity. At present, if a party puts a candidate in all 635 constituencies, the total allowable for all candidates to spend, assuming that each spends the maximum, is about £1 million. My proposal is that the amount that parties may spend nationally should be half that amount, so that the figure would be about £500,000.
That figure has a number of virtues. It would not be that different from what the parties have spent in recent elections. In October 1974 the Tories spent about £600,000 and the Labour Party a little less than £500,000. It also has the strong advantage of being linked to local expenditure and would therefore automatically change when we changed local expenditure.
The strongest advantage of all is that by setting it at a fairly low level we should prevent our General Elections being involved in the sort of ballyhoo and obscene expenditure that is associated with, for example, American presidential elections. I hope that everyone would wish our election expenditure to be limited in this way. The Bill would also provide for the proper publication and auditing of party accounts—we have to do this in our constituencies—and would mean that expenditure by fringe organisations supporting political parties would be included in the party accounts and subject to the maximum figure of about £500,000.
This is the main concern of the Bill, but there is one other proposal that, although it is related, could be considered separately. I wish to see the deposit that candidates have to pay at General Elections increased from £150. That figure was set when deposits were first introduced in 1918 and it has not been changed since.
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There are only two positions that can be adopted on this issue. Either we get rid of the deposit or we raise it to a more realistic level—we can argue about the precise amount—bearing in mind the value of money now compared with 1918. I am aware of the suggestion that increasing the deposit would penalise certain sorts of candidates who might not have the requisite funds and some of the smaller parties, but £150 is extremely good value as a deposit for a General Election campaign.
A candidate gets a lot of benefits for his £150. There are television and radio coverage and free postage. I am surprised that commercial organisations have not taken advantage of this before. There are 100,000 electors in my constituency and the £150 deposit means that a candidate can get a delivery to every elector for 0·15p each. That is pretty good business for any organisation backing a particular cause. A candidate also has the great advantage of receiving free copies of the electoral register, for which many commercial organisations would be grateful. It is time that the deposit was increased and the proposals in the Bill would make for fairer elections in this country and would help the democratic process.
Question put and agreed to.
Bill ordered to be brought in by Mr. Bruce Grocott, Mr. Ivor Clemitson, Mr. Joseph Dean, Mr. Geoff Edge, Mr. John Garrett, Mr. Bruce George, Mr. Kevin McNamara, Mr. J. W. Rooker, Mr. Terry Walker, Mr. Ken Weetch and Mr. David Young.

GENERAL ELECTIONS (LIMITATION OF EXPENSES)
  GENERAL ELECTIONS (LIMITATION OF EXPENSES)
  Mr. Bruce Grocott accordingly presented a Bill to limit expenditure by political parties and other organisations connected with general elections; to provide for the publication of income and expenditure of such organisations incurred in connection with general elections; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 15th July and to be printed. [Bill 120.]
  ORDERS OF THE DAY

    LOCAL AUTHORITIES (RESTORATION OF WORKS POWERS) BILL
    Order for Second Reading read.
    Mr. Nicholas Ridley: On a point of order, Mr. Speaker. I wish to draw your attention to the fact that the Explanatory and Financial Memorandum says that the Bill will not have any additional financial or manpower effect on local authorities and that no additional Exchequer expenditure is involved. It clearly will have an additional manpower effect on local authorities, because additional men will be employed to deal with the additional works outside the boundaries of the authorities concerned.
    It will almost certainly result in additional financial effects as well, because it is well known that operations of this sort result in considerable losses being made and, in due course, they will attract rate support grant. Consequently, there will also be considerable Exchequer expenditure as a result of the Bill.
    I know that the memorandum has no statutory force, but, as there will be additional Exchequer expenditure, it is unreasonable that there should not be a Money Resolution on the Order Paper, and it would not be in accordance with precedents if the Bill proceeded until there is such a Money Resolution. No such resolution appears on the Order Paper today and no preparations have been made for one.
    I seek your guidance, Mr. Speaker, as to the statutory effect of the words on the front of the Bill. It is clear that they are thoroughly misleading, and it is wrong that a Bill should be presented with the claim that there will be no manpower and financial effects when clearly there will be. I know that these words have no statutory force, but the House should be protected from straightforward misrepresentation of this sort. The House should not proceed to give a Second Reading to the Bill until these matters are put right.
    Mr. Speaker: I am obliged to the hon. Member for Cirencester and Tewkesbury
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    (Mr. Ridley) for the way in which he put his point of order. It is similar to one that we had a few weeks ago, and I ruled then that a Money Resolution was not necessary on Second Reading. This is a matter for the Chairman of Committees when the Bill goes to Committee, and the matter can properly be raised at that time.
    I am not responsible for the words on the front of the Bill, but those who are will have heard what the hon. Gentleman has said.
    4.8 p.m.
    The Minister for Housing and Construction (Mr. Reginald Freeson): I beg to move, That the Bill be now read a Second time.
    The purpose of the Bill is to restore to 25 district councils in England and Wales power to do certain kinds of work by direct labour. When the Local Government Act 1972 was passed, these authorities, quite by accident, were prevented from doing work within their boundaries on functions which were transferred to county authorities—mainly highways and education. When the problem was discovered, Statutory Instruments were made temporarily restoring the works powers of these authorities under Section 254 of the Local Government Act 1972.
    The temporary orders expired on 31st March this year and none of the 25 authorities may continue to carry out work that it had previously been empowered to do. The only exception is the completion of agreements signed before that date.
    The substantive clause of the Bill simply makes permanent the temporary orders. It would make no sense to disrupt working arrangements.
    I believe that the whole House will recognise that this is a necessary and sensible measure. Unless it is enacted speedily, there might be unnecessary redundancies in these organisations, and their efficiency could be impaired.
    While the Bill is essential, it is far from being a comprehensive measure of the kind needed to produce the proper framework within which direct labour organisations should operate. The Government had intended to introduce such a measure. The parliamentary situation prevented our doing it, as hon. Members know, and gave

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    rise to the statement from my right hon. Friend the Prime Minister on 23rd March in which he undertook on behalf of the Government that
    "The Local Authorities (Works) Bill will be confined to the provisions that are required to protect the existing activities of direct labour organisations, in the light of local government reorganisation"—[Official Report, 23rd March 1977; Vol. 928, c. 1308.]
    It is sad that some Opposition Members should have opposed our original intentions without really knowing what the proposed Bill contained. It would have removed unnecessary restrictions on undertaking new construction work by direct labour organisations for neighbouring local authorities and for housing associations and new towns in the locality. I say "unnecessary" because it seems to me ludicrous that a local authority or another public body should be precluded from using a local DLO if that is the most efficient way of getting the work done.
    In a similar vein, we would have allowed DLOs to do improvement and maintenance work on private houses in the housing action areas and general improvent areas in neighbouring authorities. It often makes sense for rehabilitation to be carried out by one organisation in such an area. We would have allowed them to work for other public bodies for the same reason—efficiency.
    The extension of powers would have been tied closely to new arrangements for accounting, charging and tendering. These would have implemented statutorily the recommendations in the Chartered Institute of Public Finance and Accountancy report of June 1975 and, indeed, would have gone further. We intended to include repairs and maintenance in the accounting requirements. The DLO accounts would have been separate.
    Mr. Norman Tebbit: On a point of order, Mr. Speaker. I do not know whether you have been following what the Minister has been saying, but he is telling the House about a Bill that is not before the House. He is going on at great length about a Bill that he wanted to introduce but that the Prime Minister would not let him introduce. The Minister is saying absolutely nothing about the Bill that he is introducing.
    Mr. Speaker: Perhaps I was not giving the full attention that I ought to have
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    given, but on a Second Reading debate we are allowed to go a little wider and state our feelings about what should be in and what is not in a Bill.
    Mr. Freeson: Thank you, Mr. Speaker. What is more, if I may say so, the hon. Member for Chingford (Mr. Tebbit) could not have been listening as closely as you were, Mr. Speaker, or otherwise he would have heard me describe the objective of the Bill in my introductory remarks.
    Mr. Ridley: Further to the point of order, Mr. Speaker. The Minister is saying what he thinks should be in the Bill, but he is the person who has introduced it. Surely it is wrong for a Minister to introduce a Bill and then criticise it strongly for not being the sort of Bill that he wants to introduce.
    Mr. Speaker: Order. The right hon. Gentleman does not lose his rights as a Member by being a Minister.
    Mr. Freeson: I am much obliged, Mr. Speaker. Indeed, if I may say so through you to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), I was not complaining about what is in the Bill before the House today. I was describing in outline the kind of Bill that the Government would have liked and had intended to introduce to the House had it not been for the parliamentary situation preventing us. If I may say so, such a Bill will be introduced in due time into this House. I shall come to that point later on.
    As I was saying, we would have gone further than the Chartered Institute of Public Finance and Accountancy report of June 1975 and included repairs and maintenance in the accounting requirements. We would have required that the DLO accounts would be separate. We would have enabled charges to be made on a firm price basis—rather than being linked to actual costs as at present—so that the extent of profits and losses would be known. We would have ensured that all appropriate overheads were taken into account, including a return on capital employed. A local authority would have been under a duty to avoid making a loss, and we would have taken powers to close down activities where an organisation failed

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    consistently to meet the financial objective.
    Mr. Stephen Ross: Will the Minister tell us whether the Government intend to introduce these sorts of conditions into the Bill by amendment or by statutory order? There are fears about the inefficiency of some direct labour organisations.
    Mr. Freeson: I shall deal with that question, but let me say straight away that the Bill before the House, in implementing the undertaking of my right hon. Friend the Prime Minister of 23rd March, precludes any such move, because it is confined to the simple issue that was announced to the House in that statement and cannot cover any other matters. It is my regret, as I am indicating, that we have not been able to introduce the broader Bill, but I live in hope that we shall have the good sense to deal with such legislation in due time.
    I was referring to the ideas with which we should have liked to deal.
    Mr. Ridley Mr. Ridley rose—
    Mr. Freeson: I shall complete this passage, if I may, and then I shall gladly give way in due time, if the hon. Gentleman will keep a close eye on me and listen carefully and attentively to what I am saying.
    We would also have required local authorities to produce a report each year on the activities of their direct labour organisations so that their performance could be judged wisely. We would also have enabled DLOs to be set up as separate trading bodies so that their competitiveness could be demonstrated without the difficulties in comparison which would remain even if the CIPFA recommendations were implemented. This provision would have been the basis, too, of sponsoring building workers' co-operatives on a commercial basis, which I believe to be essential to the future health of the construction industry and, indeed, industry generally in our country.
    Mr. Ridley: These things are not in the Bill. The Minister regrets it, but he appears to be in dispute with his right hon. Friend the Prime Minister over this. Has the Minister tendered his resignation to the Prime Minister as this Bill is totally
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    out of sympathy with his own publicly declared intentions and views?
    Mr. Freeson: The hon. Gentleman has got it wrong again. I am fully in support of what is before the House, and it would have been included in the more broadly based Bill had we had the opportunity. I am not out of sympathy, obviously, in wishing to make sure that the accident of the Local Government Act 1972 is avoided, which is what we have done by the temporary provisions and orders in the last 18 months to two years, provisions which this Bill seeks to make permanent. The hon. Gentleman has got it wrong again.
    I hope that I have said enough about the ideas that we had intended to incorporate in the more broadly based Bill to demonstrate that what we had proposed was sensible and reasonable. That could hardly be said of the attitude of some Opposition Members and some of their colleagues who control some of the local authorities in the country. They seem to have only one attitude to DLOs—to close them down, to destroy established organisations and to sack their staff.
    I say to them that even if they are correct—and some of their criticism of DLOs is undoubtedly correct to a degree, but nowhere near the degree they have expressed—they have a responsibility when they are in local government. If they claim that their DLOs are inefficient, it is their job to make them efficient. Whatever their party, councillors are elected to do that, and it is the responsibility of their colleagues in this place and elsewhere to express that view.
    For our part, in Government we shall go on, through my Department's working party, to work out sound procedures for direct labour organisations, some of which already, partly through our influence, have begun to adopt good accounting and tendering practices. The working party has so far concentrated on procedures for new construction, for publication of reports on performance and for competitive tendering. I hope that this part of the work will be completed by the summer.
    By around the turn of the year we expect to complete similar work on repairs and maintenance which the Chartered Institute of Public Finance and

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    Accountancy has also been studying. The institute hopes to publish its findings in the summer. Had the original Bill to which I have been referring been introduced and passed, we would have phased in the new powers with the new disciplines. Action will be limited without legislation, but we shall take whatever action lies open to us to improve the scope and efficiency of DLOs.
    Direct labour organisations account for about 8 per cent. of all construction output. Most of it consists of repairs and maintenance. They employ about 173,000 people. Thus, although they are not by any means a major part of construction, the promotion of efficiency and sound practice in them would be a useful contribution to the efficiency of the industry as a whole.
    Many DLOs have already given good service to their local authorities and have been of great financial benefit to the ratepayers. Such matters never reach the Press. Successful DLOs do not make good journalistic copy. District auditors' reports, for example, are often quoted to point out failings. But district auditors often point out savings that DLOs achieve. That is not to be seen published in the Press or debated or mentioned in this House. There are frequent examples of DLOs having to take over jobs when firms have gone into liquidation and the authorities have been unable to find others to take their place.
    I shall give one or two examples to illustrate what I have said. On two major road contracts in the North-East, worth £4½ million, the contractor went into liquidation with the work barely started. The county DLO stepped in and completed the contracts within the original competion dates, thus avoiding a delay of at least six months if another contractor had been engaged. Not only was there no additional cost to the Department, but at least £400,000 was saved by not employing another contractor.
    In another case a district auditor found that the final costs on 25 highway maintenance projects carried out by a DLO averaged 5 per cent. more than the estimate. That is the kind of figure that would have appeared in the Press. But acceptance of the next lowest tender from a private contractor would have cost another
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    £500,000, or 19 per cent. more than the final DLO cost, including the 5 per cent. overspent. That kind of information does not get published in its proper context.
    In yet another instance an authority did not have sufficient finance to accept the lowest tender of £200,000 from a private contractor for a school project, so the DLO undertook the work and completed it at a cost of £110,000; thus the authority saved £90,000. Incidentally, in that case, if the private contractor had done the job, it would have appeared that his operatives were twice as productive as those of the DLO as this type of calculation, which appears in official and published statistics, is based on the valuation of output rather than on the actual quantity of work done.
    Mr. David Mitchell: Can the Minister tell me how many direct labour organisations make a commercial return on the capital invested in them?
    Mr. Freeson: I am not sure whether the hon. Gentleman was present when I described the kind of legislation which we had originally intended. If so, he will recall that I said that that was one of the points with which we wished to deal in the Bill that we were unable to introduce because of the parliamentary situation. There are no requirements to impose conditions for a return on the capital invested. However, we wished to do just that, among other things, in the Bill that we could not introduce at this stage.
    Mr. David Mitchell: I was not asking whether there were any requirements, but whether the Minister could indicate any such commercial success.
    Mr. Freeson: The hon. Gentleman has not taken my point clearly enough. There are no such requirements, so examples cannot be quoted. We had intended to take action to remedy that situation in the Bill that Opposition Members and their colleagues in the industry and the Press opposed so vigorously, despite the explanation that we sought to give. However, I agree with the hon. Gentleman's implication. I regret that, as a result of the sustained campaign over many years, which aroused great prejudices about our intention's, we were unable to do what the hon. Gentleman would have liked us to do.

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    The instances that I have quoted are not exceptional. There are many examples of efficient DLOs in addition to those I have mentioned and there is plenty of evidence that they give good value for money. Direct labour organisations also have a creditable record as good employers, especially in providing training opportunities and, like the better private contractors, maintaining continuity of employment even when times are difficult.
    It ill becomes certain people in the construction industry to criticise DLOs for inefficiency in the way that the rather wild campaigning has suggested in recent months. As I said in the Supply debate on the construction industry on 2nd May, there is enormous scope for improvement in the efficiency of the industry as a whole, in its building operations and in its financial structure. I forbear to list examples of the industry's failures, but public sector clients are often left picking up the pieces. I do not gloat over these failures. They are exceptions. They are not the general rule, but they are significant failures. I want something done about them. In the meantime, perhaps certain people in the industry might do better to concentrate on putting their own house in order than to waste vast sums on expensive advertising campaigns against DLOs.
    I remain convinced that it is right for us to provide DLOs with a framework which allows closer comparison between them and private contractors by not only proper accounting and tendering procedures, but more freedom to use their valuable resources more flexibly and thus more efficiently. It remains our intention to legislate on these matters, but the parliamentary situation means that we must wait for another day. Today we are confined to this small but essential measure. I commend it to the House.
    4.26 p.m.
    Mr. Keith Speed: First, I declare an interest. I am a consultant to a group of construction companies in the West Midlands.
    I listened with interest to the Minister for Housing and Construction, who has advanced some way towards our point about the CIPFA recommendations, although he still has a long way to go.
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    I should point out that Conservative-controlled local authorities—they are now very much in the majority—which have direct labour organisations will see that they are efficient. I am urging upon them, and receiving a constructive response, that they should as far as possible adopt the CIPFA recommendations. The Minister will know better than I do that some of them need legislation. In certain circumstances, where authorities deem that the direct labour organisations are not doing a reasonable job, they may choose to close them down. That is their prerogative. I should not wish to stop them doing that.
    The Minister quoted some examples of efficient direct labour organisations. My hon. Friend the Member for Basingstoke (Mr. Mitchell) was trying to make the point—I am sure that the Minister appreciated this, because he referred to a 5 per cent. return or whatever the figure was—that unless there is an ongoing CIPFA accounting procedure, unless we know the proportion for the chief executive, the personnel officer and everyone else, it will be difficult to get any meaningful figures of efficiency for DLOs. That is the problem facing all of us.
    The Federation of Civil Engineering Contractors has made its views on the Bill perfectly clear. It says that the
    "Bill is a step in quite the wrong direction. The fact that it is a very small step ought not to be enough to save it."
    The National Federation of Building Trades Employers says that
    "the members of the NFBTE feel that the Bill must be defeated"
    and they are
    "adamantly opposed to this Bill."
    I have a letter today from the Opposition Leader on the Burnley Council, one of the districts affected by the Bill. Councillor Wilson writes:
    "My overriding reaction to the Bill is an emphatic 'No': more especially until a method of realistic commercial accounting is introduced to the Works Department. Time and time again when a 'tender' has been received, and accepted by the Labour Group, we are subjected to estimates for extra items of equipment required for the project. Our direct works spokesman is at present preparing a detailed brief on one current contract with a view to obtaining the true cost to the Authority upon its completion.
    The obvious concern regarding the right to work outside the Borough boundary is

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    again fiscal. Should one group of ratepayers subsidise or receive support from another group?"
    The history of this measure is interesting. A more comprehensive Bill, about which we have heard a great deal today, was promised by the Minister on 14th July last year. We certainly had a pretty clear indication of what was in it, because the Under-Secretary, whom I am glad to see present, gave a good trailer on 19th September in Scarborough, in a speech which was widely reported in the construction and building Press. Therefore, all of us had a very fair idea long before the Queen's Speech, about what would be in the Bill. I do not think that the Under-Secretary would retract a word of what he said then.
    The Bill was forecast in the Gracious Speech on 24th November. As the Minister said, there were to be major extensions of powers for direct labour organisations. Certainly at that time there was very little talk about the CIPFA recommendations or much tougher accountancy. I read the hon. Gentleman's speech, and I recall many times in the House when I urged the Minister and the Under-Secretary even simply to endorse the CIPFA recommendations and was comstantly referred back to the working party that had been set up.
    On 25th February a Press conference was fixed for the introduction of the comprehensive Bill, the bigger Bill. I understand that invitations were sent out but were suddenly cancelled on the evening of 24th February. That Press conference was cancelled because the Government at that stage had abandoned the Bill. I am sure that that is right and that the Minister knows that it is right.
    That was a full month before the Lib-Lab pact and the Prime Minister's statement. As the Minister was honest enough to say, the parliamentary situation then was such that there was no majority in the House for that comprehensive Bill. The Liberals, the national parties and one or two Labour Members, as well as my own party, were adamantly opposed to the Bill, and so it died then. Let this point be quite clear. It was nothing to do with the Lib-Lab pact, which was perhaps the funeral rites over a Bill that had already been killed.
    Mr. Ridley: Does not my hon. Friend think that as well as he and I, and all
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    our right hon. and hon. Friends, the Liberal Party would not have objected to adding on to the Bill the implementation of the CIPFA proposals? Is it not rather strange that the Bill we are considering does not contain powers for tightening up financial discipline? I stand to be corrected by the two Liberal Members present, but does not my hon. Friend feel that the Liberals would have welcomed the introduction of the disciplines and would not have objected to their being in this Bill?
    Mr. Speed: I am grateful to my hon. Friend, who has anticipated something I intend to say in a few minutes.
    As there appears to be agreement among the Minister, myself, the hon. Member for Isle of Wight (Mr. Ross) and, I suspect, most hon. Members, that we need at least the CIPFA disciplines, would it not be possible to introduce them? I can promise a safe passage on behalf of my party, and I believe that the Liberals would do the same. This would be extremely helpful. Perhaps we can explore that in a few minutes, but the grunts coming from the Under-Secretary make me suspect that it does not meet with his entire approval.
    Mr. Robert Mellish: They are my hon. Friend's normal way of speaking.
    Mr. Speed: I am grateful to the right hon. Gentleman for putting me right on that.
    The House will have to consider this matter. In the meantime, it should note that it was on 14th October 1975, some time ago, that the working party was set up by the Minister to review the operations of direct labour organisations. I have consistently criticised and shall consistently criticise that group. I have described it as a hung jury. That is what it was. If it had had on it representatives of outside interests, the construction industry and free enterprise people, it would have been more worth while.
    When we have consistently questioned the Minister about CIPFA, that group has been called in aid. The right hon. Gentleman and his hon. Friend have said that we must wait until it has reported. If I understood the right hon. Gentleman correctly today, he said that it will report in the summer, and I believe that that is

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    correct. I presume that the report will be published and be available for all to see, but I do not know, for we have never had that matter cleared up. Does this mean that the possibility of having legislation to improve the accounting will be delayed to take account of what the group says? Will what it says have any effect upon the larger Bill, which is at present dead and buried but which might be resurrected one day?
    As for the Bill, I must first tell the Minister that it was presumably possible to extend by further Statutory Instruments what were interim arrangements under the Act reorganising local government. Indeed, if there were particular problems it was possible for any one of the 25 authorities to bring forward a Bill under the Private Bill procedure. Having looked at the Statutory Instruments, I see no obvious connection between the 25 local authorities concerned, except that a majority of them are still Labour-controlled. In the current local government scene, that is remarkable.
    In addition, it is clear that the Statutory Instruments and the Bill do, albeit in a small way, extend, or continue the extension of, direct labour in those 25 authorities. There is a problem when we are talking also about former county borough boundaries. These are nearly dead and gone and will be more nearly dead and gone in the years ahead, so I question whether it is wise to refer to them in such legislation.
    The extension of construction powers for local authorities outside their own boundaries is certainly now finally established in a Bill, as opposed to a purely interim order. That was mentioned in the letter to me by the councillor from Burnley.
    For these reasons alone we should be unhappy about the Bill, but it goes much further. There is the whole question of the accountancy, which the Minister dwelt upon at some length and which other hon. Members will no doubt wish to mention. Here at least was an opportunity for something to be tidied up. I question the way in which the Government have done their tidying up in relation to direct labour. Apparently all hon. Members agree that the present accounting principles and procedures are totally wrong. The building industry has said that in
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    many cases fair competition is not the order of the day and that local authorities award considerable contracts without having any other kind of tender.
    There are also all the various CIPFA recommendations—the importance of the contracts being put out to competitive tenders; the importance of adopting the same standards in dealing with contracts carried out by direct labour and those carried out by independent factors; the importance of valuation by an independent quantity surveyor of the value of work performance; and, something which the Minister mentioned and about which I agree with him, the importance of establishing direct labour departments as separate trading organisations so that the ratepayer and the local people can see—and, I hope, quickly, not having to wait two or three years—exactly how efficient or inefficient the organisation is.
    The Minister was right to deal only with new construction. We still await the maintenance proposals. I believe that the above items and many others mentioned by CIPFA could have been introduced in this Bill. I see no reason why not. After all, there is a fair degree of time. The devolution talks are going on, and the House is not exactly overburdened with legislation. All parties are agreed upon the need for proper and fair accountancy. The vast majority of local authorities are Conservative-controlled, so it can be seen that we are not trying to be beastly to the right hon. Gentleman's party. I ask him to ask his right hon. and hon. Friends whether it is not possible, on this measure if nothing else, to have this element of agreement about accountancy, and then at a later stage we can look at the question of accountancy procedure for maintenance. This is a fair and reasonable offer which I hope the other parties may be prepared to go along with.
    Mr. Freeson: Why is it, then, that the hon. Gentleman's party—not so much the hon. Gentleman, but his party and others associated with it—spent so many months campaigning vigorously against our proposals when we had placed clearly on the record in speech, correspondence and statements in various quarters what our intentions were in the original Bill in relation to CIPFA? We could have had the common ground then. Why is the hon. Gentleman now, having campaigned

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    against that Bill and having virtually compelled us to withdraw it, calling on us to join him on common ground?
    Mr. Speed:The common ground was CIPFA. It was not on the major extension of direct labour proposed in the Bill and as outlined by the Under-Secretary of State at Scarborough. Such common ground will never exist. The common ground between us is on accountancy, as it is between the Government and the Liberal Party. We were asked to find common ground, and we found it on the accountancy aspect. Let us limit it to that. The Conservatives and, I believe, the Liberals, and also some hon. Members opposite, felt that the extension proposed in the Bill could not be supported. I ask the Minister to bear in mind also that two of the three local authority associations are on record in recent weeks as being opposed to any extension of direct labour at present. I am not speaking in total isolation. The Association of County Councils and the Association of District Councils are on record with their opposition.
    Mr. Mellish: Let us assume that we lived in a perfect world and had an accountancy system which made certain that direct labour was efficient, competitive and everything else flowing from that, and that by every yardstick possible it was shown that direct labour was worth while; would the hon. Gentleman still oppose it?
    Mr. Speed: There is perhaps a fundamental philosophical point between us. The first thing to remember, as I am sure the right hon. Gentleman does, is that we have an interest as representatives of the ratepayers, who may have to pick up the tab if things go wrong. I understand that the Government wished for a major extension of direct labour powers by authorities of all kinds, including—although it has not appeared in the Bill—power for the Minister in certain circumstances to allow direct labour organisations to do all kinds of things for the private sector. We oppose that because we take the view that, at the moment, local government has more than enough to do with the things that no one else can do.
    Mr. Mellish: Oh.
    Mr. Speed: The right hon. Gentleman says "Oh", but the fact is that, under the present Government, the local authorities have more than enough to do. They are being denied resources. Yet there are great pressures on them to carry out all sorts of statutory duties and obligations. We do not believe that there is a great abundance of talent in local government waiting to do jobs that the private sector can not only do itself but in most cases can do very much better. That is the first and fundamental point on which we disagree.
    Secondly, we are not naive enough to suppose that the Government's proposals are designed merely to get more efficient direct labour organisations. I have quoted on various occasions Labour spokesmen and Labour documents showing that the main aim of extending direct labour is to get a major public stake in the construction industry. We happen to be opposed to that. That is another important reason for opposing such a comprehensive Bill. No doubt that is also the view of the Liberals and other parties, but they must speak for themselves. We are not to be taken down that path.
    We shall, however, at any stage, join the Government on the question of improved accountancy. But the Government have never shown us their proposals. It was rumoured that there were to be skeleton proposals which would be filled in by order later. Their proposals may be introduced in stages, but we simply do not know. I shall be happy to have discussions about the matter. It is not unknown for me to have discussions with Ministers in the Department of the Environment and to improve Bills thereby. It happened last summer.
    Mr. Stanley Newens: Is the hon. Gentleman prepared to say that he is opposed in principle to all direct labour organisations on ideological grounds, whatever the merits and however well difficulties could be overcome?
    Mr. Speed: I am not prepared to say that. I have never said it, as the hon. Gentleman knows. I am opposed to any extension of the present system, which is one of the reasons why I shall vote against the Bill. I am in favour of much tougher accountancy procedures because fair competition is essential for the free enterprise industry, and we ought

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    have proper accountancy procedures in the interests of the ratepayers, the people who have to pick up the tab at the end of the day.
    Mr. Tebbit: Does not my hon. Friend agree that, while direct labour organisations have the ability to raise capital—and working capital, too—at non-commercial rates and with a total guarantee, buttressed by the Government at the end of the day, they can never in reality be fairly compared with other organisations in the private sector that do not have those advantages?
    Mr. Speed: I accept that point, which is important. I was interested to hear the Minister say that the Government have in mind something that we, too, have in mind—the power to close down direct labour departments consistently making losses. As my hon. Friend has hinted, local government cannot go bust as such. There will always be someone, be it the Government, through the rate support grant, or the ratepayer, to bail it out. That is the difference between direct labour organisations working for local government and nationalised industries, and free enterprise contractors.
    We have been talking about these CIPFA recommendations for two years. The Government say that they are prepared to do something about it—but not apparently in this Bill. We do not know when they will do something about it. They had their opportunity to do so in this Bill or in a separate measure with all-party agreement. Such proposals would take relatively little time to get through the House. That opportunity is still open to the Government.
    Of the 25 councils covered by the Bill, a number have unfortunate records in recent times with direct labour. I am not sure that we shall achieve a lot by swapping experiences. The Minister gave examples of where direct labour organisations were doing well. I have pointed out the difficulty of knowing whether they are doing well unless there are proper accountancy procedures.
    I can quote the example of Liverpool, where a landscaping and road-widening scheme valued at £450,000 went to Liverpool's direct labour organisation without any kind of competition. Surely the right
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    hon. Gentleman cannot accept that sort of situation. There is another example in Gateshead. There, a housing improvement scheme by direct labour, with an agreed completion period of 80 weeks, actually took 156 weeks. Surely that is not something that the Minister would wish to go along with. These are examples taken from some of the 25 districts. There are many horror stories about direct labour. There may be success stories. But until we have proper accountancy, we shall not know the true extent of just how bad or good they are.
    Therefore, we believe that the Bill, although admittedly in a marginal form, puts on a permanent basis an extension of direct labour. We believe that the Minister has forgone a good opportunity to bring in new accountancy procedures. Had he done that, the Government would have gone some little way towards restoring the vast amount of ground that they have lost with the construction and building industry. As they are not prepared to do that, we believe that the Bill in its present form is unwanted, unnecessary and unhelpful, and I ask the House to reject it.
    4.48 p.m.
    Mr. Robert Mellish: I was Minister of Public Building and Works in 1968, and, therefore, the sponsoring Minister for the construction industry. I take that industry seriously, and I got to know it well. I certainly do not condemn—and I do not know any hon. Friends who do—the building and construction industry in a wholesale way. The vast majority of the people in it are honourable men. The firms are desperately anxious to ensure good relations with the Government of the day, whatever their political persuasion. They are crying out for long-term planning of work.
    I learned some interesting figures at that time. I shall always remember them, and I think that they more or less still apply today. Over 50 per cent. of the entire output of the building industry is obtained from the Government and over 90 per cent. of the entire output of the civil engineering industry is obtained from the Government. If, then, the Government of the day are by far the largest client of the entire building industry, it behoves the Government to be a good

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    client, and if they want the building industry to work for them, their contracts must be of the sort that will bring out the best in the industry.
    Mr. Speed: I am trying to assist the right hon. Gentleman. He should be talking of the public sector, which is slightly different from the Government as it involves other clients, including local authorities.
    Mr. Mellish: I agree. The Government do not build a single house. That is done through local authorities and county council which go to Government for various aids, such as the rate support grant. Therefore, the Government have the final word.
    I always wanted to see a universal construction system which brought out the best for the client and for the local authority. For example, the Government are bad payers—or I should say that local authorities and county councils are bad payers. They do not pay as quickly as they might. Half-way through a contract they should hand over 50 per cent. of the sum due and settle their bills soon after a contract is completed.
    One of the biggest problems for private enterprise is a shortage of money. I know that I might appear to be dealing with mundane matters. I am not anti-private enterprise. That would be foolish. There are some famous firms in the private sector that none of us could do without. They are honourable firms and employ trade unionists. This is why I find the attitude of the Opposition to direct labour bewildering. They are so bitter about this subject.
    It has come shining through that the Opposition, if they had their way, would introduce a Bill to make it illegal for any local authority to employ direct labour. That came out in the speech made by the hon. Member for Ashford (Mr. Speed). Anyone who was not a Member of the House would find it hard to believe that the hon. Member thought that there was any good at all in direct labour.
    Mr. Tebbit Mr. Tebbit rose—
    Mr. Mellish: If the hon. Member for Chingford (Mr. Tebbit) intends to say anything good about direct labour I shall be frightened to death. The
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    Opposition challenge the concept of the accountancy system.
    Mr. Tebbit: Let it be clearly understood that there are few people who believe that local authorities could exist without some direct labour workers. It would be absurd if all minor maintenance involved calling in private contractors. The right hon. Member must accept that it is difficult to organise fair competition between a public sector organisation that cannot go bankrupt and a private sector organisation that can and that has only one chance.
    Mr. Mellish: I understand that the hon. Member for Ashford argued that the ratepayer had to pick up the tab. I respect that argument. If it can be shown that a local authority, by the advent of direct labour, can do a particular job cheaper and better than private enterprise, I sincerely say that that local authority should be allowed to employ direct labour because in that instance direct labour has been proved to be cheaper and better. I see that the hon. Member for Chingford is nodding his head in agreement. We are coming nearer to what I want to see established.
    I have lived in that part of London where direct labour matters a great deal. I was also Minister of Public Building and Works and I have seen the situation from close quarters. Direct labour began in the early 1920s. One of the pioneers was that great predecessor of mine, Dr. Alfred Salter. He began to employ people to relieve his own local employment problem. No one could work for direct labour unless he lived within the boundaries of the borough. That direct labour organisation made its own paving stones, for instance. But the idea of any local authority starting from scratch and trying to implement a direct labour force is dangerous today. No direct labour force can be efficient unless it has full use of the machinery that is essential for any good building work. Cranes, cement mixers and the whole paraphernalia of construction work machinery are required. The capital expense of setting up such equipment is enormous.
    I am not one of those who say blindly that all local authorities should go for direct labour, willy-nilly, when there are many qualified building constructors who

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    are willing and able to do the job. How ever, it is unfair that local authorities who possess all the necessary machinery should not be allowed to develop direct labour.
    I find it hard to understand what the Tories are thinking on this matter. The hon. Member for Ashford said that local authorities have enough to do in coping with the terrifying cuts in public expenditure made by this Government. He said that they were unable to do a number of things because of that. But if the Tories were in power I believe that the cuts would be more severe. Everyone knows that they are completely dissatisfied with the cuts and say that the Government have not gone far enough. Some of my hon. Friends have also attacked the Government for going as far as they have gone.
    Looking back at the activities of the Department of the the Environment, I believe that it has done well to salvage what is left. It comes ill from the Opposition to talk about cuts in public expenditure.
    Mr. Speed: The right hon. Gentleman must not misinterpret me. I was not criticising the Government for cuts in public expenditure. I was saying that at a time when local authorities are grappling with so many difficulties because, for instance, the rate support grant has been cut back, it is a bit much to expect them to use their expertise on activities that the private sector can handle better than they. I was saying that they should concentrate instead on trying to make the social services work.
    Mr. Mellish: If the hon. Member is saying that it is unwise for local authorities without the necessary machinery, and because of the problems caused by the cuts, to set up direct labour organisations, I agree with him. At this moment that is right. However, I am not talking of that type of authority. With so many authorities under the control of the Tories I doubt whether any direct labour organisation will get off the ground.
    My experience of direct labour is that it has been a credit. It has done a first-class job, not only on maintentance but on construction work. I know that the Opposition view is that direct labour
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    should do all the rough work. All that the Opposition can do is to criticise and sneer at direct labour and slam it if a wallpapering job is not well done. When direct labour has been allowed to build new construction, it has done it well.
    When I was Minister, one or two direct labour organisations were shut down because they were inefficient and incompetent. Many private enterprise organisations are inefficient and they lose contracts. We told the local authorities concerned that they would not be allowed to build new buildings under direct labour as long as their methods remained inefficient. In the original Bill there was no intention by the Government of the day to compel local authorities to set up direct labour departments. This Government's intention is to allow local authorities to have direct labour organisations if they can prove that they are justified and that their accountancy procedures are good.
    The hon. Member for Ashford is whistling in the wind if he thinks that there will be any move towards direct labour because of the Bill. The Explanatory Memorandum states:
    "The Bill restores, and gives permanent effect to, provisions in three orders under the Local Government Act 1972…".
    In other words, the provisions were already there prior to 1972. We are now allowing local authorities to do what they were allowed to do previously.
    What are we making all this fuss about? It is absolute rubbish. Once again, the Tory Party and Tory Members have hung their hats on this one sort of peg, to make a deliberate attack on direct labour, as though it is some foreign element from abroad.
    I know that one may go fairly wide on the Second Reading of a Bill, Mr. Speaker, but I promise not to go too wide. However, why do the Tories so hate State ownership? It is something owned by Britain.
    Mr. Tebbit: It does not work. That is why.
    Mr. Mellish: I make my point that State ownership means something owned by Britain, and it is sneered at and jeered at by Tory Members, who wrap themselves up in the Union Jack, almost choking themselves to death with it, when they

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    go to bed and on every public platform. State ownership means that which is owned by Britain, but they sneer and jeer at it in principle. If it is not efficient, I am all for saying "Let us have a change where that is practicable." Of course that is right. But I shall never know why the principle is attacked in the manner in which it is attacked and why there is not a greater intent to make State ownership, and so on, work better.
    I do not know what this fuss and do is all about. This is a piddling little Bill. It is only a little tiddler of what was originally in a Bill about which many people seem to know more than I have ever known. I do not know why this attack is being made—although, of course, I do really know. It is because the Tories hate direct labour in principle. They say that they will oppose the Bill. It is so unfair of the Tory Party, which used to be a great political party, to oppose simple principles that cannot be denied.
    5.2 p.m.
    Mr. Stephen Ross: I shall not keep the House for more than a few minutes One good reason is that I have a cold, and it would be unfair were I to do so.
    Like the right hon. Member for Bermondsey (Mr. Mellish), I have no great philosophical objection to direct labour organisations. I speak as one who represents a constituency that tends to have rather monopolistic situations in regard to its construction industry. I assure hon. Members—I have said this in the House previously—that four or five years ago I should have been sold on an extension of direct labour, because at that time we could hardly get anyone to do work for the local authority. We were getting cowboys coming in and doing atrocious jobs, and it fell to direct labour afterwards to put things right.
    Having said that, however, I do not think that it would have been right at this stage for the Government to bring in a Bill, such as the Minister was describing, to extend these activities into a vastly wider range. First, there is the huge unemployment situation in the construction industry generally—about 200,000. Whether that figure contains many genuinely skilled men, I do not know. At any rate, I suggest that something
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    over 100,000 is probably nearer the mark for those with experience who are unemployed.
    Undoubtedly, firms are tendering extremely competitive figures. One has only to ask local authorities and they will confirm that most tenders today are extremely competitive. In many cases they are coming from firms that are losing over the contracts that they are taking on purely to keep their work forces together.
    Therefore, if the Government had brought in a Bill vastly extending direct labour, their timing would have been very bad. I am almost sure that, in his own mind, the Minister tends to agree about that.
    However, I see no reason why I should not honour the agreement that the Liberal Party has with the Government, and I shall do so this evening if there is to be a Division. I support the Bill.
    When one is describing the situation in the construction industry as disastrous, with so many people out of work, why should the House, if it refuses a Second Reading for the measure, take part in closing down certain direct labour organisations and putting more men out of work?
    Mr. David Mitchell: Will the hon. Gentleman explain how the size of the demand for the labour will be altered? Surely what would simply happen is that instead of something being carried out inside local authority organisations, it would be carried out in the private sector.
    Mr. Ross: If the hon. Gentleman is suggesting that we should now impose conditions on some 25 authorities and that they should make a start in sacking their labour forces, I do not agree. If he is suggesting that we should give the men concerned the traumatic experience of trying to find another employer after some have worked for 30 years or more for one authority, I do not agree. I have had representations from people concerned with direct labour in my constituency. They have come to see me with lists of work that they have had to carry out. They were fearing that, because we had made clear to the Government, as a party, that we could not continue with the extension of direct labour, their jobs would be at risk. I say to the hon. Gentleman in all seriousness that that is not a

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    proposition that I am prepared to go along with at this stage.
    Mr. Tebbit: I should like to be sure in my own mind that the hon. Gentleman is not under the impression that a decision not to enact the Bill would cause the closing down of some of these direct labour organisations. Even if the Bill were not enacted, that would not be the case. In any case, the Minister could bring forward further orders for a further temporary extension. He does not need a Bill to make it permanent, which the hon. Gentleman is supporting.
    Mr. Ross: I accept that we could go along with merely an extended period, but I do not think that it would be very satisfactory. I do not understand the quibble into which we are entering, because these are old-established direct labour organisations that were previously with the old county boroughs. I happen to think that the county borough was one of the finest forms of local government. It was a great pity that it was wiped out.
    I have had the facts and figures from the accountants who have been examining this matter in relation to North Country direct labour organisations. Although I accept that there are those that do not come out very well, others come out quite well. Therefore, there are both sides to the equation.
    However, I support the Conservative Opposition in their request to the Minister that the CIPFA basis of accounting should be written into the Bill. We ought to have taken the opportunity already to do that. We cannot do it on Second Reading, but perhaps it can be done in Committee or on Report. The working party appointed by the Institute of Municipal Building Management, in its summary of recommendations at paragraphs 5.10 and 5.11, wishes to see this written in. After all, that is a local authority based inquiry and one that I should have thought that we could take on board now. It seems a great pity that we cannot do it at this stage. Of course, I support that call. I think that all hon. Members, on both sides of the House, would support it. It seems that it is an opportunity that is about to be missed, if we do not take it now.
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    Apart from those few comments, I shall be honouring the agreement that we have with the Prime Minister, and I shall be is to be a vote later this evening, which supporting the Bill in the vote, if there I think would be a pity.
    5.9 p.m.
    Mr. Stan Crowther: I do not wish to take up more than a few minutes. As an old county borough man and one who was involved in local government for many years before becoming a Member of this House, I warmly welcome the Bill. I share the unhappiness about the fact that we are debating only such a limited measure and not a measure that will extend the scope of direct works departments, as many of us had hoped earlier in the Session.
    The hon. Member for Ashford (Mr. Speed) spoke about ratepayers having to pick up the tab, as he called it, when anything goes wrong. I could tell him of a good many occasions when the tab has had to be picked up because of the bankruptcy of private companies and when the job has had to be taken over and the contract finished by a corporation's direct labour department. In my experience, they have finished these jobs in a most efficient way, and they have generally done a better job than those who started it.
    The hon. Member also spoke at considerable length about the need for fair competition. I want to mention a few points that make competition unfair to the local authority, rather than unfair to the contractor. For one thing, it is the habit of local authority works departments to try to maintain a stability in their labour forces. They do not go in for the hire and fire policies that are so common among private contractors. That in itself creates additional costs for them.
    I accept what the hon. Member for Isle of Wight (Mr. Ross) said about certain reputable firms now tendering at under-cost prices to keep their labour forces at work. I do not dispute that many firms in the industry have good industrial relations and adopt that sort of policy. However, there are many that do not. It is no good trying to hide the fact that among the smaller firms in the industry—I think that there are far too many small firms in it—the hire and fire policy operates. Local authorities are not able to do

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    that. They do not go in for the casual labour approach. Furthermore, there is no lump in local government. The lump still lives in private enterprise building, and let us not pretend that it does not.
    When it comes to talking about fair competition, the dice are loaded against the local authority rather than in its favour. It is my experience, and the experience of many others who have been in local government, that when a corporation's department has won contracts in open competition, which has happened on many occasions, it has done a good job. My authority employs tradesmen of the highest possible standard. What is more—perhaps this is the most important point that I make—it is still taking on apprentices.
    Throughout the whole of 1976 the only building organisation in Rotherham that took on any apprentices was the local authority building works department. If we are concerned about the long-term future of the building industry and the training for skills, without which it cannot survive, any restriction placed upon the responsible authorities that are still appointing apprentices and training men for the future will be extremely damaging.
    I suggest that the future of the industry requires an expanding and successful public sector. If we leave matters to the private sector, and if the example of 1976 is anything to go by, we shall be desperately short of skilled tradesmen for the next generation and the generation after that. I hope that the Bill will receive the support that it deserves. I hope that one day we shall have the pleasure of voting in favour of a Bill that I am sure my right hon. Friend would have loved to introduce today instead of this much more restricted measure.
    5.14 p.m.
    Mr. David Mitchell: This is a Bill to make permanent the powers of certain district councils to carry out the construction of buildings or other works of certain other local authorities. It is not to extend for two years or three years but to make permanent. I was horrified to hear that, notwithstanding that fact, the Liberals have been forced to become Lobby fodder with the Government because of their new voting agreement.
    Mr. Stephen Ross: It was not a matter of being forced to vote with the Government. I happen to think that the Government are taking the right course. We must not keep people in limbo. We must remember that we are talking about people who have been employed in the same job for many years. They should know whether they are to be employed permanently. It is time that we introduced permanency.
    Mr. Mitchell: The hon. Gentleman has said that there should be permanency. I find myself unable to agree with him. As the argument develops I think he will find that there are many others who do not agree with him.
    Mr. Tebbit: Does my hon. Friend think that the hon. Member for Isle of Wight (Mr. Ross) is worried about the permanency of his job rather than of anyone else's job, bearing in mind that he has been singularly unsuccessful in persuading the Government to live up to their part of the bargain and introduce the direct elections Bill, for example? Therefore, he is Lobby fodder, and nothing more than that.
    Mr. Mitchell: I do not wish to detain the House with the obvious parallel of two drunks trying to prop up each other, both terrified of what would happen if the other withdrew his support. However, we have before us a Bill that is designed to continue permanently something that was originally introduced on a five-year experimental basis. Since then we have had the Layfield Report. That is a new factor that has not been properly taken into account and has not been raised in the debate.
    In page 7, paragraph 22 the Layfield Committee states:
    "The complaint most forcefully made to us about the control of local authority spending was a simple one. It was said that local authorities decided first what they intended to spend. Only thereafter did they consider what rates they must levy to meet the bill. This process was not considered to be budgeting in the sense that individuals understood it.
    "Local authorities were accused of being concerned primarily with the expansion of services, and only secondarily with the means of financing that expansion. Large projects were said to have been undertaken in many instances without adequate thought for the effect that the capital debt incurred would have in increasing future current expenditure."

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    I go further into the report and quote most damningly from page 90, under the heading "Value for Money". The committee states:
    "Unlike most commercial undertakings there are for most of their services no objective standards of performance or output against which costs can be measured."
    That seems to be a clear indication of the situation being changed by the findings of the Layfield Committee. I return to page 7, where the committee states:
    "The operations of direct labour organisations were singled out as particularly bad examples of a failure to control costs."
    It is against the background of wholly changed circumstances as a result of an independent report that the House should be considering whether it should make permanent the powers contained in the original experimental Bill.
    I noted with interest the examples given by my hon. Friend the Member for Ashford (Mr. Speed). I add to them the examples that the Small Business Bureau has brought to my attention. Abuse of the bonus scheme by the Manchester direct labour organisation, often held to be one of the most efficient, was said by the district auditor to have cost £680,000 in two years. In Sunderland the direct labour organisation was given, with competition, a leisure centre to construct. It increased its estimate by £1·4 million within weeks of starting the contract. I am sure that my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), who has great experience of the construction industry, would not feel able to submit a tender as a private enterprise firm and then increase the price by £1·4 million when he started.
    I am sorry that the right hon. Member for Bermondsey (Mr. Mellish) is no longer in the Chamber. In Southwark one of the projects that was engaged in by the direct labour organisation, in the absence of competition, escalated by 147 per cent. from £890,000 to £2,200,000. Against that background how on earth can the Minister blandly ask us to extend permanently this section of direct labour powers?
    In addition to the examples that I have given from the Small Business Bureau's research and briefing there is the example of Camden, which is known
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    only too well by many hon. Members, some of whom live in the borough. I see that one new recruit to the House, my hon. Friend the Member for City of London and Westminster, South (Mr. Brooke), is nodding in agreement. My hon. Friend is only too aware of the disastrous state of affairs of the direct labour organisation of the Camden Borough Council.
    Another example is that of Glasgow, where it cost over £21,000 to build an equivalent house to others alongside that were built by private enterprise for £16,500. I am not surprised that Glasgow changed hands in the recent local elections. We have a situation in which there are endless examples of unsatisfactory direct labour organisations.
    I entirely accept that some are efficient, particularly those which do undertake major construction work. Both sides of the House will agree that there is a case for retaining a limited staff for maintenance work on local authority equipment and buildings.
    Mr. Stan Crowther: Would not the hon. Gentleman agree, however, that it would be difficult to keep tradesmen of high quality working for a direct labour department if all they could do was maintenance and they never got a go at new capital building?
    Mr. Mitchell: I take that point, which is important, and I will deal with it in a moment.
    I agree with those who have said that if certain work can be done most efficiently by direct labour, it should be done in that way. The question is how one measures that efficiency. What is deplorable about the Bill is that the Government have not taken this opportunity to accept the known common ground between the parties and include the CIPFA recommendations.
    There are three immediate things upon which we could get agreement. First, whenever a contract is awarded, it should be in direct competition with private contractors. There is nothing sacrosanct about someone who happens to work for a local authority and no reason for him to have priority over another equally skilled man, belonging to the same union, who works for a private company.

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    Second, the local authority direct labour department should be established as a separate trading service. Third, its accounts, itemised and including overheads, should be properly submitted within a defined period so that we may know whether it is covering its costs, making a return on the capital investment, or simply whittling away the resources of the ratepayers.
    It is important to use this opportunity to bring about changes because the extension of direct labour operations is damaging in three ways. First, it damages the ratepayers. I have given examples already of colossal losses and overspending on contracts. This causes suffering to ratepayers who are often already hard pressed.
    Second, it damages the large contractor. As I have said, a member of the appropriate union, whether his employer is a private contractor or a local authority, has an equal right to opportunities for work. Equally important, most large contractors are working in the export field as well. They can tender for major export contracts, thus earning overseas currency that the country needs, only if they have a sound home market. The direct labour organisations do not take up contracts in the Middle East or in Europe, yet companies which are seeking world-wide contracts have the ground cut from under their feet by artificial and subsidised contracting by local authorities.
    Third, the extension of direct labour is unfair to the small business. We all know how difficult it is to find a small contractor to do work at the moment. The number of small businesses in the building industry has been declining rapidly. Bankruptcies are an all-time record. The number is greater than at any time since the war, greater than it was in the depths of the depression, greater than it has been since records were first kept in 1914.
    The number of liquidations has doubled since this Government came to office. Many firms have simply given up. These small firms are under acute pressure and they have as much right as anyone else to a fair share of the bread available.
    Mr. Ivor Clemitson: If they are efficient.
    Mr. Mitchell: Yes, if they are efficient. That is why it is essential to include in the Bill a requirement for proper and separate accounting and not to make this proposal permanent until that accounting has shown, over a further experimental period, whether direct labour departments are efficient.
    This proposal links with the other attack on the building industry, the licences to work for small builders under the 714 certificate procedure. I should have thought that the Minister would by now be aware of the enormous damage which is being done to thousands upon thousands of small businesses. I expect that we all receive two or three examples a day in our post of these certificates to work having been withheld, without right of appeal and sometimes without the reasons being given.
    They are often withheld for reasons which have nothing to do with tax. The Government contended that the 714 certificate was intended to prevent tax dodging, but they have imposed so many conditions which have nothing to do with tax that it has become a licence to work.
    When the industry is squeezed by the proposal in the Bill and by the licence to work system, it is not surprising that builders, small builders particularly, are crying out for protection against unfair and oppressive treatment by this Government.
    There are practical reasons for not making this experiment permanent. There are also broad and strong reasons of philosophy why we on this side do not believe in concentrating power, wealth and decision-making into the hands of the State, whether it be the Government or local authorities. We believe in spreading those things throughout the community. The Bill is a further obstacle to doing so.
    All those in the building industry will note the threat in the Minister's speech, when he made it clear that he intended to extend direct labour activities at the first opportunity and made grave references to his own leader, the Prime Minister, for not having unleashed that proposal at this time.
    5.28 p.m.
    Mr. Eric S. Heffer: I am not certain whether the hon. Member

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    for Basingstoke (Mr. Mitchell) was arguing that direct labour departments should be allowed to compete overseas with private companies or whether he was so opposed to competition that he wanted it to disappear altogether. I did notice that he argued that there were many bankruptcies among small builders. I have news for him: there have been bankruptcies among small builders ever since there has been a construction industry.
    At times of crisis, small construction businesses are among the first groups to go bankrupt. I am not surprised, and anyone who is surprised does not know the first thing about the industry. One of the troubles is that everybody—I mean everybody—believes that he can be a builder. People think that it is the simplest thing in the world. We used to refer to these people on Merseyside as the "ladder and barrow" merchants. They think that if they have a ladder and a barrow they can go into construction.
    As a matter of fact, during the period of the home improvements boom far too many ladder and barrow merchants, who thought they could build, made an absolute mess of the situation. One has only to think of the legal battles that have taken place about incompetence and the dreadful conditions constituents were left in after these merchants appeared on the scene. I am not surprised that people eventually got round to not employing them. Because of their inefficiency and lack of ability and knowledge of the construction industry these people went to the wall.
    Mr. Michael Latham: The hon. Gentleman knows a great deal about the industry. I do not dissent from some of the things that he has said, but does he not agree that some of the greatest companies in the country started exactly on the basis that he is describing?
    Mr. Heffer: Of course, because they decided to employ highly competent craftsmen. The craftsmen they employed were sufficiently able and intelligent to lift them out of the nonsensical position in which they started. If they had not employed those craftsmen they would obviously have been unable to get beyond a certain stage and would have gone out of business. It depends upon whom one employs.
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    I am glad that the hon. Member for Melton (Mr. Latham) raised this matter because it is a fundamental question with regard to direct works departments. We can have efficient direct works departments and inefficient ones, just as we can have efficient private enterprise companies and inefficient ones. As the hon. Member for Melton rightly says, I do know a lot about this industry. Let no one suggest to me that only the direct labour departments have come out at the end of the contract well above the price that they went in for in the first place. The number of construction companies that have gone well beyond the original price, and have had to go to the local authorities or to their clients and ask for more money, is legion. The hon. Member for Folkestone and Hythe (Mr. Costain) knows that this goes on all the time. He is nodding his head. Of course he has to agree, because he knows it happens.
    For example, let us take the question of negotiating contracts and tenders. I do not know whether hon. Members are aware that for many years in the city of Liverpool, under various local political administrations, we negotiated tenders, agreements or contracts with the Unit Construction Company for two reasons: first, because the Unit Construction Company was already doing the job and had the work force; second, we felt that it was giving us a good price.
    It was not unique that we actually negotiated contracts with private labour. Local authorities can and do negotiate contracts with big companies like Unit Construction and others. As a matter of fact, the money that went into building the prefabricated units by Unit Construction was underpinned by the local authority. There was a hell of a row about it because Labour people at the time objected most strongly, saying that the Tories were advancing millions of pounds in order to assist a private enterprise company. That is the reality of this sort of thing.
    Mr. A. P. Costain: I only interrupt because the hon. Gentleman said that I nodded at his remark. I was nodding because I was about to say that when a private enterprise firm gets an increase over the original contract it is because the plans were wrong. The increase is not given

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    out of charity. But a direct labour department has to be paid out of charity, otherwise something goes wrong with the rate fund.
    Mr. Heffer: The hon. Gentleman is surely not suggesting for a moment that the plans are never wrong with regard to direct labour departments and that they can only be wrong with the private enterprise builder. That is the most remarkable suggestion that I have ever heard. The plans can be wrong whoever the builder is. One of the problems in the industry is the rôle of the architect. That is a real problem and it is about time that we dealt with it.
    The whole question of architects, surveyors and engineers is one that we need to look at. Other countries deal with this matter in a totally different way from ours. Their costs are much lower than they are in this country. It is about time that we had a look at this aspect of the industry, but I do not want to go into that matter because we are not discussing it this afternoon.
    Let us look at direct labour. We can have an efficient direct labour department and an inefficient one. Believe it or not, I was chairman of a works department in Liverpool and was actually responsible for its creation. When I was chairman it made money, but when I came to the House of Commons, for some unknown reason it began to lose money. The same thing happened when I worked for the Merseyside Docks and Harbour Board. It made money, and, when I left, it went into the red. That proves beyond doubt that some of us have the ability to make money for others but no money for ourselves.
    The point I am making is that we need to organise direct labour departments in an efficient way. We need the right type of management and supervisors. We also need buyers to be separate from the local treasury. If that does not happen one gets tied up with the local treasury and is unable to act independently. We are not always able to get the type of material that we need at the cheapest cost. I know much about this sort of thing. We have to be competitive, and we must run direct work departments, as far as it is humanly possible within our society, on a competitive basis, but we cannot entirely do that.
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    Why? Hon. Members know that under local authority agreements one has to pay for sickness benefits, whereas if one is in the construction industry one gets sickness benefit on the basis of national health insurance and that is all. There are also many other overheads.
    I agree with my hon. Friend the Member for Rotherham (Mr. Crowther) who pointed out that the difficulties for direct labour departments are much greater because one quite rightly has to give workers better conditions. They ought to have been a model for the whole of the construction industry. That is the truth of the position. Therefore, direct works departments are in a worse competitive position than they would have been if they had been purely a private enterprise companies. There are many other aspects as well.
    Mr. Tebbit: Surely the hon. Gentleman is not suggesting that giving the best conditions to one's workers makes one uncompetitive? I thought his argument would have been the opposite—that by giving employees the best conditions one is competitive.
    Mr. Heffer: I find that an amazing argument as well. I have yet to work for an employer in the construction industry who comes along to me as a worker and says "We are going to give you the best possible conditions and this will make us more competitive than the rest of the construction industry". That is absolute rubbish. The hon. Gentleman knows that within the capitalist system, which he supports, the situation is precisely as I have said. It is the opposite. It tries to cut down wages and conditions because that makes companies more competitive than their neighbours. The point about direct labour is that one has higher overheads because one cannot compete in that way. If the private enterprise companies want to give the best possible conditions by way of full sickness benefit and so on, let them do so. Let them go to George Smith of UCATT and offer to provide all these advantages, instead of George Smith, the rest of the UCATT members and the other unions having to use their strength to wring better conditions out of the employers.
    We must extend the direct labour system as quickly as possible. Why

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    should not direct labour be able to compete with the private enterprise companies? Why should it not be able to go in for the bigger jobs and, if it has a good department, take work in other parts of the country? Direct labour departments should certainly be able to do work in neighbouring boroughs, counties and regions.
    The Conservatives believe that any suggestion for setting up direct labour departments signals the end of the world. What rubbish! The same thing happened when the old-age pension was introduced. It was said that the economy would collapse, but the pension was introduced and the economy did not collapse. The economy of the construction industry will not collapse through any extension of direct labour. I wish that the Conservatives would abandon their narrow sectarian philosophy on this matter. I am glad that they are laughing because their laughter proves my point. Their outlook is so sectarian and narrow that they cannot see the wood for the trees. They cannot see when something might be good; automatically they say that, because it is direct labour, or because it is public ownership, it must be bad. I say that it could be good or bad, just as private industry can be good or bad.
    I want the system extended because the time is coming for workers in the construction industry to be given greater continuity of work. We must eliminate the unemployment that constantly plagues them. We have to ensure that they have decent working conditions, and we want to eliminate the days of the ragged-trousered philanthropists once and for all. We must do that on the basis of extending direct labour.
    I cannot understand the Conservative approach to this matter. The Conservative Government accepted this idea in their 1972 Act. The Labour Government now have a small majority with the support of the Liberals and so the Conservatives see their chance to embarrass us. That is political opportunism of the worst kind. I am ashamed of the Conservatives for that, although I do not know why I should be since they are only acting in their normal way. I only hope that the Bill will be passed and that later we can bring in the other Bill as soon as possible.
    5.44 p.m.
    Mr. A. P. Costain: It is a great privilege to be able to speak after the hon. Member for Liverpool, Walton (Mr. Heffer). I think that I have known him for 40 years. I have seen him work in private enterprise and direct labour departments. My interest in the building industry is well known, but I have no directorships now to declare. I suppose I shall be guilty of advertising if I tell the hon. Member for Walton that he worked for the wrong firm in Liverpool. I can assure him that another certain firm gives all the privileges which are available to workers under direct labour, and more—full sickness benefit and so on—but it does so at the expense not of the ratepayers but of the shareholders.
    The hon. Gentleman's comments would have been germane 50 years ago. All this talk about grinding down the workers would have been appropriate then. I told him in the Tea Room the other day that the executive directors of the company that bears my name, the men who are now controlling the company, all worked as foremen. One of them, the chief executive was the hon. Gentleman's charge hand on one of the Liverpool contracts. I know a great deal about the hon. Gentleman in that way, so let us get that out of our system.
    We heard a most extraordinary speech from the Minister. He appeared to me as a fisherman describing the big fish that got away but declaring that, by gosh, he would get it next time. We have also seen a wonderful example from the Liberals, who came into the debate but have now gone. They have been laying ground bait for future occasions. As I explained to a meeting of builders with whom I was lunching the other day, it is quite clear what will happen in this Parliament. If the Liberals think that by their voting with the Opposition, the Opposition will win, they will always vote with the Government. Conversely, every time it appears that in that situation the Opposition will lose, they will cast their vote with us.
    In an incredible speech the hon. Member for Isle of Wight (Mr. Ross) bent his principles in such a way that he went out of the door. He talked about private enterprise and how efficient it should be. Let us get down to what is basically involved

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    here. It will surprise the hon. Member for Walton and perhaps even the Minister himself if I say that, as one who has been in the construction industry and has built up two firms, I am in favour of direct labour in certain circumstances. It is stupid to involve all the machinery and paraphernalia that is necessary for putting work out to tender in dealing with a small maintenance contract.
    It is necessary, therefore, to have a direct labour organisation to do maintenance work, but now we follow that through. The fact that the engineer or other person in charge of the contract does not have to write out a specification or go through the tender procedure makes him lazy. He has only to pick up the phone and say, "Charlie, put a new roof on that house. The old one has fallen off. I do not want the bother of going through the tender procedure".
    The hon. Member for Rotherham (Mr. Crowther) says that direct labour organisations must be given more specialised work. In other words, he says that instead of getting a direct labour department merely to fix hinges it should be given the job of building a town hall, and so it goes on. As a result, glorious lavatories are built in certain areas if only to retain the tradesmen. The hon. Member for Walton said that once a direct labour department had a crane it wanted to play with it. The same goes for a concrete mixer. In that way the department builds up and up. That is how the whole concept of direct labour goes wrong. The Minister is smiling one of his happier smiles. He is not the most popular Minister in the building industry, but that will not be news to him.
    We heard a most interesting speech from the right hon. Member for Bermondsey (Mr. Mellish). He was a Minister, and from time to time the sun shone and he praised private enterprise as a wonderful show. Then he would go back to his old form and get worried about the situation in which direct labour organisations did not have enough work.
    I believe in direct labour where it is doing a maintenance job for a specific client. Once direct labour organisations start working for another authority they are in exactly the same position as an outside contractor. They have to be given
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    better instructions and they should be given specification, or some sort of drawings, for larger jobs. This may not happen. If they are to do that they will be involved in direct competition.
    My hon. Friend the Member for Basingstoke (Mr. Mitchell) made a very fine speech in which he set out clearly his feelings about direct labour organisations. He said that they would stop other firms from building for export. I saw the hon. Member for Walton licking his lips at that stage. Maybe he envisaged direct labour organisations in Liverpool going to the Isle of Man, Dublin or even New York.
    Let us get this matter right. The Bill must be opposed. If it becomes a permanent fixture it will give direct labour organisations the opportunity to engage in direct competition with private enterprise firms. Once a direct labour organisation is working for a local authority it is working for the referee. In that event the referee and the builders are the same people and they can alter the rules without anyone else knowing. Where there is direct competition there is an independent referee who is a fair judge. We shall never get fair competition unless a direct labour department is a completely separate trading organisation with its own overheads, office and so on. In those circumstances there is a slight excuse for proceeding with direct labour organisations, but basically it is wrong, and the Bill should be opposed.
    5.53 p.m.
    Mr. T. W. Urwin: I welcome the opportunity to join in this debate, albeit briefly. I have listened to the comments from both sides of the House with deep interest if only because of my own personal connection with the construction industry. That connection goes back some 51 years, since I first began my apprenticeship as a bricklayer. It continued until I became a Member of this House. I was a full-time officer in the Amalgamated Union of Building Trade Workers prior to 1954, and I have had experience of working in direct labour departments. Until 1965, I was a member of a local authority, having the great honour to be chairman of the housing and planning committee with responsibility for running and organising a highly successful direct labour department.

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    Because of my lifetime commitment to the principle of direct labour, I welcome the Bill. However, I regret deeply the necessity to withdraw the previous Bill, which would not only have consolidated direct labour, but would have given great opportunities for expansion in the field of more intensified competition with building contractors. As representatives of the Conservative Party have always claimed that they believe in free competition, I fail to understand why they are so fearful of competition from direct labour departments.
    It is a tragic fact that in my connections with the construction industry I have found that private enterprise has from time to time failed abysmally to measure up to the responsibilities. I have had the misfortune to be working for private building contractors at the time when they have gone bankrupt. Although the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) may laugh, that is a fair indictment of Conservative policy. As a full-time trade union official I spent many long hours trying to recover wages for employees of firms that had gone to the wall, largely because of their own inability to organise a building site which they had won by competitive tender.
    I have always believed that the principle of direct labour is absolutely right. Equally, I do not believe that inefficient direct labour organisations should be encouraged. They should be encouraged to become efficient, as efficiency is the keynote. It is well within my knowledge that there have been a great number of highly efficient direct labour departments up and down the country, particularly in the North-East.
    Mr. Kenneth Lewis: What about Sunderland?
    Mr. Urwin: I could tell the hon. Member a lot about Sunderland. I suppose he has read what Aims of Industry put out, and what Mr. Malcolm Hoppe, former Lobby Correspondent of the Sunderland Echo, has written; but he only tells people what he thinks people should believe. I could tell the House a lot more about that situation, but there is no time.
    The direct labour department in my old urban district, which became part of
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    Sunderland under the Local Government Act 1973, actually came into being as a direct labour organisation because of the failure of a private firm, which left a site mid-way in a contract. The local authority decided to set up a small direct labour organisation to complete the contract. From very small beginnings an eminently, highly successful direct labour organisation has evolved. Until 1973 it was tending in competition with private builders and it never lost a contract.
    I simply cannot see—providing the direct labour organisation is being run efficiently—how it can ever fail to obtain contracts in competition with private contractors. This is the way it has happened in my urban district. The enlarged borough of Sunderland, with the exception of Easington, has taken in the old urban district of Hebden. They have their own direct labour departments, all of which have had a large measure of success.
    The hon. Member for Rutland and Stamford (Mr. Lewis) made a jibing remark about Sunderland, but Sunderland started its direct labour department far too late. When small authorities were working very successfully with direct labour departments Sunderland was still totally dependent on private enterprise, even for its own council house building. Once it established the department it quickly became successful, and is successful now. Recently it succeeded in obtaining the contract for the leisure centre—the biggest it has so far undertaken. Many accusations have been made against the Sunderland direct labour department because of alleged failures over the leisure centre in the city, but the problems faced by the direct labour department equally would have faced a local building contractor who had won the contract in open competition. There were delays in delivery of steel, which is not uncommon in the construction industry, and the local authority had no control over that situation. These are matters which Aims of Industry and Malcolm Hoppe did not bring out as they should have done.
    Mr. Kenneth Lewis: I was not making a jibe at Sunderland. I was merely citing it as an example. There are-other towns and boroughs and authorities in the same situation. How does the hon.

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    Gentleman measure the success of a direct labour department if such a department is losing a great deal of money? If it is costing the ratepayers money, it is surely not successful.
    Mr. Urwin: I thought that I had made clear that I would not in any circumstances support an inefficient direct labour department. Nothing I have said should be taken to indicate that Sunderland direct labour department is inefficient or unsuccessful. It is on record that in the last five or six years Sunderland has saved its ratepayers several hundred thousand pounds both in contracts in open competition and under the old two-for-one system.
    There are many faults in the private sector of the construction industry. I am not referring to the all too frequent bankruptcies, but I wish to draw attention to an incident in Peterlee New Town in 1962–63 when a somewhat adventurous firm from Lancashire came to Peterlee and obtained the first contract with a ridiculously low tender price, beating all the local firms. That organisation grew like Topsy; it obtained more and more contracts, but finally it suffered an almighty crash, when many thousands pounds of deficit were incurred, and when several hundred building trade operatives had to leave without having received their wages and without having had access to holiday credits.
    The private sector of the construction industry—and I echo what was said by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer)—surely should not be afraid of competition with direct departments. It should now begin to put its own house in order in organisational terms.
    The time is riper than ever before for a major move to decasualisation of the construction industry and towards registration of employers as well as of employees. This is one major advance for which the industry is crying out, and that opportunity should be grasped.
    I look forward to the time, in the not too distant future, when my right hon. Friend the Minister for Housing and Construction will come forward with the Bill that has been dropped, but in a strengthened form, so that healthy, efficient and successful direct labour departments can exist and expand even further to the
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    advantage of the ratepayers and people in the community generally.
    6.5 p.m.
    Mr. Michael Latham: The House has just had the pleasure of hearing three very experienced contributors. We heard the hon. Member for Houghton-le-Spring (Mr. Urwin), who said that he worked in the industry 50 years ago. That means that he worked in the industry 16 years before I was born, which is a sobering thought. We also heard the contribution of my hon. Friend the Member for Folkestone and Hythe (Mr. Costain), who had experience of building an oil refinery in Persia before I was born, and that contract involved many millions of pounds in investment.
    The hon. Member for Liverpool, Walton (Mr. Heffer) again spoke with great knowledge, and I always enjoy his speeches. Knowing that the hon. Gentleman is a tough fighter, I was surprised that he accused the Opposition of being political and ideological. If ever I knew somebody who was both political and ideological, it is the hon. Gentleman. That comment came somewhat oddly from a fighter such as the hon. Gentleman has always been.
    The House knows that I have an interest in these matters as I am a director of Lovell Homes, part of the Y. J. Lovell Group, which may be said to be in direct competition with direct labour departments.
    Let me seek to outline why I think the Bill should be opposed and why it is unfortunate that this legislation should have been brought forward. I would have been even more appalled if the original Bill had been brought forward rather than dropped, as it was, following the Lib-Lab agreement.
    The Minister set up a working party to consider the subject of direct labour following a number of incidents that caused trouble in earlier years. I did not disagree with the setting up of the working party, although its membership left something to be desired. Since a number of its members had a vested interest in maintaining direct labour in certain forms, I was not happy about that feature. Nevertheless, the working party was set up.
    It has not yet, as I understand it, reported. Its views may be known to

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    the Minister, but they have not been made public. It would surely have been better if the Minister had made an order in respect of the 25 authorities for another year maintaining the existing position until he was in a position to bring before the House the results of the working party's deliberations.
    What has happened since the war on the subject of direct labour? For a long time we had the one-in-three rule, which meant that one in every three contracts went to competitive tender. That rule was originally set by the post-war Labour Government. It was Aneurin Bevan who once said that direct labour was an "expensive luxury". Therefore, he brought in the one-in-three rule as part of a Ministry of Health circular after the war.
    That operated until 1965 when Mr. Richard Crossman issued a circular withdrawing the one-in-three rule and allowing direct labour departments to take work on a negotiated basis whenever they wanted it. It was significant that the one-in-three rule in 1965 was followed a couple of years later by some of the most deplorable scandals, such as that in Salford to which the right hon. Member for Bermondsey (Mr. Mellish) referred, and of which he had experience when he was in the Ministry of Housing. Then Mr. Anthony Greenwood, or Lord Greenwood as he now is, produced the "Manual of Principles" for direct labour departments in 1968 and issued a circular saying that there should be more competition.
    Therefore, what has happened is that the position has changed every few years. I hope that by the time the working party comes up with a clear report, firm rules will then be promulgated and will be adhered to. Unfortunately, this Bill has been brought forward before those deliberations have been completed, and the fact that no temporary order has been laid to cover the matter is good enough reason for opposing the Bill tonight.
    Let me examine the wider issues. I do not deny that this is a difficult philosophical problem for both sides. The right hon. Member for Bermondsey asked whether we wanted no direct labour departments or efficient ones. My hon. Friend the Member for Ashford (Mr. Speed)
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    gave a clear answer. He suggested that he wanted to see efficient direct labour departments, but he thought that there was no reason for increasing the scope of such departments now. I agree with my hon. Friend. We cannot ignore the direct labour departments which are now in existence; nor can we ignore the fact that tenders were difficult to obtain between 1971 and 1973.
    I do not blame the building industry for that situation. It was caused by the economic position of that time and by the monetary policies of the then Government—which I have criticised in the House and which I shall continue to criticise. I hope that those policies will not be repeated. It was not the industry's fault that it became overheated, and that must be prevented from happening again. That situation has given those who believe in direct labour in principle a strong argument. They say that tenders could not be obtained at that time and that only direct labour departments could do the work. That is an argument that cannot be ignored. If, on the other hand, we say that we want not no direct labour but efficient direct labour, that assumes that direct labour departments must be on all fours with the private sector—and must be seen to be so—and have the same commercial and statistical basis.
    The hon. Member for Houghton-le-Spring said that he could not understand how a direct labour department could help but have a lower price than a contractor when a contractor was trying to make a profit. However, profitability is the test of efficiency and the need to make a profit motivates a contractor in keeping his costs down to the absolute minimum and to organise production on site to the maximum effect.
    It is significant that the CIPFA report says that unless there is a 4½ per cent. return by a direct labour department and unless that department shows a saving compared with the contractors, the department cannot be efficient. The test of efficiency is the profit made, because that represents a real command over resources. The hon. Member for Houghton-le-Spring has views about the statistical differences in productivity between direct labour departments and independent contractors. Many people have pointed out that there is a great difference in that productivity, but the

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    Minister has said that statistics are misleading because relevant considerations are missing from them. That would be a more impressive argument if the Government had not changed the basis of the figures a few years ago so that they are unlike and not comparable. I am not suggesting that the basis was changed for political reasons, but it has made comparison difficult.
    The overall test of efficiency in the construction industry is profit—or, in the word used by the Prime Minister at the Labour Party Conference, "surplus". It is the difference between the tender price and the eventual outcome.
    Mr. Heffer: The hon. Member for Melton (Mr. Latham) must know that that cannot be the entire test, because it may well be that a contract says that there should be, for example, three coats of paint and that the original paint should be burnt off. The hon. Gentleman must know that such specifications are not fulfilled on many occasions because there is a great deal of skimping. That might be regarded as quick, efficient and profitable, but it is bad for the efficiency of the work and for the end product.
    Mr. Latham: I am absolutely amazed that the hon. Member for Walton has given such an example, because he must know well that those who argue against direct labour claim that the way that it produces notional savings is by changing the specifications during the course of the job. He must also know that the view has been expressed that direct labour departments use the notional benefits from their maintenance sections to offset construction losses. One needs a properly identifiable trading fund, as the CIPFA report suggested, and works committees should receive real information immediately—not years later—so that they can make direct comparisons. Certainly the Bill does not provide for that and nothing else will until the CIPFA report is implemented.
    So there is a dilemma for Opposition Members about whether there should be no direct labour or efficient direct labour. There are also dilemmas for the Minister and his party. The view of the hon. Member for Walton and the right hon. Member for Bermondsey is that direct labour departments should be
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    efficient and, presumably, that if they are not efficient, they should be closed down, just as civic restaurants were closed down, according to the provisions of the Civic Restaurants Act, if they made a loss on their trading activities for three years running. That is one point of view and it is a fair one. However, I am sure that Labour Members will not deny that not every Socialist or every person involved in direct labour thinks in that way.
    Many of those people believe that direct labour should be a social service and that it therefore does not matter whether such departments make a profit. Such people claim that it is a social service to employ the men. There have been instances where this has happened, such as at Sal-ford. Some people forgot that after the critical report that was made by the district auditor about the Salford direct labour department in 1967, the then Labour authority nevertheless proposed to continue with the department because the authority was in favour of it in principle. It was only as a result of pressure from the Government and the defeat of the Socialist local authority in the 1967 elections that the closure was brought about.
    There are plenty of Labour Party members who feel that an attack on direct labour is an attack on Socialism. They see direct labour as an extension of State ownership. They believe that it is a good thing in principle and do not see it as strictly a matter of efficiency or inefficiency—as apparently the hon. Members for Bermondsey and Walton see it.
    Mr. Heffer: I agree totally that if there is competition for new work with private enterprise, there must be a construction firm of a similar kind. However, in maintenance there is a major difference, because any sensible local authority will carry out a policy of planned maintenance: that is, an authority will decide, for example, that certain blocks of houses or flats will be painted over a period, not haphazardly but the whole work being done so that in the long run money will be saved in spite of the initial high capital cost.
    I am sorry to intervene at such length, but one cannot have a profit in every aspect of direct labour work, because even if such work were put out to private

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    enterprise, although there might be a profit on the planned maintenance initially, savings would not be made in the long run, because future costs would be high.
    Mr. Latham: I am surprised that the hon. Member has made such a point. I can understand and sympathise with the argument that direct labour departments should be able to compete to undertake major planned maintenance, such as the external painting of council houses in Liverpool, which would be a planned programme over many years. That is exactly the sort of work that can be put out to contract, and this should be tested because there are plenty of painting contractors who would be perfectly able to undertake such work in competition with the direct labour department on a job-by-job profit basis. If the work is done on a job-by-job basis, such firms can tender and make a profit. The same can be done if the work is carried out over a planned period.
    No doubt the hon. Member for Walton will correct me if I am wrong, but did not Liverpool City Council change politically and was not the planned painting of council houses put out to contract for the first time in many years? Did not the contractors do the job well below the price given by the direct labour department? If I am wrong, I shall withdraw that.
    Mr. Heffer: The future maintenance costs were higher because of it.
    Mr. Latham: No doubt the hon. Member for Walton can produce the figures on a later occasion. If we are both on the Committee that will consider the Bill, perhaps we can argue about it. My general point is that such work should be put out to contract on a regular basis, and that was said by the CIPFA report.
    The building industry has several basic needs. There must be a firm and coherent flow of work. That is extremely desirable but it is also extremely difficult to achieve. We are not now debating the problems of the construction industry, as we did last week, but, rightly or wrongly, when the axe is swung, it tends to hit the construction industry and when there are cuts, a firm flow of work is difficult to obtain.
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    The industry also needs honest and above-board tendering on a selective basis. Many reports in the past 10 or 15 years, including the Banwell and Emmerson Reports and the 1967 EDC for Building, have said that open tendering is a waste of money and that we must have selective tendering. There is nothing between us on that and successive Governments have put out similar circulars on this matter.
    I know that there is sometimes negotiated tendering in the construction industry and that some people would like it to take place more often. I do not share that view. Ratepayers, particularly in the present climate of concern about corruption and scandals, have a right to be assured that jobs have been tested in proper competition with a reasonable number of firms able to put in sensible quotes for the work. It is not proper competition if tenders are invited from one firm that is capable of doing the job and seven that are not.
    The trouble with negotiated tendering—and this is also an argument against the increased use of direct labour—is that the firm gets slack. It has the job and has the prospect of others to follow. The motivation falls, and that is bad for the ratepayers, the clients and the building industry. I am not satisfied with the concept, except on very similar jobs and in closely controlled conditions. The existence of negotiated tendering in the construction industry is not an argument for the increased use of direct labour.
    Finally, the building industry needs the flexibility to adapt to changing situations that may occur, whether on the contracting or speculative side. Labour Members said when building controls were introduced in 1965 that it was not possible to get houses built because resources were being used up in office building. Labour in the construction industry is not all that interchangeable, but there is a certain amount of interchangeability that can be achieved swiftly and efficiently by private enterprise. For example, when a council house contract runs out and the possibility of speculative housing arises, a builder will quickly switch men from one to the other.
    The same is true of the much-criticised hiring and firing that has been mentioned by the hon. Member for Walton, and the

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    fact that there are so many small firms, as the hon. Member for Houghton-le-Spring has said. Hiring and firing and the small firms are essential to an efficient building industry. Building industries all over the world are mainly comprised of small firms that can react best to local circumstances. The fact that they are small is no criticism. It is a reality of the industry all over the world, and it is the way that it works best.
    The Phelps-Brown Report of 1968 dealt with labour-only subcontracting and found that two-thirds of the hiring and firing at the end of jobs involved men who left voluntarily and were often subsequently taken on for another job by the same contractor or a nearby firm. That is how the industry works. Ratepayers should not be asked to keep on people for whom there is no work and to provide benefits such as pensions and sick pay—however desirable they may be—unless they can be justified by productivity.
    There has been much talk about the lump and labour-only subcontracting, but productivity under these systems is much higher. The reason that two-thirds of the workers in the building industry do not belong to trade unions is not that they are not allowed to join unions but that they have worked out better deals for themselves on a labour-only basis.
    Mr. Urwin: The hon. Gentleman is paying a glowing tribute to the lump and its higher productivity, but will he not also acknowledge that labour-only subcontracting has been directly responsible for the enormous wage drift in the construction industry? If the National Federation of Building Trades Employers had seen the warning signals 10 or 15 years ago, conditions on the bona fide side of the industry would be far better now.
    Mr. Latham: We could argue about that all night, but we can establish as a matter of fact that labour-only subcontracting has been so prevalent in the building industry for hundreds of years because the men concerned have preferred to make their own bargains and to have the flexibility and higher wages involved.
    Mr. Urwin: And the shoddier work.
    Mr. Latham: It is all very well to say that direct labour departments offer men pension schemes and sick pay, but the productivity is not necessarily commensurate with those benefits and we cannot necessarily afford to provide these benefits unless profitable work is also available.
    It is a shame that the Minister brought forward this unnecessary Bill in advance of the report of the working party. If the report had been published, we could have settled this matter once and for all.
    6.27 p.m.
    Mr. Nicholas Ridley: I declare my interest as a director of a building company. Before I came to the House I spent many years in the industry, finally running a company in the North-East.
    I had a happy early part of the afternoon listening to the Minister and the hon. Member for the Isle of Wight (Mr. Ross), because neither appeared to like the Bill very much, despite the fact that it is a product of the Lib-Lab pact. The Minister was quite strong in his condemnation saying that it was not the Bill that he wanted, and the hon. Member for the Isle of Wight said that he would not welsh on the deal with the Government, although he did not like the Bill very much, either. They were reluctant sponsors of the Bill.
    I enjoyed hearing the Minister eat humble pie, although he does not do it very gracefully. There are a strong crackling noise and a lot of crumbs flying around the Chamber when he does so, and he will have to do so increasingly. He has already had to eat humble pie over rent restrictions, and again over this Bill, and it is a pleasure to watch him.
    No one has yet spoken who does not believe that the CIPFA rules should be in the Bill. Hon. Members opposite say they are in favour of efficient direct labour, but they should have said efficiently monitored direct labour. The rules do not make direct labour efficient, but they make the analysis of its performance efficient. There is not an enemy of implementation of the rules. Indeed, they have friends on all sides, and I am surprised that they are not the subject that we are debating. The extension of direct labour later would have followed logically from having introduced the

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    rules first and seen that direct labour organisations were performing satisfactorily under them.
    Mr. Urwin: The hon. Gentleman speaks about efficiency in direct labour and qualifies it by saying that it should be monitored efficiently. He should know from his experience as a building employer that there is a great deal of inefficiency in the private sector, and I believe that the construction industry has the highest rate of bankruptcies in all British industry. Surely that is not a cause for expression of joy by the hon. Gentleman or his hon. Friends.
    Mr. Ridley: I shall be coming to the questions put by the hon. Gentleman in the course of my speech.
    It has been alleged that we on the Conservative Benches are in some way doctrinally opposed to direct labour, and it is alleged by the Minister and others that they are doctrinally in favour of it. I do not think it is a question of doctrine. I entirely take the point of my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) that there is every advantage in using direct labour for one's own maintenance operations. But we are moving out of the field of maintenance with this Bill and the question, surely, is whether direct labour organisations operate as efficiently as private sector building companies. I do not think the issue is employment. For every 100 jobs lost by the private sector, 100 go into the direct labour organisations, and vice versa. The question is where the employment takes place.
    We must first have sure ways of measuring who is efficient. Secondly, we must have clear and unequivocal ways of removing from the scene those who are not efficient. This is the answer to the question by the hon. Member for Hough-ton-le-Spring (Mr. Urwin).
    In the private sector we have efficiency because we know that private sector companies have to publish fully audited accounts. They have no way of subsidising themselves from the rates or the taxes. If they can make a profit, they are operating efficiently. We do not even know that about direct labour, because these rules have not been implemented.
    298
    The hon. Gentleman, therefore, with his great belief in direct labour, should have used his speech to demand the introduction of the CIPFA rules so that he could demonstrate the truth of what he has said—that direct labour is efficient. He did not do anything of the sort. Let us first get an impartial analysis of the state of efficiency by having these rules instituted. It is easy to cheat by sharing overheads and having all sorts of blurred lines between what goes in one account and what goes in another, but let us try to get it right for a start.
    Mr. Urwin Mr. Urwin rose—
    Mr. Ridley: I will not give way any more. I have only a short speech to make.
    My next point concerns what happens if any building organisation is not efficient. Government Members—I have heard all but one of their speeches—have said that DLOs should not continue to exist if they are inefficient. I entirely agree with them. What would happen to a direct labour organisation that after three years had demonstrated that it could never make a profit? It would have to be closed down. The hon. Member would be making the same complaints about the inefficiency of the public sector, dumping men and causing unemployment. There is no difference between the private and the public sector in this connection except for the fact that the public sector has concealed its inefficiency and has failed in nearly every instance to take the appropriate action when the appropriate action should be taken.
    Let us assume that, with these rules, public sector operations show themselves to be efficient, and that there are many DLOs in the country that continue to make profits and do well. The final question, which we have every right to consider as politicians, is whether the capital of the State should be employed, even efficiently, in this type of operation.
    Admittedly, there is much of doctrine in what answer is given to that question, but there is also much that is more important than doctrine. There is an economy of scale in building. There is a specialisation. I was a piling contractor, dealing with heavy foundations. The work there is almost of world-wide and certainly of country-wide specialisation.

    299
    Building is not all one trade. It is everything from civil engineering to a painting maintenance contract.
    The firms that prosper will not be tiny ones based in one town in Durham or another. They will be large, specialist, highly capitalised firms, down to the smallest self-employed builder, who is mobile and flexible. I do not really believe—and I do not believe the hon. Gentleman would believe—that that is really the sort of activity in which the State's capital is best employed, because the State's capital is in fact money taken from taxpayers by taxation and may well be better employed in building schools, hospitals, roads and every other sort of infrastructure of communal living.
    That is why I think that the Bill is not necessary and that it is the wrong Bill at the wrong time. That is why I shall join my hon. Friends in opposing it.
    6.36 p.m.
    Mr. Michael Morris: This may be a small Bill but it is still, nevertheless, another piece of fairly insidious legislation that the present minority Government are trying to get on the statute book. I say "insidious" because the original orders for the named 25 councils were temporary in order to allow those councils time to adjust to reorganisation. The Bill would make the orders permanent. Worse still—as my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) spent some time explaining—it would extend their powers in terms of geographical dimensions.
    Everyone in the House fully understands the reason behind the Bill, namely, that it is the start of the Labour Party's nationalisation of the building and construction industry—[Interruption.] Labour Members may laugh, but it is in Labour's programme for 1976 and it is in Labour Party propaganda. The Labour Party made quite clear what it wanted when it talked about developing and exploiting direct labour across a much wider front. We have listened to Back Bench Labour Members this afternoon who look forward to the day when they see a great extension of direct labour. They want to see the drive towards it becoming very fast indeed.
    If we look at the statistics on the output of the construction and building
    300
    industry we find that the Government have been quite successful already in their direct labour objectives. In 1973 just under 10 per cent. of the work was accounted for by direct labour. In 1976 the figure was about 13·4 per cent.
    It is little wonder, therefore, that the builders and sub-contractors oppose the Bill so vehemently, as do Conservative Members. The builders and sub-contractors have watched, as we have, the Government's hesitation and procrastination over the CIPFA report on accounting principles, published in June 1975. This independent report—it is agreed on all sides that it was an independent and a good report—was wholeheartedly endorsed by my hon. Friend the Member for Ashford (Mr. Speed) very soon after it came out, but the Government were pretty cool about it at Question Time all through the summer of 1975, and we have only this afternoon had a firm indication that the Government would like to see these accounting methods and principles applied.
    Even so, we have not had a statement from the Government Front Bench that these accounting principles are so important in regard to direct labour that the Government will bring them forward at an early date. Indeed, we are bound to ask—as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) did—why on earth they are not a part of the Bill. I speak for my hon. Friend, I think, when I say that we hope that when we put down an amendment to the Bill in Committee for them to be included, the Government will welcome it and we shall be able to move forward jointly in getting these methods included as part of the schedule to the Bill.
    As Labour Members know, many of us are opposed to large-scale direct labour, and I have been searching for some positive evidence in its favour. I was particularly delighted to see recently the Institute of Building Management's report on "Value for money in public building". I took the opportunity of reading that report in great depth. In its conclusions, in paragraph 6.1, it says:
    "Perhaps the most outstanding performance by a municipal direct labour department is that achieved by the City of Manchester Direct Works Department over a period of 15 years to April 1976."
    I thought "Hurray, at last we have found a successful large-scale direct labour

    301
    organisation". But I was equally amazed when I looked at the district auditor's report for the year ended 31st March 1975 for, lo and behold, it was bitterly critical of the performance of that direct labour organisation, stating:
    "The abuses of the bonus system are firmly established and have existed for a number of years."
    The report went on to criticise at considerable length the quality control, performance, lack of financial control and heavy losses.
    I think that one is bound to draw a certain conclusion. If, in a published report, that is quoted as being the best, what on earth are the rest like?
    We know how some of the 25 have performed on the ground. It is a pity that the hon. Member for Liverpool, Walton (Mr. Heffer) is not in the Chamber. Liverpool is concentrating on rehabilitation and improvement work after closing its new work section for overspending. In March 1976 we learned that on a rewiring contract in 1974, split 50-50 between direct labour and private contractors, the private job was done on time and the direct labour job was only 50 per cent. done.
    Mention was made of tap washers. The most frightening small example which I have found in my research is that in Liverpool the replacement of a tap washer by a private contractor cost £2·20, which seemed to be excessive, but by direct labour it cost £12·00.
    I turn now to Sheffield, which tries to avoid competition. In December 1975 the Sheffield authority voted that any work could be allocated to the direct labour department without competition unless the Department of the Environment insisted on competitive tendering.
    Then there is dear old Sunderland, which the hon. Member for Houghton-le-Spring (Mr. Urwin) complimented in his speech. Sunderland also does not believe in competition. It has raised its non-tendering figure to £100,000. Its leisure centre, built by the direct labour department, is 21 months late, which is quite a time. If it is so wonderful, why was Sunderland's direct labour department hauled over the coals in the district auditor's report? I do not think that it
    302
    is one of the jewels in the crown of direct labour.
    Mr. Urwin: Clearly, the hon. Gentleman's researches into the activities of Sunderland's direct labour organisation have not carried him far enough to examine the enormous saving that it effected against the tender prices of outside contractors for house building over the past three or four years.
    Mr. Morris: I was frightened off by the answer that I got from the Minister, when I asked how many district auditors' reports had been critical of direct labour organisations in the last 12 months and found that Sunderland was amongst them. I checked and found that the district auditors were highly critical of Sunderland. I believe that district auditors are well respected in local government. If they are critical of direct labour in Sunderland, there would appear to be something wrong with direct labour in Sunderland.
    So it goes on through all these 25 authorities. Newcastle has lost £700,000 since the beginning of 1975. Then there are Wigan, South Tyneside, and others. It is little wonder that we are now seeing increasing numbers of district auditors' reports complaining about various aspects of direct labour organisations and how they are operating on the ground.
    It is not just that the vast majority of large direct labour departments are a failure or less efficient than they should be and cost the ratepayer a great deal of money, which they do, and that, as my hon. Friend the Member for Basingstoke (Mr. Mitchell) made clear, they deprive good experienced builders and contractors, large and small, of genuine work. The problem goes deeper. As was pointed out by my hon. Friend the Member for Folkestone and Hythe, it affects industries other than the building industry.
    For example, it affects lift manufacturers. There is a lift manufacturer in my constituency. Lift maintenance, as anyone who knows anything about the industry knows, is its bread and butter, but slowly and surely this base is being eroded by fictitious costings and dubious skills, all of which undermines the home market, which is the basis of export expansion. There is a serious danger there. I suggest that the Department of

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    Environment's export group should look at that aspect in addition to direct labour.
    The Bill also forgets that local authorities exist to serve their own electors, for it purports to make them into authorities with general trading powers outside their own boundaries. Why do the Government believe that these 25 authorities should be selected to continue permanently in business? Why are they using the old county borough boundaries, not more up-to-date boundaries? Why do they not tell the housing and construction industry the truth—that this is part of their programme for nationalisation and that they have managed to hoodwink hon. Member on the Liberal Bench to buy this Bill?
    I find the Liberal Party's stance on this Bill most surprising. The original Bill was withdrawn on 24th February because it did not have support from both sides of the House. A month later we had the Lib-Lab deal. We understand that the Liberal Party supports this Bill tonight, although the hon. Member for the Isle of Wight (Mr. Ross), in a brief speech, criticised it. I think that Liberal Members should sort themselves out a bit.
    In any case, where is the evidence that these increased powers are needed by these local authorities or, indeed, are wanted by the majority of them? My hon. Friend the Member for Basingstoke asked Why the Government flew in the face of the Layfield Report which, on page 7, paragraph 23, made it clear:
    "The operations of direct labour organisations were singled out as particularly bad examples of a failure to control costs".
    Finally, why will the Government not understand that the building and construction industry is facing a very severe slump at this time and that all that the Bill does is to ensure that there will be more unemployment and bankruptcies in the private sector? I believe that this Bill is an abuse of legislation. It is not well thought out. It is out of date. It is a holding operation.
    I believe that the Minister should take the Bill away and come back with the Bill in which he believed, or bring back this Bill with the full CIPFA recommendations. As it is, I believe that the House should reject the Bill, and I hope that all the Opposition parties will reject it.
    6.48 p.m.
    The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): In many ways this has been a disappointing debate. This afternoon we have once again heard the whole range of doctrinaire arguments that we have grown accustomed to hearing over the past year from those who are completely opposed to any form of public enterprise in the construction industry. Having listened to Opposition Members, I wonder whether they have bothered to read the Bill at all.
    Perhaps I can bring the House back to earth by recalling what my right hon. Friend said at the very beginning of the debate about the purpose of the Bill. By any standards, it is a modest measure. It is virtually a one-clause Bill which has the intention simply of restoring to a relatively small number of local authorities the power to undertake new construction work for other authorities through their direct labour organisations. Problems had arisen because a number of functions newly became the responsibility of county authorities as a result of the Local Government Act 1972. Interim orders were made under a provision in the 1972 Act to give 25 authorities the necessary works powers to deal with these problems, and the necessity for the Bill arises from the expiry of those temporary orders on 31st March this year.
    Much has been said by Opposition Members about making these powers permanent. We have been repeatedly asked why we did not merely extend the orders. I am advised by the legal authorities that temporary means temporary. Transitional orders are transitional. If we had merely tried to bring in the orders again, they could well have been succesfully challenged in the courts. That is the reason for the Bill.
    These are the facts about this small Bill. When originally preparing our legislation on the subject last year, we were anxious to have a constructive debate about direct labour organisations and the rôle of direct labour in the construction industry as a whole. But, of course, we got nothing of the kind, nor have we had it this afternoon. The debate has always been much more closely related to political philisophy than to economic fact.
    Despite all the extravagant language used by Opposition Members, the Bill

    305
    deals with a sector of the construction industry that is responsible for approximately 8 per cent. of national construction output, mainly in the area of maintenance and repairs. It is therefore regrettable that the employers' organisations that are responsible for by far the major part of construction in this country should have spent so much time, energy and money in a campaign designed to pillory all direct labour departments.
    The hon. Member for Ashford (Mr. Speed) spoke about horror stories. The Tory Party has aided and abetted this campaign by the builders' organisations. When there is such a constant tirade against municipal enterprise it is only natural that those who are attacked should spend a little time highlighting the failures in the private sector. There are plenty of examples. I could talk until midnight giving examples of the failures in the private sector. When the construction industry is facing the most serious recession since the war, constant emphasis on failures in both sectors gives a distorted picture of what is happening throughout the country and causes irreparable harm to the standing of this vital industry.
    Of course, we need to recognise failures wherever they occur, but we have to bear in mind also that there are plenty of examples of competent management and hard-working, skilled craftsmen with pride in their job, working on improving and changing the environment in a way which brings credit to all concerned. Precious little has been said about that by Opposition Members.
    Much of the propaganda in national advertisements and pamphlets produced on behalf of the private sector has been much more concerned with political ideology than with any kind of constructive debate. The campaign has been responsible for giving currency to many of the distortions, exaggerations and misconceptions that we have heard this afternoon from the Opposition. I do not claim, nor have I or my right hon. and hon. Friends ever suggested, that direct labour organisations in this country are perfect or that there is no room for improvement in their operations. We recognise that there have been examples of inefficiency among them. Nevertheless, there are many direct labour organisations throughout the country which pro-
    306
    vide an effective and efficient service for authorities and their ratepayers.
    Those who have been so ready today to criticise direct labour organisations have been rather quiet about the failings of private contractors. We were told by the hon. Member for Folkestone and Hythe (Mr. Costain) that private contractors are put to the test by having to sink or swim according to their own performance, but he knows that this is not the whole of the story. There have been numerous occasions when private contractors have failed to deliver the goods at the right time and at the right price and have put public sector bodies to considerable difficulty and expense as a result. We should not forget the cost to ratepayers when a contractor goes bankrupt in the middle of a job or when ex gratia payments have to be made to enable completion.
    Nor is it any use for those who have over the past months opposed the Government's proposals for a far more wide-reaching Bill than the present one to complain now about the absence of provisions on direct labour organisations' accounting and charging. The Government consider that there should be a sound financial and legal framework for the operation of all local authority direct labour organisations.
    The hon. Member for Northampton, South (Mr. Morris) said that for the first time this evening my right hon. Friend had stated that we agreed with CIPFA. I remind the hon. Gentleman and his hon. Friend the Member for Ashford that I gave full details in a speech at Scarborough. I quote from the periodical Building of 29th October 1976:
    "Ernest Armstrong. Parliamentary Under-Secretary at the DOE went further than any other Minister has done in accepting the main recommendations of CIPFA which would bring DLO accounting procedures more in line with private contractors."
    That was our statement about the intentions of the Bill, a Bill which was rejected by the Opposition before they even knew its contents.
    Mr. Speed: I thank the hon. Gentleman for giving way. He is always courteous in these matters.
    I agree that the hon. Gentleman said that. If that is so, if the preparations were all made and the provisions were

    307
    to go into the Bill—and presumably they are sitting in Marsham Street now—and if there is all-party agreement in the House about the desirability of the CIPFA provisions, which is what we are talking about, why cannot the Government bring them forward this Session? On behalf of my hon. Friends, I can guarantee them a swift passage.
    Mr. Armstrong: I shall come to that. A doctrinal position was taken up by the Opposition. The hon. Gentleman should consult his friends in the Shadow Cabinet about that. It was for them to decide. I am coming to the kind of provisions of which the hon. Gentleman is talking.
    We hope to provide the sound financial and legal framework, but it must be done as part of a comprehensive measure. It would be illogical for us to attempt to introduce a comprehensive, new financial system applying to all local authorities in the context of a Bill to remove an anomaly which affects only 25 of them. That is what this Bill is about. If the hon. Gentleman would only bother to read it, he would know that it is concerned with new building and 25 authorities. In a Bill which sought to make a fundamental change of this kind we should also want to include provisions to free DLOs from the present excessive restrictions, which create employment problems and impede efficiency [HON. MEMBERS: "Oh."] We heard a great deal about unfair competition this afternoon. In fact, the restrictions placed on DLOs, the restriction on the work that they can do, are unfair to them.
    We have also heard it claimed, both today and on other occasions, that our original proposals for legislation on direct labour would have undermined the private sector. In fact, the proportion of total
    construction output undertaken by direct labour organisations is very small, as hon. Members well know, and there would have been no more than a gradual expansion of efficient undertakings.
    Of course, if direct labour organisations are as inefficient as some hon. Members claim, and if the horror stories that the hon. Gentleman has in his book are all true, the private sector would have little to fear, because client bodies would not want to engage them.
    Mr. Ridley Mr. Ridley rose—
    Mr. Armstrong: I shall not give way, because I am pressed for time.
    In answering the debate, I have had to go much wider than the scope of the Bill. This measure, like the transitional orders, has been necessary only because those on the Opposition Benches failed to deal adequately with the position of direct labour organisations in the Local Government Act 1972. They failed to deal adequately with many other matters in that Act as well.
    We are simply asking the House to restore powers which have applied to a very limited number of authorities for several years. The powers expired at the end of March. We are concerned to keep the gap in the powers as short as possible in order to avoid unnecessary problems for those authorities. I trust, therefore, that the Bill will be given a speedy passage through the House and that it will not be delayed by doctrinaire arguments such as we have heard this afternoon.
    Question put, That the Bill be now read a Second time:—
    The House divided: Ayes 186, Noes 161.

    Division No. 141]

    AYES

    [7.00 p.m.

    Abse, Leo

    Boyden, James (Bish Auck)

    Crowther, Stan (Rotherham)

    Anderson, Donald

    Bradley, Tom

    Cryer, Bob

    Archer, Peter

    Butler, Mrs Joyce (Wood Green)

    Cunningham, Dr J. (Whiteh)

    Armstrong, Ernest

    Callaghan, Rt Hon J. (Cardiff SE)

    Davidson, Arthur

    Ashton, Joe

    Callaghan, Jim (Middleton & P)

    Davies, Denzil (Llanelli)

    Atkins, Ronald (Preston N)

    Campbell, Ian

    Davies, Ifor (Gower)

    Atkinson, Norman

    Canavan, Dennis

    Davis, Clinton (Hackney C)

    Bagier, Gordon A. T.

    Cant, R. B.

    Dean, Joseph (Leeds West)

    Barnett, Guy (Greenwich)

    Carter-Jones, Lewis

    Dempsey, James

    Barnett, Rt Hon Joel (Heywood)

    Clemitson, Ivor

    Doig, Peter

    Bates, Alf

    Cocks, Rt Hon Michael (Bristol S)

    Dormand, J. D.

    Beith, A. J.

    Colquhoun, Ms Maureen

    Douglas-Mann, Bruce

    Benn, Rt Hon Anthony Wedgwood

    Conlan, Bernard

    Dunnett, Jack

    Bennett, Andrew (Stockport N)

    Corbett, Robin

    Eadie, Alex

    Blenkinsop, Arthur

    Cowans, Harry

    Edge, Geoff

    Boardman, H.

    Cox, Thomas (Tooting)

    Ellis, John (Brigg & Scun)

    Boothroyd, Miss Belly

    Craigen, Jim (Maryhill)

    Evans, Ioan (Aberdare)

    Bottomley, Rt Hon Arthur

    Crawshaw, Richard

    Faulds, Andrew

    Fernyhough, Rt Hon E.

    Lewis, Ron (Carlisle)

    Silverman, Julius

    Fitch, Alan (Wigan)

    Lipton, Marcus

    Skinner, Dennis

    Flannery, Martin

    Loyden, Eddie

    Smith, John (N Lanarkshire)

    Fletcher, Ted (Darlington)

    Lyon, Alexander (York)

    Snape, Peter

    Foot, Rt Hon Michael

    Lyons, Edward (Bradford W)

    Spriggs, Leslie

    Ford, Ben

    Mabon, Rt Hon Dr J. Dickson

    Stallard, A. W.

    Forrester, John

    McCartney, Hugh

    Steel, Rt Hon David

    Fowler, Gerald (The Wrekin)

    McDonald, Dr Oonagh

    Stewart, Rt Hon M. (Fulham)

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

    McElhone, Frank

    Stoddart, David

    Freeson, Reginald

    MacFarquhar, Roderick

    Stott, Roger

    Garrett, W. E. (Wallsend)

    Madden, Max

    Strauss, Rt Hon G. R.

    Gilbert, Dr John

    Marks, Kenneth

    Summerskill, Hon Dr Shirley

    Ginsburg, David

    Marshall, Dr Edmund (Goole)

    Taylor, Mrs Ann (Bolton W)

    Gourlay, Harry

    Marshall, Jim (Leicester S)

    Thomas, Dafydd (Merioneth)

    Graham, Ted

    Maynard, Miss Joan

    Thomas, Jeffrey (Abertillery)

    Grant, George (Morpeth)

    Mikardo, Ian

    Thomas, Mike (Newcastle E)

    Grocott, Bruce

    Miller, Dr M. S. (E Kilbride)

    Thomas, Ron (Bristol NW)

    Hamilton, James (Bothwell)

    Mitchell, Austin Vernon (Grimsby)

    Thorne, Stan (Preston South)

    Harrison, Walter (Wakefield)

    Molloy, William

    Tierney, Sydney

    Hatton, Frank

    Moonman, Eric

    Tinn, James

    Heffer, Eric S.

    Morrison, Charles (Devizes)

    Torney, Tom

    Hooley, Frank

    Murray, Rt Hon Ronald King

    Tuck, Raphael

    Horam, John

    Newens, Stanley

    Urwin, T. W.

    Howells, Geraint (Cardigan)

    Noble, Mike

    Walker, Harold (Doncaster)

    Hoyle, Doug (Nelson)

    Oakes, Gordon

    Walker, Terry (Kingswood)

    Huckfield, Les

    Orme, Rt Hon Stanley

    Ward, Michael

    Hughes, Mark (Durham)

    Palmer, Arthur

    Weetch, Ken

    Hughes, Robert (Aberdeen N)

    Pardoe, John

    Wellbeloved, James

    Hughes, Roy (Newport)

    Park, George

    White, Frank R. (Bury)

    Hunter, Adam

    Parry, Robert

    White, James (Pollok)

    Jackson, Colin (Brighouse)

    Pavitt, Laurie

    Whitehead, Phillip

    Janner, Greville

    Richardson, Miss Jo

    Whitlock, William

    Jay, Rt Hon Douglas

    Roberts, Albert (Normanton)

    Williams, Alan Lee (Hornch'ch)

    Jenkins, Hugh (Putney)

    Robinson, Geoffrey

    Williams, Rt Hon Shirley (Hertford)

    John, Brynmor

    Roderick, Caerwyn

    Williams, Sir Thomas (Warrington)

    Johnson, James (Hull West)

    Rodgers, George (Chorley)

    Wilson, Alexander (Hamilton)

    Jones, Alec (Rhondda)

    Rodgers, Rt Hon William (Stockton)

    Wilson, William (Coventry SE)

    Jones, Barry (East Flint)

    Rooker, J. W.

    Wise, Mrs Audrey

    Jones, Dan (Burnley)

    Rose, Paul B.

    Woodall, Alec

    Kaufman, Gerald

    Ross, Stephen (Isle of Wight)

    Woof, Robert

    Kelley, Richard

    Ryman, John

    Young, David (Bolton E)

    Kilroy-Silk, Robert

    Sedgemore, Brian

    Lambie, David

    Shaw, Arnold (Ilford South)

    TELLERS FOR THE AYES:

    Latham, Arthur (Paddington)

    Shore, Rt Hon Peter

    Mr. Joseph Harper and

    Leadbitter, Ted

    Silkin, Rt Hon S. C. (Dulwich)

    Mr. Donald Coleman.

    Lestor, Miss Joan (Eton & Slough)

    NOES

    Adley, Robert

    Fairbairn, Nicholas

    Langford-Holt, Sir John

    Atkins, Rt Hon H. (Spelthorne)

    Fairgrieve, Russell

    Latham, Michael (Melton)

    Baker, Kenneth

    Farr, John

    Lawrence, Ivan

    Banks, Robert

    Finsberg, Geoffrey

    Lawson, Nigel

    Bennett, Sir Frederic (Torbay)

    Fisher, Sir Nigel

    Le Marchant, Spencer

    Benyon, W.

    Fookes, Miss Janet

    Lester, Jim (Beeston)

    Biffen, John

    Forman, Nigel

    Lewis, Kenneth (Rutland)

    Biggs-Davison, John

    Fry, Peter

    Loveridge, John

    Blaker, Peter

    Gardner, Edward (S Fylde)

    Luce, Richard

    Boscawen, Hon Robert

    Gilmour, Rt Hon Sir Ian (Chesham)

    Macfarlane, Neil

    Bottomley, Peter

    Goodhart, Philip

    MacKay, Andrew James

    Bowden, A. (Brighton, Kemptown)

    Gorst, John

    Macmillan, Rt Hon M. (Farnham)

    Braine, Sir Bernard

    Gray, Hamish

    Marten, Neil

    Brittan, Leon

    Grist, Ian

    Mates, Michael

    Brocklebank-Fowler, C.

    Grylls, Michael

    Mather, Carol

    Brooke, Peter

    Hamilton, Michael (Salisbury)

    Maude, Angus

    Brown, Sir Edward (Bath)

    Hampson, Dr Keith

    Maudling, Rt Hon Reginald

    Bryan, Sir Paul

    Hannam, John

    Mawby, Ray

    Bulmer, Esmond

    Harrison, Col Sir Harwood (Eye)

    Maxwell-Hyslop, Robin

    Butler, Adam (Bosworth)

    Hawkins, Paul

    Meyer, Sir Anthony

    Carlisle, Mark

    Hayhoe, Barney

    Miller, Hal (Bromsgrove)

    Channon, Paul

    Heseltine, Michael

    Miscampbell, Norman

    Clark, Alan (Plymouth, Sutton)

    Hodgson, Robin

    Mitchell, David (Basingstoke)

    Clark, William (Croydon S)

    Holland, Philip

    Moate, Roger

    Clarke, Kenneth (Rushcliffe)

    Hordern, Peter

    Molyneaux, James

    Clegg, Walter

    Hunt, David (Wirral)

    Monro, Hector

    Cooke, Robert (Bristol W)

    Hunt, John (Bromley)

    Montgomery, Fergus

    Costain, A. P.

    Hutchison, Michael Clark

    Moore, John (Croydon C)

    Dodsworth, Geoffrey

    Irving, Charles (Cheltenham)

    More, Jasper (Ludlow)

    Drayson, Burnaby

    Jones, Arthur (Daventry)

    Morgan, Geraint

    Durant, Tony

    Joseph, Rt Hon Sir Keith

    Morris, Michael (Northampton S)

    Eden, Rt Hon Sir John

    Kershaw, Anthony

    Morrison, Charles (Devizes)

    Elliott, Sir William

    King, Evelyn (South Dorset)

    Morrison, Hon Peter (Chester)

    Evans, Gwynfor (Carmarthen)

    Kitson, Sir Timothy

    Mudd, David

    Eyre, Reginald

    Knox, David

    Nelson, Anthony

    Newton, Tony

    Roberts, Wyn (Conway)

    Tebbit, Norman

    Oppenheim, Mrs Sally

    Rossi, Hugh (Hornsey)

    Temple-Morris, Peter

    Page, Rt Hon R. Graham (Crosby)

    Rost, Peter (SE Derbyshire)

    Thatcher, Rt Hon Margaret

    Page, Richard (Workington)

    Sainsbury, Tim

    Thomas, Rt Hon P. (Hendon S)

    Parkinson, Cecil

    Shaw, Giles (Pudsey)

    Trotter, Neville

    Pattie, Geoffrey

    Shepherd, Colin

    van Straubenzee, W. R.

    Percival, Ian

    Silvester, Fred

    Vaughan, Dr Gerard

    Powell, Rt Hon J. Enoch

    Sims, Roger

    Viggers, Peter

    Price, David (Eastleigh)

    Skeet, T. H. H.

    Walder, David (Clitheroe)

    Prior, Rt Hon James

    Smith, Dudley (Warwick)

    Walker, Rt Hon P. (Worcester)

    Pym, Rt Hon Francis

    Speed, Keith

    Wall, Patrick

    Raison, Timothy

    Spence, John

    Weatherill, Bernard

    Rathbone, Tim

    Spicer, Michael (S Worcester)

    Whitelaw, Rt Hon William

    Rawlinson, Rt Hon Sir peter

    Sproat, Iain

    Wigley, Dafydd

    Rees, Peter (Dover & Deal)

    Stainton, Keith

    Winterton, Nicholas

    Rees-Davies, W. R.

    Stanbrook, Ivor

    Wood, Rt Hon Richard

    Rhodes James, R.

    Steen, Anthony (Wavertree)

    Ridsdale, Julian

    Stewart, Ian (Hitchin)

    TELLERS FOR THE NOES:

    Rippon, Rt Hon Geoffrey

    Stradling Thomas, J.

    Sir George Young and

    Roberts, Michael (Cardiff NW)

    Taylor, R. (Croydon NW)

    Lord James Douglas-Hamilton.

    Question accordingly agreed to.
    Bill read a Second time.
    Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  CONTROL OF OFFICE DEVELOPMENT BILL
  Order for Second Reading read.
  7.14 p.m.
  The Secretary of State for the Environment (Mr. Peter Shore): I beg to move, That the Bill be now read a Second time.
  On 25th February last, in reply to a Question from the hon. Member for Hornsey (Mr. Rossi), I informed the House that I intended to introduce legislation to continue the office development control powers beyond 4th August next, when they would otherwise expire, and I promised to make a statement later. I am therefore taking the opportunity provided by the debate on the motion for the Second Reading of this Bill to explain to the House the Government's reasons for wishing the office development control powers to continue and to describe how I shall operate the control in the future.
  The main purpose of the Bill is contained in Clause 1, which provides for the continuation of the office development control power—which I exercise at present under Sections 73–86 of the Town and Country Planning Act 1971—for a further period of five years from 5th August 1977. In presenting this Bill the Government are fully aware that there are within the House—and on both sides of the House—hon. Members who would wish to see office development control abolished without further ado. But we also know that there are many other hon. Members most anxious that the control should be not only maintained but rigorously enforced.
  As the House will recall, the history of office development control goes back to 1965 when its introduction was among the first actions of the Government led by my right hon. Friend the Member for Huyton (Sir H. Wilson). It was maintained throughout the period of Labour Government and when its powers expired in 1972 they were renewed by the then Conservative Government. Office development control has enjoyed the support of Government of both major parties.
  Nevertheless, the objectives stressed have changed considerably over the
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  period, reflecting not only the different priorities of the major parties, but changing circumstances. In 1965 the general aim was to promote the better distribution of employment in Great Britain and in particular to ease the severe congestion that then existed in central London. In 1972, when the Conservative Government decided to renew the control for a further five years, the objective of steering office employment to the less favoured regions was discarded. The right hon. Member for Crosby (Mr. Page), who was then Minister for Local Government and Development, told the House:
  "We have concluded that an intelligent use can be made of the control for a limited period to further the objectives of the Strategic Plan for the South-East".—[Official Report, 26th January 1972; Vol. 829, c. 1485.]
  The emphasis then, as he made clear, was to concentrate growth within the South-East Region in a number of defined growth areas.
  The effect was of course to reduce pressure in London and to divert employment to already prospering and growing centres all around the periphery. With the return of the Labour Government to power in 1974 the emphasis on steering firms to the assisted areas was again asserted. Throughout the whole period from 1965 there has been a gradual relaxation of the original 3,000 sq. ft. exemption limit—and in its geographical area of application—to the present exemption limit of 15,000 sq. ft. in the South-East economic planning region.
  Now that the time has come for further renewal of these powers I have had to consider changed circumstances and the contemporary policy objectives that office control should serve. In coming to my conclusions four main considerations have influenced me. First, congestion is no longer a major problem in central London. In 1964 the figure for passenger traffic commuting into the central area during the rush hour was over 1,200,000. By 1976, 12 years later, this figure had declined to just over 1 million. Also, while in 1966 there were about 1·3 million people working in the central area of London there were nearly 10 per cent. fewer in 1975.
  Secondly, while congestion in central London is no longer a major issue, the better distribution of employment in Great

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  Britain remains an objective of continuing high importance. I am sure that all hon. Members who represent constituencies in the assisted areas will agree with me when I say that there are still not enough places of office employment outside the South-East of England. Although some cities have a good deal of empty office space at present, we can only improve on the position and balance of employment of many parts of the country by steering office development into them. That means diverting some firms who too readily suppose that the South-East is the only place to have an office.
  Since June 1973 the Department of Industry has been paying attractive grants to firms which wish to move their offices and other service industry activities to the assisted areas. Up to the end of last February a total of 244 offers worth £8·4 million had been made under this scheme, which were expected to lead to the creation of 7,600 jobs in these areas. Only last October these incentives were increased, and since then the rate of applications has doubled. This scheme should encourage firms which cannot secure ODPs to move to the assisted areas and give local authorities in those areas a powerful means of attracting them. We rely upon the local authorities to encourage such firms to become established in locations where they can provide the best employment opportunities.
  The third consideration is that the Government are determined to do all that they can to help the country's declining inner city areas—including those of London. In this we have widespread support. The relocation of offices can help here, although, naturally, the extent of help will vary from city to city. The fact that the office sector continues to expand makes it an obvious contributor to the regeneration of urban areas which have experienced an overall decline in employment opportunities.
  The sort of benefits we can expect from the relocation of offices to those needy areas are: in the short term, new jobs for people living in the area—as well as office jobs these will include a proportion of jobs for unskilled manual and service workers; and in the longer term, a widening of the economic and social make-up of these areas by providing a greater range of employment opportunities. As secondary effects we can
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  expect increased employment in services ancillary to office activities and environmental gains through the physical improvement of derelict or run-down areas. The fourth consideration is that I want to avoid unnecessary bureaucracy and to confine control to the larger and more mobile office developments.
  It is with these considerations in mind that I propose to make the following policy changes. I have decided to confine the operation of this control to those office developments which are of major importance—to exempt developments in which no more than 200 to 300 people are employed. The smaller developments tend in any event to be more firmly rooted in their local economy. Accordingly, I shall shortly lay before Parliament an order increasing the exemption limit for ODPs from 15,000 to 30,000 square feet. This will lift control from some 55 per cent. of the number of applications we are currently receiving.
  Not only will this confine the control to the size of development which is of most importance and most likely to be mobile but it will help the construction industry by allowing a number of small to medium projects to go ahead. I am sure this will be welcomed by the construction industry of whose problems we are—and, indeed, should be—acutely aware.
  It will also help the property market. When the economy picks up again, it will be reasonable to expect an upturn in demand for new and better offices. The situation will require continuous monitoring if we are to get the policy right. In view of the time involved between seeking an office development permit and completion of the building, we must try to avoid the danger of the supply of new offices lagging behind demand, with the consequent inflationary effect upon rents.
  In addition, therefore, I intend to give permits for a limited number of speculative office buildings in inner London. In selecting schemes for approval I shall be looking for those which make a strong contribution to the regeneration of the inner urban areas which require improved job opportunities and physical renewal. I have today granted an ODP for the development of 180,000 square feet of office space which forms part of the redevelopment of the approach to

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  Clapham Junction Station in Wandsworth. This project will bring about a substantial improvement to an important inner city area and will provide—apart from the offices—new shops, a car park, a sports centre and a public square.
  Mr. Arthur Jones: Will the right hon. Gentleman be extending this special consideration to the London dockland area? Is he coming to that point?
  Mr. Shore: At present I should not like to nominate particular areas of London. However, from what I have been saying it will be clear that the speculative office developments at which we shall be looking with particular sympathy will be those that would help the renegeration of inner areas of London where redevelopment is required, and certainly that would not exclude dockland.
  Mr. Douglas Jay: I should like to thank my right hon. Friend very cordially for this extremely sensible decision about the Clapham Junction site, although I know that he realises that it is not the only derelict site needing redevelopment in the Battersea area, where Government help will be necessary for development to go ahead.
  Mr. Shore: I note what my right hon. Friend says. He is, of course, very conscious of the needs of the borough of Wandsworth. But I believe that this particular office project is thoroughly justified and will have a very good positive effect on this important part of that borough.
  Apart from measured relaxations to assist inner London, the control will continue as at present—namely, ODPs will be available only to provide offices for firms that can demonstrate that they have a tie with the area.
  In applying the control in the outer South-East Region we must make sure that the needs of other areas—the assisted areas and the inner cities, as I have already explained—are taken properly into account and that the development of employment opportunities does not outrun the general development of the economy. The House will recall that in my recent statement on new towns I indicated reduced population targets for third generation new towns and will be aware that the thrust to provide for over-
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  spill in expanded towns is now somewhat abated. The provision of office space and particularly of the major developments which would come above the new 30,000 square feet threshold must be regulated accordingly in the outer parts of the South-East Region.
  I turn now to the question of the place of the Location of Office Bureau in this new policy. When I made a statement just before Easter about inner city policy, I said that I had in mind a change in the direction of the bureau's activities.
  As the House knows, its advisory service has provided London's management with information on all aspects of office location and office moves; and it has also provided valuable guidance to local authorities up and down the country which wish to encourage or need office employment. But up to now the emphasis of the bureau's work has been on decentralisation from London—to quote its terms of reference
  "the decentralisation and diversion of office employment from congested areas in central London to suitable centres elsewhere."
  This remit clearly needs revision. In particular I propose to give the bureau two new tasks: attracting international concerns so that they locate office employment in Great Britain, including London; and giving particular attention to the promotion of office employment in inner urban areas, including London. This involves broadening the bureau's terms of reference to "promoting the better distribution of office employment" throughout the country. I shall shortly lay before the House a draft Order in Council to give effect to this change.
  The bureau will, of course, continue to have the general duty of assisting in the mobility and efficiency of office employment. In carrying out its wider remit it will simply be extending and giving a new emphasis to the activities and methods, which, under its founder chairman, Mr. Sturgess, and its present chairman, Mr. Prendergast, it has developed and perfected with such marked effect. In particular, I hope that it will be able to attract international concerns to establish themselves in Great Britain—whether that be in London or in other major cities.
  Although it is the bureau's publicity which attracts most attention—that, too, will have to reflect the new approach—the mainspring of the bureau's success

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  has been the collection and collation of the information that office employers need in order to consider and plan a move, for I have no doubt that the results that the LOB has achieved depend on the reputation it has earned for giving employers easy access to accurate, comprehensive, impartial and up-to-date information, and to the research studies it has done on the mobility of office employment.
  The bureau's experience and research are equally valuable to local authorities interested in attracting office employment and interested to learn how they can make themselves attractive to it. The bureau will, of course, continue to give special attention to the needs of towns in the assisted areas for office employment, and to helping the inner urban areas up and down the country to attract the office employment which they need.
  So much for Clause 1 and the new policies we intend to pursue if, as I hope. Parliament enacts the measure.
  The remaining clauses of the Bill need not detain us long. They provide for some minor, technical amendments to the existing legislation.
  Clause 2 simply makes it possible to provide that the floor space exemption limit for office development permits be expressed in terms of square feet or in terms of square metres.
  Clause 3 remedies a defect in the existing statutory provisions. It provides that an order made by the Secretary of State to exclude any area from the control shall be subject to the proper parliamentary procedure. I trust that the House will welcome this proposal for greater parliamentary control over my actions and those of my successors.
  Clause 4 also remedies a defect in the existing statutory provisions. It relates only to local authority development. At present, I am told that there are exceptional circumstances in which local authorities in the controlled area can develop offices without getting a permit. The purpose of the clause is to close that loophole and put them on the same footing as other developers.
  Having thus explained its purpose, I commend this short Bill to the House in what I hope has been a properly short speech. I hope very much that it will be given a Second Reading.
  7.32 p.m.
  Mr. Hugh Rossi: First, I thank the Secretary of State for the way in which he has presented the Bill and the important statement that he made in opening the debate. We welcome all that the right hon. Gentleman has said about his new policy, especially that he has recognised the difficulties of the construction industry, and the anxiety he has shown in his new policy in trying to help the industry. I noted that he has regard to the fact that he must guard against the future upward spiralling of rents in the centre of London by ensuring that there is a sufficient supply to meet demand as and when the economy boom, for which we all wait, takes place.
  We welcome the right hon. Gentle man's proposals to try to revitalise the inner-city areas, whether they be in London or in other cities. We noted with great interest all that he said about the new function of the Location of Offices Bureal, which I understand will now bring back jobs into the inner cities whereas its activities were directed to ensure that they were taken out of the inner cities.
  That is a great reversal of policy and one begins to wonder whether there is anything left in ODPs. There seems to be little justification or basis, with all the exemptions there are, for keeping this administrative machine, other than perhaps the difficulty of knowing what to do with the civil servants who are presently engaged upon the exercise until some other job is found for them.
  Having recognised the great step forward that the Secretary of State has taken, it is appropriate to consider whether there is any justification for maintaining any ODP system. With that in mind, I have turned to see what independent commentators have said about the operation of the system. It seems that there is almost universal criticism. The right hon. Gentleman should have regard to what is being said by planners about ODPs, the effect that they have had on our economy and inner cities and whether they have been effective in giving the sort of help to the assisted areas that the Secretary of State hopes will continue.
  I refer the right hon. Gentleman, first, to the book written by John Radcliffe entitled "Town and Country

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  Planning", which was published in 1974. In the chapter on offices he wrote:
  "Location theory for industry might be unsophisticated but for offices it is primitive. The policy underlying it is indiscriminate, inconsistent, tardy and heavily reliant upon trial and error. Too much emphasis is placed upon the existing stock and future supply without sufficient regard to the nature of demand. Virtually no attempt has been made to define which office functions are most appropriate to central metropolitan positions, which to peripheral positions and which to the provinces, and how a policy of decentralisation, if considered expedient, might best be implemented."
  That is a heavy and formidable criticism of the ODP system. It is said that it is crude and unscientific. Mr. Radcliffe demonstrates that one of its consequences was to contribute to the spiralling increase in office rents that took place in the 10 years that he had under review in his book, with prime rents in the City of London rising from about £2 per square foot to £15. That cannot be attributed wholly to the consequences of inflation.
  Compared with other commercial centres it has been demonstrated that London office rents in 1974 at £15 per square foot—they have stayed at about that level, having stagnated with our economy—were unfavourable compared with other commercial centres. For example, in Brussels, at the time Mr. Radcliffe was writing, rents were about £3 per square foot. In Zurich they were about £4 a square foot. Our economic difficulties have seen a stagnation in the rise in office rents while those on the Continent have begun to catch up.
  However, London is still uncompetitive, rents ranging between £50 and £160 per square metre. I have to convert to metric terms as those are the figures that the CBI has available. That level of rents has to be compared with £36 to £47 per square metre in Brussels, £37 to £56 in Western Germany, £46 in Amsterdam and £16 to £44 in Milan. This difference in the rental of office accommodation in the centre of London exists at a time when we are so dependent upon our invisible earnings in banking, shipping and insurance to hold our balance of payments above water.
  The theme of spiralling rents is taken up by Peter Townroe in his book entitled "Planning Industrial Location", which was published in 1975. In chapter 9,
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  under the heading "The Movement of Offices", he writes:
  "The ODP system has certainly contributed to the very high office rental values in Central London, thus making operations for companies forced to remain in London more expensive as their leases get renewed. The system also contributed to large increases in the wealth of individuals and companies involved in owning and leasing properties."
  Thus we have it that ODPs, by artificially restricting the amount of office space available, have greatly contributed to the cost of life in London, reduced our competitiveness in the international commercial world and served to make more wealthy those who invest in office property blocks—
  "they toil not, neither do they spin:
  And yet I say unto you, That even Solomon in all his glory was not arrayed like one of these."
  I hardly think that that is a result that the Labour Party can regard with equanimity, especially when it tends to lecture us so much concerning the evils of unearned income, non-productive activity and the need to keep down the cost of living. However, I imagine that it consoles itself with the thought, as the right hon. Gentleman has done, that this is the unhappy consequence of the need to have a fairer distribution of new employment throughout Great Britain and the important principle of ensuring a shift of employment from the relatively wealthy South-East to the more depressed and assisted areas.
  If that is the case—the Secretary of State said that it was his major objective—I am afraid that I must disillusion him. I refer the right hon. Gentleman to an article written in January of this year by G. B. Goddard in "Town and Country Planning". There he comments upon the Government's "Office Location Review" which was published in April 1976. He says:
  "the proposed new powers will improve only marginally on the pretty abysmal success rate of the present system that is noted in the Review. Thus of all the forty one ODPs refused to named user applicants for 10,000 sq. ft. of space in the GLC area in the period 1965–72, eleven had remained in the same premises and twenty four had subsequently obtained an ODP on the same site or on another site in London. Only six of the applicants had in the event moved out of London, and all of these stayed in the S.E."
  I think that the explanation for that is to be found in the comment made in

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  Chartered Surveyor for February 1973. It reads:
  "The demand for additional floor space increased, but not because of an increasing number of jobs. The average amount of floor space per worker in offices was rising, not only because acceptable standards were rising, but also because mechanisation of many routine office jobs meant that more room was required for the machines. However, at the time, lack of information meant that this pressure from within central London for the expansion of existing offices was equated with additional employment and the interwar concept of London attracting development at the expense of other areas."
  In other words, the concept of the Government in restricting office accommodation in London is destroyed if one finds, first, as the review has shown, that those refused ODPs do not move out of London and the South-East anyway, and, secondly, that their motivation is to increase their capacity within their organisaton in order to have more efficient machines and internal operation.
  I think that this is borne out by the experience of the LOB, which says that over two-thirds of its recorded moves have been to distances of less than 40 miles and that only one-eighth of them have been over distances of 80 miles—a very small proportion. The majority of the relocation of offices has been to Reading, Southend, Maidenhead, Croydon, Hounslow and Richmond. Others have been to new towns or expanded town developments, such as Ashford, Basingstoke, Swindon and Harlow. Again, in spite of the LOB, the concentration remains once more within the South-East.
  Thus, the ODPs have not been a signal success in terms of creating jobs in the assisted areas. The only real success attained in this area has been that of the Government in decentralising their offices. Even so, there is currently a dispute with the unions over the 31,000 civil servants whom the Government wish to move out but who do not wish to leave London.
  All this must be balanced against the stultifying effect that ODPs have had on the firms wishing to expand. I remind the House of the 11 that Mr. Goddard mentioned who had decided to stay where they were in their cramped and overcrowded conditions and the 24 who, after much delay, frustration and expense, obtained ODPs for their original sites or sites nearby.
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  Furthermore, the assisted areas have not been assisted. The Government review admits that indigenous growth has been the principal contributor to office development, especially in the assisted towns. The growth there has taken place not because of the movement of jobs, but because of the growth in their own populations.
  To cap it all, some of the decisions of the Department responsible for ODPs have been bizarre and inflexible to say the least. This has manifested itself in respect of applications for office development over central area railway stations.
  Here no extra land is required. Little or no burden is placed upon local public transport. Yet 43 such schemes proposed by British Rail were frustrated by ODP refusals. One is entitled to ask what difference this might have made to the finances of British Rail had it been allowed to enjoy rental income from developments such as these.
  The Under-Secretary of State for the Environment (Mr. Guy Barnett): The hon. Member has quoted the figure of 43 refusals. What period does that figure cover?
  Mr. Rossi: It covers the 10-year period. I am quoting from the authorities that I mentioned earlier.
  The closer one examines the operation of the ODPs, the more one wonders why we have allowed the system to remain for so long. The ODPs have created more problems than they have solved. Even the relaxations we have heard of today will not go sufficiently far to help deal with some of the problems I have indicated have been created by past practices. The Opposition take the view, therefore, that the time has come to scrap the ODP system altogether, or at least to let it die a natural and unlamented death by not extending its life in the way that the Bill seeks.
  Certainly London and the inner cities, facing the crises they do, they must be given the freedom to allow their commercial life to expand. At the moment there is a surplus of office accommodation in the London area. Given the costs of construction against the rents obtainable, few developers at the moment are prepared to risk capital in building new offices.

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  That in itself is an argument for the abolition of unnecessary restrictions and controls. But the time will come, we all hope, when our economic life will be revitalised by the nourishing flow of oil and when it will once again expand. We must then allow our commercial offices to meet the challenge and not to be constricted and limited by inefficient and insufficient accommodation. If we do not do that, I am afraid that once again we shall see an office rents spiral or explosion blunting the edge of our competitiveness.
  I suggest that we leave it entirely to the local planners to determine the problems of congestion and transport that might arise out of the granting of planning permission for the building or expansion of offices. There is no case for continuing a system that has served us so badly in the past and created so many difficulties. Therefore, I regret to say to the Secretary of State that we cannot support him on the Bill.
  7.48 p.m.
  Mr. Geoffrey Finsberg: I, too, begin by welcoming the relaxations mentioned by the Secretary of State. I shall have two detailed questions to which I hope the Minister will be able to reply.
  It is significant that the Government Front Bench is occupied by three London Members. They will find it difficult to explain to their constituents why, when unemployment in greater London has more than doubled in the past four years, they are seeking to prolong the life of a system which is still helping to keep jobs out of London. I look forward to hearing their explanations on this point.
  The ODP principle in London is out of date, and I shall cite one or two authorities that I think will have the backing of all London Members. The 1965 and 1971 Acts were temporary, the latter being basically a consolidating measure. They were temporary but, alas, so was income tax when it was first introduced, and it is still with us. I do not wish to see the ODP system still with us in five years' time.
  What cannot be stressed too much is that London is not asking for any preference. All London is asking for is that it should not be continually disadvan-
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  taged, which it has been over the years. I accept what the Secretary of State says and very much welcome his response and his new terms of reference for the LOB. I join him in paying tribute to the current chairman—I did not know his predecessor—who has done a first-class job, even if it was a wrong-headed job because of the instructions given him by the Government. I am sure that now he has a different mandate he will do an even better job.
  What I was not quite clear about was whether in the revised terms of reference that were being given to the LOB it was clear that under no circumstances would its job be to assist anyone to move out of London. That was not completely clear in what the Secretary of State said and perhaps it can be cleared up later.
  With regard to office development permits, there is no political party divide. I would just remind the House of the resolution passed by the GLC on 12th October when all three parties, even the Liberals, who were then there, were unanimous in asking for the abolition of ODPs. I do not think I do him any injustice when I say that the one Labour Member on the Back Benches, the hon. Member for Ealing, North (Mr. Molloy) was not unsympathetic to that idea. I look forward to seeing what he does tonight should there be a Division on this issue. Of course, the Government may decide to drop the Bill.
  But in the April 1976 review the GLC said:
  "the following are giving cause for concern—
  (1) A fall-off in employment for clerical workers. (More than 80 per cent. of female and more than a third of male office employment is in the clerical workers category.) While the numbers of administrative and professional workers continued to grow in London between 1966 and 1971, there was nevertheless a drop of over 10 per cent. in employment for male clerical workers, mainly in inner London. There was a similar drop in employment for female clerical workers in inner London though in their case the decline was counter balanced by a corresponding increase in outer London".
  It went on to talk of
  "Further dispersals of civil servants under the Hardman report;
  Recent moves by major banks and insurance companies to move out staff; and
  The effects of further progress towards automation, new methods and improved telecommunications."

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  The GLC continued by asking that the system of office development permits should be dropped, and added:
  "in any event should not be renewed after August 1977 when the present powers expire. If it is to continue, notwithstanding the Council's representation to the contrary, then consideration should at least be given to limiting it to large developments only (say those over 100,000 sq. ft.)".
  I shall be interested to hear why the Government have not found it at least possible to respond by going up to that figure of 100,000 square feet for exemption because, after all, that was the considered view of those people who know the problems of London best. The GLC knows these problems much better than does the little man sitting in his office in Marsham Street who is dealing with the ODP system throughout the country.
  I reinforce what my hon. Friend the Member for Hornsey (Mr. Rossi) said about the need to transfer the examination on the question of ODPs from central Government to local government. I repeat that that was the unanimous view of the GLC on 12th October, and the same view has been re-expressed in a letter only this week from the new council. The policy is still unchanged. It is also right to quote from another document, the 1976 review "Strategy for the South-East".
  In its review, The Economist described the major changes which it highlighted as follows:
  "London is no longer the engine behind the expansion of the South East. It is a disaster area losing 100,000 people a year (mainly skilled workers), where more businesses fail than manage to get out in time, and pockets of unemployment as severe as in the depressed areas."
  I do not think there is a single London Member of either political party who would disagree with that analysis. Yet the Secretary of State continues to believe that there is a need for office development permits in Greater London. I do not believe there is a need for them anywhere. But if there is to be some sort of control, let it be exercised, in London, at any rate, by the GLC and equivalent bodies outside London which know their own local areas and their own local problems. In a debate in which we are discussing London and elsewhere it would be—
  Mr. William Molloy: I understand the theory which the hon.
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  Gentleman is submitting in that local authority planning officers in London know the problems best. It would appear to be a simple fact that they are bound to know better than the officers in Marsham Street. But that does not always follow in practice. In my own area in the London borough of Ealing I have seen large parts of my constituency almost maimed for life by the behaviour of planning officers. The only hope we might have is that the appeals of ordinary people against the decisions of local planning officers may be brought to the attention of my right hon. Friend via his inspectors. I do not think we can say that in general all will be well if we simply leave things to planning officers in the borough.
  Mr. Finsberg Mr. Finsberg That was not quite what I was saying. I was saying, let us leave it to the GLC or the Greater Manchester Council. It is, after all, for the elected members on those authorities to take the decision.
  That brings me to another quote that I was going to make from Hansard of 14th January. Unlike the Minister who wound up in the previous debate, I shall not quote myself. I shall quote instead the former Government Chief Whip, who was a highly knowledgeable person, the right hon. Member for Bermondsey (Mr. Mellish). He said:
  "When I was appointed a junior Minister with responsibility for London housing by my right hon. Friend the Member for Huyton (Sir H. Wilson) in 1964, we received the advice, which had also been given to the previous Conservative Government, that at all costs London had to be denuded of population and industry. We were told that it was growing fat and bloated and that the othe regions were suffering as a consequence."
  That was the point the hon. Member for Ealing, North (Mr. Molloy) made.
  "Foolishly enough, I believed it. I took the advice of those great planners. For many months I spent much time urging industry and people to leave London. Looking back now, I realise that it was about the worst advice that any Government were ever given."—[Official Report, 14th January 1977; Vol. 923. c. 1828.]
  That reinforces the point that it is the advice given to Ministers, or the advice given to elected councillors, on which they base their decisions. If that is not so, there is no point in having an elected member. That is the point that I put to the Secretary of State for him to consider. Of course, it may be that he always takes

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  the advice or his officials, but I have a greater respect for him and I do not think that he does.
  What I have said so far demolishes much of the case—the rest was demolished by my hon. Friend the Member for Hornsey—for ODPs. I should like to know a little more about the effect of raising the limit from 15,000 square feet or metres to 30,000. The Secretary of State said this would save about 51 per cent. of applications. May we be told in actual figures what that means? Are we talking of 100 applications, 1,000 applications, or 10,000 applications? May we have it related to the 51 per cent.?
  The Financial Memorandum says:
  "The effect of the Bill will be to continue the cost of staff for administering the provisions, estimated at £128,000 a year, including overheads, at 1976 prices".
  May we assume that when the exemption limit is raised to 30,000 sq. ft., there will be a saving of 50 per cent. of the present staff doing this work?
  I said that unemployment in Greater London had more than doubled in the past four years. I believe, as I said, that those who can judge the situation best on the advice of their experts are the elected representatives. These experts are not merely planners. Some local authorities are now employing industrial officers to liaise with industry and to tell them what the employment prospects are. If local authorities can get the advice and act on it, rather than the Secretary of State, a better job will be done. I hope that even now the Government will have enough common sense not to proceed with the Bill.
  8.1 p.m.
  Mr. Arthur Jones: My hon. Friends the Members for Hornsey (Mr. Rossi) and Hampstead (Mr. Finsberg) have covered the ground so fully that there is little left to say to justify the Bill. I want to deal with the central bureaucracy which has been built up around office development permits, the Location of Offices Bureau, and other methods by which the Government have tried to move office and service industries from one part of the country to another.
  This debate shows the tremendous change of opinion there has been since
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  the early 1960s. In the Press and the professions there was almost universal acceptance in 1964 of these arrangements to move office employment out of London. The system was extended to the whole of the South-East, the Midlands and East Anglia two years later. Those controls were essentially removed three years later, and one wonders whether that was not an admission that things had gone too far. Since 1970 office development permit arrangements have ruled only in the South-East.
  As recently as July 1974 the Secretary of State said that strict application of controls that would apply severe restrictions would be brought to bear on speculative development, even for the replacement of existing accommodation. With concrete examples, my hon. Friend the Member for Hornsey has shown what a limited effect this has had elsewhere than in London. Even some of the movement from London has not been very far afield.
  There is no doubt that this system has taken up a great deal of the time of the surveying and planning professions and of the planning departments of local authorities throughout the South-East. One should therefore consider the bureaucratic consequences of what has happened hitherto and of what the Bill proposes.
  The office location review, which was published in July last year—a carefully researched document in which most Departments, including the Cabinet Office, were involved—considered not only ODP control but possible alternative instruments of policy in trying to prevent what the Government saw as too much office development in the South-East. One cannot but question whether such an exercise was worth the cost, which must have been tens of thousands of pounds, of such an erudite document. I wonder what a cost-benefit analysis would reveal.
  We are concerned not only with these arrangements under the Department of the Environment. The Department of Industry has its own methods of getting service industries and office development to certain locations. I know that this is not the Secretary of State's remit, but in July 1973, under the Industry Act of the previous year, incentive schemes were used to get service industries to

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  move to assisted areas so as to encourage office job take-up in those areas. There was a grant of £800 per employee moved with his work, normally up to 50 per cent. of the number of new jobs created. That, too, was a considerable bureaucratic machine using public money to encourage people to move.
  The Location of Offices Bureau, established in April 1963, has only a modest staff and budget. Expenditure of 1975–76 was about £172,000. But we must consider its effect on public and private expenditure. In its 13 years, the bureau has moved 1,976 firms—presumably mainly out of London—and provided 139,326 jobs. It has done the work that it was asked to do. Many of us have been fascinated by the octopus advertisements on the Underground—one of the most effective advertising campaigns that I have seen.
  The policy has been successful, but does the bureau need a new rôle? Can that new rôle be justified when, as my hon. Friend the Member for Hornsey said, many local authorities have substantial organisations operating successfully to encourage people to develop in their areas? The development corporations are outstanding examples of what can be done. One must question the need to continue the bureau.
  It is not only the firms that have moved that have been affected. Many others have been persuaded to develop for the first time elsewhere than in London, which has achieved the Government's purposes. But this has led to a progressive run-down in London. That is the remarkable change of opinion that has occurred in the past few years.
  I am told that the office development permit system last year refused 57 programmes, totalling 302,000 sq. ft. It would be interesting to know where that office development was provided. Does it mean that the contracts were lost, or does it mean that they moved out of London within a comparatively short distance?
  In today's circumstances different considerations must apply from those that justified the introduction of the scheme in 1964. There is no question but that the arrangements distort the normal operation of financial and economic factors. From what the Secretary of State
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  has said, I do not think that the Government have justified the need for continuing the office development arrangements for another five years.
  The Secretary of State is not anxious to wind up the arrangements, so he is struggling to alter them by increasing the development from 15,000 to 30,000 square feet and the number of employees from 200 to 300. In this way he hopes to catch only the schemes of major importance. I do not consider that this is adequate justification for retaining the scheme of office development permits.
  In the context of the wish of the Government to reduce public expenditure and bring greater effectiveness into the economy here was a small but positive example of the need to act. The Government should recognise that ending the scheme would mean savings in cash terms, in manpower, and in the interference in the economy.
  I wish I thought that the controls, albeit significantly reduced, were not being maintained for their own sake, but I do not. I think that there is a reluctance on the part of the Government to surrender any form of control. They are lifting the controls somewhat but they are reluctant to lose a measure of control altogether. They are determined to maintain this control despite overwhelming evidence that it no longer serves a useful purpose.
  The Government must face the realities of today. I regret that in bringing this Bill before the House they appear to be unwilling to do so.
  8.13 p.m.
  Mr. Tony Durant: I represent an area some 30 miles from London. We have been affected by the whole ODP policy for a long time.
  I have been involved with two local authorities—at Woking and at Reading. Historically, both towns mushroomed as a result of the railway age. I moved there with my parents because in those days the fares were cheap and it paid to move out of London. These towns grew very fast. The result of that growth was a decline in availability of office accommodation and other accommodation had to be redeveloped.
  Both Woking and Reading decided to redevelop and both drew up imaginative

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  schemes. The problem of the whole concept of redevelopment—whether it is done in partnership or direct with the local authority—is that it needs to be of the type where office accommodation is on top with shops and other facilities underneath in town centres. Office development permits, therefore, became a crucial part of the development of these towns.
  If a plan were drawn up that involved large sections of the town with restricted ODP development, the net result was that there were large gaps in the development in one part of the town and that another part was blighted and became a desert where nothing happened for years. That has happened in East Reading.
  One of my constituents had a German guest and when this man was leaving the town he apologised that the Germans had bombed Reading so vigorously. My constituent pointed out that it had nothing to do with German bombs—the local authority had pulled half of the area down. It was not its fault, office development permit policy had brought this situation about. Therefore, I am against the continuation of this policy in the Bill.
  Another problem in the outer periphery towns is the cost of travel. It now costs a phenomenal sum—about £450 a year—to get to work. This means that people are seeking office employment within Reading rather than travel to London. They prefer Reading and they want to live there, but office development policy tends to work against that. This is bad for Reading.
  One of the difficulties that we do not recognise enough is that because the policies of successive Governments have attracted industry from the South-East to the North—and I am not against that in principle—different kinds of employment must be found in Reading, Woking and other parts of the South-East. My constituency was once known for beer, bulbs and biscuits. We still have the beer, but the bulbs have gone to the West Country and the biscuits have gone to the constituency of the right hon. Member for Huyton (Sir H. Wilson). Manufacturing biscuits was once a crucial part of Reading's history. A number of companies are moving out simply because of the attractiveness of placing industrial units away from London. This means
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  that other employment must be found, but the whole ODP policy works against it.
  Reading is becoming the regional headquarters for the whole of that part of the country. We have a number of regional offices being established in Reading and we have attracted one or two headquarters from London because of the easy communications and the facilities. We need this development and we welcome it tremendously, but the ODP policy tends to work against it, and that is why I want to do way with this Bill.
  I welcome the relaxation of the controls. The increase to 30,000 square feet and to 200 to 300 employees sounds fine, but in any major development in a town one starts with a key block in the centre. This is still controlled by the policy of central Government and this fact may hold up development around it. Unless there is a key block of offices with shops underneath in the centre, the whole development of a major block in a town can be held up.
  I welcome the relaxation, however, because it will help in areas like mine. Nevertheless I do not believe that there is any need for it at all. We can make our own decisions with the Berkshire County Council.
  I have been involved in marches on Ministers. In fact I marched, as a member of the planning committee in Woking, on the right hon. Member for Crosby (Mr. Page) and sat in front of him trying to persuade him to let us have more ODP permits for Woking. He was not too keen on the idea, because we were developing rather fast. We would have liked freedom of action to do what we wanted. We wanted to get rid of the blight that is serious in many developing towns.
  Although we welcome the fact that Reading has had ODPs granted, this trend must be continued. We need the opportunity to make our own decisions and our own plans for developing our own town. The only reason the Government are anxious to hang on to this bureaucratic machinery is that they hate to get rid of any planning policy.
  I am slightly anti-planner. I have a great suspicion of planners, who usually meet in offices and examine charts but seldom look at what they are dealing

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  with on the ground. Too often the planners do not understand the needs of the people. A development may look tidy, but it needs local control and responsibility and not central bureaucratic machinery. This is an out-of-date concept, we do not need it any more, and I hope that we shall vote against the Bill tonight.
  8.20 p.m.
  Mr. William Molloy: I welcome the relaxation offered in the Bill. However, it has been suggested that it does not go far enough and that there should be more relaxation, and possibly no control whatever. We must try to keep a sense of balance.
  We all know that there was complete unanimity in the House 10 or 12 years ago on this subject. There had been massive office development in Greater London, and the dangers were obvious. Large office blocks of 10 or 12 storeys were built in our capital. Yet we were always being asked by constituents, particularly by young couples who wished to marry, "Why cannot Parliament see to it that new homes are built for people such as ourselves and many like us, instead of allowing the development of great tower office blocks?" Therefore, we were all agreed that we needed to control office development.
  The hon. Member for Hornsey (Mr. Rossi) quoted a number of learned works written by learned gentlemen. However, we know that those learned gentlemen in 1976 were of the view that we should do away with the control of offices. But some of us have memories that go back a long time. The same learned gentlemen in 1965 told Parliament to control the mushroom development of offices in the capital. They will say anything if they can make a bit of money by selling their books. We should all be mugs if we fell for that kind of nonsense. Therefore, let us try to keep the matter in perspective.
  There was a need to control that type of development, and it was right that we took action—but we took it too late. Nevertheless, that legislation was introduced by a Labour Government, and was rightly continued by a Conservative Government. All the brilliant geniuses in our universities, so busy reading books written by other people, tell us when they
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  see something going wrong "You must change the situation". We do not want them to tell us these things. We know all about them. They could make a much greater contribution to the problem by indulging in a little silence for four or five decades, because that would help us all.
  I wish to pay tribute to the hon. Member for Hampstead (Mr. Finsberg) whose knowledge of the problems of London we all appreciate. We do not always see eye to eye, but London Members recognise the hon. Gentleman's abilities. We may have disputes about solutions, but we generally know what we are talking about because we see these things happening on the ground.
  The hon. Member for Reading, North (Mr. Durant) spoke of the rôle of local authority planning departments. The Opposition generally believe that this Bill is not required and suggest that we should leave it all to the planners. That was all said at about 7.50 this evening—but at 8.15 p.m. the hon. Member for Reading, North took the reverse point of view and said that he was an anti-planner. He gave good reasons for not wishing to leave everything to the planners. But we cannot have the Tory Front-Bench spokesman saying "Leave it all to the local planners" and then, a short while afterwards, being told by a Conservative "The last thing we should do is to leave it to the planners".
  The wise thing for the House to do is not to listen to what is being said in this House by the Opposition, but to take full cognisance of the experience on the Labour Benches, particularly my contribution from which the House is now benefiting. I hope that that contribution will not now be spoilt by the intervention of the hon. Member for Reading, North.
  Mr. Durant: The point I was trying to make was that planning gets worse the higher up one gets. I am in favour of local planners, but I sought to make the point that the higher up the structure one went, the more remote the planners appeared to be.
  Mr. Molloy: That may be true, and certainly the power vested by Parliament in local authorities is pretty formidable. We have all seen local planners at work on their charts, with finely drawn lines

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  that look so impressive, but many of the plans have been drawn up merely to look pretty. If one asks "Where is that area?", the planners do not know what it is because they have drawn up their plans from somebody else's plan. Planners at local level are always desperately concerned with steel, concrete and glass, and when one seeks to question those plans it is almost regarded as a form of lèse-majesté. Many planners appear to be quite unconcerned about the needs of ordinary folk who live in the streets where the planners would like to see warehouses and large office blocks.
  The three major parties in the GLC have requested the abolition of office control. I would not go as far as that. We have heard that industry is being attracted out of Greater London. Looking at the matter from a GLC standpoint, I believe that we have suffered as much as have other regions. I cannot see the sense of a policy which suggests "Because there is high unemployment in Wales or in the North or in Scotland, you in London must have your share". That is the sort of stupidity one finds handed down from youngsters from Oxford and Cambridge. It is no good saying to the ordinary man on the dole, "There is only 9 per cent. unemployment in your region". That kind of figure cuts no ice with the man with a family who is out of work. As far as he is concerned, he regards himself as 100 per cent. out of work.
  Mr. Robert Kilroy-Silk: I am sure that my hon. Friend as a Socialist is in favour of sharing our resources throughout the country in terms of need.
  Mr. Molloy: Of course I go along with that, but I do not see that kind of classification being sorted out in terms of unemployment. I shall have to work that one out. I can see the idea behind that suggestion—namely, that in certain areas one's fellow countrymen are suffering excessive unemployment, and that if industry can be attracted to those areas of large-scale unemployment, the problem in those areas will be reduced. In order to do that, it is argued, areas such as the South-East and Greater London must be told that they have enough industry and that no more can be brought
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  into those areas because it must be spread into other areas.
  However, things do not work in that way and that idea is not working. That was the intention and it was a good and honourable one, but it has not worked. Industry has been lost to London—and not only did the industry leave that we expected would leave but industry that we had believed would come to London did not come. What have we been left with? There are large shells of buildings in all parts of London that are going to rack and ruin. Men are losing their jobs.
  I can give a classic example of a large factory that employed skilled men in the glass container industry. Since 1920 it had been a household name in that industry. I am referring to Rockware Glass. The firm made all sorts of clever glass containers as well as milk and beer bottles, and it sold its products to well-known firms all over the world. It then became financially attractive for the firm to say to its skilled employees, "You have done well boys, but we cannot respect your skills or crafts because the power of profit tells us that we must leave you in the lurch and shove off somewhere else." That is exactly what happened. I am anxious because the site that was used by that company is still empty.
  London Members on both sides of the House want industry to be attracted back to London. I am gravely apprehensive that large industrial sites, such as the one that I have just mentioned, will be occupied by 12 to 13 warehouses. At one time about 1,500 skilled workers would have been employed on such a site, but if the area is used for warehousing there will be jobs for only about 30 to 40 clerks and a couple of fork-lift-truck drivers. That is the danger. Warehouses and offices cannot help such an area as Ealing.
  As the hon. Member for Reading, North and the hon. Member for Hampstead have said, the ramifications are enormous. I support them, and I go further. The ramifications are extremely serious.
  At one time in Ealing youngsters about to leave school were put in touch, through special courses, with the glass container industry. Some trained as specialists in that industry and many have travelled all over the world to sell the skilled work produced by their colleagues

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  in England. Some school leavers became skilled fitters, carpenters, joiners or glass-blowers. All this was encouraged by the education authority in the area. When pupils were attracted to this industry their education was directed to that end. The idea was that they could become skilled artisans in this great industry. But suddenly the great industry was no longer there. Not only were the fathers of these pupils out of work but the whole educational system had to be readjusted, and there was nothing else to readjust to because no other industry came to Ealing.
  Hon. Members are today pleading for more industry, but it is essential that we do not act too peremptorily because there is a danger that instead of industry we shall get warehouses and office blocks. I ask the Minister to bring to the attention of the Secretary of State the warnings that I have given about the danger of valuable land that once housed industry being taken over by either office blocks or warehouses, with the consequent threat to job creation in Greater London.
  I wish to make one last point that has already been mentioned by hon. Members opposite, and it is another point that I ask the Minister to pass on to the Secretary of State. I entirely agree with the hon. Members for Hampstead and Reading, North that, as far as possible, all planning should be left to the local authority or the councils that know the area. Everybody is saying "Hear, hear" to that, but I wonder whether they will say "Hear, hear" to this: when councillors make their decisions for the benefit of the people that they represent and when pompous planning officers do not agree with those decisions and there is an appeal to the Secretary of State for a public examination, the councils know that they cannot count on the support of their own officers, whose salaries are paid by the ratepayers. Those officers will not appear at the tribunal on behalf of the ratepayers who pay their salaries because they claim that it is infra dig. That is as absurd as our wanting to send armed forces somewhere in the world and the Chiefs of Staff saying that although Parliament may have taken the decision, they did not agree with it and would therefore not carry it out.
  This has been the attitude of some planners, and the problem must be seriously considered. It is no use hon.
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  Members opposite and I agreeing in principle that local authorities should have more say in the planning of their citizens' towns if, in the final instance, too much power is vested in the local bureaucrats. That is as heinous as having too much power vested in bureaucrats at any other level, and I hope that my hon. Friend will mention this problem to the Secretary of State.
  I have some apprehensions about the Bill and am not entirely happy with it. However, there is enough in it to tempt me to support it. At least we are not swimming in completely the wrong direction. There was a need for control of office building and, despite what others say to the contrary, I believe that that need still exists. For the reasons that I have mentioned, some form of control must be held at ministerial level.
  8.36 p.m.
  Mr. Fred Silvester: I shall not follow the arguments of the hon. Member for Ealing, North (Mr. Molloy) in his hot pursuit of pompous planning officers. Everyone who has spoken so far has come from the South-East or thereabouts, with a heavy preponderance from London. That will change when my hon. Friend the Member for Crosby (Mr. Page) speaks, but it is not surprising that there should have been so many speeches from hon. Members from the South-East since the Bill will have a direct effect upon London and the South-East.
  But it should be remembered that the Bill was planned to have a powerful indirect effect on other regions and it is right to question whether we should allow this extension for another five years. It is not a clear judgment, but rather a narrowly based one.
  I have never believed that there is any point in trying to build the rejuvenation of the North-West or any other area on the ashes of London, and I agreed with the reaction of the hon. Member for Ealing, North to the intervention of the hon. Member for Ormskirk (Mr. Kilroy-Silk). There is not much joy in equal shares of misery, and I do not see the joint of sharing out unemployment in that way.
  The object of the exercise is to balance the various attractions of the regions so that the natural decisions of industry and

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  office builders will be spread more evenly over the country. There is a natural gravitational pull to the South-East, and it is at this time, when there is unemployment in the South-East, that we may test whether we are serious about this policy.
  It is easy to say that there should be special measures in assisted areas at times when it is a nuisance to have more business in the South-East because of the difficulty of finding labour, but the argument is more difficult when the South-East itself comes under unemployment pressure. The argument about relative levels of unemployment must be seen in the context that the whole country is sinking while the South-East is just beginning to get its feet wet. In the North-West and in other areas they are already well aswim. That is the situation with which we are faced, and the Bill is concerned not only with the present situation but with what will happen in the next five years. It is right, therefore, to look at it in a rather longer-term way than the hon. Member did.
  There is a point which worries me considerably, and it is a major factor in my attitude towards the Bill. We are faced with the gradual peeling away of the traditional means of dealing with assisted areas. We lost the regional employment premium. I agreed with that because I did not think that it was very effective. Although the Government are still holding firm, the whole procedure for the transfer of civil servants is now under strong attack from the Civil Service unions, from Committees of the House and from speeches here. The whole attitude towards it is changing. I should not be surprised if the pressure continued to build up and there were an announcement that a change is to be made.
  There is now the question of dropping the office permit arrangement. I think that we are in some difficulty here. It is obviously true that we do not wish to continue with something which has proved relatively ineffective. On the other hand, if we start peeling away these arrangements one by one, we shall have difficulties, because we do not thereby do away with the problem at the same time.
  I entirely agree with the comment made earlier that all the evidence is conclusive that the strength of a region will come from its internal generation rather than anything we are likely to import from
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  outside. That is true of offices, and the figures quoted confirm that. Nevertheless, it is true to say that imported jobs have made a contribution. If we examine the statistics of the Location of Offices Bureau for 1963 to 1976, we can say either that the North-West, the North, Wales and Scotland have only got 6 per cent. of the offices which have moved out of London, or, doing some quick mathematics, we can say that about 7,000 jobs have been moved out of London. If we simply quote the percentage it sounds derisory, but to areas in receipt of 7,000 jobs it is not derisory. That is the situation with which we are faced.
  It so happens that in the North-West, part of which I represent, we are relatively well placed with offices. We have a rather higher proportion than the population would lead us to expect. But for other regions that is not the case, and the importance of the office element in the rejuvenation of these areas should not be underestimated.
  My real concern in dealing with the Bill is not so much the office development permit system, to which I will come shortly, which I think has been ineffective. I am more concerned because it is part of the continuing erosion of the support for these areas. I think we shall soon come up against the problem at the next stage of IDC policy. I realise that it would probably be out of order for me to go into that aspect, but the IDC is the permit system relating to the industrial side, and there is quite substantial evidence from some of the academics and from others that the IDC policy has been one of the most effective ways of getting new jobs into the assisted areas. We should take that into account.
  We have then to ask ourselves, given that we all agree with all these objectives, whether the office development permit policy is the right way of going about it? Clearly the answer to that must be "No". I do not think there can be any serious doubt that the statistics which were quoted, and which I think are generally accepted, show a remarkably small return for all this effort. If we were seriously setting out to get more office jobs in inner city areas or in any other part of the country, we should be disappointed by the return for what has been many years of this policy. As we have

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  heard from London Members, we are now seeing a similarly adverse effect in London. If we pose the question—What is the trade-off between the advantage to the assisted areas and the disadvantage to inner London?—we must come to the conclusion that there is greater disincentive to inner London than any benefit to the other areas. It is for that reason only that I support my hon. Friends tonight. It is a narrow judgment.
  It is most important that, having made that assessment, we undertake the next step. It is up to those of us who oppose the Bill and to others who have misgivings about it to point out that, nevertheless, we need some mechanism. The problem will not go away. The need for offices in other parts of the country is important.
  One test will be the extent to which the Government hold firm to the proposals for Civil Service dispersal. I am aware that the Minister of State, Civil Service Department has emphasised that is his intention, but it is an interesting microcosm of the whole problem. It is true that people who are now employed in London in Civil Service jobs do not wish to go to Bury or somewhere else. They have their roots, like everyone else. Of course, a certain amount of inefficiency results from transfer. However, unless the Government, who in this respect have more powerful means of decision than any private firm, are prepared to take that step, we shall not get the pockets from which other satellite developments can occur.
  I support rejection of the Bill, because that is right, but something must keep going in its place. A whole review of the way that we treat the regions is necessary. Many historic proposals could be demonstrated to have failed or not to have been very successful. Therefore, we must search for something new.
  The most powerful argument against the Bill was adduced by my hon. Friend the Member for Hornsey (Mr. Rossi). He said that 41 firms had been checked, that of those only six moved out of London, and those six moved into the South-East. Therefore, keen though I am to find a way of channelling new resources into the assisted areas, I cannot support a Bill which will prove ineffective in achieving that end.
  8.50 p.m.
  Mr. T. W. Urwin: It is a pleasure to follow the hon. Member for Manchester, Withington (Mr. Silvester) if only because he has attempted, with a measure of success, to lift the debate from London into the regions. As I represent a constituency in the Northern Region, I welcome his initiative. I listened with great interest to his recital of the development area incentives and his whole attitude to the Bill and the general subject of office development control.
  I am sure that the hon. Gentleman will forgive me when I tell him that I dissociate myself completely from that part of his speech in which he referred to his agreement with the recent decision to abrogate the regional employment premium. The whole of the Northern Region—as the House knows and as you certainly know, Mr. Deputy Speaker—is, like most of Scotland, a development area. I hope that we have gained some benefit from the operation of office development control, although the hon. Member for Withington and the hon. Member for Hornsey (Mr. Rossi) sought to dissuade me from that belief.
  I welcome the Bill, but with reservations because of the relaxation of control, to which my hon. Friend the Member for Ealing, North (Mr. Molloy) gave an unqualified welcome, and because of the whole history of office development control. I was a Member when the system was introduced, and I recall the serious and extensive arguments in this Chamber on the subject.
  One cannot think about office development control without immediately thinking of that highly controversial project, Centre Point, around which many of our arguments revolved, and the fact that when the first Act was introduced it was undeniably proved that far too much office space was available in the metropolis in comparison with the regions. At that time we were deeply concerned about the absorption of sometimes scarce building materials and the fact that skilled labour was being diverted from more praiseworthy jobs, such as the construction of housing, to build the tower blocks to which my hon. Friend the Member for Ealing, North referred. In some cases it was impossible to find

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  tenants for the blocks when they were constructed.
  There is and always has been tar too great a concentration of these resources in London. When the hon. Member for Withington speaks about the North-West, I am reminded that in the North-East and the Northern Region generally we have not only a higher unemployment rate than any other region in the country, including Scotland, but far too few outlets for school-leavers. There is far too little office employment for them, no matter how good their academic qualifications. On leaving school all too few of them find that sort of employment, whether in Government offices, commerce, or other sections of private industry.
  My hon. Friend the Member for Ealing, North, in a rather philosophic discourse, referred to the justice of sharing resources. Surely it is right to try to increase the woefully inadequate job opportunities available to young people in my constituency, for example, which is dominated by coal mining, where only a few handfuls of office jobs are available anyway.
  The town in which I live is bordered on the north and south by the two new towns of Washington and Peterlee, where land and other facilities are available for office development. Both these new towns have much to offer to Government offices and other offices. Certainly, Washington new town has. Both of them have tremendous leeway to make up. They are admirably geographically placed in an industrial area where the catchment area for young people is large enough to justify the allocation and construction of offices, whether Government or private.
  I see office development control as an integral and essential part of the regional policies which have been pursued by both Labour and Conservative Governments. It is a historic fact that the right hon. Member for Crosby (Mr. Page) had the onerous responsibility—sometimes not meeting with the full approbation of his Back Bench colleagues—of administering the office development control policy handed on by the previous Labour Government. There is everything to be said in favour of the Bill and of the extension of powers sought in it.
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  My final argument in favour of creating more office work in development areas has a high economic content. Office space in the centre of London is much more costly than in the Northern Region, whether it be in Newcastle, Sunderland, Durham, Washington, Peterlee, Newton Aycliffe, or elsewhere.
  Despite the opposition of some civil servants to a move, it is a fact that the Northern Region has become one of the most attractive in the country. It has sweeping open spaces replacing the old colliery spoil heaps; there is the beautiful and rugged Durham and Northumberland coast; there are the North Yorkshire moors. The Lake District and the Scottish Borders are both within one and a half hour's driving distance. There are all the amenities for enjoyment by people decanted from London or other parts of the country. We can also claim to have made available by the beauties of the North more accessible by the development of a system of communications much better than ever before.
  I hope that the extension of the powers contained in the Bill will provide us with more opportunities for employment, particularly for younger people, than we have ever had in the North.
  8.59 p.m.
  Mr. Ivan Lawrence: The hon. Member for Houghton-le-Spring (Mr. Urwin) said that he was pleased that the debate had been lifted away from London to the North. Perhaps I can attempt to lift it away from stale political dogma into the fresh air of reality.
  As the hon. Member for Ealing, North (Mr. Molloy) says, both sides of the House are divided on the dispute about whether we should have planning restrictions and controls. That is a direct reflection of the fundamental rift between us. Members on the Government Benches believe in planning and controls. They will hold on to planinng and controls long after the need for them has passed.
  The Bill provides for a layer of bureaucracy and planning which is unnecessary. I concede—as will all hon. Members—that the original legislation was justified, although by the time it was introduced in 1965 there had been a shift. The need for a restriction in commercial development had passed. That was because of the measures taken by the Conservative

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  Government to discourage the further proliferation of commercial development.
  The House often legislates just as a situation is beginning to turn against the need for legislation. That was reflected in the original legislation, which the Labour Administration intended to be temporary. Perhaps it was to our shame that we continued the temporary nature of that legislation instead of abolishing it.
  The position that existed in 1965 cannot be compared with the situation today. In 1965 there was congestion of office development in London and other parts of the South-East. In 1965 there were not the same financial problems that face the Government at present. In 1965 a new Labour Government were in power after 13 years of Conservative rule. The new Government needed to flex their planning muscles and to show themselves to be a Socialist Government of the future.
  The position now is different. First, the policy of rigid control in London and South-Eastern towns has begun to create more problems than it solves. Hon. Members who have become familiar with environmental matters cannot but have been impressed with the vast amount of evidence which pours into Government Departments of the rundown, the poverty and the misery of unemployment in the inner city areas. The present situation is different from that which existed in 1965 when the legislation was introduced.
  Mr. Donald Anderson: Surely the central point is that the rundown is in the manufacturing base and that the office mix in London compared with that in the provinces is still favourable to London.
  Mr. Lawrence: There is some strength in that argument. Nevertheless, there has been a rundown in employment in the inner city areas, in particular in London, even in commercial properties. About 100,000 people have moved out of London. The demand earlier this decade was to move commercial development out of London to other parts of the country. The result has been a rundown in the metropolis and the South-East area. That has caused tremendous harm and we are now experiencing massive unemployment. The situation is graver than it was in the mid 1960s. Anything that we can do to get employment back to the inner city, urban areas will
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  cure many problems—not only the problems of unemployment and poverty but those of crime.
  The second change that has come about is that in 1965 local government wanted these controls. But now we know that the new local government body in London, the Greater London Council, under Conservative control, is against them. We come back to the point that must be made time and again in debates of this kind—that we should leave development of local areas to those who understand it and know it best, and they are the local government in the particular place. If the GLC, under Conservative control or Labour control, feels that it would be better off without these controls, it ought to be allowed to make the choice, because it is the democratically elected body for the area. As far as possible, planning of this kind should be left to local authorities.
  Mr. Kilroy-Silk: The hon. Gentleman does not seem to know anything about regional policy. The GLC is not a local authority but a regional authority. The hon. Gentleman is contradicting himself all the way through what he is saying.
  Mr. Lawrence: I do not think that the hon. Gentleman appreciates what it is that I am saying. Anyone who argues that the GLC is not a local authority ought to study local government a little more.
  Mr. Urwin: It is a region, all the same.
  Mr. Lawrence: The position is as I have stated it. It is that the GLC does not want these controls, and the GLC, being the local authority—whether or not it is a regional local authority—ought to be able to take these planning decisions.
  The third change is that we have, I think, learnt a little in the 12 years or so since the passing of this legislation, and we realise that if we can make savings in bureaucracy and in public expenditure, that will be to the good of the nation. The Government have been making very strenuous efforts to cut back on public expenditure and to cut out waste, particularly bureaucratic waste. Here is an opportunity to do this and to remove a useless layer upon the bureaucratic system. It is an opportunity of which I should have thought that the Government, in the present financial straits, would

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  have been only too delighted to take advantage.
  It may be thought that the views I am expressing are the views purely of a Conservative. I am very proud of the fact that I am a Conservative. I think that we have too many of these controls, restrictions and limitations and that it is a valid criticism of Socialism that Socialists hold on to the controls and the planning long after that is necessary. However, I draw the attention of the House to what the right hon. Member for Bermondsey (Mr. Mellish) has had to say in recent months about this legislation. After all, he was a Minister in charge of London development at the time that the legislation was introduced. He has said,
  "When I was appointed a junior Minister with responsibility for London housing by my right hon. Friend the Member for Huyton (Sir H. Wilson) in 1964, we received the advice, which had also been given to the previous Conservative Government, that at all costs London had to be denuded of population and industry. We were told that it was growing fat and bloated and that the other regions were suffering as a consequence. Foolishly enough, I believed it. I took the advice of those great planners. For many months I spent much time urging industry and people to leave London. Looking back now, I realise that it was about the worst advice that any Government were ever given."—[Official Report, 14th January 1977; Vol. 923, c. 1828.]
  That comes out of the mouth of a London Member who had responsibility for planning and housing at the time that this legislation was introduced. Let hon. Members not think that this is just a piece of party polemics. It stretches across the party barriers. I am only sorry to see that the right hon. Member for Bermondsey is not in the Chamber at present to give support, as it were, for the Opposition's attitude to this legislation, however many concessions the Minister may already have made.
  In short, therefore, I say that this sort of legislation proliferates a wholly unnecessary layer of bureaucracy and planning controls. Office development should best be left to those who know best about it—namely, the regional planning authority or other forms of local planning authority. When the present legislation expires on 4th August it should be allowed to stay expired. It has served its purpose and it should go. I
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  am pleased that the Opposition have taken a hard line against it.
  9.11 p.m.
  Mr. Robert Kilroy-Silk: I was extremely surprised to find the hon. Member for Burton (Mr. Lawrence) appearing to represent metropolitan London. Either the hon. Gentleman has his eye on a London seat, or he has some peculiar motivation to advance the claims of London, claims that have been advanced so frequently in the past against those of the other areas of the country.
  Like my hon. Friend the Member for Houghton-le-Spring (Mr. Urwin) in the North-East and my hon. Friend the Member for Swansea, East (Mr. Anderson) in Wales, I am surprised that the hon. Gentleman should make out a whole case in terms of London, he representing an area such as Burton. But then it is not surprising that he seems to have this confusion in his mind. The hon. Gentleman obviously has no concept of what a region is when he talks of the GLC in terms of a local authority.
  Mr. Lawrence Mr. Lawrence rose—
  Mr. Kilroy-Silk: No, I am not giving way to the hon. Gentleman. I do not have enough time to give way.
  Mr. Lawrence Mr. Lawrence rose—
  Mr. Kilroy-Silk: I have not finished with the hon. Gentleman. Perhaps he will choose to intervene at a later stage.
  The hon. Gentleman made his normal, expected protestations about bureaucracy and free enterprise. That is what we have learned to expect from him. What he said is what we have heard so often from the Opposition Benches. Conservatives want a Tory free-for-all. They want no attempt to determine a proper, logical, coherent plan of development that will suit the country as a whole and the regions in it—regions such as Merseyside and the North-East, which have suffered years of neglect and decline. If Tory freedom, Tory free-for-all and the loosening of controls and bureaucracy that the hon. Gentleman wants are allowed to take place, they will lead to the proliferation of office buildings in London that are built at a profit, built to stay empty, while we have dereliction, high housing costs, a lack of adequate housing, and many other deficiencies.

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  I am sure that the rest of the country will say with me that it wants nothing of Tory freedom. However, the hon. Gentleman learns quickly. That much has to be said for him. At least he has learned that the Labour Party believes in planning. He turns to a startled House and says "The Labour Party wants the Bill because it believes in planning". Next week the hon. Gentleman will be saying "Labour Members believe in Socialist planning". That is true.
  Mr. Geoffrey Finsberg: The planning of 1½ million unemployed.
  Mr. Kilroy-Silk: It is because of our belief in planning that many of us do not fully accept the Bill, which extends for a further period the power to control office development. The Bill does not go far enough. We do not want a continuation of the existing powers. If there are any defects in the Bill, they are not those that have been outlined by Conservative Members. There are controls over the building of offices but they do not go far enough.
  Bearing in mind the speculative office building that takes place in London, the South-East and the South-West, the facilities in the North-West and the North-East and the unemployment in the construction industry in those areas, the only logical conclusion is that there is not enough control over office building in areas where there is transport congestion, congestion of houses and schools, and a great burden upon all the social services.
  Those are the conditions that we have witnessed in London. At the same time there is an intolerable level of unemployment and a lack of opportunity in the North-West and the North-East, and especially upon Merseyside. There is unemployment in the construction industry and a lack of proper facilities.
  Given that situation it is eminently sensible to have control and planning. It is not necessary to be a Socialist to believe in that. Surely it is sensible to consider these matters dispassionately and objectively, whether it be England and Wales or the United Kingdom, and to attempt fairly and equitably to distribute and allocate our resources where they are needed and when they are needed. That seems to be eminently sensible.
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  One does not have to be a Socialist to believe in that approach.
  That approach does not imply a sharing out of misery but a sharing of the resources available to us to alleviate misery. Of course, other Conservative Members, like the hon. Member for Burton, have spoken in favour of London even though they represent constituencies in the regions. I suppose that they have to follow what has been said from their Front Bench and adopt the same rationale if they are to be able to explain their vote to their constituents.
  The important thing is that we should be allocating resources to the areas where they are needed. They are needed in the North-West and the North-East. They are not needed in the South-East or the South-West to the same extent. It is ridiculous to suggest that this is in any sense unnecessary and potentially damaging bureaucratic control.
  Such control is even more important when there is a depression. It is more important to share our resources then than to share them when there is a boom. One Conservative Member said that we should share resources in a boom but not in a depression. He said that London should not share its resources in those circumstances with the North-East or the North-West. Surely that is precisely the time to allocate resources fairly and equitably.
  Perhaps when there is a boom the deprivation and neglect of decades in the North-West will go by unnoticed, even though it ought not. There is a greater need than ever, however, to share out the resources now.
  We hear the Conservatives talking about freedom from controls and calling for public expenditure cuts in other areas. They want freedom from bureaucracy and yet they complain about unemployment in the North-West and Merseyside. They complain also about direct works departments. I know of no direct works department that has built a block of offices that has remained empty. No such department has built a Centre Point that has remained empty for years. If there is to be control of office development, it should not just be the controls in the Bill that ensure that offices move out to areas where they are needed, but a control to ensure that far more of our

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  capital resources are put into the building of homes.
  The Conservatives have been speaking about free enterprise and are in favour of the property developer and the speculative builder. They want capital to move freely after the profits in speculative building even if the buildings are to remain empty for several years. They worship Mammon but ignore the needs of my constituents who have no homes and who desperately require extra housing, which is denied them because the necessary resources are tied up far too much in speculative building for profit.
  I want my right hon. Friend the Secretary of State to start some speculative building of his own. Let him put in hand a variation of the advance factory, building advance offices instead. Merseyside desperately needs more offices and I understand from the Merseyside Development Office that it receives several inquiries a week from concerns wanting to move into the area but unable to do so because suitable accommodation is not available. They require a purpose-built office with a lease or credit guarantee. On Merseyside we provide factories and we manage to attract industry, but there is a demand for office facilities and it is not being met.
  Cannot my right hon. Friend help Liverpool and Merseyside? It is a service industry area and it has all the ancillary skills and resources to meet the needs of those industries. Cannot my right hon. Friend initiate a scheme whereby the builder can build an office block because the Government are guaranteeing his credit and capital or are prepared to take the office over as an advance office and to promote its letting when it is built?
  I regret that this Bill is necessary. I would have hoped that my right hon. Friend would go a little further so that we control the building of offices in future and ensure that investment is directed to the building of houses more than we have done in the past or seem prepared to do in future. Regions like Merseyside which are not affluent, and which never have been, will never be unless the Government take more positive steps than they have in the past to ensure that resources are distributed
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  through a Socialist regional policy which will generate the movement of resources from one area of the country to another according to the criterion of need.
  There should be no other criterion, neither that of profit nor of who can shout the loudest. It should not be my hon. Friend the Member for Houghton-le-Spring versus the hon. Member for Ormskirk or dog eats dog, but a Socialist policy of sharing resources. We shall achieve that only when we have public control of the construction industry and the public ownership of land. I hope that my right hon. Friend will pursue a far more positive policy in future and along with his other right hon. Friends ensure that we do not get any diminution of this policy but rather its toughening up in future.
  Mr. Speaker: The winding-up speeches by the Front Benches begin at 9.25 p.m. It is hoped that the hon. Member for Swansea, East (Mr. Anderson) will co-operate.
  9.22 p.m.
  Mr. Donald Anderson: I certainly agree that there is a case for rethinking the location of offices policy. But I do not think that now, a time of high unemployment, is the time.
  This continuation Bill is opposed by the property world, by the new GLC and by the Conservatives, who are clearly trying to mend their fences as speedily as they can with the property world, having had such difficulties with the development land tax and the Community Land Act.
  Mr. Geoffrey Finsberg: The Bill is opposed by the GLC totally. Both parties oppose it.
  Mr. Anderson: So be it. But clearly the new GLC has been particularly vocal in that respect.
  Mr. Geoffrey Finsberg: No.
  Mr. Anderson: Conservatives at last week's conference of the Incorporated Society of Valuers and Auctioneers said that office development control had distorted the economic base of the country. That is the whole argument for regional policy as such. If, as has been argued by the hon. Member for Hornsey (Mr. Rossi), office development policy has

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  been ineffective, the same argument can be used against regional policy. Both regional policy in general, as well as office development policy, have had some significant effects in the regions.
  The London argument, as instanced by my right hon. Friend the Member for Bermondsey (Mr. Mellish), is that there are parts of London with high unemployment. What is wrong with London is the mix of employment. The manufacturing base has moved out to the regions and London is still largely over-dependent on the service sector.
  But the regions, particularly my own part of Wales—the North-East, which is the area with the highest degree of unemployment currently—are over-dependent on the manufacturing base and need to attract offices. They need to attract service employment at a time when the public sector, as a result of constraint, is unable to provide it.
  If we were now to start dismantling this control, although it has not been as effective as we should have liked, it would be another blow to the Government's regional policy, which by and large has been effective and will be seen as such. I, together with hon. Members representing not only Wales but the regions, ask for the continuation of this control.
  9.24 p.m.
  Mr. Graham Page: The hon. Member for Swansea, East (Mr. Anderson) will, I hope, forgive me if I do not follow the line of his speech directly, because it is appropriate that I should follow closely on the heels of my neighbour, the hon. Member for Ormskirk (Mr. Kilroy-Silk). I say "closely on his heels" because he has left the Chamber. Had he remained, he would have found that I do not argue for what he called the Tory free-for-all. In fact, I would join him in pleading for greater consideration for the difficulties of the North-West, particularly Merseyside, where both of our constituencies are situate.
  However, I shall argue that there is a far better way of helping Merseyside and the other development areas and the less favoured areas than the ODP system, which hon. Member after hon. Member tonight, without always going as far as to say that it has completely outlived its purpose, has said should be thought out
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  again because circumstances have changed. The Secretary of State himself described a number of ways in which he hopes to develop the system. I was hoping that he would drop it altogether.
  It appears from the Explanatory and Financial Memorandum that office development is controlled very economically by the Department of the Environment. A sum of only £128,000 per annum is required to process about 430 applications, which I calculate to be about £300 per application. I gather that it will in future be much cheaper. My hon. Friend the Member for Hampstead (Mr. Finsberg) pointed out that the Secretary of State said that the load would be reduced, if he extended the limit, by about 51 per cent. I therefore presume that the cost, and I trust the manpower, will be halved.
  If there has to be some control in addition to planning control, one might ask why this comparatively cheap system should not be continued. My answer is twofold. First, this cost is merely the tip of the iceberg. The system might be cheap to run within the Department of the Environment, but it is very expensive for commerce in preparing these applications and in the delay in obtaining planning permission because of the necessity to obtain an ODP first. Second, this control, as an addition to planning, is now ineffective in its objective. It is not only no longer necessary but is an encumbrance to planning control and development.
  I should declare an interest as a director but not a shareholder of a property trust which has from time to time built offices. I am conceited enough, having declared that interest, to say that I know something about the problems which have been and will be faced by that kind of developer.
  The original objective of the ODP system in 1964 was the control of office development in metropolitan London and, a few months later, in the South-East as well, so as to reduce or at least to keep static office employment in that area. No one now wishes to reduce office employment in London—at least not just for the sake of reducing it, as was the original intention. My hon. Friend the Member for Hampstead made that point effectively, as did the hon. Member for Ealing, North (Mr. Molloy), although the

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  latter did not entirely carry with him his hon. Friend the Member for Ormskirk.
  If the result were to encourage the increase in office employment in the North-West and the North-East, I imagine that London would grin and bear it, but the system has not been doing that very effectively. Incidentally, that was not the original objective of the system. That developed over the late sixties and early seventies. The ODP system has been singularly ineffective in achieving the objective of forcing development into the North or other areas—the South-West and Wales—where office employment was needed. I do not say that the system has been a complete failure; of course not. It has achieved the movement of perhaps 7,000 jobs.
  The policy of dispersal of Government offices has achieved far more than the ODP system in taking office jobs to the assisted areas. The lack of success of the negative system of ODPs in bringing about a positive increase in office jobs in assisted areas was admitted by the Government when they introduced financial incentives.
  My hon. Friend the Member for Reading, North (Mr. Durant) pointed out that he lost beer, bulbs and biscuits because of the success of industrial incentives, and the hon. Member for Ealing, North lost glass containers. That movement of industry was so successful that it was obvious that the same sort of idea should be applied to office movement.
  The Industry Act 1972 gave an £800 grant per employee moved out and a five-year rent subsidy. On top of that there was selective employment tax and the regional employment premium, but none of these incentives succeeded in achieving the sort of movement of jobs that we had all hoped would be achieved at the time.
  The need for incentives was obvious. This can be seen when one looks at the figures that were referred to by my hon. Friend the Member for Hornsey (Mr. Rossi) when he quoted from the office location review for the seven years up to 1972. This showed that of the 41 larger "named users" whose ODP applications were refused in the London area only six moved out of the capital and all of those moved to locations somewhere in the South-East. That was the sort of failure that we had to face.
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  My hon. Friend the Member for Daventry (Mr. Jones) asked about those firms that were refused applications last year. He asked whether they had moved out of London or just moved into the suburbs. Certainly there has been an increase in the number of office jobs in the assisted areas—some 8 to 12 per cent. But that is in line with the rest of the country. In the office location review this point is brought out very formidably in Section 5 which says:
  "private sector relocation from other areas appears to have made only a very small contribution. The assisted areas have been benefiting mainly from the growth of 'indigenous' office employment, i.e. the expansion of enterprises already located in assisted areas or the establishment there of new establishments with origins in these areas."
  So the increases come mainly from indigenous growth.
  It is not surprising that by 1974 the then Secretary of State for the Environment set up this review of office location. When the review reported, the Secretary of State said that he would increase the limits of 10,000 sq. ft. to 15,000 sq. ft. for exemption from office development permits and that he would consider the rest of the suggestions in the review.
  The whole tone of the report of the review was that the ODP system on its own had outlived its purpose and was not achieving the objectives that we all hoped would be achieved. I quote again from the review:
  "The control acts on the supply of new premises. By adding to the delays imposed on the market by the planning system, it is an additional brake. Whilst the control may not be very effective in achieving relocation to the assisted areas in that firms, refused an ODP, have a choice of alternatives, it nevertheless provides an opportunity for 'steering' because the individual application identifies the firms with the accommodation problem."
  So the best that the report could say was that it gave a chance to steer a firm. But it did not succeed, because the report concluded by saying:
  "If a control is needed in addition to the incentive scheme…the choice would seem to lie between the occupation permit scheme"
  —I hope that the Secretary of State will not adopt that—
  "or continuing the simpler, more familiar ODP system."
  Having recognised that the system was not successful at that time, it gave the

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  Secretary of State no real recommendation what to put in its place.
  I should like to examine how the system operates in practice within the Department of the Environment. A small unit there receives and processes the applications and receives from the Secretary of State from time to time guidelines—in the same way as he might send out a circular to local authorities telling them what applications for planning permission he would call in. They are the guidelines upon which the unit works.
  The provision in the legislation which directs the Secretary of State in the exercise of the discretion which he has in issuing office development permits is wide. Obviously, such guidelines have to be given to those administering the issue of the permits, but because of those guidelines the unfortunate applicant has to do an enormous amount of work before his permit is considered.
  Before it moved its 1,500 employees to Sheffield, the Midland Bank considered as possibilities 750 cities and towns. That is what has to be done by those who apply for an ODP. They have to satisfy the Department of the Environment that nowhere else outside the controlled area will do. They have to carry out a survey of the staff—who will move or who will not move. In considering going to Merseyside or to the North-East, they have to consider whether there is staff available in that area, give their reasons and all the rest of it. It is an elaborate and costly business for a firm to prepare a planning application. Furthermore, it is hopeless to expect to get an application through unless the applicant firm is the "named user" or can satisfy the Department that the property will be custom-built.
  Up to the present time it has been impossible to obtain ODPs on speculation, although the Secretary of State has now said that he intends to allow that in future. I refrain from commenting upon why a Socialist Government should support speculative builders; I agree with him to some extent, and I am glad to see a reform in his ideas.
  There are now four categories of areas of control. There is the City of London—and nobody wants to control development there. It is said in the office location review report that the professions, in-
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  dustry and banking are concentrated in London because they need to be close together.
  Secondly, as for the rest of central London nobody wants to depopulate its office population there. Thirdly, in suburban London there has been much building development and it has been shown that a firm that has been refused permission to build in a suburban area rarely goes far elsewhere. Such a firm might go further into the South-East but not to the North-West or the North-East. Fourthly, there is the rest of the South-East—and by that I mean the South-East regional planning area not just the South-East of London but an area that goes as far as Bedford—I am sure that there matters can safely be left to the normal planning law.
  That is why I am against the Bill and why I say that the ODP system should now be scrapped and control left to the normal calling-in procedure under Section 35 of the Town and Country Planning Act 1971. Under that Act, the Secretary of State has full power to give directions about the sort of planning application with which he wishes to deal himself. Indeed, such directions have been given many times about various types of development. I can recollect one that was issued about hypermarkets, and there have been others about forestry and so on.
  If the Secretary wishes to have central control or some supervision over office development in the South-East where that development would exceed 30,000 square feet, he could disband the ODP system altogether and issue a directive that he wishes to call in all such planning applications. The advantages are that there would be no need for a separate unit in the Department of the Environment and that there would be no need for such applications for permits. The consideration of such development would be carried out through a partnership between the local authority and the Secretary of State at an early stage and the Secretary of State would have flexibility in applying the limits as necessary and in phasing out the whole system in due course.
  My hon. Friend the Member for Manchester, Withington (Mr. Silvester) said that if ODPs were to go, something should be put in their place. My hon Friend wants to destroy the ODP system,

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  as I do, but I do not want to destroy the whole of planning control. I wish to see provided a far better form of control—one within the normal planning law in partnership with the local authorities. The normal planning law would be applied and the Secretary of State could call in whatever he felt was of national or regional importance. That would mean that we should do away with the bureaucracy of the present ODP system and recognise that a planning system can deal with the problems that confront us far more effectively.
  Now that the hon. Member for Ormskirk has returned to the Chamber I must repeat what I said at the beginning of my speech when he was absent, that is that dealing with such matters on a planning basis rather than by ODPs would be of far greater assistance to Merseyside and the less favoured areas of the country.
  9.45 p.m.
  The Under-Secretary of State for the Environment (Mr. Guy Barnett): It will not be possible in the 15 minutes available to me to reply in detail to all the points made in this interesting debate, but I shall do my best at least to refer to most of them.
  I start by answering the specific questions of the hon. Member for Hampstead (Mr. Finsberg), who asked how many ODP applications were received each year. In 1975 the number was 510 and last year there were 325 applications. I think that the hon. Gentleman wanted the figures because he believed that if we raised by half the figure of square feet for exemptions we could save 50 per cent. of the applications and therefore 50 per cent. of the staff who administer ODP controls in the Department.
  I cannot do sums that simply, if only because of the differences in the number of applications in, for example, 1975 and 1976. However, I give the hon. Gentleman an absolute assurance that we shall, as always, adjust the number of staff to the work load with which they have to deal.
  I was mildly surprised by the number of Opposition Members who raised the bureaucracy bogy. They admitted that only 14 staff in the Department coped with ODP control and that the Location
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  of Offices Bureau spends less than £250,000 a year, yet we heard about bureaucratic control and the Government being reluctant to surrender this form of control. Hon. Members seem to be seeing if not Communists at least bureaucrats under the bed.
  It may not be an effective policy of control—I shall come to that later—but it is certainly an inexpensive form of control for us. The right hon. Member for Crosby (Mr. Page) told us about the expense that property companies and others go to in preparing applications for ODPs. I shall look at the points that he raised, but we cannot be accused of continuing a highly expensive form of control.
  There has been much criticism of ODPs in the 12 years of their operation. Every hon. Member opposite who took part in the debate, even the hon. Member for Manchester, Withington (Mr. Silvester), who has something to gain from it, was critical of the system as it has been operated. They suggested that it should be abolished.
  I have to ask them whether they believe that there is a place for an office location policy. Obviously, the right hon. Member for Crosby thinks that there is but he believes that it should be part of general planning policy and that the Secretary of State should exercise control over the location of offices in this way. However, he was the only Opposition Member who made even that admission and we must assume from the speeches of the hon. Member for Hornsey (Mr. Rossi) and others that the Opposition want no form of control over the location of offices.
  In a debate on 14th March the hon Member for Hampstead said:
  "All impediments to growth must be removed—IDCs, ODPs".—[Official Report, 14th March 1977; Vol. 928, c. 110.]
  I am sure that is not yet official Opposition policy, but things are moving fast in that direction.
  It is important that I should try to explain why we believe that some form of office location policy must be continued. It was nowhere better illustrated than in the speeches of my hon. Friends the Members for Ormskirk (Mr. Kilroy-Silk) and for Houghton-le-Spring

  363
  (Mr. Urwin), who spoke about their con stituencies and the range of opportunities for people looking for employment there I did not fully follow the speech of my hon. Friend the Member for Ealing, North (Mr. Molloy), who seemed to be referring more to manufacturing industry than office employment.
  Several hon. Members drew attention to the fact that we are concerned with the balance of employment in London compared with other parts of the country. Figures from the office location review indicate that, according to the figures in the 1971 census, the percentage of people in office accommodation in the Northern Region is 18·5. In Yorkshire and Humberside, the percentage is 19·3 and in Wales 18·0. I have no reason to believe that they are all that different today. In London the percentage is 38·3. Those figures illustrate quite simply that there is a very unfair balance of employment in different parts of the country, and it is that which we need to attempt to correct first.
  It is partly for that purpose that we believe that there is a need for an office location policy, apart from the fact that office development in inner cities, as my right hon. Friend has pointed out, can be an important form of assistance in the regeneration of a run-down area, whether that area is in inner London, Liverpool, Birmingham, or anywhere else.
  There has been criticism of the office development permit system. A lot of it is based upon experience of the system. Perhaps on occasion it has been used insensitively. Perhaps one of the reasons for its being used insensitively to begin with is that the Government did not monitor the operation of the system as well as should be.
  My right hon. Friend pointed out the great importance of monitoring the system and of using it sensitively. Over the last dozen years or so we may have learned from some of our experiences of the need to monitor demand for and supply of office accommodation and to be sensitive to local needs, such as the needs of inner city areas, which we have been too ready to neglect in the past.
  Perhaps, too, we made the mistake a dozen years ago of applying too low a limit for the requirement of office development certificates. I hope that, as a
  364
  consequence of that experience and as a consequence of the reappraisal which my right hon. Friend has made of the need for office location policy today, we are now moving towards a policy which is relevant and which has benefited from experience.
  Office location policy cannot, it seems to me, if it is to be successful, merely be confined to operation of an office development permit system, but that has been the implication of most of the speeches made by Opposition Members. It cannot be so confined, and my right hon. Friend made this absolutely clear. It is part of three aspects of office location policy with one of which the Bill is concerned. The Bill, admittedly, is concerned with ODP control, and hon. Members were right to concentrate their attention and their criticisms on that aspect of the policy. What is it? It is a disincentive to decisions to develop in South-East England.
  Perhaps it is important to recognise—because figures have been quoted on a number of occasions this evening—that it acts as a disincentive and that, therefore, there may be and almost certainly are people or firms who, because of ODP control, make decisions to locate offices away from London without even applying for office development permits. Nevertheless, that is the purpose of the ODP policy.
  But that is not the end of it, because the Location of Offices Bureau has a vital part to play in policy. I know that because of its advertisements that is the respect in which LOB is perhaps best known by hon. Members and, indeed, by the public in general. But it is fair to point out that the Location of Offices Bureau provides a very useful free information service to those interested in building or setting up offices in different parts of the country. This information service is perhaps not recognised for the importance it has, because of the general prominence of the LOB's advertisements.
  The bureau has available for anyone who wishes to consult it a comprehensive list of office accommodation vacant in towns all over Great Britain and corresponding information about rents being asked. On top of this it can give help concerning Government assistance, planning permission, availability of staff, housing, transport, and anything else that

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  anyone interested in moving his office needs to know. That is a vital part of office location policy. That is why my right hon. Friend is altering and broadening the remit of the Location of Offices Bureau. We believe that it has a vital part to play in this important job that needs to be done—that of getting a better distribution of office employment in the country at large.
  There is a third aspect of the policy to which the right hon. Member for Crosby referred—the grants available from the Department of Industry. The right hon. Gentleman saw that as an alternative to office development policy, but I see it as a complement or at least as the third aspect of a successful policy.
  The Department of Industry has been paying grants since 1973. But since October of last year those grants have increased. In consequence, there has been a doubling in the rate of applications for assistance to move to assisted areas. I believe that those three aspects have a vital part to play in office location policy. Indeed, Government dispersal has already been mentioned. That, too, has an important part to play. Only in that context can we see the real importance and value of the Bill.
  I come back to what I said earlier. Clearly, it is important that the policy should be operated sensitively. Where it can reasonably be shown that a firm has a close link with an area in which it wants to operate, or that a large percentage of its employees need to be in that area, there is a case for the policy being operated as sensitively as possible.
  The hon. Member for Reading, North (Mr. Durant) gave us an interesting analysis of problems in his constituency which no doubt affect many towns round London. With the great rise in transport
  costs, there may need to be more office jobs available in those areas. The fact that we have raised the limit makes the policy immediately more flexible and should enable towns like Reading to develop offices where they need to do so. If there is a need for development because of a serious imbalance of opportunities in certain towns, or because unemployment has developed as people can no longer afford to travel long distances to work, I hope that we shall operate the policy intelligently and sensibly to cope with the situation.
  I think that I should speak to those Members who, like myself, represent London constituencies and who are clearly worried about the situation. As has been pointed out, London has lost many manufacturing jobs. It has not lost quite as many office jobs. One reason for that—I think it worth quoting this, because it appears in an advertisement in tonight's Evening Standard—is what is said by the Location of Offices Bureau:
  "We have details of available office space in 375 locations throughout the UK (including Greater London). And we know about local planning policies and Government incentives and controls."
  I should emphasise that one final aspect of the policy is just that, because of the policy being pursued by the Government, because of ODP control and all the rest, we are in the long term influencing public opinion. Whereas 10 or 12 years ago people might not have thought seriously of going north to an assisted area, nowadays they are more ready to consider the possibility of dispersal to areas where the opportunities of employing labour are easier than they may be in London.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 155, Noes 121.

  Division No. 142]

  AYES

  [10.00 p.m.

  Anderson, Donald

  Callaghan, Jim (Middleton & P)

  Cunningham, Dr J. (Whiteh)

  Archer, Peter

  Campbell, Ian

  Davidson, Arthur

  Armstrong, Ernest

  Canavan, Dennis

  Davies, Ifor (Gower)

  Ashton, Joe

  Carter-Jones, Lewis

  Davis, Clinton (Hackney C)

  Atkins, Ronald (Preston N)

  Clemitson, Ivor

  Dempsey, James

  Atkinson, Norman

  Cocks, Rt Hon Michael (Bristol S)

  Doig, Peter

  Barnett, Guy (Greenwich)

  Coleman, Donald

  Dormand, J. D.

  Benn, Rt Hon Anthony Wedgwood

  Conlan, Bernard

  Douglas-Mann, Bruce

  Bennett, Andrew (Stockport N)

  Corbett, Robin

  Dunnett, Jack

  Blenkinsop, Arthur

  Cowans, Harry

  Eadie, Alex

  Boardman, H.

  Cox, Thomas (Tooting)

  Edge, Geoff

  Boothroyd, Miss Betty

  Craigen, Jim (Maryhill)

  Ellis, John (Brigg & Scun)

  Bottomley, Rt Hon Arthur

  Crawshaw, Richard

  Evans, Gwynfor (Carmarthen)

  Butler, Mrs Joyce (Wood Green)

  Crowther, Stan (Rotherham)

  Ewing, Mrs Winifred (Moray)

  Callaghan, Rt Hon J. (Cardiff SE)

  Cryer, Bob

  Faulds, Andrew

  Fernyhough, Rt Hon E.

  Leadbitter, Ted

  Skinner, Dennis

  Flannery, Martin

  Lestor, Miss Joan (Eton & Slough)

  Smith, John (N Lanarkshire)

  Fletcher, Ted (Darlington)

  Lewis, Ron (Carlisle)

  Snape, Peter

  Foot, Rt Hon Michael

  Loyden, Eddie

  Spriggs, Leslie

  Ford, Ben

  Lyons, Edward (Bradford W)

  Stallard, A. W.

  Forrester, John

  Mabon, Rt Hon Dr J. Dickson

  Steel, Rt Hon David

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

  McCartney, Hugh

  Stewart, Rt Hon M. (Fulham)

  Freeson, Reginald

  McDonald, Dr Oonagh

  Stoddart, David

  Garrett, W. E. (Wallsend)

  McElhone, Frank

  Stott, Roger

  Gilbert, Dr John

  MacFarquhar, Roderick

  Summerskill, Hon Dr Shirley

  Gourlay, Harry

  Marks, Kenneth

  Taylor, Mrs Ann (Bolton W)

  Graham, Ted

  Marshall, Dr Edmund (Goole)

  Thomas, Mike (Newcastle E)

  Grant, George (Morpeth)

  Marshall, Jim (Leicester S)

  Thomas, Ron (Bristol NW)

  Grocott, Bruce

  Maynard, Miss Joan

  Thorne, Stan (Preston South)

  Harper, Joseph

  Miller, Dr M. S. (E Kilbride)

  Tierney, Sydney

  Harrison, Walter (Wakefield)

  Mitchell, Austin Vernon (Grimsby)

  Tinn, James

  Hatton, Frank

  Molloy, William

  Torney, Tom

  Heffer, Eric S.

  Moonman, Eric

  Tuck, Raphael

  Hooley, Frank

  Morris, Charles R. (Openshaw)

  Urwin, T. W.

  Howells, Geraint (Cardigan)

  Murray, Rt Hon Ronald King

  Walker, Terry (Kingswood)

  Hoyle, Doug (Nelson)

  Newens, Stanley

  Ward, Michael

  Huckfield, Les

  Noble, Mike

  Weetch, Ken

  Hughes, Mark (Durham)

  Palmer, Arthur

  Wellbeloved, James

  Hughes, Robert (Aberdeen N)

  Park, George

  White, Frank R. (Bury)

  Hughes, Roy (Newport)

  Parry, Robert

  White, James (Pollok)

  Hunter, Adam

  Pavitt, Laurie

  Whitlock, William

  Jackson, Colin (Brighouse)

  Roberts, Albert (Normanton)

  Wigley, Dafydd

  Jackson, Miss Margaret (Lincoln)

  Robinson, Geoffrey

  Williams, Alan Lee (Hornch'ch)

  Jenkins, Hugh (Putney)

  Roderick, Caerwyn

  Williams, Sir Thomas (Warrington)

  John, Brynmor

  Rodgers, George (Chorley)

  Wilson, Alexander (Hamilton)

  Johnson, James (Hull West)

  Rodgers, Rt Hon William (Stockton)

  Wilson, William (Coventry SE)

  Jones, Alec (Rhondda)

  Rooker, J. W.

  Wise, Mrs Audrey

  Jones, Barry (East Flint)

  Ross, Stephen (Isle of Wight)

  Woodall, Alec

  Jones, Dan (Burnley)

  Ryman, John

  Woof, Robert

  Kaufman, Gerald

  Shaw, Arnold (Ilford South)

  Kilroy-Silk, Robert

  Shore, Rt Hon Peter

  TELLERS FOR THE AYES:

  Lambie, David

  Silkin, Rt Hon S. C. (Dulwich)

  Mr. Alf Bates and

  Latham, Arthur (Paddington)

  Silverman, Julius

  Mr. James Hamilton.

  NOES

  Atkins, Rt Hon H. (Spelthorne)

  Hannam, John

  Rawlinson, Rt Hon Sir Peter

  Baker, Kenneth

  Harrison, Col Sir Harwood (Eye)

  Rhodes James, R.

  Banks, Robert

  Hawkins, Paul

  Rippon, Rt Hon Geoffrey

  Bennett, Sir Frederic (Torbay)

  Hayhoe, Barney

  Roberts, Michael (Cardiff NW)

  Benyon, W.

  Heseltine, Michael

  Rossi, Hugh (Hornsey)

  Berry, Hon Anthony

  Hodgson, Robin

  Rost, Peter (SE Derbyshire)

  Biffen, John

  Hunt, John (Bromley)

  Sainsbury, Tim

  Biggs-Davison, John

  Hutchison, Michael Clark

  Shaw, Giles (Pudsey)

  Blaker, Peter

  Junes, Arthur (Daventry)

  Shepherd, Colin

  Boscawen, Hon Robert

  Kershaw, Anthony

  Silvester, Fred

  Bottomley, Peter

  King, Evelyn (South Dorset)

  Sims, Roger

  Bowden, A. (Brighton, Kemptown)

  Kitson, Sir Timothy

  Skeet, T. H. H.

  Braine, Sir Bernard

  Knox, David

  Smith, Dudley (Warwick)

  Brittan, Leon

  Langford-Holt, Sir John

  Smith, Timothy John (Ashfield)

  Brocklebank-Fowler, C.

  Lawrence, Ivan

  Speed, Keith

  Brooke, Peter

  Lawson, Nigel

  Spence, John

  Bryan, Sir Paul

  Le Marchant, Spencer

  Spicer, Michael (S Worcester)

  Butler, Adam (Bosworth)

  Lester, Jim (Beeston)

  Sproat, Iain

  Carlisle, Mark

  Luce, Richard

  Stainton, Keith

  Channon, Paul

  Macfarlane, Neil

  Stanbrook, Ivor

  Clark, Alan (Plymouth, Sutton)

  Mackay, Andrew James

  Steen, Anthony (Wavertree)

  Clegg, Walter

  Marten, Neil

  Stradling Thomas, J.

  Cooke, Robert (Bristol W)

  Maxwell-Hyslop, Robin

  Taylor, R. (Croydon NW)

  Costain, A. P.

  Miller, Hal (Bromsgrove)

  Tebbit, Norman

  Crowder, F. P.

  Moate, Roger

  Temple-Morris, Peter

  Douglas-Hamilton, Lord James

  Molyneaux, James

  Thatcher, Rt Hon Margaret

  Durant, Tony

  Moore, John (Croydon C)

  Thomas, Rt Hon P. (Hendon S)

  Eden, Rt Hon Sir John

  More, Jasper (Ludlow)

  Trotter, Neville

  Elliott, Sir William

  Morgan, Geraint

  van Straubenzee, W. R.

  Eyre, Reginald

  Morrison, Charles (Devizes)

  Vaughan, Dr Gerard

  Fairbairn, Nicholas

  Nelson, Anthony

  Viggers, Peter

  Farr, John

  Newton, Tony

  Walder, David (Clitheroe)

  Finsberg, Geoffrey

  Oppenheim, Mrs Sally

  Wall, Patrick

  Fisher, Sir Nigel

  Page, Rt Hon R. Graham (Crosby)

  Weatherill, Bernard

  Fookes, Miss Janet

  Page, Richard (Workington)

  Wells, John

  Forman, Nigel

  Parkinson, Cecil

  Whitelaw, Rt Hon William

  Fry, Peter

  Pattie, Geoffrey

  Young, Sir G. (Ealing, Acton)

  Goodhart, Philip

  Percival, Ian

  Younger, Hon George

  Gorst, John

  Powell, Rt Hon J. Enoch

  Gray, Hamish

  Pym, Rt Hon Francis

  TELLERS FOR THE NOES:

  Grylls, Michael

  Raison, Timothy

  Mr. Carol Mather and

  Hampson, Dr Keith

  Rathbone, Tim

  Mr. Peter Morrison.

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  CONTROL OF OFFICE DEVELOPMENT [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to extend the duration of and otherwise amend certain enactments relating to the control of office development in England and Wales, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to that Act in the administrative expenses of the Secretary of State under any other enactment.—[Mr. Snape.]

  EUROPEAN COMMUNITY (ENERGY POLICY)
  10.13 p.m.
  The Secretary of State for Energy (Mr. Anthony Wedgwood Benn): I beg to move,
  That this House takes note of Commission Documents Nos. R/75/77 (rev 1), R/477/77, R/478/77, R/479/77 and R/684/77 on EEC Energy Policy.
  I shall begin with a word of introduction. The Scrutiny Committee asks that we include in our discussion Commission Document No. R/684/77 relating to refinery policy. I believe that the Leader of the House omitted to mention it when he announced the business for the week, but it is on the Order Paper.
  The House will appreciate that it is right that immediately after the Summit discussed energy policy we should have another debate on Community energy policy. The Scrutiny Committee in fact recommended that we should have a debate on some of these matters before the 29th March Energy Council, and we did have a debate on 21st March on coking coal. We shall broaden the subject tonight.
  At the Energy Council meeting on 29th March we had a general discussion about the energy prospects for the EEC. There was a discussion on conservation. We also agreed that Euratom loan scheme and the extension of the coking coal aids. Another decision was taken: it was decided that there should be national surveillance of coal imports from third countries. On 29th March I failed to persuade the Council that its meetings on conservation should be held in public. I attached much importance to that, and I still do.
  On 14th June there will be another Energy Council meeting—the last under my presidency. We shall have proposals from the Commission for the protection of energy investments, including minimum safeguard price, with draft instruments before us. We shall have some papers on refinery policy—to which I shall refer tonight—and we shall have more on conservation. I very much hope that we shall have a general discussion on nuclear policy, rather like the discus
  372
  sion that we had on conservation at the March meeting.
  Perhaps I may now turn to the individual instruments that the Scrutiny Committee invited the House to consider, and then, if it is agreeable, before I finish I should like to broaden the discussion so as to set it into a wider perspective.
  Document R/479/77 deals with energy saving and was, as I have mentioned, discussed. No new policy issues are involved. There are no legislative proposals brought forward. However, every country, including the United Kingdom, attaches great importance to energy conservation, and although we have indigenous fuels at present in plenty, that is no excuse for inaction on our part. We estimate that we have saved—a genuine saving—at least 2 per cent. of primary energy in the United Kingdom, and, of course, we are part of an IEA programme as well, and the United States is also involved in conservation measures, which was underlined by the President in his statement in April.
  Recommendations had been accepted in May 1976 by the Council of Ministers dealing with thermal insulation of buildings, with heating systems, with information about road vehicles, with some provisions on urban transport and with appliance labelling. We have asked the Commission to elaborate these proposals, but they will require action at all levels and it would not necessarily be wise or sensible to try to standardise our procedures here. This is an area in which each country will want to adopt what seems sensible to itself, and I hope that this will not require directives.
  I now turn to Documents R/75/77, which is the paper referring to coal for electricity generation, and R/478/77 on the Community coal situation. I should like to refer to each of those very briefly in turn.
  In December 1974, the Council of Ministers decided to maintain coal production at 250 million tonnes per annum up to 1985 to try to reduce the dependence on imported oil and to increase the security of supplies. The importance of coal will grow. That is widely recognised in the United States, which has an objective now of over 1 billion tonnes of coal a year, which is the same as that of the Soviet Union, which also plans to expand coal production.

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  The present coal production in the Community is the equivalent of 166 million tonnes of oil—that is, one and a half times or one and two-third times the full production of North Sea oil. For every 1 million tonnes of coal that we can produce and use, we are saving 600,000 tonnes of oil.
  However, it is a fact that the coal targets set by the Council in 1974 have not been met. There has, in fact, been a 9 per cent. fall in coal production since 1973, and in 1976 only 229 million tonnes of coal was produced in the Community compared with the target of 250 million tonnes. This is partly because of the recession, which has affected the steel industry, and partly because imports of coal have risen and, therefore, stocks have risen, too.
  In order to meet this, the Commission has made two proposals. I shall deal with them one by one. Document R/75/77 is to promote 30 gigawatts of coal-fired capacity by the 1980s to burn 37 million tonnes of coal—which is the equivalent of 26 million tonnes of oil. For this purpose, 500 million units of account, or £327 million, would be made available, of which the United Kingdom would be required to pay between £70 million and £80 million over a 12-year or 15-year period. The intention is that this should be used to cover 30 per cent. of the extra cost of having coal-fired stations. That would be spread over a 12- to 15-year period at a maximum annual spend of 50 million units of account, or £32 million. The electricity authorities would be asked to make an estimate of their coal-burn seven years ahead. If they failed to meet their estimate of burn, the aid would be withdrawn.
  Mr. T. H. H. Skeet: Of the 30 gigawatts of coal-fired capacity, how much of that is attributable to the United Kingdom?
  Mr. Benn: That would depend on the the extent to which we took advantage of it. We have an interest in taking advantage because we have a great deal of coal. I cannot give a specific figure as it will depend on the decision that is taken in respect of conversion or of new coal-fired stations, for example.
  The programme is needed to sustain a burn of 150 million tonnes of coal by
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  1985 and to prevent a fall, which might otherwise occur, to 90 million tonnes of coal. It is a modest aid as proposed and the grant or assistance that is contemplated would meet 30 per cent. of the additional cost of a coal-fired station, which is normally about 20 per cent. above the cost of an oil-fired station.
  Mr. Tim Sainsbury: Is aid available to meet the additional cost of reducing sulphur emission from a coal-fired station to the equivalent level of emission from an oil-fired station?
  Mr. Benn: If I cannot give a precise answer now, I hope that the hon. Gentleman will forgive me. My understanding is that the aid is intended to cover the capital cost. Therefore, the problem of sulphur emissions would be catered for in so far as it would be involved in the capital cost of building the stations. That is my understanding. Does that sound right to the hon. Member for Bridgwater (Mr. King)?
  Mr. Tom King: Yes.
  The Minister of State, Department of Energy (Dr. J. Dickson Mabon): It does to me.
  Mr. Benn: My right hon. Friend will present the House with the correct answer as he can wait for a message while I struggle on as best I can. However, I think I have it right.
  The other proposal that the Commission makes is that there should be a monitoring of third-country imports. This we put under way at the March meeting. It will provide the Commission and member States with some knowledge of what is happening. That is intended to be part of our policy for increasing our own independence.
  There were two other proposals that are not really for discussion tonight. One proposal has already been dealt with—namely, the coking coal subsidy, which was extended at the meeting of 29th March. The other proposal is Community aid for coal and coke stocks, which would be to meet one-third of the excess of stocks exceeding one month's supply, up to 20 million tonnes. That is under examination by the Commission, and it may come up for discussion in June. It will have to go to the European Assembly for comment before a decision

  375
  can be taken. That is of considerable importance to us because of our coal interests.
  I turn to the third item, R/684/77, dealing with oil refinery problems. There is estimated to be a surplus in the Community of 140 million tonnes of refinery capacity. The reason for that is partly what took place in 1973 and what followed from it and partly the recession. This is an industrial problem that confronts individual States, and the Community has decided to examine the matter. The Commission has proposed a standstill on construction and a withdrawal of marginal or less efficient plant and a monitoring and consultation process on the construction of new refineries. We share the problem because in 1976 our own refinery utilisation was at the level of only 67 per cent. Under the legislation that Parliament has passed, I have power to control new plant.
  Our interest in refining policy as a major oil producer, however, is not the same as that of other member States. Since my predecessor, the present Secretary of State for Industry, made a statement on refinery objectives in December 1974, it has been an objective of United Kingdom oil policy that on average two-thirds of our oil should be refined in the United Kingdom. This is a very important national interest for us because if we are able to refine our own North Sea oil the value of that is added here, and that is a benefit.
  There is therefore no question of Her Majesty's Government encouraging refinery closures. Four new projects in the United Kingdom have already received planning permission and the Commission has been notified. We cannot accept that a sensible procedure for consultation can mean a standstill on new refinery capacity if a case for it can be made out. In any case we know that more secondary processing plant is needed in the Community.
  There is one other aspect of the refinery policy to which I should draw attention en passant, and that is the importation of refined products from the oil-producing countries. Clearly, it is likely that there will be an expansion of capacity in those countries, and this is a problem for the future that we shall have to watch very carefully. We want proper
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  information, consultation and discussions with third countries about it. It is possible that some measures might be necessary.
  I have given the House a brief report on the papers that the Scrutiny Committee has asked the House to examine. Perhaps I might now be allowed to set this discussion against a wider background. I think that it is increasingly understood each time we debate the subject that there seems to be a wider public acceptance of the central rôle of energy provision and energy policy in the policies of all countries. Energy is vital to the national interests of all member States of the Community. Any sensible British Minister, particularly now during our presidency of the Council, must respect the fact that we are dealing with central national interests of other member countries.
  There is no question of the Community controlling EEC energy resources. Those countries that have those resources will trade in them. We shall trade in energy and our contribution will be through trade. Our great wealth in coal, oil and gas and our skill in nuclear generation put us in a very powerful position. I gave the figures in our debate on 21st March.
  I have tried to build on our common interests at a sensible pace. That is to say, I have tried to discover the interests of the other member countries and gradually to put the pieces of the jigsaw puzzle together in a way that meets our common interest. But, apart from what the Council of Ministers might do, the Treaty of Rome applies in this area.
  There are aspects of the matter that we did not discuss at the March meeting, so perhaps I can mention them now. For example, the Commissioner for Competition, Commissioner Vouel, came to see me two days ago to discuss the impact of the interest relief grants. These have been a part of our policy for stimulating the opportunities for British industry to take advantage of the great potential that exists for supplying equipment to the North Sea. This scheme was introduced not by the present Government but by the Conservatives, but it was made known to the Commission at the time. I think the scheme was introduced in 1973 but was brought forward under the Industry Act 1972. It is a most important interest

  377
  of ours because the percentage of equipment orders won by British industry has risen from 30 per cent. to over 50 per cent., as the Brown Book revealed, and 100,000 jobs, particularly in Scotland, have derived directly and indirectly from this. The Interest Relief Grants Scheme, introduced by the previous Government, is of great importance to us. We hope that there will be further discussions about this because, as is widely known, the Commission has raised queries on it. There are other areas of possible energy—
  Mrs. Audrey Wise: I am not quite clear about what my right hon. Friend is saying. Is he saying that the Commission is objecting to these arrangements, which are very important for all these jobs? What exactly does my right hon. Friend mean?
  Mr. Benn: In order to give the House a perspective of this I was reporting that the Treaty of Rome on State aids, which applies to all State aids, applies with regard to energy, and that the discussions we are having with the Commission represent just one aspect of this policy. Of course, in other areas of oil policy, such as refinery policy, landing provisions and power station siting, there is a Commission interest. These are things that any British oil Minister has to work on where essential interests are concerned.
  Mrs. Wise: Do I take it that, while bearing all these things in mind, my right hon. Friend will observe the overriding necessity to stick to the policies which we have been operating and not allow the Commission to interfere?
  Mr. Benn: Discussions are in progress. I do not believe I am saying anything that the House does not already know arising from the provisions of the treaty, which are dealt with by the Commission and can ultimately be dealt with by the court, which do not lie within the authority of the United Kingdom or, indeed, any member State. I am not saying anything new to the House. I was just putting some of the aspects of membership of which the House should be aware.
  I turn to the international aspects of energy policy, with which I have been particularly concerned in visits over the last few weeks. First, there are many
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  forums in which energy policy is discussed. There is the OECD, of which we are members. There is the International Energy Agency, of which we are members. There is the CIEC, or what has loosely been known as the North-South dialogue. There are various congresses such as the World Power Congress, the World Petroleum Congress, the International Atomic Energy Agency and the London Club of Nuclear Suppliers. We are one of the three signatory States to the Non-Proliferation Treaty. There is no doubt whatever that energy is discussed worldwide and not only in a Community context.
  As the House knows, I had a series of meetings to which perhaps I might briefly refer. First, there were my visits to the EEC capitals as President of the Energy Council, and then I went to the United States for discussions with Dr. Schlesinger, the Secretary-elect for Energy, in which I took the opportunity of discussing with him a range of nuclear interests including uranium demand and supply, waste reprocessing, the fast breeder, fusion, and nuclear accounting.
  I followed this with a visit to Norway, where we have a strong common interest with the Norwegians, and then to Saudi Arabia, which has a massive oil capacity which can operate to the extent of three North Seas without any loss of revenue to Saudi Arabia. If the taps are open the price goes down and if the taps are closed the price goes up. More recently, last week I went to the Soviet Union. Perhaps I should put the figures on the record. The Soviet Union has 57 per cent. of world coal, 45 per cent. of its gas, 60 per cent. of its peat, 12 per cent. of its hydro power and 37 per cent. of its oil-bearing areas. There is a nuclear programme which was begun in 1970.
  China is another factor of which little is known, although there are some indications, and, of course, the Third world is enormously interested in energy because those that are without oil are very much affected by high oil prices.
  It is clear that Britain must play its full part as a full member in these discussions. Shortly we shall be the tenth largest oil producer in the world. We have 300 years—45 billion tonnes—of coal, and 13 per cent. of our elecricity is already generated by nuclear power. When the AGRs now under construction

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  are completed this will rise to 20 per cent.—the maximum figure cited in the recent report published by the Massachusetts Institute of Technology. Also we have gas reserves. We are the only self-sufficient industrial country in the Western world, and we must see that we use our energy strength in a number of ways.
  We must proceed with a planned United Kingdom energy policy, and use the revenues to meet our debt repayment obligations and to reindustrialise our own country through developing our oil equipment industry and our manufacturing industry.
  We must make a major and independent contribution to world energy discussions, which, at the moment, do not exist. There is no real forum in which all these forecasts could be harmonised. I made this point in the United States, Saudi Arabia, the Soviet Union and Norway about the need for harmonisation of forecasts of supply and demand because it is against that background that all our planning needs to take place.
  Over the weekend at Suningdale I had some discussions on this problem. If one thinks about it, one sees that this applies to Britain, the EEC and the world as a whole. The major long-term objective of energy policy, as far as we are concerned, is to see that we are able to maintain self-sufficiency of supplies in the 1990s when current projections show a shortfall in assured domestic provision at a time of projected world energy shortage.
  There will need to be a large commitment, but resources will be required soon because of the long lead times in the development of alternative energy resources, whether they be nuclear, gas, conservation or other resources. Before Parliament and the public are committed to expenditure of this magnitude they need to be satisfied about the size of the energy gap within maximum and minimum margins. They also need to be satisfied on the time scale, on alternative ways of reducing or eliminating the shortfall, and on the cost and reliability of the alternative ways of doing it.
  I aim to report this to the House of Commons. I aim to encourage the EEC to do the same. We all shall be feeling our way forward in the same direction. I want to see the widest world interest
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  in these problems, because these are key questions in energy policy, in this country, worldwide, and, of course, inside the EEC. In that context I aim to play a constructive part.
  Mr. Peter Rost: Is the Secretary of State suggesting that he should publish a White Paper in the near future, or is he proposing to deal with this matter through his Energy Commission, or both?
  Mr. Benn: I mentioned at the last meeting that I would try to see each draft of what we have been working on as it becomes available. I said last time that it was illegal to leak and premature to publish. It is best to let documents seep out. Working documents in my Department have seeped out with my good will. They have been conveyed to the NEDC and the chairmen of the nationalised industries. They are available quite widely, and I thought that they had been put in the Library of the House. If not, I hope that they will be available. I am reluctant to go along with one of those classic major White Papers that are published and then are out of date almost as soon as they appear. It is better that a working document should be published when the Energy Commission is set up—and the delay has been caused by the fact that everyone wants to be on it. When it is set up and these documents come to the Energy Commission, I hope that they will be made generally available at the same time so that no one will be excluded from an examination of the current thinking of the Department.
  I am trying to do it in that way. It is less dramatic than the great build-up to a White Paper, but I am not sure that it is not a more sensible way of dealing with a situation in which circumstances change. In any case, we want to hear the current comment and to take decisions as they are needed rather than to hold anything up. We want to share this information as widely as possible.
  10.41 p.m.
  Mr. Tom King: The House will be grateful to you, Mr. Deputy Speaker, for reminding us, as you put the Question, that we are talking about European policy matters and papers dealing with energy. I can well understand the confusion in the mind of the hon. Member for Coventry, South-West (Mrs.

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  Wise) in trying to determine what the Secretary of State's attitude was to these European affairs. The House might not be aware that we have been listening to the President of the Council of Energy Ministers for the Community addressing himself to a range of policy matters since the House will have noted that, with his usual ambivalent pose, on no single occasion did the right hon. Gentleman give any indication of his attitude to the policy of which he was inviting the House to take note.
  The Secretary of State is an extremely suave and articulate performer at the Dispatch Box. He charmed all of us with his description, but I imagine that I am not the only hon. Member to have noted that on no occasion when he was explaining these matters did he give any indication of the Government's views—or his own. The House it entitled to hear them.
  Mr. Benn: I would certainly never accuse the hon. Member of being suave or charming and I hope he will acquit me of ever doing any such thing. If he has the opportunity of reading Hansard carefully he will see that I not only announced what the Government's position was at the 29th March meeting where the coking coal arrangements were made and when the Euratom loans were approved, but I also described in detail how we were approaching each of the policies coming forward and exactly what our view was on them. I think, with respect, that the hon. Member will not find another President of the Council of Energy Ministers who has spent as much time in discussing these problems with other member States as has been the case in the six months of our presidency.
  Mr. King: The Secretary of State will have to read those two speeches together, if we ever get Hansard printed again. I listened extremely carefully to what he said. He explained the purposes of the papers he was presenting, but he studiously avoided any direct involvement with them or any commendation of them. My hon. Friends will have noted that. They will also have noted the enthusiasm of the Secretary of State to stray outside the terms of the papers before us and to indulge in a tour d'horizon, telling us of his trip to Moscow and other parts of the world, including Saudi Arabia.
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  We hope to hear of the world scene when we have the wider-ranging debate on energy policy, which I hope the right hon. Gentleman will arrange with the Leader of the House, following my request. We are tonight dealing exclusively with European policy matters. This is a suitable time to debate such matters because we are half-way through the penultimate month of the six-month presidency of the Council of Energy Ministers of the Community. It is, therefore, interesting to see just what has happened in that time. I suggest that the Secretary of State's performance has had all the marks of the performance that we might have expected of him in such a capacity.
  The right hon. Gentleman started with what I understand was an extremely impressive performance before the European Parliament Committee for Energy which greatly encouraged both my Friends and other hon. Members of that Committee. At the start of his presidency the Secretary of State was impressive in answering questions from the Committee and the Committee was enormously encouraged. The right hon. Gentleman was as impressive as he always is in the House.
  However, I am worried because I have been checking up today with a number of hon. Members about what they have felt about the conduct of the presidency since that impressive public relations launch. There is deep disillusion over what has happened. The first paper refers to European energy policy and it is an opportunity to review just what has happened to European energy policy since the Secretary of State took over the presidency on 1st January 1977.
  The Secretary of State may like to intervene and correct me if he feels that he has more achievements than I shall now enumerate. We have unfrozen our position over Euratom—a position that has been described by some of our colleagues in the Community as an "asinine British position". It was a position that, as the right hon. Gentleman knows, was bitterly resented by other members of the Community because the British obstruction of nuclear subsidies and encouragement for additional nuclear capacity hit other countries in the Community far harder than it hit us because their position in electricity generating was

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  different from ours. We obstructed that for our own purposes in negotiating. The right hon. Gentleman knows that that is true. We then changed our position in what must have been one of the most humiliating negotiating sessions in which any British Government have ever been involved in the Community.
  There also was the tragic failure to agree on JET. I do not propose to pursue that matter, but one of the most important research projects in the Community has made absolutely no progress whatsoever. There clearly was an opportunity for resolving that matter. There is a widespread belief that the conduct and record of the right hon. Gentleman and the Minister of State at that meeting was singularly unhelpful. The JET project has made no progress.
  Mr. Frank Hooley: Would the hon. Member for Bridgwater (Mr. King) care to say were the JET project should be sited?
  Mr. King: I should like it to be sited at Culham. Hon. Members may say that it is impossible, through negotiation, to get it sited there, but do they know—and we have made inquiries—what happened at that session that night in Brussels? It was one of the most disgraceful episodes in the whole conduct of the Secretary of State in his presidency of the Council of Energy Ministers. I suggest that the hon. Member for Sheffield, Heeley (Mr. Hooley) does not know that. The Secretary of State was not in the chair but—
  Mr. Benn: Not only was I not in the chair but it was not a meeting of the Energy Council. It was a meeting of the Research Council, which we are not discussing tonight. I should not dream of asking you, Mr. Deputy Speaker, to protect me, but the hon. Member for Bridgwater (Mr. King) must recognise that the Research Council discussions were entirely separate from the Energy Council discussions. I am content that this should be a general debate, but I should make it clear that that was another Council of Ministers.
  Mr. King: I do not know what the right hon. Gentleman hoped to gain by that intervention. Is he suggesting that he had nothing to do with the siting of JET or that he did not spend considerable time trying to organise its siting? Is he
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  saying that JET has nothing to do with future European energy policy? If so, I can understand his intervention. If not, his saying that, technically, it was not the Energy Council—
  Mr. Peter Hardy: On a point of order, Mr. Deputy Speaker. We are supposed to be looking at a number of documents and our time is limited. The hon. Member for Bridgwater (Mr. King) is paying no attention to the documents and is talking about matters that should be reserved for the general energy debate mentioned by my right hon. Friend.
  Mr. Deputy Speaker (Sir Myer Galpern): This is a wide-ranging debate on the whole energy issue and it would be difficult to limit it. However, I hope that we shall now get down to discussing the documents.
  Mr. Rost: Further to that point of order, Mr. Deputy Speaker. The document on energy policy specifically refers to research and development in a wide context in a number of places. Surely it must be relevant to the whole concept of European energy policy to discuss research and development.
  Mr. Deputy Speaker: There is a time limit of two hours for the debate and, judging from the attendance in the Chamber, many hon. Members wish to take part. Points of order on matters to which I have already replied are a waste of time.
  Mr. King: The Secretary of State talked of his discussions in Saudi Arabia and his visit to Russia. I am dealing with a European project, and this is what the papers are about. I understand that the hon. Member for Rother Valley (Mr. Hardy) wants to protect the Secretary of State, but the right hon. Gentleman can just take it for a few more minutes. I have spoken for 12 minutes so far and the right hon. Gentleman took 30 minutes. I shall try to keep my remarks brief.
  We have gained no friends by unfreezing our position on Euratom—a position that we were unwise to take—and have made many enemies over our handling of JET. We have half of the coal resources in the Community, and I have heard a disturbing story that, because of our attitude over Euratom and JET, other countries may be less than wholly co-operative

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  over some important proposals that would be helpful to us and our coal industry. I hope that this is not true, but it is the story that I have heard.
  If it is true, it is an indication of how, after the bright dawn of the Secretary of State's start as President of the Council with his rush around Community capitals, subsequent results have been abysmal.
  Mr. Ted Leadbitter: The hon. Gentleman has spoken of stories that he has heard. What does he conclude from them? Our conclusion is that because we have taken a stand on Euratom and JET in order to protect our national interest, the Community is taking retaliatory action. Is that the conduct of friends?
  Mr. King: I suggest that the hon. Gentleman should do some homework and should talk not only to the Secretary of State but to the Minister of State, who may have a different view of developments in Europe. Let the hon. Gentleman discuss these matters further and then come back to me. I shall try to help him. The hon. Gentleman may know the background to the situation. There are difficult negotiations. Of course, there are different national interests. It is a complex matter to try to get a reasonable balance within the Community.
  Mr. Leadbitter Mr. Leadbitter rose—
  Mr. King: The tragedy of the present situation is the way in which things have been mishandled. It is not difficult to understand the motivation. I do not think that any hon. Member in the House believes that the Secretary of State is passionately keen on making a great success of Europe in any case.
  There is a further and wider background to the policy papers before us. During the Secretary of State's presidency—I do not blame him for this—the European energy situation has sharply deteriorated. Oil imports are increasing rapidly. Therefore, dependence, so far from reducing, is increasing.
  In the past six months the potential development of nuclear power has received a major setback within the Community. I think that hon. Members will be aware that court actions in
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  Germany and in France have posed a major threat to the development of the thermal reactor progamme.
  Mr. Ron Thomas: Will the hon. Gentleman give way?
  Mr. King: I am sorry, but others wish to speak, and I want to be brief.
  Another area where it is disappointing to see such poor results is in conservation. The Secretary of State quoted a figure of 2 per cent. That is an extremely disappointing figure. I must be critical of efforts at conservation in this country as well. Any hon. Member who addresses himself to the problem and realises the scope that is attainable must feel that our efforts at conservation are still woefully short of what should be achieved.
  It is interesting to note that we are supposed to have an energy saving policy committee—the Secretary of State did not refer to this matter—to try to exchange information and to bring forward proposals for concrete action by midsummer. I am not sure whether we have had any proposals for concrete action in the first half of the year, but that is what is indicated in the papers. I am not aware that such proposals have been made.
  A further area of concern to me relates to coal. We in this country are aware of the importance of coal. As I said, we have more than half the total coal reserves in the Community. What is happening to coal in the Community? The Community lays great stress on the importance of burning more coal. We have proposals for encouraging electricity generation from coal. What is happening? We have reducing domestic production and increasing imports.
  The forecast in the papers is that domestic production will continue to fall and that imports will continue to rise. It will be ironic if the proposal is that, as a Community, we are to reduce our dependence on imported oil and to replace it by dependence on imported coal. That would seem to be an unsatisfactory switch.
  The documents indicate that coal imports into the Community have gone up by 50 per cent. since 1973. We have the ironic situation of rising imports, falling productivity and rapidly rising stocks. These documents indicate that

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  the level of coal stocks is expected to be 71 million tons at the end of 1977. That is virtually equivalent to the total annual coal-burn for electricity generation in this country. How much of that is expected to be the United Kingdom's stock at the end of that period? That is certainly an extremely worrying figure. The papers on these various matters indicate the need for a co-ordinated policy approach to energy. My hon. Friend the Member for Ross and Cromarty (Mr. Gray) particularly hopes to raise the question of oil refinery policy.
  One of the most humiliating occasions for us was when President Carter was able to arrive at the Summit Meeting with a prepared policy position for energy in the United States, but when he asked the Summit Meeting what was the European policy approach to energy there was a fairly deafening silence. The Secretary of State has had responsibility for this matter for the past four and a half months. Such is the urgency of this matter that the paper before us tonight was prepared on 25th February, the Secretary of State wrote a letter to Parliament on 10th March, and the House actually gets round to debating it today, on 17th May, after 10 o'clock in the evening.
  What is needed in Europe, and in Britain as well, is a far more impressive and far more co-ordinated approach. As has been made clear by the experience of the United States, a wide range of Departments are involved. These policies cannot be implemented by the Secretary of State for Energy alone. They are also matters for the Chancellor of the Exchequer and the Secretaries of State for Transport, Trade, and the Environment. Whatever the arguments about figures, the Secretary of State knows that the energy situation will at some time become extremely serious. If we are to respond to that serious energy situation, we need a much more dramatic, much more coordinated and much more urgent approach by the Government. The dilatory approach indicated by these documents and the passing references by the Secretary of State tonight are all indications that, as yet, the Government have totally failed to comprehend the need for a British and European energy policy.
  11.2 p.m.
  Mr. Arthur Palmer: I am glad that the hon. Member for Bridgwater (Mr. King) referred to general European energy policy, because. I hope to do the same shortly. I think that the hon. Gentleman was far less than generous to the Government, and particularly to the energy Ministers, in his references to Culham and the European nuclear fusion developments. It cannot be doubted that the British Ministers—and I am sure that Conservative Ministers would do the same in similar circumstances—have done their utmost to get the plant sited at Culham. It was most unfair and inaccurate to suggest that our present Ministers did not do this.
  I wish to say only a few words about particular EEC documents. It could be said that they are not very controversial in themselves, except perhaps the oil document Certainly the documents on coal and energy saving refer to policies that can either be operated under existing United Kingdom legislation or, in many instances, policies that are being operated already.
  On energy conservation, for instance, those of my hon. Friends who share membership of the Select Committee on Science and Technology know that the Committee made about 40 separate recommendations to the Government about ways and means by which energy could be saved in this country without loss of efficiency. The question now is not about the principle of energy conservation but about how fast the savings are being made. The Select Committee, after taking a vast amount of evidence, felt that 15 per cent. could probably be saved by the end of the next decade or, more optimistically, in even six or seven years' time.
  I note from these documents that that figure is not significantly different from the ideal EEC estimates. But the saving after two or three years of the "Save It" campaign by the Department is about 2 per cent. I do not think that it is particularly impressive but, to be fair, that saving should be taken in relation to the growth of the national product during that time.
  In its document on conservation the EEC points out that the essential difference between reductions in consumption

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  due to higher prices and economic recession and genuine savings because of higher efficiency of utilisation must be differentiated, because they are not the same thing. I think that that is a sentiment well understood by the Select Committee and I hope appreciated in the Department.
  I turn to the general document on the West European energy situation to which the hon. Gentleman made so many references. It is certainly the document that interests me most. My right hon. Friend gave us an account of his travels to the Arabian sands and to Moscow. I do not think that he has very recently been to Washington.
  Mr. Benn: Last month.
  Mr. Palmer: I beg my right hon. Friend's pardon. But I do not think that he has been there since President Carter made his speech. It seems to me that if that speech had been made before the EEC document was produced, the document might in itself have taken a different form or could have been seen in a different context by us. I say that because the new American view on nuclear policy, not only for the United States but for the world generally, has important implications for Western Europe and the United Kingdom. American companies have supplied most of the nuclear systems which are used in Western Europe, and on the assumption that the American companies are up to point bound to be under the influence of the American Government—if it is not the other way round—one cannot avoid the implications of some of President Carter's remarks. Indeed, several of the EEC countries, notably France, have already indicated their dissent from the Carter assumptions and deductions.
  Are the British Government, as an EEC Government, formulating continuing views on the Carter approach and are those views likely to support the President of the United States, or, in view of our own energy needs, particularly nuclear, are those views likely to be different? I think that our view should be different. President Carter very properly thinks, as I imagine we all do, that the proliferation of the means to make nuclear weapons should be severely restricted. That is why there is the non-
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  proliferation treaty, which a considerable number of countries have signed. But President Carter goes much further in his ideas and suggests that it is undesirable that sensitive technologies associated with the peaceful production of energy in power stations could also be a nuclear threat. No doubt they could be under some extreme circumstances. But I believe that such an important if oblique reference by the President to the enrichment and reprocessing of nuclear fuels, which we are able to do highly successfully at Capenhurst and Windscale, should be of major concern to the United Kingdom and its Government.
  My view is that if we and the French gave up doing this work of processing, reprocessing and enrichment, it would be a great incentive to other countries poscessing reactor systems in the Third world, for example to do it themselves. Instead of there being a concentration, as there is generally at the moment, on reprocessing in the advanced Western countries, with our developed facilities and where it is controllable, the end result of Mr. Carter's ideas if applied might be an extension of nuclear processing and the availability of plutonium throughout the world rather than a contraction.
  I therefore suggest that in this matter, in spite of the present wave of enthusiasm for a new President of the United States and, incidentally, I suppose for a new British Ambassador—admirable individuals as they may be—we should avoid too quickly saying "Yes" to Mr. Carter without the most careful investigation of all aspects of an admittedly very difficult problem. We should also take this view to Brussels, where again it requires the most careful consideration by the EEC nations.
  I think that President Carter's speech waved aside much too easily the question of the general development of nuclear power for energy production. The American utilities are now forced to take a short-term view of nuclear power production because they are short of capital and have difficulty in raising it, and a coal-fired power station, especially with cheap American coal, is more economical and has a lower first cost. The fact that the American utilities are tending at present to turn back to coal is a reflection of their present financial problems rather than of careful choice for the future.

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  Energy economics have to be taken much more seriously in this country and in the other EEC countries generally than may be the case in the United States, where the fashion has been to throw everything at the target and hope that something sticks. There has been historically a vast, wasteful use of energy resources in the United States. We in this country cannot afford that kind of approach. I will give, perhaps without much comment, the latest Central Electricity Generating Board's figures. They give the nuclear cost of generation in magnox power stations, as 0·69p per kilowatt-hour, coal as 0·97p per kilowatt-hour, and oil as 10·9p per kilowatt-hour. With us nuclear power is the cheapest power.
  While I am all for developing renewable sources of energy—another subject that the Select Committee is looking at, particularly the Severn Barrage—nobody can perhaps avoid the inconvenient fact that in Western Europe, once the fossil fuels run out, nuclear fission is the only certain source of energy open to us if we want the massive blocks of power that we must have to maintain our way of life. I have read and heard all the arguments, but I cannot escape that conclusion; I do not think that any expert with a fair reputation dissents from it either. My right hon. Friend, who presided so admirably at the conference at Sunning-dale last weekend, which I had the privilege to attend as Chairman of the Select Committee, will, I am sure, agree that the majority of experts then supported that view. There were those who adopted the more extreme environmentalist point of view and differed, but none of those who have the ultimate responsibility dissented.
  We must consider seriously, both in this country and in the EEC, the question of uranium supplies. We have been developing successfully the fast breeder reactor for 20 years. It has not been dreamed up in the last five or 10 years. It was the keystone of British long-term nuclear policy from the beginning. I do not say this in a boastful, national spirit, but British nuclear fast breeder technology is ahead of that of the United States.
  I respect my right hon. Friend's caution about the commercial fast breeder
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  reactor, but the need for a Government decision on it becomes more urgent each month. In some ways it is sad to have to listen to the constant pleas of Sir John Hill, who is responsible for this matter and responsible for keeping his teams together, for action by the Ministry. He was promised a decision a year ago but he has not had one. It is now more and more urgent that the questioning should stop and construction be started.
  At one time I was concerned about the safety doubts associated with the fast breeder reactor but largely they are now resolved. I am satisfied that the combination of the expert engineers of the Atomic Energy Authority and the Safety Inspectorate can provide full protection for the public and operators.
  I must ask my right hon. Friend to make a decision reasonably soon. We should either proceed alone—whatever the Americans say—or in conjuction with the French. We certainly must proceed.
  Britain should be taking the lead in Europe on these important energy questions. We are still too inclined—perhaps because of the long-drawn-out controversy about Britain's entry to the EEC—to react to events in the EEC instead of taking the initiative. I can never understand, for instance, why this country, which has some of the most successful thermal reactors in the world, has not yet been able to persuade our European neighbours that the British reactor systems have much to recommend them. I should like to see an argument of that kind deployed in a positive fashion by those who represent us in the energy councils of Europe.
  11.19 p.m.
  Mr. T. H. H. Skeet: The hon. Member for Bristol, North-East (Mr. Palmer) and others with an interest in this subject will be aware of the gap that is likely to occur before the end of the century. The hon. Member must be aware that General Electric of America is thinking of pulling out of reactors.
  I do not know whether the Secretary of State's visit to America was made at the appropriate time. I hope that it was. I hope that he was able to interpret the situation correctly. I was heartened when, in his speech, he appeared to be responding to the forces of supply and demand

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  and talking about commitments for expenditure because of the long lead times. If he was saying that and believed it, I should have thought that he would come up with decisions. The Secretary of State talks a lot but decides little.
  If the Minister can give answers to one or two questions, the House will probably be satisfied. I hope that he will not deviate from answering my specific questions.
  What type of reactor is the Minister prepared to back now that the SGHWR has been placed on the shelf? Will he give us the size of a viable nuclear programme for the United Kingdom? This would naturally arise from Document R/477/77. Is the Secretary of State interested in developing a reactor that customers abroad will buy? In other words, is he prepared to go for the light water reactors, which several of us have recently seen in Spain? What is the future of the CFR1. The hon. Member for Bristol, North-East has implied that something should be indicated about that. He has read the Flowers Report and he knows what is required in the plutonium economy. One either stores it or one uses it. The CFR1 is one of those reactors in which it can be used.
  Since President Carter has made his enunciations on nuclear fuel reprocessing and has indicated that the United States is to abandon it, will the Minister re-emphasise that he is prepared to go ahead with the Windscale functions and have a substantial plant to reprocess oxide fuels, not merely for the United Kingdom AGRs but for any other reactor that may be chosen to help fully to service the Japanese contract when that comes on stream?
  Will the Minister also take a decision on whether he is prepared to stand up to environmentalists, who have had such a disruptive effect in Germany and elsewhere?
  On a global stance, nuclear energy could provide 21 per cent. of the world's primary energy by 2000 AD. That would be equivalent to 43 million barrels of oil a day, which is probably what the world requires.
  There are one or two other matters on which the Minister may wish to give us his views. That is what the country requires. It requires decisions, and not
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  long talks. Is he prepared to argue in Cabinet against discriminating taxes on the production of fuels, which disrupt the energy market? Is he prepared to share North Sea oil with the European Community, provided that member countries pay the market price? What, if any, is his depletion policy?
  The mistake of the Secretary of State is this: he is like Canute, sitting by the shores and allowing the tides of time to lap against him. If he only decided the issues that were relevant and if he only came to the correct decisions, he could be classified as being one of the great Secretaries of State of our time—if; but there is a lot in the "if". He has yet to substantiate it. However, I am generous by disposition.
  Document R/75/77 is to promote the use of coal for electricity generation, but this will not necessarily assist the producing countries, and particularly our National Coal Board. The United Kingdom produced 122 million tons in 1976. The Federal Republic of Germany produced just under 100 million tons and France produced about 22·4 million tons. But who are the chief importers? They are France and Italy. France imported 16·6 million tons and Italy imported 10·1 million tons. But where did they buy it from? Did they buy it from other Community States? Not a bit of it. It came from the United States and Poland. In 1976, 14½ million tons came from the United States and 15·1 million tons came from Poland.
  Why did France and Italy not buy it from their Community partners? They did not do so for the very simple reason that the current average price, delivered to Europe, for steam coal for power stations from Poland, the United States, Australia, South Africa and India is $30 to $33 a ton. That compares with an Immingham price for steam coal delivered to Europe of about £30 a ton—in other words, about 1·7 times as high as the price for coal from other countries. [Interruption.] It may be said that it is coal extracted in a certain way with certain advantages, but it is deliverable and the Community is not against fair trade in this commodity. Therefore, I do not see that we shall receive any alleviation in this respect.
  Dr. J. Dickson Mabon: Will the hon. Gentleman give us the German and

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  French market figures so as to be absolutely fair?
  Mr. Skeet: I cannot give those figures. I am not talking about the German and French figures but about the Polish and United States figures. They are the countries that sell coal cheaply. I recognise that in Germany Ruhr coal faces a difficult situation. I am not comparing National Coal Board coal with Ruhr coal; I am comparing the figures behind the Iron Curtain.
  The Secretary of State referred to R/478/77 on Community coal deliveries and coal obtained from third countries. This is purely data collecting. There are no teeth in it and it is not intended to interfere drastically with the market.
  I appreciate that time is marching on but I shall quickly run through the points that I have in mind. Grants of 30 per cent. of the extra capital cost of building, converting and modernising coal power stations is implicit in R/75/77, but the funds are available to reduce oil in favour of coal secured from Community and third countries for use in power stations. That must be so, as it would be catastrophic for the Italian economy if otherwise.
  There is little scope remaining to aid United Kingdom power stations, for coal accounts for over 70 per cent. of the fuel-burn in CEGB stations in 1976. There is little economic sense in increasing that ration further without making the board a subsidiary of the National Coal Board.
  For the National Coal Board it is now a question of supply due to lack of availability. There is little evidence available to convince the fair-minded analyst that the Board's targets will be accomplished.
  The oil-burn, now dramatically reduced, has reached critical limits for the CEGB. Oil consumption at power stations fell from 23·5 million tons oil equivalent in 1972–73 to about 11 million tons oil equivalent in the current financial year. During the same period coal has risen from 63 million tons to 70 million tons. The crucial point between coal and oil is between 10 and 12 million tons oil equivalent, and that point has now been reached. At least 4·5 million tons is sacrosanct to meet winter electricity demand.
  The directive comes from the Community and it will assist Western Ger-
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  many, which burns a great deal of natural gas in its power stations. It should not do that, but it will not and cannot aid the United Kingdom because the policy conflicts with the uranium fuelling of post-1977 stations if the United Kingdom is to have an intelligible programme in the years ahead.
  Further conversions would not provide a solution for the additional supplies of fuel oil that would flood the market, particularly when its market continues to be eroded by natural gas.
  The elimination of the remaining limited number of highly efficient oil-powered stations built several years ago at non-inflated prices through their replacement with new coal-fired stations built at highly inflated capital costs would do nothing to aid electricity consumers and would lead only to a rapid closure of old plant with an overall reduction in coal consumption.
  I hope that the right hon. Gentleman will bear that in mind if he is running for economies. Further conversions would make nonsense of the Government's declared policy of refining two-thirds of North Sea crude oil, which is an indigenous fuel refined in the United Kingdom, if less crude would be run through inability of the industry fully to market in competitive conditions a product which comprises the largest slice of the barrel.
  I suggest to the right hon. Gentleman an interesting little comparison. Post-Budget prices per delivery therm for heavy fuel oil works out at 12·3p to 12·8p. Coal averages 9p and marginal coal is 11·3p to 12·0p. There seems to be a considerable margin between the two.
  Perhaps the right hon. Gentleman will take some interest in this little calculation. The CEGB's esimated fuel oil consumption for 1977 is 7 million tons. With tax at 2·5p a gallon or £5·73 a ton, the Government are imposing a levy on the CEGB of £40 million. That is roughly what the Government want to pay the Board for the Drax B power station. In other words, the Secretary of State is taking away with one hand and giving back with the other.
  Before we study this European directive a little more carefully we should urge the Secretary of State to bear in mind that what he is doing is not in the interests

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  of the coal industry. The right hon. Gentleman is simply picking its pockets in order to ensure that its expenditure is recouped in another way.
  11.31 p.m.
  Mr. Peter Hardy: The hon. Member for Bedford (Mr. Skeet) ranged widely in his speech, but at least it was lightened by a note of rather patronising generosity when he referred to my right hon. Friend the Secretary of State. The hon. Gentleman seems to fail to understand the difference between coking coal and steam-raising coal. I thought that the figures he gave applied in one case to the first sort and in another to the second.
  His speech would have been useful in a much wider debate when we could deal with the subject of energy in broader terms and in greater detail. My right hon. Friend said that we shall have such a debate, and I hope that then the hon. Member for Bridgwater (Mr. King), who is not now in the Chamber, will be satisfied. It was clear that tonight he was irritated by having to restrict himself to documents, and he gave very little sign of having read them.
  Document R/479/77, which is concerned with conservation, is welcome, but I utter a cautionary note. Bureaucracies everywhere seem to be obsessed by the work of committees and there is a great deal about expert committees in the document. I believe that the increased energy price has had rather more effect on energy saving than the work of all the expert advisory committees here and in Europe.
  So high have the price increases inevitably been that I am surprised that energy saving has not been even more marked. Nevertheless, one welcomes the concern for saving, because it is important. Our resources are finite, and we should not waste them. I am glad therefore for this concern and that the Government have recently announced a further sum of money to support and finance the energy saving campaign. We must wish the campaign well.
  If we are to see further progress in energy saving it might be a good idea, however, for the Government to give more serious consideration to further helpful measures which need to be taken, and I refer to the need to encourage and sup-
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  port home insulation. The provision of flues in new homes would not go amiss. It would give people a choice and might ensure that energy use was properly balanced.
  Just as support for insulation and so on would not go amiss, nor would a better-informed and broader public debate. Unfortunately, too much public debate today seems to be concerned with either the dangers of nuclear power or the cost of energy. If there were such a debate I believe that my right hon. Friend's comments on Document R/684/77 in relation to refinery policy would certainly meet with general approval in this country. It is noticeable that the Conservatives have not in any way moved away from the acceptance of that policy tonight.
  The documents before us are rather more realistic than the EEC energy documents that we considered a couple of years ago. I recall the debate in which several of us on this side were critical because it seemed at the time that Europe was becoming prepared to accept a gross over-reliance on nuclear power. We warned that it still did not overcome the need to achieve public acceptance and also that it had not properly taken into account the vast capital expenditure that the rather extravagant proposals of two years before would involve.
  I shall not suggest that we should not go ahead with nuclear technology. I think it is essential to go ahead. At the same time, Europe must proceed not merely with caution in regard to technology, and certainly not merely with caution in regard to non-European technology, but with caution in regard to the expenditure which will be involved, particularly if it is expenditure on maintaining excessive reliance on current nuclear technology.
  I am particularly pleased that one of the ways in which European policy has changed is that there is a clear acceptance, particularly in Document No. 478/77, that a substantial coal industry should be retained. Current European production at about 220 million tonnes is less than the target that should be achieved, and I therefore believe that measures to promote the achievement of that target are necessary. The United Kingdom could, and should, be producing over half the European production in 1985, albeit that that production will

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  remain at the modest level of 250 million tonnes.
  Document No. 478/77 mentions the very high level of stocks that exist today. These stocks offer a persistent disincentive to production. The Community seems to be more aware than some Conservative Members that if miners know that there are large stocks of coal they have anxiety whether they should add to those stocks by extra enthusiasm. At Question Time yesterday Conservative Members showed that they could not comprehend that point.
  One way in which the stocks could be reduced is by ensuring that there is greater use of European-produced coal and less reliance on imports. The proposal to monitor is welcome, though it may well be singularly ineffective unless it is accompanied by a much firmer arrangement to discourage imports.
  One reason for the high level of imports is, perhaps, that the spot market price for coal on the world market is very low because of the recession. Indeed, that is the principal reason. The price has been low because some countries require European currencies and are prepared to sell coal to Europe at less than the cost of production.
  We should not allow that policy to be sustained. It is in Europe's interests to ensure that the production of coal within the member States is encouraged. That should be ensured, either by the application of wit and common sense—that seems to be needed—or, if that fails, by firmer policies than have been announced so far.
  I doubt whether the proposals in Document No. 75/77 regarding coal firing will have a massive effect, but they are to be welcomed as a sign that Europe is accepting reality. Perhaps the greatest helpfulness of these proposals is that they demonstrate an acceptance of a cause some of us have been arguing for a long time and they may assist by engendering confidence in that sector of industry that is responsible for power station construction, which certainly needs an injection of confidence.
  The greatest help of all would come from a move away from the recessionary conditions which still affect the world. It is to be hoped that the latest OECD fore-case will prove to be inaccurate. However,
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  I will not spend further time on that aspect. We certainly need an energy debate in which we can express our thoughts at much greater length than has been possible in recent months.
  Europe will not achieve the required level of production of coal unless men are available who are prepared to mine it. We need to spell out our attitude to the mining industry more vigorously than we have of late. Someone said recently that this Labour Government have done very little for the miners. It is time that Tory Members were a trifle more honest and that Labour Members were more vigorous in presenting the realities. The Department of Energy and hon. Members need to spell out the facts—namely, that this Labour Government have done a great deal to secure a future for British coalfields. Anyone who recalls the folly that we inherited in 1974 and the hardship and uncertainty that prevailed then will acknowledge the tremendous transformation that has been brought about. We should ensure that the people of the coalfields realise the steps that have been taken since then. If they did they would not complain as much as some people have been complaining about the record of the Government in establishing tripartite considerations, in developing compensation for disease and in developing and introducing the earlier retirement which was spurned by the previous Government. [Interruption.] Conservative Members are now showing that they have less sympathy with the miners than they claimed before the Ashfield and South Yorkshire County Council elections recently.
  The pits in my constituency at the time when I was selected Parliamentary candidate were in grave uncertainty. Several collieries were being spoken of as at risk of closure. Every one of the pits was rumoured as likely to close. But today vast sums of money have been invested to ensure that the vast reserves of coal in those pits can be extracted.
  I believe that the miners have been hit by the incomes policy. They led, but did not gain from, the wage inflation of 1974. Wage rates in the pits are lower than many people represented by Conservative Members imagine. The fact remains that if we are to ensure that Europe gets the coal which it needs we

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  have to get our wage and industrial policies right with regard to the coal industry.
  In so far as these documents make a contribution to this being achieved, they are welcome, but a much more vigorous policy needs to be announced by the Department during the next few months.
  11.42 p.m.
  Mr. Peter Rost: It does not help the standing of Parliament that we should have only two hours in which to debate this most important matter of EEC energy strategy and these documents in particular. Bearing in mind what little opportunity we have had in the past two years to debate energy strategy in this country, we are certainly entitled to ask the Secretary of State when, in addition to the endless conferences, meetings and discussions that he has outside Parliament, he will allow hon. Members to debate these matters as well.
  I want to say a few words about these documents in particular and about energy conservation strategy indicated in the EEC proposals. There has certainly been no lack of weighty forecasts recently about the future prospects for world energy resources. We have had the EEC and OECD reports. We have had President Carter's CIA reports. There have been any number of weighty presentations, with different time scales about when we shall be in trouble.
  What is common between all these expert assessments and forecasts on the long-term energy scheme is that there is no shortage of energy. There is no shortage now, nor does there need to be in the future. There is plenty of energy. That comes out clearly in all these forecasts. It is equally clear that there will be a shortage of energy unless we start doing something about it. Therefore, the solution to the problem is in our own hands. It is up to us to make the right policy decisions.
  What also comes out of these forecasts, whether they are pessimistic or optimistic, is that the most vital factor is time. Time is the most valuable asset that we have in finding solutions to energy strategy. Yet it is the most crucial and intractable factor—the time scale—that is being wasted. We are wasting the most valuable
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  asset in the solution of our enegy policies. We must get the timing right if we are to prevent an energy gap.
  Of course one can understand the Government's deferring important decisions because they are not sure which nuclear strategy they should adopt, if they should adopt one at all, and they are not sure which alternative resources should be developed. One can understand why they have been slow to take decisions, but one cannot understand or justify deferring decision-taking in the one sector that can give us that longer option in which to get the rest of the strategy right—that is, to invest in a more rational use of energy in the meantime in order to get a longer lead time in which technology can help us to get the right solution in the most economical way.
  The EEC energy document is most relevant to the problem today, in that it regrets that there has been too little progress towards the achievement of the initial target of a 15 per cent. saving in energy by 1985. Why has there been so little progress? In a nutshell, it is because there is no coherent strategy either in the United Kingdom or in Europe.
  I quote from the document:
  "Energy saving considerations have so far played little part in the formation of general economic policy, fiscal, industrial, transport and environment policy."
  That is absolutely true. We have provided some stimulus for the price mechanism and this is helping, but we have not given the right incentives to allow the price mechanism to produce the solutions.
  When we see the Secretary of State's comment on the document we feel that it expresses far too complacent an attitude by the Government. The Secretary of State previously said that the document raised no new policy issues, and he said that again in his opening remarks tonight. I believe that it does raise new issues. It raises the issue whether the Government have implemented conservation policies. We know that we have aims, objectives and hopes, but we also know that we have not got policies.
  We should not be misled into believing that the "Save It" promotion and education campaign, with one or two other little measures thrown in, represents an energy conservation policy. It does not. There is a great deal more to be done

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  to provide the right incentives and a little bit of a carrot to allow the price mechanism to begin to operate.
  There are areas in which we are lagging far behind the satisfactory progress being made in Europe. We are bottom of the European league in the generation of electricity with combined heat and power, and we are doing nothing about it. We are bottom of the league in providing real incentives for insulation, and although we are far behind the rest of Europe we are doing nothing about it. Those are two specific areas in which criticisms by the EEC are fully justified.
  If the conservation programme fails and does not get enough impetus and initiative from the Government, we shall also fail to provide the new energy resources in the long term. The two are inter-related, and we cannot separate them.
  The Under-Secretary of State for Energy (Dr. John A. Cunningham): I am listening carefully to what the hon. Member is saying about our lagging behind and about conservation generally. He clearly has not read comparisons that have been published by international agencies, which give this country a good report. As for his point about combined heat and power, is he not aware of Energy Paper No. 20, published by the Department of Energy, and the fact that we are looking much more closely into this matter? Since it is a historical situation that he has described he can hardly blame us. This has built up over a number of years.
  Mr. Rost: The Under-Secretary is taking advantage of me because he knows that my time is up. He should understand that I have not only read Energy Paper No. 20; I have studied it in great detail, together with many other papers. I know that this country is bottom of the European league in combined heat and power production. We are the only nationalised utility in Europe that does not produce any combined heat and power, while the thermal efficiency of our electricity generating system overall is about the lowest in Europe. In the other European countries much more combined heat and power is produced by private sector industry. The incentives for producing combined heat and power here are not
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  in existence. I cannot develop that point because I do not have the time.
  I emphasise the point that if the energy conservation programme does not get under way we shall not get the right stimulus for the production of substitute energy, for new sources of supply and for the proper competitive climate in which the price mechanism can allow new energy resources to develop. These factors are closely inter-related. It is vital that we make a greater effort to provide the investment that can be cost-effective in producing a more rational use of our energy. For those reasons I very much welcome the EEC documents and I hope that the Government will take note of them and begin to think a little more about this problem.
  11.52 p.m.
  Mr. Hamish Gray: One thing that the debate has proved conclusively is that there has not been nearly enough time for everyone who wished to take part in it to do so. I was glad that a number of speakers, including the Secretary of State, mentioned that we shall be having a full energy debate in the not-too-distant future. We look forward to this, so that we can outline our views on the short- and long-term aspects of energy policy and strategy.
  My hon. Friend the Member for Bridgwater (Mr. King) dealt adequately with the performance of the Secretary of State and his handling of these documents. There seems to be a tendency for a great deal of talk to take place in committees, commissions or whatever, but a decided lack of decision-making. This view is held both outside and inside the House. I hope that the time is not too far distant when the right hon. Gentleman will take some positive decisions and stop putting everything off in favour of wide-ranging public discussions. They are all very well, but they can never be a substitute for decision-making.
  I was sorry that the hon. Member for Rother Valley (Mr. Hardy) introduced a slightly disagreeable note into the debate, particularly when he remarked on the fact that he considered that my hon. Friend the Member for Bridgwater had not studied the documents in detail. I should point out that it was only because of my hon. Friend's representations that

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  we have had two hours for this debate. Without his representations we should have had one and a half hours, and the hon. Member for Rother Valley might not have been able to make his remarks.
  The hon. Member was worried about the future of miners in his constituency. I suggest that when Clause 11 of the Coal Industry Bill is discussed on Report he should carefully consider whether to support the proposal that the National Coal Board should be able to operate overseas. The jobs of miners in his constituency will be put at risk if the NCB is diverted from its primary task, which is the production of coal.
  I turn to the document dealing with oil-refining policy. I entirely agree with what the Secretary of State said about the document. Our requirements as an oil-producing nation to some extent differ from those of our Community partners. Therefore, it is only right that although we must, of course, be good Europeans we must also remember that our own interests must not be neglected. I believe in being good Europeans, in the same way as the French. They never forget that the requirements of their own country are every bit as important as those of their neighbours.
  I must say a word about nuclear policy, because that has been by far the most controversial matter mentioned tonight. It is not the first time that I have found myself in agreement with much of what was said by the Secretary of State, and that was amply confirmed by my hon. Friend the Member for Bedford (Mr. Skeet). We must give serious consideration to the future of the nuclear industry. I make a prediction now that we shall proceed with the fast breeder reactor, despite what the conservationists say—with the greatest respect to my hon. Friend the Member for Sutton and Cheam (Mr. Macfarlane), with whom I do not always agree—because there is simply no alternative for filling the gap that we shall face in the 1990s. There is no doubt that the West may face a major new energy crisis within the next decade.
  I doubt whether many of the suggestions and predictions that have been made by President Carter will see the light of day because, as one well-known writer
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  has already said, his speeches contain "a Bill in every line". That is pretty accurate. He will find it extremely difficult to obtain every one of those Bills. While I have the greatest respect for his moral integrity and his wish to do the world a service, I am afraid that I have a slight reservation about his remarks because the commerciality of certain things in America is involved and American enthusiasm could influence matters.
  I also want to speak about the documents that deal with the coal industry. We obviously agree with the sentiment expressed in them, but a number of questions arise that the Minister may be able to clarify when he replies. We accept the principle behind the grants that are to be made, but how will this operate in conjunction with the terms of the present Coal Industry Bill? Will the Government be willing to accept such grants from the EEC, and do the Government consider that the amount that we shall have to contribute—which the Secretary of State said would be about £70 million—to the project will lead to a reasonable return for that money? What consideration have the Government given to nuclear power as a competitor of the coal industry? Perhaps the Minister will reply to those questions.
  I know that the Minister will be pushed to answer all the points that have been raised by hon. Members tonight, but I should like him to say a word about the important subject that was raised by my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) in connection with conservation. My hon Friend has made a particular study of this and I know that the whole House respects the amount of research that he has put into it. There is no doubt that what he said about the "Save It" campaign was correct. The cost involved has not been fully rewarded by success, and some of the more recent bungling of which we have read has given cause for concern. I am sure that the Minister will do all he can to ensure that detailed policy on the "Save It" campaign is handled with a little more care.
  I promised to conclude at midnight to give the Minister of State 13 minutes to reply. I hope that he will respond by answering my questions.
  12 midnight.
  The Minister of State, Department of Energy (Dr. J. Dickson Mabon): I am obliged to the hon. Member for Ross and Cromarty (Mr. Gray), who has, as usual, done a good job. I agree that two hours is inadequate for a debate on energy, but it is two hours of Government time and it is two hours more than the Opposition have provided in this Session.
  Considering the indignation of the speech of the Opposition spokesman, the hon. Member for Bridgwater (Mr. King), it is remarkable that we have not had a full Supply Day on energy. Judging from the hon. Gentleman's speech, it would be worth having a full day's debate because he has misunderstood not only what has happened in the Energy Council—over which my right hon. Friend currently presides—but what will happen at the next Council meeting.
  All hon. Members have welcomed the papers and there have been some most able speeches, even in this short debate. The hon. Member for Bridgwater was the only one to spoil the debate. We are going to discuss protection of investment at the next Council meeting. The hon. Member for Bridgwater will remember the so-called minimum safeguard price and why, in our fight to get that, we took a certain attitude on Euratom loans. He will remember that his hon. Friend the Member for Cheadle (Mr. Normanton) said last year:
  "Has he considered a trade-off to achieve what the Government have declared to be their policy—to see the siting of JT at Culham?"—[Official Report, 15th November 1976; Vol. 919, c. 1043.]
  Trade-offs are a well-known practice in the Community. The hon. Member for Ross and Cromarty, who apparently has more sense than has the hon. Member for Bridgwater, knows that this is how the Community goes about its business. Those of us who are strongly for Europe may criticise it and say that it is not right, but it is a reality of Europe and the world. Various nations pursue their legitimate interests through so-called trade-offs. I do not like them, but I remind Opposition Members that the word "trade-off" was used by an Opposition spokesman last year.
  We unfroze our position on Euratom loans, and that significant act was appreciated by our collegues in the Council.
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  We have protection of investment on the agenda. Our French friends and other colleagues have accepted the principle of a minimum selling price as worthy of discussion. That is important for this country. Even if, by some mischance, the hon. Member for Bridgwater were put in charge of the Department of Energy, I do not think that he would abandon the efforts to get the principle of MSP accepted.
  In the Council we shall also have full discussion on coal policy. No one has criticised the propositions in the Commissioners' papers. All the colleagues endorsed them. The hon. Gentleman should remember what we did at the last Council meeting. At the next meeting, we shall also be discussing conservation—largely because of the presidential influence.
  Everyone knows that a good president can arrange discussions, and conservation is on the agenda for the next meeting. In addition, the British have achieved an agreement to reconsider the papers submitted on refinery policy.
  These are the big issues that we shall be discussing at the Council. It is incredible that the hon. Member for Bridgwater should have launched an attack on the Secretary of State. My right hon. Friend has not been renowned in this country for his advocacy of European union but no one can gainsay that he has been a most enthusiastic president of the Council.
  My right hon. Friend was the first president to visit all his colleagues, the first to discuss the papers, the first to arrange that matters might be discussed in public at certain sessions, the first to try to bring the agenda together, and the first national representative to make such gestures of a community spirit at the first meeting.
  I find it extraordinary and breathtaking to hear such a speech as was made by the hon. Member for Bridgwater about my right hon. Friend. Indeed, the hon. Gentleman went so far as to say that if he had anything to do with the matter JET would go to Culham. That is not what we heard before. The official Opposition have been singularly inept in supporting the British Government.
  Mr. Skeet: Rubbish.
  Dr. Mabon: It is my opinion that the hon. Member for Bedford (Mr. Skeet) is sadly misused by the Conservative Party. He should be on the Front Bench. If he were, we would probably get more support for these matters. Unfortunately, he is not on the Opposition Front Bench. That is not my fault.
  The fact is that other Opposition Members who occupy singularly influential positions—for example, the hon. Member for Cheadle—make these speeches in the European Parliament on behalf of the Conservative Party. I refer to the Official Report of 16th March 1976, col. 1274. I shall not read the disgraceful words. There was no support for the Government in trying to get JET sited at Culham. On the contrary, selling the pass, letting it go to Ispra, made Ministers' lives difficult when they appeared at the Council to argue the case.
  All our gestures on coking coal, Euratom loans, and so on, are obfuscated by statements of the kind made by Opposition Members. I appeal to them to realise that they are listened to just as much as we are. If there is a division of opinion in a country, it is used against us. I suggest that, far from attacking my right hon. Friend, however justified the hon. Member for Bridgwater may feel on certain occasions, we should have some unity when discussing European policy when British interests are at stake.
  Mr. Tom King: I think that the Minister slightly misquoted what I said about Culham. Can he cite a single instance when in this House my right hon. and hon. Friends have not given full support to the siting of JET at Culham?
  Dr. Mabon: I have just referred to one—16th March this year, preceding the meeting of the Council. That is not to be disregarded. The hon. Gentleman said that there were stories in Europe. I am reminded of the remark "If you keep your ear close to the ground you will inevitably get it filled full of dirt". The hon. Gentleman has listened to stories. Where does he get them from? He gets them from his colleagues, naturally, just as we get information from our colleagues in the European Parliament.
  I am sorry that the debate has proceeded in this way. It was because the hon. Member for Bridgwater went on
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  attacking my right hon. Friend. If he wants to make a real case, I suggest that he finds Opposition time to try to make it. But that will not happen. I shall get on to the real business. I was provoked. I do not think that anyone in my position could have listened to that speech and left it unanswered.
  My hon. Friend the Member for Bristol. North-East (Mr. Palmer) was more than generous when he said that Conservative Ministers would behave in the same way as we are behaving. I begin to wonder. I hope that the Opposition will make it abundantly clear, in time for the next Council meeting, that there is a definite view in all sections of the House that we deserve to have JET sited at Culham. Inevitably, that development will be of great importance to Europe and to our children in future. It is important that Great Britain should be in that kind of business and should take a leading part in it. I hope that we can get absolute amity and unity on that matter. I am glad that the hon. Member for Bridgwater is now conceding that matter.
  My right hon. Friend is anxious that we should go ahead with immediate decisions on nuclear energy matters which concern us now. The Government cannot make such decisions without public confidence. Public confidence can only be assured if we as Ministers and the House of Commons are willing to wait for the report of the Nuclear Inspecorate. That report is not due for another month. It would be wrong to abuse my right hon. Friend for not making a decision unless hon. Members were willing to say that they did not want to hear what the Nuclear Inspectorate had to say. If there is a hiatus after that, by all means let them attack my right hon. Friend, but I doubt that there will be.
  I shall not embark on comments about the predictions of the hon. Member for Ross and Cromarty about the fast breeder reactor or anything else. It would be foolish of any Minister to do so. We are concerned about the decisions, and we hope that these decisions will be taken promptly after we have the advice of the Nuclear Inspectorate.
  Mr. Nigel Forman: Will the right hon. Gentleman clarify whether he is speaking about the report on the social and political implications of an

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  extended nuclear programme, and not just on the safety aspect? Will the report be placed in the Library?
  Dr. Mabon: Yes. I think that the hon. Gentleman will find the Flowers Report, which plays a large part in our thought and judgments, in the Library.
  Reference has been made to an interesting one-day seminar to which we invited Conservative Members and Members of other parties. This was referred to by my hon. Friend the Member for Bristol, North-East. There was a strong representation at the conference. Sir Brian Flowers was present and members of the learned societies and all the industries concerned were there.
  Mr. Brian Sedgemore: Where was the hon. Member for Bridgwater (Mr. King)?
  Dr. Mabon: It was regrettable that the hon. Gentleman could not be there, but I am sure that his hon. Friend will have reported to him what went on at the conference.
  There will be a response from the Government to that Royal Commission report. That is in addition to the reference that I made to the Nuclear Inspectorate's report. It would be foolish of any Government to make a decision on this—I know that hon. Members are aware of my personal views on the matter—without the public being confident that we had taken every factor into consideration. That is only prudent.
  Mr. Tom King: The intervention of the Secretary of State's PPS, the hon. Member for Luton, West (Mr. Sedgemore), implied that I was not willing to attend the seminar. I appreciated the invitation and would have been more than willing to attend. If the conference had as much importance as the right hon. Gentleman claimed to attach to it, it is a pity that hon. Members were not given more than 10 days' notice.
  Dr. Mabon: I suggest that we should let peace break out now. It is important that we should try to keep as much in harmony as we can on these vital decisions. It would be awful if we started to quarrel on a party basis about fundamental issues which have no doctrinaire content. I am sorry that the hon. Member for Bridgwater did not receive enough notice. Perhaps next time all will be well.
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  I wish to make one reference to conservation. My right hon. Friend referred to the range being at least 2 per cent. of demand, going up, as the Energy Paper put it, to 10 per cent. of demand. We have concluded—indeed, we told the Council—
  It being two hours after the commencement of 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 takes note of Commission Documents Nos. R/75/77 (rev 1), R/477/77, R/478/77, R/479/77 and R/684/77 on EEC Energy Policy.

  WELSH GRAND COMMITTEE
  Ordered,
  That, during the proceedings on the matter of Small Businesses in Wales, the Welsh Grand Committee have leave to sit twice on the first day on which they shall meet, and that, notwithstanding the provisions of Standing Order No. 64 (Meetings of Standing Committees), the second such sitting shall not commence before Four o'clock nor continue after Six o'clock.—[Mr. Coleman].

  BUSINESS OF THE HOUSE
  Ordered,
  That, notwithstanding the Order relating to Business of the House of 25th November, the Ballot for Private Members' Notices of Motions which are to have precedence over Government Business on Friday 17th June shall be held on Wednesday 25th May.—[Mr. Coleman.]

  WORKS OF ART (SALES ABROAD)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]
  12.13 a.m.
  Mr. Andrew Faulds: I cannot believe that there is a single Member who has not heard of Christie's and Sotheby's, those two houses whose domination of the auctioneering markets of the world has been one of the great commercial successes of the post-war period. Their business flair has also been combined with scholarship, and in this

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  latter respect some of their experts are among the world leaders in their particular fields.
  If the example of the art trade and the auctioneers had been equalled by industry and commerce in this country, our economic position would be considerably healthier than it is. It would be invidious to single out any individuals in these two firms for particular praise, for it is their combined talents that have made London the unquestioned centre of the art trade of the world.
  Having said that, I should like to sound some notes of warning, with particular regard to the acceleration of the dispersal of our artistic heritage. This development is sadly underlined, as we all realise, by the colossal sale at Mentmore Towers, which begins in a matter of hours, under the aegis of Sotheby's.
  It cannot be disputed that when capital taxes have to be paid works of art may have to be sold. In those circumstances it is evidently the duty of the auctioneer to obtain for his client the best price possible, and many objects will unfortunately find their way abroad. Nevertheless, statutory facilities, which can be very favourable to owners, exist for the discharge in kind rather than cash of obligations for capital taxes. These apply to pre-eminent works of art, which are thus preserved in this country for public enjoyment. But the question that has now become specially relevant and, indeed, urgent is whether these provisions are being fully utilised in the interests of our national collections.
  If the possibilities available by statute are to be properly implemented and so enhance our heritage, initiatives and good will are required from the four interested parties: first, the owner and his legal advisers; secondly, the art expert they consult, who is often an auctioneer; thirdly, the appropriate museum officials; and, fourthly, the Treasury, represented by the capital taxes office. Alas, those interests can well diverge and may result in the nation becoming the loser. This has indeed been the history in some sad cases.
  The first essential is that the striking financial advantages that may accrue to the owner of a pre-eminent work of art
  414
  upon adopting such a procedure are placed fairly before him. But if his expert adviser happens to be an auctioneer it must be admitted that the latter stands to lose financially by doing so. Since the recent much-criticised introduction of a 10 per cent. buyers' surcharge, which naturally cannot apply when works of art are accepted in satisfaction of tax, the difference between the commission charged for such negotiation and the fees that would arise from a sale by auction becomes very considerable. Nevertheless, since transactions of this kind form so relatively small a proportion of an art auctioneer's ever-increasing turnover, it is surely not unreasonable to suggest that, in these few cases, the nation's interest should take precedence over financial considerations as a matter of course rather than as a consequence of outside pressures, which is too often the case.
  It is unfortunately a fact that the computations laid down by the Treasury in connection with the acceptance of a pre-eminent work of art in lieu of tax are so complex as to be daunting. Consequently it is only too easy for an owner to conclude, in spent bafflement, that the simplest course is to sell by auction and have done with it. One's tax can thus be paid from the proceeds, and if a British institution is outbid, well, that is just a risk that has to be run.
  But the Director of the National Gallery, that admirable fellow, Michael Levy, whom some of us are fortunate enough to know, pointed out in a letter to The Times a couple of months ago that, taking due account of the very substantial tax concessions, the knock-down price at auction would have to be
  "quite exceptionally high to realise a greater net sum for the vendor."
  The nub of the private treaty sale is that not only does the owner who is selling have the concession of paying no tax, but 25 per cent. of the tax he would have paid is included in the negotiated sum which he subsequently receives. When the auctioneers do co-operate in giving such advice, is it not obviously to the benefit of all parties and, of course, in the best interests of the nation?
  The only way in which a deal beneficial to our cultural heritage can then be thwarted is by the Treasury becoming

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  somewhat difficult or intransigent. The Treasury's knowledge and understanding of works of art leaves a great deal to be desired. Such obstruction, if it should take place, entitles one to ask: What is the use of statutes being enacted in this House to protect our heritage if they are rendered ineffective in practice, not merely by the obscurity—and, my God, they are obscure—of the consequential regulations insisted upon by the Treasury, but, I am sorry to have to say, by its obvious lack of good will?
  This lack of good will has been recently highlighted by the utterly unconvincing insistence of the Treasury that when capital tax obligations are discharged in kind rather than in cash, by means of qualified objects at mutually agreed valuations, public expenditure is incurred. The so-called reason adduced is that certain payments connected with such a discharge have in the past, by custom, taken place within the Treasury between the National Land Fund and the Board of Inland Revenue.
  But it has recently been officially admitted—I have been chasing this matter for some time—not merely that these interdepartmental transactions do not in themselves constitute public expenditure but that they are not mandatory, in the sense that the acceptance of works of art in lieu of tax does not by statute require them to be made. Since these payments are merely optional, and if they are deemed in some mysterious way and however implausibly to involve public expenditure, why not dispense with this nonsensical ritual altogether? The answer to that seems to be that they provide a pretext for the thwarting by bureaucratic means of the intention of the statute.
  Next, I turn to what I consider to be one of the most worrying developments to have arisen in recent years—the increasing number of overseas branches of the two leading London auction houses, Christie's and Sotheby's. Of course, any initiative that increases the profitability of these companies and, at the same time, ensures that British companies are world leaders is to be welcomed. But I am worried that the very competition and drive that stimulates overseas business may, in the end, lead to London taking second place to Geneva or, more probably, New York, as the centre of the art trade of the world.
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  Today, both auction houses have premises in New York, and they are constantly vying with each other to obtain the works of art that they must sell in order to justify their extra-territorial expansion. Overheads in America are high, far higher than here, and I believe that it cannot be long before both auction houses are tempted to draw on works of art from houses in this country for their New York branches. Once this begins—I seriously fear that it cannot be long in coming—the drain on our national heritage will be exacerbated to a very dangerous extent.
  Corporate tax legislation, which is far more favourable to business in the United States than here, will naturally further encourage the financial advisers of both these firms to persuade their fellow directors that the maximum benefit of their respective shareholders lies in having their headquarters overseas, with all the resulting fiscal benefits. Can anyone who examines these developments seriously doubt that that will happen?
  Now I want to discuss the most controversial innovation that I mentioned briefly earlier. Our two leading London auction houses have introduced, without consultation with the museums or, indeed, with their best clients, the art and antique dealers, the buyer's 10 per cent. surcharge, which is in addition to the normal seller's commission of 10 per cent., thus making an effective profit of 20 per cent. on each transaction. Once this was introduced, reasoned arguments were advanced against the practice by all sections of the artistic community. Fortunately, this greedy innovation was not imitated by all their rivals, and in particular I wish to praise Messrs. Phillips, the distinguished auctioneers, which held out against this practice and which has prospered without any surcharge whatever, so disproving the claim that the buyer's premium was a financial necessity, the argument adopted by those two leading auction houses, Sotheby's and Christie's.
  Since it is clear from Phillips' example that the buyer's premium is unnecessary, I would have hoped that Christie's and Sotheby's would have second thoughts. Sadly, they have not. At the least, neither firm should contemplate imposing a surcharge on acquisitions by any public museum in this country, either directly or indirectly. I could not understand why

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  Christie's insisted on applying the surcharge to the subscriptions raised by the public for the recent acquisition by the Fitzwilliam Museum of that splendid Van Dyck of the Virgin and Child from the Duke of Sutherland's collection. The efforts to raise nearly £250,000 were impeded by the knowledge that Christie's was to take an extra £20,000 in buyer's commission on top of what it charged the seller.
  Surely, if the auctioneers cannot be persuaded voluntarily to help to protect our heritage it is not unreasonable for this House to debate how best to ensure that they do so.
  I turn to the activities of so-called art investment trusts, most of which are nothing more than art dealers in disguise. There is one to which I must draw attention—the British Rail Pension Fund. I do not think that the Government are fully aware of the extent to which railwaymen's savings have been invested in works of art. I am damn sure that railwaymen are not. The British Rail Pension Fund has been coy in revealing not only the extent of its acquisitions, but—and this is silghtly sinister—the fact that a member of Sotheby's staff actually advises the fund about its purchases. If ever there were a conflict of interest, that must rank as one of the worst examples.
  At the moment the National Gallery has at least one painting on loan from the Fund, and the Victoria and Albert Museum is negotiating the loan of a number of works of art from British Rail. What harm is there in that? Well, it does not need much imagination to see that the borrowing and display of works of art which have been bought for investment—that is, for sale at a profit at a future date—cannot be in the best interests of the museums concerned, particularly if they themselves might later wish to acquire some of the items. Foreign competition would be stimulated by the cachet that would attach to a loan to a national institution, and if a sale were eventually effected, presumably at Sotheby's, the works of art concerned would, in all likelihood, go abroad.
  I hope that the Trustees of the National Gallery and the Director of the Victoria and Albert Museum will take into account the points that I have raised here before
  418
  accepting loans from this source, bearing in mind their long-term responsibility for the retention of our national heritage.
  One trade practice at present operated by Messrs. Sotheby's which I deprecate is the acquisition of single works of art or collections of works of art by the auctioneers themselves prior to offering them for sale in their own auction rooms. My disapproval of that practice stems from the fact that I, and others, believe that auctioneers should act as agents only and not as principals. This has been a generally accepted tradition in this country. In no circumstaces should it have been altered. The danger is that, as owners of the objects, Sotheby's must be tempted to ensure the best return.
  Its new system of estimated prices, which are published before the sale and included in the catalogue, can only lend suspicion to its expectations when it is owner as well as agent.
  In conclusion, to return to the auction sales starting at Mentmore today, Sotherby's and the Treasury stand to make a fortune out of the disposal of Lord Rosebery's works of art. The prospect of this auction sale ought never to have been so much as considered by the Government. The house and its contents were offered at a bargain price by Lord Rosebery nearly three years ago, and through indifference, through procrastination and bureaucratic incompetence, the opportunity was lost of retaining for the nation probably the most important collection formed in the high Victorian era of our history.
  I have no doubt at all that the Government, who have to bear the opprobrium for this disgraceful dispersal, will stand condemned by those who care for our cultural heritage. Such a deliberate political act of philistinism will not readily be forgotten or forgiven. It is the Government who should be setting to all others the example of responsibility in conserving our national heritage. They have not done a very remarkable job yet in that example.
  12.31 a.m.
  Mr. Robert Cooke: I should like briefly to pay tribute to the energy of the hon. Member for Warley, East (Mr. Faulds) and to his efforts over many years in the House to preserve what has come to be known as the national

  419
  heritage. He has rightly drawn attention to the sack of Mentmore, which begins today. I think that we might look at it—I hope that the Minister will at least acknowledge in replying to the debate that she is thinking of this aspect of the problem—from the point of view of considering those other houses that will be threatened on future occasions by the same pressures that came to bear upon Mentmore.
  The real threat to the national heritage in historic houses is the threat of penal capital taxation. Thanks to the efforts of the hon. Member for Warley, East and other hon. Members in all parts of the House, great progress has been made on capital transfer tax. The hon. Member will recall how we all battled with Governments to make sure that CTT did not bear down upon a historic house, or its historically related contents or its amenity lands, provided that those were accessible to the public. From now on, under CTT, they are not to be destroyed; they are to be kept together.
  The one remaining link in the chain is the supporting resources. The estate, or whatever income-producing assets are needed to support that part of the heritage, must be held exempt from CTT. From now on this House must address itself to the question of the supporting resources. There will be amendments tabled to the Finance Bill in Committee this year. This House and the Government—all of us—must face the fact that if we want to keep historic houses and the historically related contents and the amenity lands available for public access, we must leave the owners with the resources—under the most stringent conditions of supervision by the Historic Buildings Council, or whatever we like to call the necessary body. It works with CTT now on buildings and contents and gardens. It must also work for the supporting resources. The hon. Member would support us in this. That is what we must address our attention to in the coming weeks.
  12.34 a.m.
  The Under-Secretary of State for Education and Science (Miss Margaret Jackson): As my hon. Friend the Member for Warley, East (Mr. Faulds) and, indeed, the hon. Member for Bristol, West (Mr. Cooke) have outlined, there are four ways in which the Government
  420
  at present deal with the problem of protecting the national heritage against the excessive sales of works of art.
  First, as the hon. Member for Bristol, West mentioned, there are the conditions for exemption from capital transfer tax, which apply on a wide range of material of national interest—exemptions that are designed to encourage owners of works of art to retain heritage property in their own possession. As the hon. Gentleman also suggested, one of these conditions is that there should be reasonable public access to such works of art.
  The second arrangemnt that is available is encouragement for owners, if they decide to sell, to sell to public collections or to offer objects to the Treasury in lieu of capital taxes. I think that that, as my hon. Friend suggested, has applied, for example, in the case of Mentmore, in which I think three objects have been offered in lieu of capital taxes so far.
  Thirdly, we provide £3·5 million each year—probably my hon. Friend and the hon. Member for Bristol, West will say that it is not sufficient, but at least it is something—to assist the national collections in Great Britain to buy objects of this kind. Although they may feel that more money should be provided, that sum represents an increase of 125 per cent. over the level of acquisition grants for the preceding five years. The period involved finishes this year and we shall be considering before long the level of grants that should apply for the next period.
  Fourthly, we come to the system of export control in respect of works of art, which is bound up in many ways with the remarks of my hon. Friend. It is the view of my Department and, I think, of the Department of Prices and Consumer Protection, on whose behalf I am replying—my hon. Friend the Minister of State regrets that he is not able to reply but my hon. Friend will be aware of the problems with Committees elsewhere—that the system of export control has had a good measure of success over many years. We try to operate it with the minimum of red tape, fuss, staff and resources. As a result, it relies on the art trade for co-operation in the working of the system.
  My hon. Friend said that perhaps recently we have had more problems with

  421
  the system than in the past. In the past 21 years only 18 objects have been lost that the reviewing committee on the export of works of art felt should be retained in this country. However, we are aware and very sensitive of the fact that in the past year four objects were lost. That is a considerable increase in the number of objects lost in this way. We are equally aware that important sales such as that at Mentmore are planned for this year. Although the problem has so far been contained by the system of export control, we are aware that it is rapidly worsening.
  My hon. Friend referred to the fact that the financial advantages involved in various ways of disposing works of art to the nation should be more widely known. I cannot do other than agree with him. It is not only a matter for my Department, but I shall ensure that his comments are brought to the attention of the appropriate Departments.
  My hon. Friend said that the systems now operating are too complex. He said that if they were simpler it would be easier to draw them to the attention of those involved and to ensure that they understood the implications of various options, and would enable auctioneers to take a full part in giving advice to those involved in the sale of works of art. My hon. Friend argued that everyone—the sellers, to some extent the auctioneers, and certainly the nation—benefits from the fact that such people understand accurately the implications of sale that they may make.
  I am sorry that my hon. Friend feels that there is a lack of good will on the part of the Treasury in interpreting part or parts of the existing arrangements. It is not a matter of which I have personal knowledge, but I am sure that I can get one of my hon. Friends to write to reassure him that whatever else may be lacking, good will is not.
  I was somewhat alarmed when my hon. Friend referred to the establishment of overseas branches of firms such as Sotheby's leading to a greater draw on our works of art for sales overseas. I must admit that it is not entirely plain to me why, given our system of export licences, that should be a greater difficulty than we have experienced so far. I
  422
  recognise that it would put a greater pressure on our existing system, but it seems, that if we continue to operate our existing system as in the past we shall be able to cope with that greater demand. I shall ask those involved to consider the matter and to write to my hon. Friend if there is some further point that I have not discerned and have not met.
  Equally, I am somewhat at a loss to know why it should be the case that a picture or a work of art owned by the British Rail Pension Fund, for example, should be at more risk than any other work of art. If it is on show, if it has the cachet of being shown at a national gallery, why should it be at greater risk for sale abroad than is the case with our export licence system? But, again, these are matters that I shall pursue. If my hon. Friend has evidence to offer which shows that there is a greater risk, I am sure that this is something that we shall be very anxious to consider. I am certainly at one with my hon. Friend in feeling that it is perhaps not wise for firms such as Sotheby's to act as principals in disposing of works of art rather than acting merely as agents.
  The principal factor to emerge from this debate has been the concern felt on both sides of the House for the preservation of items that are thought to be part of our national heritage, for the retention of works of art in this country. I do not think that there is any dispute about the aims of our procedures. There is perhaps, some minor dispute about the methods and their effect, but I am sure that these are matters that can be resolved between us.
  Mr. Robert Cooke: Will the hon. Lady address herself to the cause of the dislodgement of the national heritage? This is where the hon Member for Warley, East (Mr. Faulds) and I are entirely at one. We want to avoid this dislodgement and dispersal. The reason for it is the penal taxation on everything that a man such as Lord Rosebery possesses. That is why he sells his works of art, and why Mentmore is being sacked. Will the Government address themselves to that problem?
  Miss Jackson: I am not aware that the hon. Gentleman and my hon. Friend are at one in thinking that this is the root of the problem or, if it is, that this is a

  423
  problem that may be dealt with in terms of the disposal of works of art rather than by means of capital taxation. If the hon. Gentleman and my hon. Friend agree on this point, I hope that my hon. Friend will indicate that fact. It is not, however, a matter on which I agree with the hon. Member for Bristol, West. Capital taxation of the kind that my
  424
  Government and my party have favoured for many years carries with it complications and difficulties. I believe that we should seek to solve those difficulties rather than to avoid capital taxation.
  Question put and agreed to.
  Adjourned accordingly at eighteen minutes to One o'clock.

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

GIBRALTAR: AIR SPACE RESTRICTIONS
Lord BOYD-CARPENTER: 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 Spanish Government have now withdrawn or modified the restrictions imposed by them on the use of Spanish air space by British civil aircraft using Gibraltar Airport.
Lord ORAM: My Lords, I regret that the Algeciras Prohibited Zone which applies to aircraft of all nationalities remains in force. It is of particular concern to Britain since it imposes limitations on the approach to landing and take-off manoeuvres of aircraft using Gibraltar. The matter has been discussed with the Spanish authorities on various occasions, but it has not up to now been possible to secure any relaxation.
Lord BOYD-CARPENTER: My Lords, is the noble Lord aware, however, that these restrictions substantially erode the margins of safety involved in the operation of aircraft into and out of Gibraltar? Now that the Spanish Government are seeking closer and better relations with the nations of Western Europe, might it not be expedient to point out to them that until they cease to interfere with access to a loyal British colony they can hardly hope for any improvement in relations with us?
Lord ORAM: My Lords, I agree with the second part of the noble Lord's supplementary question. Periodically that point is put very strongly to the Spanish Government by Her Majesty's Government. With regard to the safety question,
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I understand that the zone does not constitute a serious additional safety hazard. Indeed, as the noble Lord will well remember, the Civil Aviation Authority has no record of any incident in which the safety of civil aircraft was put at risk by the presence of the zone.
Lord BOYD-CARPENTER: My Lords, if I may deal with the noble Lord's final point, is it not a fact that the manoeuvre, involving a very sharp turn just before landing or just after take-off, must, as I put it in my original Question, erode the margins of safety, inasmuch as there is a lower margin of safety upon which to rely if any other problem arises? If the noble Lord will refer to it, is not that the considered view of the Civil Aviation Authority?
Lord ORAM: My Lords, I accept the way that the noble Lord now puts the question. At that point there is obviously an additional workload on the pilot making the right-hand turn, which would not be the case if the restricted zone did not exist. I accept that point, but I am advised that this is not a serious additional safety hazard.
Lord LEE of NEWTON: My Lords, now that the Spanish people are feeling their way gingerly towards democracy, would my noble friend agree that one of the ways in which they could re-establish themselves in the eyes of the Western World would be to cease the stupid victimisation of the Gibraltarians which they have had to endure for so many years?
Lord ORAM: My Lords, I agree that we hope for increasing democratisation in Spain. We are putting to the Spanish Government the point of view that my noble friend expresses in relation to the Gibraltar situation.
Lord TREFGARNE: My Lords, is it not the case that Spain has recently applied for membership of the European Economic Community? Will he therefore represent this very unsatisfactory state of affairs to those who are responsible for the negotiations of that application? Would he also carry back to his right honourable friend the views of my noble friend Lord Boyd-Carpenter, which carry considerable

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weight and which are causing very considerable concern among the airlines operating into Gibraltar?
Lord ORAM: My Lords, I will certainly convey the points which the noble Lord, Lord Boyd-Carpenter, has made here this afternoon. On the question of a Spanish application for membership of the European Economic Community, Spain has not yet made such an application. Therefore, it would be premature to speculate on the issues which might arise if it did so. However, we should naturally have the interests of the Gibraltarians firmly in mind in any negotiations for Spanish entry into the EEC, should they come about.
Lord BALFOUR of INCHRYE: My Lords, the Minister plays down the element of risk which is involved in the sharp turn during the approach to Gibraltar. May I ask him whether he has consulted the British Airline Pilots' Association who, I think, would not agree with the playing down by the Minister of the element of risk.
Lord ORAM: My Lords, I have taken the advice of the officials in my Department on this technical question of safety, and I have reported their advice to the House. I have no doubt that, in reaching their conclusions, they will have had consultations such as those to which the noble Lord refers.
Lord BALFOUR of INCHRYE: My Lords, is it not better to consult the people who are doing the job rather than the officials in Whitehall?
Lord ORAM: My Lords, I referred to my consultations with those who advise me. It is not for me to speak to the pilots.
Several noble Lords: Why not?
Lord ORAM: My Lords, I said that I had no doubt that the officials in my Department had held those consultations.
Baroness WARD of NORTH TYNESIDE: My Lords, did not the noble Lord read what the British Airline Pilots' Association had to say and make a judgment, or is he just concerned with
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taking the advice of his officials, who, so far as I can see from what the noble Lord has said, may not have had all the information?
Lord ORAM: My Lords, Ministers in successive Governments take advice from their officials. That is what officials are for, and that is what Ministers are for. I have faith that the officials who advise me have taken proper steps in giving their advice.
Lord HARMAR-NICHOLLS: My Lords, is the noble Lord aware that one of the reasons for Parliamentary Questions is that the political chief will use them as a hook on which to make his own investigations to see how his officials arrive at the advice they give to him?
Lord ORAM: My Lords, during the time that I have been at this Dispatch Box I hope I have made it clear that I use my personal influence in quite a number of matters, but that does not go against the expressions of view that I gave about the position of a Minister in relation to his officials.

LONDON AIRPORT: PROPOSED FOURTH TERMINAL
2.44 p.m.
Baroness Young: 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 intend to hold a public inquiry into the proposal to build a fourth terminal at Heathrow airport.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, the British Airports Authority have consulted the local authorities concerned about the proposed fourth terminal at Heathrow and, in the light of the views being received from them, my right honourable friend the Secretary of State for the Environment is considering whether there should be a Direction under Article 4 of the General Development Order. A Direction would make the BAA's present proposal the subject of

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normal planning control and would be an essential first step towards any statutory public planning inquiry.
Baroness YOUNG: My Lords, I thank the noble Baroness for that reply. Can she say how many local authorities were consulted in regard to this development and when she expects a decision to be reached as to whether or not they might expect to have a public inquiry?
Baroness BIRK: My Lords, the following local authorities were consulted: Surrey County Council, Spelthorne Borough Council, the London Borough Council of Hounslow, the Greater London Council and the London Borough Council of Hillingdon. We are still awaiting the views of the London Borough Council of Hillingdon, which have not yet been received by my Department and after that the Secretary of State will be able to make his decision.
Baroness YOUNG: My Lords, is the noble Baroness not aware that the complexities of a fourth terminal at Heathrow reach much further than the four authorities she has just named, and should not the Department of the Environment be consulting on a much wider scale than that mentioned because of the noise nuisance, the increasing numbers of the population that will be required to service the terminal and the other infrastructure required?
Baroness BIRK: My Lords, the consultation went very much wider than that and indeed the BAA itself went much wider, but the noble Baroness asked me to name the actual local authorities and that is why I restricted my answer. If an Article 4 Direction is made and a public inquiry is held, as the noble Baroness is aware, it will be wide open for any sort of comments and views to be put to it.
Baroness EMMET of AMBERLEY: My Lords, may I ask the Minister to give us an assurance that, if there is to be a fourth terminal at Heathrow, a more practical architect will be employed to build it than was employed when the third terminal was built?—because it is totally impracticable for people arriving from far distances.
Baroness BIRK: My Lords, I think that that is one of the points that would have to be considered after the first decision is made and it would be quite improper for me to go into the merits of it at the moment.

CUBAN MILITARY PRESENCE IN AFRICA
2.47 p.m.
Lord ORR-EWING: 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 was the last date, if any, when they made diplomatic representations concerning the deployment of Cuban military personnel in Angola, Zaire, Mozambique, Eritrea or Ethiopia.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, sovereign independent States are entitled to decide from which countries they choose to seek assistance, and representations by Her Majesty's Government would not therefore be appropriate. However, we have made known our view in appropriate quarters that detente is an indivisible process and that legitimate concern arises if and when outside influences put at risk the achievement of peaceful solutions to critical and dangerous situations.
Lord ORR-EWING: My Lords, I thank the noble Lord for the second part of the reply. Is it not true that, by insufficient initiative and objections by Her Majesty's Government, we are to some extent condoning the activities of Cuban mercenaries transported and armed by the USSR? Does not their presence there in so many places contribute to the turmoil in that part of the world, and is it not helping to undermine the position of the Free World in Central and Southern Africa?
Lord GORONWY-ROBERTS: My Lords, I cannot accept the conclusions which the noble Lord draws from the policy of Her Majesty's Government. It is not in fact practicable for us to interfere

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with the invitation of one sovereign Government to another to come to its assistance. We do this with friendly countries ourselves. If we were to condemn the one, we should have to abandon the other. As to the concern expressed by the noble Lord, I entirely agree and we miss no opportunity of making absolutely clear, in Africa and in Europe, our concern about the danger to peace in various parts of the world from unwarranted interference by one country in the internal affairs of another.
Lord CARRINGTON: My Lords, am I not right in thinking that at the conclusion of the Angolan hostilities—the Civil War—there was an undertaking by the Cuban Government progressively to withdraw its forces? If I am right—and I think I am—how many Cuban troops are now left?
Lord GORONWY-ROBERTS: My Lords, I could not put a figure to the Cuban presence in Angola, but it runs into some thousands; some say about 15,000.
Lord CARRINGTON: Has there been a reduction, my Lords?
Lord GORONWY-ROBERTS: I would not say so, my Lords, but I should like to be fairly precise about numbers in this case, if I can. As the noble Lord said, there was an indication that the Cubans might consider a progressive withdrawal. I believe he is right in saying that, but I do not see that it has happened yet.
Lord GISBOROUGH: My Lords, if Her Majesty's Government accept the principle that countries may call for help wherever they wish, is that not an exact parallel to the case of Czechoslovakia when the Sudeten Germans called in Hitler, and was that not an equal invitation? Can the noble Lord say just what the qualifications are by which an invitation can be made and who can make it?
Lord GORONWY-ROBERTS: My Lords, I do not think most of us would equate the Henlein movement in Sudeten Germany with the established and recognised Government of a country.
Lord CHALFONT: My Lords, may I ask the Minister whether he can confirm the reports of prisoners of war in Southern Zaire, in Shaba, that Cuban instructors or Cuban troops crossed into Zaire and withdrew from Zaire only when there was a reaction from Moroccans, with the assistance of the French? May I further ask him whether Her Majesty's Government are aware that in addition to the places mentioned in Lord Orr-Ewing's Question there is clear evidence of Cuban presence in Libya, Conokri, Guinea Bissau, Congo Brazzaville, Nigeria, Somalia and Mali? Can Her Majesty's Government confirm the presence of Cuban troops in those places, and, if so, will they make it clear to the Soviet Union that future progress on detente will depend upon the Soviet Union bringing pressure on the Cuban troops to withdraw from those places as it is clearly the Soviet Union which has put them there?
Lord GORONRY-ROBERTS: My Lords, I think I can go along with my noble friend on the third point. Certainly we have conveyed, do and shall convey to the Soviet Union and other Governments views approximating very closely to those put by the noble Lord, Lord Chalfont. On his first question, whether I can confirm the reports to which he referred, no, I cannot at this moment. I will look into the point he has raised and see how far we can confirm the information he clearly has.
On the second point, he instanced a number of countries where there may or may not be varying degrees of involvement by the Cuban Government officially, with or without Soviet connivance. The situation varies, as he knows, from one country to another. Most of the countries he mentioned have, of their own volition, asked for this kind of assistance. Whether or not we approve of this it is their right and privilege to do so. In one or two cases I should like to look at the details of my noble friend's second point. I welcome the interjection. It is necessary to give particular attention to it.
Lord AVEBURY: My Lords, whether or not the Cubans were involved in the invasion of the province of Shaba in Zaire, has the noble Lord noticed reports of brutalities and serious ill-treatment committed against journalists trying to

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report on the conflict there? What representations will Her Majesty's Government make to the Government in Zaire on behalf of those journalists in respect of the brutalities, which do not encourage people in the West to defend the régime there against subversion?
Lord GORONWY-ROBERTS: My Lords, as I understand it—and I may not be completely in the picture about this particular point—these reports are not fully authenticated. If they are, then I certainly would wish to make representations about these practices. I give that assurance now. As to Cuban involvement, once more, leading on from the very important questions put to me by the noble Lord, Lord Chalfont, the Cuban Government have denied reports of involvement in the invasion of Shaba province, and indeed their Ambassador has attended at the Foreign Office precisely to make that denial.
Lord CHELWOOD: My Lords, so that there may be no doubt, will the noble Lord say what he meant when he said that diplomatic representations had been made in the appropriate quarters? Did he mean they had been made to the Soviet Government and the Cuban Government? May I ask the noble Lord whether Her Majesty's Government accept the fact that these actions by Cuban troops in many countries in Africa pose a very real threat indeed to the independence of the countries concerned and to their neighbours?
Lord GO RONWY-ROBE RTS: My Lords, I appreciate the faith in many countries in Africa that the noble Lord has introduced into his supplementary question. I have no doubt that in many countries these actions do produce a potential threat to the independence of those countries. What we have to be careful about is that we do not decide for those countries what threat, if any, there is to their independence. However, it is perfectly proper for us to make representations to them, in a friendly way, to indicate the risks which may be run.
As to the nature of our representations, I think I had better confine myself to repetition of what I said at the beginning. Ministers, officials, have, as appropriate, to a wide range of Governments, both in
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Europe and in Africa, conveyed the feelings that I can best describe as those presented from all quarters of this House, namely, that détente is indivisible. If one insists on non-intervention in Europe and in Eastern Europe, so one must insist on there not being intervention in Southern and Central Africa.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, the noble Lord will have read the dreadful stories of massacres occurring in Ethiopia, which is one of the countries mentioned in the original Question. Can he draw to the attention of the Cuban and the Soviet authorities the fact that, in the eyes of all reputable opinion, involvement with such a Government is inevitably going to tar them with the same brush?
Lord GORONWY-ROBERTS: Yes, indeed, my Lords, and I welcome the form in which that suggestion was made. I most certainly will act on what the noble and learned Lord has said.
The Marquess of SALISBURY: My Lords, may I ask the noble Lord a question which I understand it is convenient to ask now, namely, whether the report in The Times today is correct, that the Zambian Government state that there is a formal state of war existing between Zambia and Rhodesia?
Lord GORONWY-ROBERTS: My Lords, I understand that President Kaunda has placed his armed forces on alert against the possibility of Rhodesian armed incursions into Zambia. Her Majesty's Government have made it clear to Mr. Smith that any escalation of fighting could have very serious consequences.
The Marquess of SALISBURY: My Lords, arising out of that answer, could the Minister say why it is serious for the Rhodesians to cross the frontier, when they are constantly under attack from both Zambia and Mozambique? Surely it is not unreasonable for them to take the appropriate action to prevent this recurring?
Lord GORONWY-ROBERTS: My Lords, I think it is a matter for very careful thought and judgment as to what is unreasonable in these extraordinarily dangerous circumstances. I think what

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our Prime Minister and Foreign Secretary have already said to all concerned, particularly to Mr. Smith, ought to have the effect of defusing this extremely dangerous situation. I regret that I cannot add to what I have said to help the noble Marquess or the House on this point.
Lord SHINWELL: My Lords, can my noble friend explain why the military activities of the Cuban Government, either of their own volition or as inspired by the USSR, or some other authority, should be a matter for Her Majesty's Government, who apparently cannot use very much influence in the matter? Why does the Security Council, this peace-keeping organisation, not intervene? Have they any authority, any influence? What are they doing?
Lord GORONWY-ROBERTS: My Lords, I think it is of legitimate and compelling interest to our country, and indeed to any other country, when there seems to be a danger that outside intervention, even by an independent country at the invitation of another, may have the result of accentuating the already dangerous situation in that area. I think it is reasonable for anybody to make representations in the right way in that situation. As to the role of the United Nations, my noble friend will have noticed that there is a conference in Maputo at the present time, at which the Joint Minister of State is expressing, I think today, in clear and unmistakeable terms the United Kingdom's attitude to Southern African problems.
Lord ORR-EWING: Finally, my Lords—
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I know that all noble Lords feel that there is great interest in this Question, but I must point out that we have spent 22 minutes on it. We have another Question to deal with, and I think I take the feeling of the House that we should proceed to the next Question.
Lord ORR-EWING: My Lords, I think it is normal to allow the original questioner to round things up, but if the noble Baroness has ruled against me I bow to her ruling.

SECURITY COUNCIL AND APARTHEID
3.0 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what conclusions have been reached on apartheid in South Africa by the United Nations Security Council and what action the British Representative took.
Lord GORONWY-ROBERTS: My Lords, the United Nations Security Council debate on apartheid which began on 21st March has been adjourned until 6th June. The United Kingdom Representative has not spoken so far. Our aim throughout has been to reach a consensus whereby the full weight of a united Security Council could be thrown behind the urgent search for a just and peaceful solution to the problems of Southern Africa.
Lord BROCKWAY: My Lords, can my noble friend explain why there has been this long delay in reaching some conclusion on this subject which has now gone on for some months? Can he say whether the British Government support some restriction on investments in companies in South Africa which are practising apartheid as illustrated in last week's report about the inhuman and appalling conditions in the mines of Johannesburg?
Lord GORONWY-ROBERTS: My Lords, I do not think that it would be the consensus of opinion that there has been undue delay on this problem. I have said that this particular and very important discussion has been adjourned until 6th June, so that not only this country but others can consider how usefully they can contribute to the search for a solution. It is very complex; it is a major question. One might say that there has been a delay of many years, not simply of a few weeks. If we invest a few weeks in talking to each other in order to achieve a consensus, surely that is a very good investment.
I turn to the other kind of investment which my noble friend raised. Here our

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policy is clear. We do not place restrictions on normal civil trade with and investments in that country. However, we have made it clear that we expect British firms in their commercial dealings with the Republic to honour the spirit as well as the letter of Government policies.
Lord BARNBY: My Lords, as the Minister has indicated that this discussion will continue and that our Representative has not yet spoken, will that Representative be instructed to bear in mind that our trade with South Africa, and therefore the importance of employment in this country, will be given priority in considerations and expressions by our Minister on all matters, apart from ideological matters which in another country are not our business?
Lord GORONWY-ROBERTS: My Lords, I think that my reply to my noble friend Lord Brockway put the position as to trade and commerce quite precisely. There is no change in the Government's attitude on these matters. From time to time it is a matter of priorities, but the basics are that we intend to continue civil trade with the SAR—and quite rightly so—while maintaining our political attitude on the question of apartheid.
Lord BROCKWAY: My Lords, in view of the fact that the Government have taken some initiative to secure the payment of a living wage by British companies in Southern Africa, will they now extend that initiative to take in the conditions under which workers are employed, and the appalling and inhuman conditions which are to be found in many of the compounds of the mining firms of Johannesburg?
Lord GORONWY-ROBERTS: My Lords, I am grateful to my noble friend for reminding the House of the fruitful initiatives which successive British Governments have taken in enjoining upon British firms their duty to take the lead in improving conditions in the employment of Africans of all colours. As to future progress, we see it primarily, but not only, as the encouragement of free trade unions for workers of all colours in the South African Republic.
Lord CHELWOOD: My Lords, although I am entirely in favour of the
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Security Council concerning itself with apartheid in South Africa, is it not equally important that the Security Council should concern itself with the previous Question which was raised by my noble friend Lord Orr-Ewing.
Lord GORONWY-ROBERTS: My Lords, yes. There is no bar on the Security Council—which by definition is concerned with security, which after all is the basis of peace—considering that matter and indeed all matters related to peace and security. In the light of circumstances and evidence, I have no doubt that individual members of the Security Council will move in that direction. There are, after all, five permanent members, of which we are one.
Lord COLERAINE: My Lords, I was prevented by the intervention of the noble Baroness the Captain of the Gentlemen-at-Arms from intervening in the last Question. I should like to ask the noble Lord a similar question. Does he regard the activities of the United Nations in Central and Southern Africa as being conducive to world peace or as being conducive to further disorder?
Lord GORONWY-ROBERTS: My Lords, the answer is, conducive to world peace. The situations of danger and difficulty, of which we are all aware, have been well publicised and so have the failures of the United Nations. The successes of the United Nations and the part it has played in maintaining uninterrupted peace in terms of world disturbance for 32 years have not been so well publicised or well regarded. If the United Nations did not exist it would somewhere or other, like Voltaire's God, have to be invented.
Lord DERWENT: My Lords, should not some Back-Bencher come to the help of the Government Chief Whip by pointing out that we have now spent 29 minutes on Questions.
Lord GORONWY-ROBERTS: My Lords, may I, in my other role—the noble Lord the Leader of the House being absent—say that the cricketing score seems to indicate that this Question, even more than was so with the other, should be brought to an end.

BILL OF RIGHTS
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That, as proposed by the Committee of Selection, the following Lords be named of the Committee ordered to be appointed on the 3rd of February last, to consider whether a Bill of Rights is desirable and, if so, what form it whould take, viz.:

Allen of Abbeydale, L. (Chairman)

Blake, L.

Boston of Faversham, L.

Foot, L.

Gaitskell, B.

Gordon-Walker, L.

Jellicoe, E.

Lloyd of Hampstead, L.

O'Hagan, L.

Redcliffe-Maud, L.

Wade, L.

That the Committee have power to appoint Specialist Advisers;
That the Minutes of Evidence taken before the Committee from time to time be printed and, if the Committee think fit, delivered out;
That the Committee do meet at four o'clock on Wednesday, the 25th of May.—(Lord Aberdare.)
On Question, Motion agreed to.

PATENTS BILL [H.L.]
3.6 p.m.
Read 3a.
Clause 2 [Novelty]:
Lord ORAM Lord ORAM moved Amendments Nos. 1 to 3:
Page 2, line 42, after ("patent") insert ("or a patent").
Page 2,line 43, leave out ("another application for a") and insert ("an application for a") and insert ("an application for another").
Page 3, line 4, leave out ("that other application") and insert ("the application for that other patent")
The noble Lord said: My Lords, these Amendments, the second and third of which are consequential upon the first, cure a defect in Clause 2(3) which arose as a result of Report stage Amendment No. 2. That Amendment, which excluded from the scope of Clause 2(3) consideration of matter contained in the application in suit, inadvertently restricted the scope of the subsection to the case of applications. It should, of course, apply equally to inventions to which a patent relates. These Amendments make that correction.
On Question, Amendments agreed to.
Clause 5 [Priority date]:
Lord ORAM Lord ORAM moved Amendment No. 4:
Page 4, line 30, after ("preceding") insert ("the date of filing").
The noble Lord said: My Lords, this is a small drafting Amendment to make it abundantly clear that it is the date of filing of the application in suit to which reference is made. I beg to move.
On Question, Amendment agreed to.
Clause 15 [Publication of application]:
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 4A:
Page 14, line 36, leave out ("subject to section 20 below").
The noble Lord said: My Lords, this is purely a consequential Amendment arising out of the action taken by the House on Clause 20. With the leave of the House, at the same time I should like to speak to Amendments Nos. 6A, 46A, 46B, 55A, and 66A. They are entirely formal Amendments. I am very grateful to the Public Bill Office—to Mr. Webb and his assistants—for having picked up these Amendments which are supplementary to the Marshalled List. I beg to move Amendment No. 4A.
Lord ORAM: My Lords, I accept what the noble Lord, Lord Lloyd, said about these Amendments being consequential on action that the House took on Report. I would therefore advise the House to accept Amendment No. 4A and the subsequent ones to which the

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noble Lord referred. While accepting that this Amendment is technically necessary in consequence of the deletion of Clause 20, I do not retract anything that I said on that occasion on the merits of Clause 20. It is purely consequential.
On Question, Amendment agreed to.
3.11 p.m.
Lord ORAM Lord ORAM moved Amendment No. 5
Page 14, line 37, leave out from ("tiling") to ("during") in line 40 and insert (", then, as soon as possible after the end of the prescribed period, the comptroller shall, unless the application is withdrawn or refused before preparations for its publication have been completed by the Patent Office, publish it as filed (including not only the original claims but also any amendments of those claims and new claims subsisting immediately before the completion of those preparations) and he may, if so requested by the applicant, publish it as aforesaid").
The noble Lord said: My Lords, the effect of this Amendment, which fills a gap in the present draft, is twofold. First, it makes it clear that any withdrawal or refusal of the application after the preparations for its publication have been completed by the Patent Office will not prevent its publication under Clause 15 and its consequent inclusion in the state of the art for Clause 2(3) purposes. This change brings the Bill into alignment with Rule 48(2) of the European Patent Convention. The second effect is to make it clear that the comptroller shall not only publish the application as filed but also the last filed claims before the completion of the preparations for publication. This provision, which corresponds to Rule 49(3) of the European Patent Convention, is necessary because it is those claims which will determine the provisional protection afforded by Clause 66 and not any later claims, filed after the preparation for publication has been completed but before the end of the prescribed period, which cannot, of course, be included in the publication. I beg to move.
On Question, Amendment agreed to.
Clause 17 [Substantive examination and grant for refusal of patent]:
Lord ORAM Lord ORAM moved Amendment No. 6:
Page 17, line 12, after ("to") insert ("subsection (5) and").
The noble Lord said: My Lords, in moving Amendment No. 6 I should like
566
also to speak to Amendment No. 7. The 1949 Patents Act contains no provision preventing a person from obtaining two or more patents in respect of the same invention where the invention has the same priority date in both cases. This is because it was held in the case of Dreyfus' Application that the Crown should not grant two Letters Patent in these circumstances for the same invention. The Bill, however, does not rest upon a grant of Letters Patent by the Crown, but gives a person a statutory right to a patent if he complies with its requirements. In these changed circumstances, it is no longer safe to rely upon the decision in Dreyfus' Application. The second Amendment (No. 7) therefore puts that decision into statutory form in the Bill. The first Amendment (No. 6) is a paving Amendment for the second. I beg to move.
On Question, Amendment agreed to.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 6A:
Page 17, line 12, leave out ("sections 18 and 20") and insert ("section 18").
The noble Lord said: My Lords, I have already spoken to Amendment No. 6A, and I appreciate the reservation which the noble Lord, Lord Oram, will wish to make in regard to this Amendment. I beg to move.
On Question, Amendment agreed to.
Lord ORAM Lord ORAM moved Amendment No. 7:
Page 17, line 14, at end insert—
("(5) Where two or more applications for a patent for the same invention having the same priority date are filed by the same applicant or his successor in title, the comptroller may on this ground refuse to grant a patent in pursuance of more than one of the applications.").
The noble Lord said: My Lords, I have already spoken to this Amendment. I beg to move.
On Question, Amendment agreed to.
Clause 28 [Nature of, and transactions in, patents and applications for patents in Scotland]:
3.15 p.m.
Lord ORAM Lord ORAM moved Amendment No. 8:
Page 22, line 42, leave out ("probative or holograph writing") and insert ("writing

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probative or holograph of the parties to the transaction").
The noble Lord said: My Lords, this Amendment has the effect of requiring any assignation of a patent or application for one, or any grant of security, to be signed by all parties to the transaction. It thus brings this provision of Scottish law into line with the corresponding English provision in Clause 27 (6). This Amendment picks up a point made by the noble Lord, Lord Belstead, on Report and I thank him for drawing it to our attention. I beg to move.
On Question, Amendment agreed to.
Clause 30 [Requirement for registration or notice]:
Lord ORAM Lord ORAM moved Amendment No. 9:
Page 25, line 17, after ("application") insert ("or any right in or under it to any person").
The noble Lord said: My Lords, this Amendment restores to the text of Clause 30(4)(e) words which were inadvertently deleted by Report stage Amendments Nos. 40 and 41. Therefore, I beg to move.
On Question, Amendment agreed to.
Lord ORAM Lord ORAM moved Amendment No. 10:
Page 25, line 22, at end insert—
("In this subsection 'mortgage' includes a charge for securing money or money's worth.").
The noble Lord said: My Lords, this is merely a technical drafting Amendment of a kind commonly found in Statutes which contain provisions relating to mortgages; it makes plain that the word "mortgage" is to be interpreted as also including a charge for securing money or money's worth. I beg to move.
On Question Amendment agreed to.
Lord ORAM Lord ORAM moved Amendment No. 11:
Page 25, line 28, leave out from beginning to end of line 34.
The noble Lord said: My Lords, this Amendment deletes subsection (6) of Clause 30, which provided an extended meaning for the words,
"the inventor or one of the inventors of an invention",
which formerly appeared in subsection (3)
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of the clause. Those words were, however, removed on Report, so subsection (6) is no longer required. I beg to move.
On Question, Amendment agreed to.
Clause 33 [Co-ownership of patents and applications for patents]:
Lord ORAM Lord ORAM moved Amendment No. 12:
Page 26, line 33, leave out ("section 7") and insert ("sections 7 and 11").
The noble Lord said: My Lords, this Amendment is consequential upon the insertion into the Bill of Clause 11. Just as the provisions in Clause 33 (3), which relate to the granting of licences and mortgaging of patents by co-proprietors, are subject to those in Clause 7, under which the comptroller may, among other things, make an order transferring the rights of a co-proprietor of an application for a United Kingdom patent to anyone else, so also must it be subject to the provisions of Clause 11, under which the comptroller may make such an order in relation to the rights of a co-proprietor of an application for a patent in any other country or under any treaty or international convention. I beg to move.
On Question, Amendment agreed to.
Clause 34 [Determination of right to patent after grant]:
Lord ORAM Lord ORAM moved Amendment No. 13:
Page 28, line 42, leave out ("under subsection (2) or") and insert ("by virtue of subsection (2) or under").
The noble Lord said: My Lords, this is purely a drafting Amendment. As at present drafted, Clause 34(7) refers to an order made under subsection (2) of the clause. It is not strictly correct to do so, because the order is not actually made under that subsection but under subsection (1). Subsection (2) merely states a number of matters for which the order may provide but these are expressed to be, "without prejudice to the generality of subsection (1)", and it is, as I have said by subsection (1) that the power to make the order is conferred. I beg to move.
On Question, Amendment agreed to.
Lord ORAM Lord ORAM moved Amendment No. 14:
Page 29, line 7, at end insert—
("(9) The court shall not in the exercise of any such declaratory jurisdiction determine a question whether a patent was granted to a person not entitled to be granted the patent if the proceedings in which the jurisdiction is invoked were commenced after the end of the period of two years beginning with the date of the grant of the patent, unless it is shown that any person registered as a proprietor of the patent knew at the time of the grant or, as the case may be, of the transfer of the patent to him that he was not entitled to the patent.").
The noble Lord said: My Lords, this Amendment adds a new subsection (9) to Clause 34. It makes a provision in our domestic law which corresponds to what Article 27(3) of the Community Patent Convention provides in respect of Community patents. The effect is that anyone who claims that he should have been granted the patent in place of the person to whom it was in fact granted must institute proceedings to establish his right within two years of the date of the grant. An exception is permitted where the person registered as proprietor knew, at the time when the patent was granted to him or, if he is a successor-in-title of the original grantee, at the time when the patent was transferred to him, that he was not entitled to it.
Lord LLOYD of KILGERRAN: My Lords, is this a new matter from the point of view of the debates we have had on the Bill? I may be wrong, but I cannot recall it being discussed before. I understood the Minister to say that the new provision was required to make our law correspond with Article 27(3) of the Community Patent Convention. If it is an entirely new matter, then I think that should be indicated; in other words, that a Government Amendment is being introduced at this stage although the matter has not been raised before.
Lord ORAM: My Lords, I will take advice, but I think the noble Lord is right and I agree that, with so many Amendments coming forward, it would be for the convenience of noble Lords to have new matter indicated. It may be that references were made to the subject at an earlier stage of the Bill and I will try to find out.
Lord LLOYD of KILGERRAN: My Lords, I am obliged to the Minister.
On Question, Amendment agreed to.
Clause 37 [Compensation of employee for certain intentions]:
3.22 p.m.
The LORD CHANCELLOR (Lord Elwyn-Jones)The LORD CHANCELLOR (Lord Elwyn-Jones) moved Amendment No. 15:
Page 31, line 13, leave out from ("a") to ("provides") in line 17 and insert ("relevant collective agreement").
The noble and learned Lord said: My Lords, it may be convenient for the House to discuss at the same time Amendment No. 15A. The change effected by this pair of Amendments is purely one of drafting. It will be recalled that, as a result of your Lordships' acceptance of Amendment No. 51A moved by the noble Lord, Lord Nelson of Stafford, certain words were inserted in subsection (3) of Clause 37. This pair of Amendments achieve precisely the same objective in what, I hope, will be thought to be a more elegant manner.
Lord BELSTEAD: My Lords, on behalf of my noble friend Lord Nelson of Stafford, who is not able to be here today, I wish to thank the Government for this redrafting which I agree achieves exactly the same object as my noble friend had in mind when he moved his Amendment on Report and which is now overtaken by the better wording of the Government Amendments.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 15A:
Page 31, line 29, at end insert ("and 'relevant collective agreement' means a collective agreement within the meaning of the Trade Union and Labour Relations Act 1974 made by or on behalf of a trade union to which the employee belongs and by the employer or an employers' association to which the employer belongs which is in force at the time of the making of the invention".)
The noble and learned Lord said: beg to move.
Lord LLOYD of KILGERRAN: My Lords, while thanking the noble and learned Lord for the elegant way in which he moved this and the previous Amendment, may I ask him a question arising

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out of the fourth line of this one, in which there is a reference to "the employee"? It refers to a trade union to which the employee belongs, and it means that a collective agreement which is now associated with Clause 37 made by or on behalf of a trade union to which the employee belongs—
The LORD CHANCELLOR: My Lords, I am sorry to interrupt the noble Lord, but I think the word is "employer".
Lord LLOYD of KILGERRAN: In my copy of the Amendment the word is "employee" my Lords. If the word is "employee", it raises a point which was discussed on Report, when it was indicated that collective agreements covered the position not only of employees who are members of the trade union but employees who are not members but who are within the same field of activity. I remember that when the matter was raised, the noble Lord, Lord Nelson of Stafford, said that collective agreements should not be used to cover employees who were not members of the trade union. I have not been able to give notice of this question to the noble and learned Lord because I received the two booklets with some 80 Government Amendments only yesterday afternoon and had not noticed this point until this morning. Perhaps the matter could be clarified at some other stage.
The LORD CHANCELLOR: My Lords, it is a little difficult to see what other stage we could have, save in another place. I will certainly look into the point and communicate with the noble Lord. The words which appear in my copy of the Amendment are "to which the employer belongs" and that would seem to follow sensibly after the words "or an employers' association". It may be that the mischief is merely a misprint in the copy which the noble Lord has, but if it is not I will let him know.
Lord LLOYD of KILGERRAN: My Lords, I am very much obliged to the noble and learned Lord.
The LORD CHANCELLOR: My Lords, the explanation of this mystery is that the lining of the copy of the Amendment supplied to the noble Lord, Lord
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Lloyd of Kilgerran, is different from mine and I fear that we are talking about a different noun in the Amendment. However, I am advised that the relevant reference is "employee" and I am further advised that this has the effect that the noble Lord. Lord Nelson of Stafford, had in mind and desired. I hope that that reassurance will comfort Lord Lloyd.
On Question. Amendment agreed to.
Clause 38 [Amount of compensation]:
3.28 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 16:
Page 32, line 37, leave out ("and").
The noble and learned Lord said: My Lords, it may be convenient for the House to discusss Amendment No. 17 as well. On Report, when your Lordships were discussing Amendments Nos. 53A, 53B and 53C set down by the noble Lord, Lord Nelson of Stafford, I accepted that it would he right to add to the list of matters required to be taken into account under what is now Clause 38(5)—where the fair share of the benefit to be secured to an employee in respect of an invention which originally belonged to him is being determined—a reference to the employer's contribution to the developing and working of the invention. This Amendment carries that into effect. Perhaps I should add at this juncture that the Government are continuing to give consideration to the question whether any of the other matters specified in Clause 38(4) should also be added to Clause 38(5).
When we discussed this previously, again I accepted that reference should also be added to the marketing of the invention, provided that was necessary and appropriate. The Parliamentary draftsman has been consulted on this and he has advised that "marketing" is already comprised within the meaning of "working" and so does not need to be specifically mentioned. I confess that that is a proposition which caused me no little surprise, but that is the wisdom and guidance that I have received and I invite noble Lords to accept the view that it does not need to be mentioned specifically, and accordingly the word "marketing" does not appear

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in the Amendment. I fear that no Amendment has been tabled to insert it into what is now Clause 38(4)(d), but we are here in the presence of the esoteric skills of Parliamentary draftsmen and I am disposed to invite your Lordships to accept that view. I beg to move.
Lord BELSTEAD: My Lords, on behalf of my noble friend Lord Nelson of Stafford, should like to thank the noble and learned Lord for his explanation of the Government Amendment. Like him, I am a little surprised that the word, "marketing" should be subsumed in the word, "working", but I accept what the noble and learned Lord has said and I therefore support the Government Amendments.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 17:
Page 32, line 39, at end insert ("and
(c) the contribution made by the employer to the developing and working of the invention as mentioned in subsection (4)(d) above").
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 18:
Page 33, line 17, at end insert—
("(11) In Northern Ireland an order made under section 37 above by the comptroller for the payment of any sums may be enforced as if it were a money judgment.").
The noble and learned Lord said: My Lords, this Amendment adds a new subsection (11) to Clause 38 providing that in Northern Ireland an award of compensation made by the comptroller under Clause 37 may be enforced in the same way as if it were a money judgment. Accordingly, it inserts a provision for Northern Ireland which corresponds to what subsection (9) provides for England and Wales and subsection (10) does for Scotland. I beg to move.
On Question, Amendment agreed to.
Clause 39 [Enforceability of contracts relating to employees' inventions]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 19:
Page 33, line 31, at end insert—
"(2A) Subsection (2) above shall not be construed as derogating from any duty of
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confidentiality owed to his employer by an employee by virtue of any rule of law or otherwise".
The noble and learned Lord said: My Lords, at the Report stage, I accepted in principle the point which the noble Lord, Lord Nelson of Stafford, was making in his Amendment No. 56A and I undertook to table an Amendment expressly providing that what is now Clause 39(2) does not render unenforceable a term in a contract of employment imposing an obligation of confidence upon an employee. The Amendment now before your Lordships fulfils that undertaking. I beg to move.
Lord LYELL: My Lords, as one who spoke rather strongly in favour of such a clause at an earlier stage of the Bill, I can say that we are all very grateful to have a note of wit and charm injected into the proceedings by the noble and learned Lord who sits upon the Woolsack, and, on behalf of my noble friend Lord Nelson of Stafford, I should like to say that we are happy that the noble and learned Lord has gone as far as he can—I believe, effectively—to satisfy what was in the mind of my noble friend Lord Nelson.
Lord LLOYD of KILGERRAN: My Lords, I should like to support what the noble Lord, Lord Lyell, has said. This has reduced the serious anxieties of industry in regard to confidentiality. Although the law of confidence in these matters is still fairly clear, this has been a very helpful Amendment.
The LORD CHANCELLOR: My Lords, I am grateful for those two interventions. This shows how helpfully we have worked together to try to get the best possible Bill out of this extremely technical subject of patent law—a subject which I managed successfully to avoid during my whole career at the Bar.
On Question, Amendment agreed to.
3.37 p.m.
Lord ORAM Lord ORAM moved Amendments Nos. 20 to 28:
Clause 52, page 46, line 34, leave out ("a patented") and insert ("an").
Clause 52, page 46,line 41, leave out from first ("of") to second ("any") in line 43 and insert ("a relevant communication made in confidence")
Clause 52, page 46, line 47, leave out from ("time") to

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("shall") in line 2 on page 47 and insert ("either—

(a) after the publication of the application for the patent for the invention; or

(b) without prejudice to paragraph (a) above, in consequence of a relevant communication made after the priority date of the invention otherwise than in confidence;").

Page 47, line 7, at end insert—
("(4A) Where an invention is used by virtue of this section at any time after publication of an application for a patent for the invention but before such a patent is granted, and the terms for its use agreed or determined as mentioned in subsection (4) above include terms as to payment for the use, then (notwithstanding anything in those terms) any such payment shall be recoverable only—

(a) after such a patent is granted; and

(b) if (apart from this section) the use would, if the patent had been granted on the date of the publication of the application, have infringed not only the patent but also the claims (as interpreted by the description and any drawings referred to in the description or claims) in the form in which they were contained in the application immediately before the preparations for its publication were completed by the Patent Office").

Page 47, line 19, leave out ("use is begun") and insert ("second of the following events, that is to say, the use is begun and the patent is granted").
Page 47, line 25, at end insert—
("(7A) In this section "relevant communication", in relation to an invention, means a communication of the invention directly or indirectly by the proprietor of the patent or any person from whom he derives title.
(7B) Subsection (4) above is without prejudice to any rule of law relating to the confidentiality of information.")
Clause 53, page 47, line 32, leave out from beginning to end of line 7 on page 48 and insert—
("(1) Any reference in section 52 above to a patented invention, in relation to any time, is a reference to an invention for which a patent has before that time been, or is subsequently, granted").
Clause 55, page 51, line 30, at end insert ("after a patent has been granted for the invention ").
Page 52, line 28, at end insert—
("(6A) Where by virtue of a transaction, instrument or event to which section 30 above applies a person becomes the proprietor or one of the proprietors of an exclusive licensee of a patent and a government department or a person authorised by a government department subsequently makes use under section 52 above of the patented invention, that person shall not be entitled to any compensation under section 52(4) above (as it stands or as modified by section 54(3) above) in respect of a subsequent use of the invention before the transaction, instrument or event is registered unless—

(a) the transaction, instrument or event is registered within the period of six months beginning with its date; or

(b) the court is satisfied that it was not practicable to register the transaction,
576
instrument or event before the end of that period and that it was registered as soon as practicable thereafter.").

The noble Lord said: My Lords, before I speak to the Amendments, I should like, with your Lordships' permission, to refer to the point raised by the noble Lord, Lord Lloyd of Kilgerran, in connection with Amendment No. 14. The noble Lord asked whether the point involved was a new one. I am advised that the Amendment was consequential upon Amendments No. 42 and 112 which were agreed at Report stage. They made a provision in respect of the comptroller and Amendment No. 14 does the same for the court. So this is not an entirely new point but is a consequential one.
Turning to the Amendments, they are all primarily of a drafting character, although they make certain minor changes necessary to bring the Crown use provisions into accord with the principles underlying the remainder of the Bill. If any of your Lordships wishes me to answer any point on them, I will try to do so either now or by letter, but I do not think that it would be helpful in general for me to go through the changes in detail. I beg to move Amendments Nos. 20 to 28 en bloc.
Lord BELSTEAD: My Lords, I should like to pick up a drafting point in Amendment No. 28 which reads:
"Where by virtue of a transaction, instrument or event to which section 30 above applies a person becomes the proprietor or one of the proprietors or an exclusive licensee of a patent and a government department or a person authorised by a government department subsequently makes use under section 52 above of the patented invention, that person shall not be entitled…"
I am wondering who "that person" refers to.
Lord ORAM: So am I, my Lords. If the noble Lord agrees, I shall look into this and write to him. If there is any clarification needed in the text of the Bill, there will of course be an opportunity in another place to put it right but I anticipate that I shall be able to write to the noble Lord, Lord Belstead, making the position quite clear.
Lord LLOYD of KILGERRAN: My Lords, as the noble Lord, Lord Oram, did not indicate that the Amendments were purely formal and as they relate to the powers of the Crown in relation to

577
patented inventions, I wonder whether I may accept the offer made by the noble Lord that he would write explaining more fully the details of these Amendments rather than going through them now.
Lord ORAM: My Lords, if the noble Lord so wishes, that can readily be done. I shall send him a note which covers all the Amendments in rather more detail, although I reiterate that they are essentially drafting Amendments incorporating some minor changes.
Lord BELSTEAD: My Lords, I only wish to say that my understanding would have been that the adjective "that" in the expression "that person" related to the second person who is referred to in this Amendment, and the second person is a Government Department or a person authorised by a Government Department. However, when one comes to read the Amendment, it is quite clear that the words "that person" do not refer to the second person so mentioned but to the first person. If I may and if the Parliamentary draftsmen will allow a suggestion from the Opposition Benches, I therefore suggest that the sixth line of the Amendment should read, "that person first mentioned".
Lord ORAM: I am sure that the Parliamentary draftsmen have become used to accepting advice from very many quarters and that will include the noble Lord.
On Question, Amendments agreed to.
Clause 58 [Proceedings for infringement of patent]:
Lord ORAM Lord ORAM moved Amendment No. 29:
Page 57, line 2, at end insert—
"( ) The Arbitration Act 1950 shall not apply to proceedings before the comptroller under this section."
The noble Lord said: My Lords, this Amendment makes it clear that a reference to the comptroller under subsection (3) is not to be treated as an arbitration. Any doubt about the matter is thus removed. Perhaps I may mention that a similar provision is contained in Section 67 of the existing Patents Act. I beg to move.
On Question, Amendment agreed to.
Clause 66 [Infringement of rights conferred by publication of application]:
3.40 p.m.
Lord ORAM Lord ORAM moved Amendment No. 30:
Page 60, line 8, leave out ("that subsection") and insert ("subsection (2) below").
The noble Lord said: My Lords, this is a purely drafting Amendment to remove an ambiguity, making it clear that the subsection referred to in line 8 is subsection (2) of Clause 66 and not subsection (5) of Clause 71, both of which are referred to in line 2. I beg to move.
On Question, Amendment agreed to.
Lord ORAM Lord ORAM moved Amendment No. 31:
Page 60, line 19, leave out from second ("the") to end of line 21 and insert ("claims (as interpreted by the description or any drawings referred to in the description or claims) in the form in which they were contained in the application immediately before the preparations for its publication were completed by the Patent Office").
The noble Lord said: My Lords, before speaking to this Amendment I should like to call attention to a clerical error in the text. It should read:
"… as interpreted by the description and any drawings referred to… "
I wish to thank the noble Lord, Lord Belstead, for having pointed out this error in the text. This Amendment makes it clear that it is the claims in the form in which they are when the preparations for publication have been completed which will determine the provisional protection under Clause 66. These claims will of course be published and it would be wrong, as I said when moving Amendment No. 5 to Clause 15, to take into account any later non-published claims for Clause 66 purposes. I beg to move.
On Question, Amendment agreed to.
Clause 69 [Power to revoke patents on application]:
Lord LYELL Lord LYELL moved Amendment No. 32:
Page 62, line 27, at end insert—
("( ) A decision of the comptroller or an appeal from the comptroller shall not estop any party to civil proceedings in which infringement of a patent is in issue from alleging invalidity of the patent on any of the grounds

579
referred to in subsection (1) above, whether or not any of the issues involved were decided in the said decision.")
The noble Lord said: My Lords, I hope that the House will not lose patience at this late stage in the Bill's proceedings either with me or with my colleagues as we bring out once again the—dare I say it? —fascinations of the law of estoppel. Noble Lords will notice that the Amendment, which appears in my name and the names of my noble friends, is identical to those Amendments moved at both Committee stage and Report stage by my noble friend Lord Belstead and myself.
Briefly, we consider that as the Bill stands in its present form it does not make it clear that a litigant will be able to protect himself in any infringement proceedings which may, or probably will, follow from an unsuccessful revocation action. I should like to thank warmly the noble Lord, Lord Oram, for what I would call the flood of information and communications that has surged between us, mostly, I am happy to say, in my direction. I have been happy that the noble Lord, Lord Oram, has agreed with our point little by little, and indeed in communications outside the House he has been able to indicate that in almost all the details our Amendment was acceptable, but he had one or two minor reservations.
In his previous replies, the noble Lord, Lord Oram, believed that Clause 72(1)(a), which was indeed part of a Government Amendment, would meet our difficulty. However, I am afraid that we were not entirely of the same opinion. We consider that Clause 70(5) removes the right of an appeal to the court, except by leave of that court, and I think that I have it right when I say that Clause 70(5) will, without our Amendment, effectively estop a litigant from pleading the same evidence as he used, or indeed as was used, in revocation when he is pleading in the infringement action.
I understand that the comments of the noble Lord, Lord Oram, were part and parcel of what is known as action estoppel—concerning the validity or the obviousness of the patent—whereas our Amendment, we believe, deals with issue estoppel, and it is this aspect of the law of estoppel which, I am told, and so far as I can decipher it, is equivalent to the term, as
580
so nicely used by the noble Lord, Lord Oram: res judicata.
At the Report stage the noble Lord, Lord Lloyd of Kilgerran, mentioned the great cost of taking an appeal to the Patents Court or to the Court of Appeal. We are of the opinion that should our Amendment not be written into the Bill, a certain amount of what we call robust, swift, and effective justice would be lost. It is on these three appealing grounds, as I hope they are, that once again I beg to move the Amendment.
Lord ORAM: My Lords, the noble Lord, Lord Lyell, has indeed been diligent in pursuing this particular point, and quite rightly from his point of view. I indicated during the Report stage that the Government are indeed aware of the importance of the point that the noble Lord has been pursuing, since its insertion or omission from this Bill may well affect the attitude of persons when exercising their choice of either applying for revocation before the comptroller or before the Patents Court. During the Report stage I indicated that the Government were prepared to agree that there should be no estoppel so far as concerns prior decisions of the comptroller or the Patents Court on appeal from the comptroller. However, we had some misgivings, which I explained, about giving the same effect to prior judgments of the Court of Appeal and the House of Lords. The noble Lord, Lord Belstead, was good enough to say that he understood our misgivings on that point, and I, on the other hand, agreed to give further consideration to the matter.
I am glad to say that, as a result, we are now quite prepared to accept this Amendment, in the full realisation that a new situation arises through giving the comptroller, as everyone agrees, the same jurisdiction in respect of revocation on the court. So, if I may say so, this is a case of patience rewarded.
Lord LYELL: My Lords, we on this side of the House can only be immensely grateful to the noble Lord, Lord Oram, for the kind way in which he has seen fit to accept our points. I particularly enjoyed his latter comments, and I wondered whether it would be apposite that we should call this, together with a new concept of the law of estoppel, "Oram's revenge". I am

581
very happy to accept that the Government have seen our point, and we are very grateful.
On Question, Amendment agreed to.
Lord BELSTEAD Lord BELSTEAD moved Amendment No. 33:
After Clause 69 insert the following new clause: Effect of disclosure of matter on application where such disclosure occurs after filing earlier relevant application.
Where an invention to which an application for a patent relates has the priority date of an earlier relevant application pursuant to section 5 above, then, notwithstanding anything in this Act, the comptroller shall not refuse to grant the patent, and the patent shall not be revoked or invalidated by reason only that any matter disclosed in the earlier relevant application was used or published or taken to be comprised in the state of the art at any time on or after the date filing the earlier relevant application.
The noble Lord said: My Lords, I beg to move Amendment No. 33, which has already been twice discussed. I ventured to put it down again because I am advised, and I must say I believe, that if this Amendment is not written into the Bill, the consequences will be unfair to inventors, undesirable in the national interest, and inconsistent with the existing law for the United Kingdom, and inconsistent, too, with the Paris Convention which extends virtually worldwide.
Positively for the last time in these proceedings I will again introduce an old friend into the debate: the inventor who discovers a new method for fixing uppers to the soles of a pair of shoes. He applies for a patent, but soon after he publishes an article about it in the Shoemakers' Gazette; and then, within a year from the date of filing his application for shoes, the inventor files another application, using the same invention, for fixing blinds to their rollers and canvas hoods to the roofs of cars. I suggest that the new application for shoes, roller blinds and car hoods is a single generic claim for fixing flexible matter to a stiffer backing.
The difficulty which I am trying to put before your Lordships is that under Clause 2(2) of the Bill, which provides that the state of the art:
"shall be taken to comprise all matter… which has at any time before the priority date of that invention been made available to the public… by written or oral description, by use or in any other way",
582
the second application for shoes, blinds and car hoods has been anticipated by the disclosure of the invention which was written about in the Shoemakers' Gazette.
The noble Lord, Lord Oram, was good enough to write to me on the 13th May, and in the noble Lord's letter there were these words:
"Your question arose out of a hypothetical example of an invention which was expressed narrowly in a priority document and generically in a definitive United Kingdom application. I cannot of course say how the courts might decide the validity of the patent in that particular case, but I can say that under the Bill as it stands the patent could be held invalid because of the publication of the invention in the Shoemakers' Gazette, whereas it could not be held invalid if the Amendment were adopted".
The noble Lord then went on to say that he was well aware of the importance of the issues raised by this Amendment, and felt that the right thing to do was to refer the question to the Standing Advisory Committee on Patents to get their views on it. Indeed, I am well aware that the noble Lord takes this as being an important Amendment, because he has been good enough not only to write to me about it on two occasions but also to reply to me at length on the Floor of the House. For those reasons, my Lords, I should very much like to accept the invitation which has been given to me in writing that this matter should be put to the Standing Advisory Committee, but I hope the noble Lord will not take me as being unduly difficult over this if I say that I really do not think that I can do this at this final stage of the Bill.
My understanding is that it has been common practice for patent applicants to publish an account of their inventions after they have filed a provisional patent application—a method, of course, which is going to be done away with by this Bill. Inventors may also try to go round persuading manufacturers to take out a licence without trying to impose any obligation of secrecy upon those manufacturers; and then, as the method has been used by many inventors in the past, a complete specification is filed provided it is within a year, and Section 52 of the 1949 Act protects the inventor whether or not his final claim is drawn in broad or in narrow terms.
My Lords, this Amendment really corresponds directly to Section 52 of the

583
1949 Act; and, as I said earlier, if it is not agreed to I think it will be unfair to inventors, who are going to be very wary of exploiting their inventions at all during the first year after they have discovered them and filed the applications for them. For the same reason, I think this postponement will not be in the national interest; and, as I have been trying to argue, I do not think it is consistent with the existing law.
My Lords, there is one other difficulty. If the noble Lord will forgive me, I will put it before I finish moving this Amendment, and it is this. I think that refusal of this Amendment will make the law of our country inconsistent with Article 4B of the Paris Convention. I have tried to refer to that Convention before, but on this occasion may I say this? The Convention is absolutely specific on this subject. In Article 4B it is provided:
"Any application for a patent in any of the countries of the Union has one year to file a corresponding application in other countries and obtain priority for the first filing, and the applicant may disclose his first invention in the interim year".
The Paris Convention then goes on specifically to say that the second application shall not be invalidated,
"by reason of any acts"—
"any acts", my Lords—
"accomplished in the interval".
I do not think that the Bill as drafted corresponds to that provision.
The noble Lord, Lord Oram, made the perfectly valid objection, when this Amendment was being moved at an earlier stage, that the European Patent Convention, which is one of the two Conventions which of course we are attempting to harmonise with, is silent on this subject. My Lords, if noble Lords on the Government Front Bench would care to glance at the Preamble to the European Patent Convention, they will see that the Convention,
"constitutes a special agreement within the meaning of Article 19 of the Paris Convention".
My Lords, if the EPC does not include an equivalent provision to Section 52 of the 1949 Act, I suggest it is because Article 4B of the Paris Convention is doing so and the EPC is operating within, and not outside, the terms of the Paris Convention.
It is for those reasons—and I apologise for the length of time in moving this Amendment—that I believe that this Amendment is necessary. It will continue the effect of Section 52 of the 1949 Act; it will correspond with Article 4B of the Paris Convention; and I do not think there is anything in the EPC which is inconsistent with it. My Lords, I beg to move.
Lord LLOYD of KILGERRAN: My Lords, may I briefly support what the noble Lord, Lord Belstead, has said about this Amendment, which in effect is referred to as the Section 52 type Amendment? It is of special interest, in my view, to the small inventor and the small firm; and I have already declared an interest to your Lordships in that I have the privilege of being the president of the Institute of Patentees and Inventors. In view of the confession made by the noble and learned Lord about his practice at the bar, that he escaped patent law during the course of his practice, perhaps I may say that I have had the privilege of escaping every branch of the law except the patents and trademarks law.
My Lords, this Amendment deals with the independent inventor and the small-sized company, which frequently, when they make an invention, disclose their invention after filing a provisional specification in order to attract financial support. Such disclosure may be in a technical journal which can be read by the examiner at the Patent Office during his examination of the later, complete specification. Therefore, I should like to support this Amendment, so well introduced by the noble Lord, Lord Belstead.
Lord ORAM: My Lords, as the noble Lord, Lord Belstead, has said, this is an old friend. It has indeed been much discussed during the Committee and Report stages of the Bill, and we have considered carefully everything that noble Lords opposite have said with a view to seeing whether we could possibly meet their wishes; but I am sorry to say that, unlike the last Amendment with which we were dealing, that has not been possible in this case. As has been said before, this Amendment has the effect of introducing into the Bill a provision which corresponds to Section 52 of the 1949 Act. In that Act it may have some merit; but as to whether or not that is true we

585
cannot really say because research has not detected any case in which this section of the 1949 Act has been used. From this, I think it is not unfair to deduce that the provision which this Amendment seeks to introduce is not concerned with a matter that can be said to be of great practical importance.
Nevertheless, I have to admit to the existence of Section 52, and I must answer the charge that there is no case for omitting this provision from the new patent law. But, my Lords, it has to be realised that the new law is being established in a different framework from the 1949 Act. Throughout our deliberations, noble Lords on all sides of this House have been saying that we must line up with the European Patent Convention. We must avoid duality of standards in this country: British, European and Corn-mutiny patents must be treated alike. This is common ground, accepted by your Lordships and anxiously desired by industry, commerce, patent agents, barristers, solicitors and everyone else concerned with patents. Indeed, the Government have, sometimes at the express wish of the patent interests, moved numerous Amendments with a view to bringing into close alignment the new law with these Conventions. But here we have an Amendment producing an effect which is not, in our view, produced by the European Patent Convention. Indeed, the noble Lord, Lord Belstead, admitted during the Report stage that he took a similar view. Noble Lords opposite appear, therefore, to be moving once again an Amendment which is likely to introduce that duality of standards which they and everyone else wish to avoid.
It is, as I understand it, argued that the omission of such a provision from the European Convention is rectified by Article 4B of the Paris Convention since the European Convention does not derogate from the provisions of the Paris Convention. I do not say that the two Conventions are in conflict—far from it! —because in the view of the Government the European Convention does give effect to Article 4B of the Paris Convention in that it makes clear that a disclosure of an invention after its priority date does not destroy the novelty of the claims of the patent application directed to that invention. What noble Lords opposite are saying is that this article goes much
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further and also safeguards any development of the basic invention from a disclosure of that basic invention made after the priority date of that invention. As I have already said, we do not take this view; it not only seems wrong in principle but it is not borne out by the European Patent Convention. It is this Convention with which the new law is to be aligned without in any way running counter to the obligations which this country has under the Paris Convention.
My Lords, this is a difficult technical matter. I think I have understood what noble Lords opposite are driving at, and there are two further points that I feel that I must make. During the Report stage, and again today, the noble Lord, Lord Belstead, illustrated his point with his famous example. According to this example, the applicant, after filing an application for a patent for an invention which is a method of attaching uppers to the soles of shoes, publishes an article about his invention and then later files a second application, claiming the priority of the first application, describing the application of the same method not only to shoes but also to fixing blinds to their rollers and canvas hoods to the roofs of cars, and claiming broadly a method of fixing flexible matter to a stiffer backing. The noble Lord acknowledged that this broad claim would not attract the priority date of the first application; in other words, the invention as broadly claimed takes the filing date of the second application, this being later than the date of the article published by the applicant.
The noble Lord then asked me whether the second application was anticipated by the published article, having regard to Clause 2(2). Unfortunately I gave, off the cuff, the wrong answer and I am, of course, sorry about this. What I should have said was that the broad claim would lack novelty, since its priority date is later than the date of the article. But this is not the end of the story, because it would be possible to split the claim, notionally or actually, into one for (a) the method as applied to shoes, and the other or others for (b) the method as applied to roller blinds and car hoods. The claim to (a) would take the priority date of the first application and hence would not lack novelty. The claim or claims to (b) would, of course, also not lack novelty, since the article gave no indication of applying the

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method to blinds and car hoods. It may be argued that the claim to (b) lacks inventive step. I agree that this is so, but whether it would succeed depends on the facts; and all that I can say on this point is that if it is so obvious to apply the method disclosed in the article to roller blinds and car hoods, then I am inclined to the view that the broad generic claim may well attract the priority date of the first application; in which event, of course, no problem arises.
This leads me directly to my second point which is that this Amendment, as I understand it, does not serve the purpose which noble Lords opposite intend. The safeguard that it contains against invalidation by reason of use or publication of the matter disclosed in the first application is based, according to the Amendment, on the premise that the invention (that is, the broad generic claim) has the priority date of the first application. My Lords, if this premise is satisfied then the safeguard provided by the Amendment is unnecessary; it is already given by the express terms of Clause 2 because the public disclosure of the content of the first application takes place after the priority date of the generic claim.
My Lords, for all these reasons, I ask noble Lords opposite once again to withdraw their Amendment. Although the noble Lord, Lord Belstead, indicated that he read my letter, which summarised the case that I have been deploying at greater length, and still indicates that he is not satisfied, nevertheless I ask him to consider withdrawing the Amendment. It is, as I understand it, a highly technical matter with no political content but one on which there can be a difference of view. Because of this, as the noble Lord indicated when he quoted my letter, the Government are quite prepared to look yet again at this matter, and I can tell the House that the advice of the members of the Standing Advisory Committee on patents has been sought on this point. Unfortunately, however, there has been insufficient time to complete the consultation process, but I can assure your Lordships that if, on receipt of this advice, the Government are convinced that an Amendment on the lines now proposed is indeed necessary, they will be prepared to deal with the matter in another place. The Government are not,
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as has been suggested, intending to be infair to inventors and to delay exploitation of their inventions by the present rejection of this Amendment. Their sole concern is to adopt sound principles of patent law which are in conformity with the European Patent Convention. I repeat, therefore, that I hope noble Lords opposite will be prepared to withdraw this Amendment.
4.9 p.m.
Lord DOUGLAS of BARLOCH: My Lords, I have tried to follow this argument and as I understand it, my noble friend Lord Oram is resting on the grounds that the Amendment is unnecessary because the point in question would be covered by the Bill without this Amendment. I must confess that I have failed to understand what reasons there can be for suggesting this. If this point is correct. he is saying, in fact, that the substance of the Amendment is desirable but that he thinks it is already in the Bill. I doubt this very much. I confess that it is a long time since I practised in the Patent Office, but my recollection is that the approach of the Patent Office to applications for patents is extremely narrow and restrictive, and it is not at all willing to give a wide construction to what the inventor has said in his specification. I therefore feel a little unhappy that this provision in the Amendment should not be accepted.
4.10 p.m.
Lord BELSTEAD: My Lords, I am grateful to the noble Lord, Lord Douglas of Barloch, for coming to my rescue, because rescue I need in that I am not sure I am so grateful to the noble Lord, Lord Oram, for speaking—as he always does—with great care and, on this Amendment, at some length to try to explain why the Government will not agree to it. I found it more difficult to follow his explanation as he went on; the fault was not his entirely but mine. The noble Lord said that researches had shown that this had not, so far as could be seen, been used at all. I find that statement astonishing in view of what the noble Lord, Lord Lloyd of Kilgerran, said when he was good enough to intervene for a moment or two. The inventor, who I put forward for the "umpteenth" time. who makes his shoes, roller blinds and car hoods, precisely falls foul of the fact that this provision is not in the Bill at the

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present time. As I understood him, towards the end of his remarks the noble Lord said that my second application example, the broad generic one, could claim earlier priority and therefore there should not be this problem which I am putting forward.
I hesitate to refer to anything that I have said, but with respect I will refer to what I ventured to put forward to the Government on the Committee stage, that the inventor who I used as an example can be caught both ways. I apologise for quoting my own words, but I said this at column 60 of Hansard on 9th May:
"The Government may say, 'Under Clause 5(2), if an application is supported by matter contained in an earlier application, the second application can take the earlier priority date'. But the second generic claim, the one for the three things, is in this case not so supported by the earlier application for shoes alone, beause if there is an invention which is limited in its scope—in this case only shoes—it is very doubtful whether it would be held with a broader claim for different articles (in this case roller blinds and car hoods as well as shoes) as being supported by matter in the earlier application for shoes alone. Anyway, it could be argued that work on blinds and car hoods are different arts so far as shoes are concerned".
Having said that, I ventured to put one other point to the Government. I said at the bottom of column 60:
"The second generic claim can be said now to have been anticipated by the disclosure in the Shoemakers' Gazette,…"
It is that point which the noble Lord in his letter confirmed is correct. In this case, my unfortunate inventor is caught both ways.
The noble Lord, understandably, put to us his views about the Paris Convention. I must just gently say to the Government that, in the course of the long proceedings that we have had on this Bill, from time to time Ministers, when they felt it was the right thing to do, have told us that the European Patent Convention and Community Patent Convention are only indicative. Indeed, when we had quite a long debate on what is now Clause 122(7) many noble Lords on the Government Front Bench defended the wording of the Bill which states that a great many clauses of the Bill will be as similar as possible to the EPC and the CPC, because the EPC and the CPC are indicative and we do not have to stick exactly to them.
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I am going to use that argument now and say that the Paris Convention in Article 4B is absolutely specific on this matter. I quoted the very words:
"…by reason of any acts accomplished in the interval so a second application shall not be invalidated by what is being done between it and a first application to which it may refer".
I am saying that although the EPC is silent on this matter, that indicates that it approves of what is in the Paris Convention. I simply put it to the House that I believe that this Amendment compares exactly to Section 52 of the 1949 Act, which is the law at the present time, and to Article 4B of the Paris Convention. I venture to suggest to your Lordships that the Amendment should be written into the Bill.
Lord ORAM: My Lords, if I may briefly reply, I need only be brief because it is clear from the speech to which we have just listened that if I were to deploy the full argument again I doubt whether we would reach agreement or would persuade the noble Lord to withdraw his Amendment. If I may refer to what the noble Lord, Lord Douglas of Barloch, said, I do not think I said—or certainly I did not mean to imply—that the Amendment is already covered by the Bill; rather was it the basis of my case that the Amendment would introduce a provision that would put it out of line with the European Patent Convention. There may be argument about this, but that is what I intended to convey.
As I said, this is a highly technical matter which has been pursued with great diligence many times. I had hoped that the information I gave about our reference of such a technical matter to the people who can really best advise us, namely, those on the Standing Advisory Committee, and the undertaking that I then gave—namely, that if they felt that an Amendment of this kind were necessary, we would introduce it in another place—was a perfectly reasonable suggestion to put to your Lordships. But if that is not considered a satisfactory approach to this matter—and I understand that the noble Lord, though accepting it is useful, is not satisfied that it is sufficient for him to withdraw his Amendment—then so be it. We must put the matter to the view of the House.
4.17 p.m.
On Question, Whether the said Amendment (No. 33) shall be agreed to?
Resolved in the affirmative, and Amendment agreed to accordingly.
Their Lordships divided: Contents,116; Not-Contents 61.

CONTENTS

Airedale, L.

Emmet of Amberley, B.

Monck, V.

Aldenham, L.

Evans of Hungershall, L.

Newall, L. [Teller.]

Alexander of Tunis, E.

Falkland, V.

Northchurch, B.

Allan of Kilmahew, L.

Ferrers, E.

Nunburnholme, L.

Alport, L.

Faversham, L.

O'Hagan, L.

Amherst, E.

Fraser of Kilmorack, L.

Orr-Ewing, L.

Ampthill, L.

Gainford, L.

Platt, L.

Arran, E.

Gisborough, L.

Rankeillour, L.

Avebury, L.

Gladwyn, L.

Reigate, L.

Avon, E.

Glenkinglas, L.

Robbins, L.

Balfour of Inchrye, L.

Gray, L.

Rochester, L.

Banks, L.

Grey, E.

Romney, E.

Barnby, L.

Gridley, L.

Ruthven of Freeland, Ly.

Belstead, L.

Hailsham of Saint Marylebone,L.

Sackville, L.

Berkeley, B.

St. Aldwyn, E.

Blake, L.

Halsbury, E.

St. Davids, V.

Boyd-Carpenter, L.

Hanworth, V.

St. Helens, L.

Broadbridge, L.

Harmar-Nicholls, L.

Salisbury, M.

Byers, L.

Hatherton, L.

Savile, L.

Caccia, L.

Hawke, L.

Spens, L.

Carrington, L.

Hayter, L.

Stamp, L.

Cathcart, E.

Hemphill, L.

Strang, L.

Chelwood, L.

Henley, L.

Strathspey, L.

Clitheroe, L.

Hylton-Foster, B.

Swansea, L.

Clwyd, L.

Ilchester, E.

Teynham, L.

Cork and Orrery, E.

Ironside, L.

Thomas, L.

Cottesloe, L.

Jessel, L.

Tranmire, L.

Daventry, V.

Kings Norton, L.

Trefgarne, L. [Teller.]

Davidson, V.

Kinloss, Ly.

Vernon, L.

de Clifford, L.

Kinnaird, L.

Vickers, B.

De Freyne, L.

Leinster, D.

Vivian, L.

Derwent, L.

Lindsey and Abingdon, E.

Wade, L.

Digby, L.

Lloyd of Kilgerran, L.

Waldegrave, E.

Douglas of Barloch, L.

Long, V.

Ward of North Tyneside, B.

Drumalbyn, L.

Lyell, L.

Ward of Witley, V.

Effingham, E.

McNair, L.

Willingdon, M.

Ellenborough, L.

Mancroft, L.

Windlesham, L.

Elles, B.

Marley, L.

Wise, L.

Elton, L.

Merrivale, L.

Young, B.

NOT-CONTENTS

Ardwick, L.

Jacques, L.

Roberthall, L.

Aylestone, L.

Janner, L.

Samuel, V.

Blyton, L.

Kennet, L.

Segal, L.

Brimelow, L.

Kilbracken, L.

Shepherd, L.

Brockway, L.

Leatherland, L.

Shinwell, L.

Bruce of Donington, L.

Lee of Newton, L.

Stedman, B.

Burntwood, L.

Listowel, E.

Stewart of Alvechurch, B.

Burton of Coventry, B.

Llewelyn-Davies of Hastoe, B.

Stone, L.

Castle, L.

Lloyd of Hampstead, L.

Strabolgi, L.

Champion, L.

Lovell-Davies, L.

Taylor of Mansfield, L.

Chorley, L.

McCarthy, L.

Wallace of Coslany, L.

Cooper of Stockton Heath, L.

Milford, L.

Walston, L.

Crowther-Hunt, L.

Northfield, L.

Wells-Pestell, L. [Teller.]

Darling of Hillsborough, L.

Oram, L.

White, B.

Davies of Penrhys, L.

Pannell, L.

Willis, L.

Elwyn-Jones, L. (L. Chancellor)

Pargiter, L.

Wilson of RadclifTe, L.

Gaitskell. B.

Parry, L.

Winterbottom, L. [Teller.]

Gordon-Walker, L.

Peddie, L.

Wootton of Abinger, B.

Granville of Eye, L.

Phillips, B.

Wynne-Jones, L.

Greenwood of Rossendale, L.

Raglan, L.

Henderson, L.

Ritchie-Calder, L.

Clause 70 [Comptroller's power to revoke patents on his own initiative]:
4.26 p.m.
Lord ORAM Lord ORAM moved Amendment No. 34:
Page 63, line 8, at end insert—
("(2) If it appears to the comptroller that a patent under this Act and a European patent (UK) have been granted for the same invention having the same priority date and that the applications for both patents were filed by the same applicant or his successor in title, the comptroller may, on his own initiative but only after the relevant date, consider whether to revoke the patent granted under this Act and may, after giving the proprietor of the patent an opportunity of making any observstions and of amending the specification of the patent, revoke the patent.
(3) In this section "the relevant date" means whichever of the following dates is relevant, that is to say—

(a) the date on which the period for filing an opposition to the patent under the European Patent Convention expires without an opposition being filed;

(b) the date when any opposition proceedings under that convention are finally disposed of by a decision to maintain the European patent;

(c) if later than either of the foregoing dates, the date when the patent under this Act is granted").

The noble Lord said: My Lords, this Amendment provides for revocation by the comptroller, on his own initiative, of a patent under the Bill in cases where the proprietor has also obtained a European patent designating the United Kingdom for the same invention having the same priority date. Certain safeguards are, however, provided. First, the proprietor must be given an opportunity to make observations and to amend his patent. Secondly, no action can be taken by the comptroller until the period provided under the European Patent Convention for filing an opposition to the European patent has expired with no opposition having been filed or, if an opposition has been filed, until the opposition has been determined in the proprietor's favour. In other words, the comptroller will not be able to revoke a patent under this subsection until it is clear that two patents, one a Bill patent and the other a European patent, have been granted and the possibility of revocation of the European patent under the EPC has passed. These safeguards are analogous to those provided by Article 80 of the Community Patent Convention which deals with the
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same problem vis-à-vis Community patents and national patents. I beg to move.
On Question, Amendment agreed to.
Clause 71 [Proceedings in which validity of patent may be put in issue]:
Lord ORAM Lord ORAM moved Amendment No. 35:
Page 63, line 31, leave out from second ("in") to ("it") in line 33 and insert ("any proceedings unless—

(a) a reference to the comptroller of a question mentioned in section 34(1)(a) above has been made complying with section 34(5) above;

(b) proceedings for a declaration or declarator as to any such question have been commenced complying with section 34(9) above; or

(c) in the case of any other proceedings, they are commenced before the end of the period of two years beginning with the date of the grant of the patent or").

The noble Lord said: My Lords, this Amendment puts right a defect in the existing Clause 71(4). Under subsection (4) as drafted a rightful owner could only put invalidity in issue in any proceedings on the ground mentioned in Clause 69(1)(b) if those proceedings were brought within two years of grant, unless, of course, the proprietor of the patent knew that he was not entitled to it. It was not intended that this should be the case where the rightful owner had commenced proceedings before the comptroller under Clause 34(1), in compliance with Clause 34(5), or before the court under Clause 34(9). The Amendment makes the position clear by providing that once a reference to the comptroller has been made or proceedings for a declaration before the court have been commenced, in accordance with the two-year time limit specified in Clause 34, the rightful owner may put validity in issue under Clause 71 in any proceedings even though those proceedings have been commenced later than two years from the grant of the patent. I beg to move.
Lord AIREDALE: My Lords, I think there is a small drafting point to be raised. I should have thought that the word "or" should appear at the end of paragraph (a), in the same way as it occurs at the ends of paragraphs (b) and (c).
Lord ORAM: My Lords, I am grateful to the noble Lord for pointing that out.

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At first blush, I think he has made a point and, if so, it will certainly be taken note of and corrected in another place.
On Question, Amendment agreed to.
Clause 75 [Effect of filing an application for a European Patent (UK)]:
Lord ORAM Lord ORAM moved Amendment No. 36:
Page 66, line 41, leave out ("29 and") and insert ("to").
The noble Lord said: My Lords, this Amendment is consequential upon the addition of what is now Clause 28. This was added during Committee. I beg to move.
On Question, Amendment agreed to.
Lord ORAM Lord ORAM moved Amendment No. 37:
Page 67, line 10, at end insert—
("(aa) where a period of time relevant to priority is extended under that convention, the period of twelve months specified in section 5(2) above shall be treated as extended correspondingly;").
The noble Lord said: My Lords, Article 120 of the European Patent Convention allows time limits to be extended and where, by virtue of that Article the 12-month priority period of Article 87 of the European Patent Convention is extended under the Convention in relation to an application or patent, it is right that on any subsequent consideration of priority questions in the United Kingdom on that application or patent, it should be treated as having been extended under the Bill. I beg to move.
On Question, Amendment agreed to.
4.31 p.m.
Lord ORAM Lord ORAM moved Amendment No. 38:
Page 67, line 30, after ("30(1)(b)") insert ("above").
The noble Lord said: My Lords, I beg to move this drafting Amendment which inserts a missing word—namely, the word "above"—making it clear that the section referred to is in the section of that number in the Bill.
On Question, Amendment agreed to.
Lord ORAM Lord ORAM moved Amendment No. 39:
Page 68, line 4, leave out ('53") and insert ("52(4A)").
The noble Lord said: My Lords, this Amendment is consequential upon Amendments Nos. 23 and 26, which we have dealt with. I beg to move.
Lord BELSTEAD: My Lords, I wonder whether the reference, in line 43 on page 67, to Section 53 should be a reference to Section 52. I am not sure, and I have not had a great deal of time to look at the Government's Amendments. But I just put that to the Government, and they may care to look at it after these proceedings.
Lord ORAM: My Lords, we will certainly do that.
On Question, Amendment agreed to.
Clause 77 [Authentic text of European Patents and patent applications]:
Lord ORAM Lord ORAM moved Amendment No. 40:
Page 69, line 40, leave out ("subsection (8)") and insert ("subsections (8) and (9)").
The noble Lord said: My Lords, this Amendment is consequential on Amendment No. 37 made at Report stage, which added a new subsection to what is now Clause 25 dealing with Crown use rights when a lapsed patent is restored. I beg to move.
On Question, Amendment agreed to.
Clause 79 [Jurisdiction to determine questions as to right w a patent]:
4.33 p.m.
Lord ORAM Lord ORAM moved Amendment No. 41:
Page 71, line 38, leave out from ('applicant") to end of line 40 and insert ("does not have his residence or principal place of business in any of the relevant contracting states").
The noble Lord said: My Lords, as at present drafted, Clause 79(4)(b) requires the court or the comptroller to be satisfied, before assuming jurisdiction, that the applicant resides or has his principal place of business elsewhere than in a relevant contracting State—an expression which

597
is defined in Clause 79(9). The Amendment more correctly requires that the court or the comptroller be satisfied that the applicant does not have a residence or principal place of business in any such State. As so amended, the paragraph will more accurately reflect the intention behind the relevant provision of the Protocol on Jurisdiction, which forms an integral part of the European Patent Convention. My Lords, I beg to move.
On Question, Amendment agreed to.
Clause 81 [Patent agents and other representatives]:
Lord ORAM Lord ORAM moved Amendments Nos. 42 and 43:
Page 74, line 1, leave out ("or member").
Page 74,line 2, leave out ("or member").
The noble Lord said: My Lords, I should like to move Amendments Nos. 42 and 43 together, and to speak also to Amendments Nos. 52, 53, 54 and 60. Amendments Nos. 42 and 43 to Clause 81, and Amendments Nos. 53 arid 54 to Clause 106, in deleting the reference to a "member" of a body corporate, prevent the clauses applying to the shareholders of the body. It was never, of course, intended that a body corporate could not describe itself as a patent agent unless all the shareholders were registered as patent agents. On the other hand, Clauses 81 and 106 should apply to members of a public body corporate whose affairs are managed by those members. To achieve this, the definition of "director", which includes "members" of a public body corporate in Clause 105(2), and which was applicable only to Clause 105(1), will, I hope, be deleted by Amendment No. 52 and placed in Clause 122, where it will apply generally, by Amendment No. 60. I beg to move.
Lord BELSTEAD: My Lords, as this Amendment will reword it, Clause 81(3) prevents any body corporate from practising before the European Patent Office, unless the name of every director appears on the European list. I think this will mean that a company whose directors are European patent agents, but whose share capital is owned by citizens of a country other than the United Kingdom and who are not on the European list, could practice before the European Patent Office. I am making no criticism at all about any
598
company whose share capital is owned by people from another country, but I am not aware that the European Patent Office has as yet made up its mind on this point. The EPO is still only at a formative stage and will doubtless, in time, say whether it will allow the directors of such companies to act in Europe.
I should have thought that the only way satisfactorily to draft subsection (3) of Clause 81 at this stage is to say that a body corporate may not hold itself out to act before the European Patent Office unless it is so entitled by the European Patent Office. But that seems rather ridiculous, and I have not put down an Amendment to that effect. I suggest that the Government Amendment which has been moved by the noble Lord, Lord Oram, should now he agreed to; but I should give a warning from this side of the House that this is a point which will perhaps be returned to in another place.
Lord ORAM: My Lords, I am obliged to the noble Lord, Lord Belstead. It is a completely new point to me, as he will appreciate. I think that his suggestion is quite acceptable. If your Lordships will accept Amendments Nos. 42 and 43 together, we can give consideration to the point that the noble Lord has made.
On Question, Amendments agreed to.
Clause 85 [Effect of filing international application for a patent]:
4.38 p.m.
Lord ORAM Lord ORAM moved Amendment No. 44:
Page 77, line 16, after ("amendment") insert ("are").
The noble Lord said: My Lords, this is a drafting Amendment which inserts a word inadvertently omitted from Clause 85(4)(b). I beg to move.
On Question, Amendment agreed to.
Clause 89 [Enforcement of orders for costs]:
Lord ORAM Lord ORAM moved Amendment No. 45:
Page 80, line 40, at end insert—
("(c) in Northern Ireland the order may be enforced as if it were a money judgment".).
The noble Lord said: My Lords, just as Clause 89(a) makes provision for enforcement in England and Wales of orders for the payment of costs made by the European Patent Office in proceedings before it, and Clause 89(b) for their enforcement in Scotland, so will the new paragraph (c), which this Amendment adds to the clause, provide for their enforcement in Northern Ireland. My Lords, I beg to move.
On Question, Amendment agreed to.
Clause 93 [Appeals from the comptroller]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 46:
Page 82, line 6, leave out paragraph (b).
The noble and learned Lord said: My Lords, your Lordships will recall that at Report stage I accepted in principle an Amendment moved by the noble Lord, Lord Lyell. I am happy to say that I now also accept in the letter, and should have done so on an earlier occasion as well. I beg to move.
Lord LYELL: My Lords, after the noble and learned Lord's charming reference to the Amendment which I moved at an earlier stage, may I say that we are very grateful that he has been able to comply totally with our request. Therefore we support this Amendment.
On Question, Amendment agreed to.
4.40 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendments Nos. 46A and 46B:
Page 82, line 12, leave out paragraph (e)
Page 82, line 37, leave out ("(f)") and insert ("(e)").
The noble Lord said: My Lords, I beg to move Amendments Nos. 46A and 46B. Both Amendments are consequential and arise out of the deletion by your Lordships' House of Clause 20 from the Bill at Report Stage. Subject to any reservation which the Government wish to make about that deletion, I beg to move.
On Question, Amendments agreed to.
Clause 99 [Extension of privilege for communications with solicitors relating to patent proceedings]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendments Nos. 47, 48 and 49:
Page 84, line 15, leave out subsection (2).
Page 84, line 31, at end insert—
("(3) This section shall not extend to Scotland.").
After Clause 100, insert the following new clause:—
Extension of privilege in Scotland for communications relating to patent proceedings.
It is hereby declared that in Scotland the rules of law which confer privilege from disclosure in legal proceedings in respect of communications, reports or other documents (by whomsoever made) made for the purpose of any pending or contemplated proceedings in a court in the United Kingdom extends to communications, reports or other documents made for the purpose of such proceedings

(a) before the Comptroller under this Act, the 1949 Act or any of the relevant conventions, or

(b) before the European Court of the European Patent Office under any of those conventions.

The noble and learned Lord said: My Lords, it may be convenient to discuss Amendments Nos. 47, 48 and 49 together. As at present drafted, Clause 99(1) extends the privilege from disclosure in legal proceedings of communications made with solicitors, and subsection (2) of the clause states how the provision is to apply in Scotland. In Scotland, however, the relevant rules of law on such privilege are not confined to solicitors but apply also to communications made with other professional people. Accordingly, it is thought preferable to remove subsection (2) from the clause, to make Clause 99 cease to apply to Scotland and to make separate provision for Scotland in the new clause after Clause 100, which is set out in the third of the Amendments that I have mentioned, namely, Amendment No. 49. I beg to move.
On Question, Amendments agreed to.
Clause 101 [Costs and expenses]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 50:
Page 86, line 9, after ("7") insert ("11").
The noble and learned Lord said: My Lords, this Amendment is entirely consequential upon the introduction during

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the Report stage of the new Clause 11. Clearly, security for costs may be necessary under Clause 11, just as it may be under Clauses 7 and 34. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 51:
Page 86, line 18, at end insert—
("(5) In Northern Ireland any order under this section for the payment of costs may be enforced as if it were a money judgment.").
The noble and learned Lord said: My Lords, this Amendment makes provision for the enforcement in Northern Ireland of awards of costs made by the comptroller in proceedings before him. It does so by adding to Clause 101 a new subsection (5) which makes provision for Northern Ireland corresponding to that made in respect of England and Wales and Scotland respectively in subsections (2) and (3) of the clause. I beg to move.
On Question, Amendment agreed to.
Clause 105 [Offences by corporations]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendments Nos. 52, 53 and 54:
Page 87, line 37, leave out subsection (2)
Clause 106, page 88, line 21, leave out ("or member").
Clause 106, page 88, line 22, leave out ("or member").
The noble and learned Lord said: My Lords, these Amendments were spoken to by my noble friend Lord Oram when he dealt with Amendment No. 42. Formally I beg to move that these Amendments be agreed to en bloc.
On Question, Amendments agreed to.
Clause 107 [Power of comptroller to refuse to deal with certain agents]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 55:
Page 89, line 13, after ("above") insert ("or section 88 of the 1949 Act (which is replaced by section 106)").
The noble and learned Lord said: My Lords, Clause 107(1)(b) provides for rules to be made authorising the comptroller to refuse to recognise as agent any person who has been convicted of an offence under Clause 106. It is clearly right that he should also be authorised to refuse to recognise as agent a person who, before
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the appointed day, has been convicted of an offence under the equivalent provision of the present Patents Act, namely, Section 88. The Amendment fills this gap in the Bill. I beg to move.
On Question, Amendment agreed to.
Clause 110 [Information about patent applications and patents, and inspection of documents]:
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 55A:
Page 90, leave out lines 35 to 37.
The noble Lord said: My Lords, I have already spoken to this Amendment. It is consequential upon the deletion from the Bill of Clause 20. Subject to the reservation which the noble Lord, Lord Oram, has already made regarding this matter, I beg to move.
On Question, Amendment agreed to.
Clause 115 [Rules]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 56:
Page 92, line 27, at end insert—
("(ee) requiring the Comptroller to hold proceedings in Scotland in such circumstances as may he specified in the order where there is more than one party to proceedings under sections 7, 34, 37(1) or (2), 38(6), 68 or 69 above;").
The noble and learned Lord said: My Lords, during the Committee stage the noble Earl, Lord Selkirk, proposed an Amendment which would have compelled the comptroller in certain cases to take hearings in Scotland. My noble and learned friend Lord McCluskey indicated that the Government were giving consideration to the question of hearings in Scotland. This matter has been much discussed and a conclusion has been reached, that the wise course is to provide a power to make rules defining the circumstances in which the comptroller may or should hold proceedings in Scotland. That is what the Amendment does. Your Lordships will note that this power takes proper care of the situation which was worrying the noble Earl, Lord Selkirk, and other people, by making it clear that rules may be made in respect of proceedings involving more than one party. There is a rule dealing with these matters in the existing Patents Rules. I can give an undertaking that when the new

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Patents Rules are formulated they will contain a rule which I hope will give full satisfaction to all concerned. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 57:
Page 92, line 30, leave out from second ("the") to ("this") in line 31 and insert ("alteration of any period of time specified in").
The noble and learned Lord said: My Lords, this is a minor drafting change to Clause 115(2)(f) which is intended to meet a difficulty which could arise under Clause 5(2). I beg to move.
On Question, Amendment agreed to.
Clause 119 [Existing patents and applications]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 58:
Page 95, line 8, leave out from ("Act") to ("above") in line 10 and insert (""existing patent" means a patent mentioned in subsection (2)(a) and (c) above, "existing application" means an application mentioned in subsection (2)(b)").
The noble and learned Lord said: My Lords, this is a drafting Amendment which is intended to clarify subsection (7) of Clause 119 and to reflect the drafting of the Schedules in respect of existing patents and applications. I beg to move.
On Question, Amendment agreed to.
Clause 122 [Interpretation]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 59:
Page 96, line 34, at end insert ("above").
The noble and learned Lord said: My Lords, this is a minor drafting Amendment. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 60:
Page 97, line 20, at end insert—
"director", in relation to a body corporate established by or under any enactment for the purpose of carrying on under public ownership any industry or part of an industry or undertaking, being a body
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corporate whose affairs are managed by its members, means a member of that body corporate;").
The noble and learned Lord said: My Lords, this Amendment was spoken to by my noble friend Lord Oram when he dealt with Amendment No. 42. Formally I beg to move.
On Question, Amendment agreed to.
Clause 124 [Short title, extent, commencement and repeals]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 61:
Page 101, line 8, at end insert—
("( )The consequential amendments in Schedule (Consequential Amendments) shall have effect.").
The noble and learned Lord said: My Lords, in speaking to this Amendment may I also, with the leave of the House, speak to Amendment No. 74. Amendment No. 61 is a paving Amendment for Amendment No. 74, which adds a new Schedule dealing with consequential Amendments to other enactments. These consequential Amendments are technical in character, and I do not think I need take up the time of the House by going through them in detail. I beg to move.
On Question, Amendment agreed to.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 62:
Page 101, line 10, after ("Act") insert ("(which include certain enactments which were spent before the passing of this Act)").
The noble and learned Lord said: My Lords, in dealing with this Amendment it may be convenient to consider also Amendment No. 78. Amendment No. 78 is the principal Amendment. Again it lists a number of provisions which either are spent or will be superseded by the Bill. Amendment No. 62 makes it clear that some of the provisions repealed are already spent. I hope that we have caught most of the spent provisions in Schedule 5. I beg to move.
On Question, Amendment agreed to.
4.50 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 63:
Page 101, line 11, at end insert (",subject to any savings contained in that column".)
The noble and learned Lord said: My Lords, this is a paving Amendment, made necessary by changes in Schedule 5 made by Government Amendment No. 77, which are consequential on changes in Schedule 4 following Government Amendment No. 73. I beg to move.
On Question, Amendment agreed to.
Schedule 1 [Application of 1949 Act]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 64:
Page 102, line 7, after ("13") insert ("(1) to (3)").
The noble and learned Lord said: My Lords, this Amendment arises from changes to Schedule 4 relating to infringement of patents granted under the 1949 Act. As a result of those changes it is no longer appropriate in Schedule 1 to maintain a reference to the "rights of publication" provision of Section 13 (4) of the 1949 Act and this Amendment deletes the reference. I beg to move.
On Question, Amendment agreed to.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 65:
For galley 39—
Page 102, line 33, leave out ("eleven") and insert ("fourteen").
The noble Lord said: My Lords, there was an initial agreement between the noble Earl, Lord Halsbury, and myself that I should move this Amendment and he should reply. This brief Amendment is very important because it concerns the term of a patent. Under the present Patents Act the term of a patent is 16 years, subject to certain applications which can be made in the Court of the Comptroller-General for discretionary leave to extend the period of the term by up to 10 years; but now, under this Bill, all patents are to be extended to 20 years and the discretionary right of the court to extend the patent beyond 20 years no longer exists.
Once it has been decided to extend the patent to 20 years there really is no basic logic why the patents already in existence under the present Act should also be extended to 20 years, except for one matter. There may be licensees who would be seriously affected if the patents were all extended to 20 years. There may be
606
persons who have no interest in the patent or who may be operating in the same field, who have made certain inventions or who feel they would be in a position to exploit certain of their products if there were no patents and they thought there would be a period when the patent would have expired.
Now it becomes a question of opinion. Should one now say, in so far as the patents that already exist, that in the last resort they should not have the advantage of five years; they should allow the copyists and other people to come into the field, because they will be fairly free, for the period of five years? This Amendment says, "That is too long; the patentee, the initial innovator who has been keeping on his patent for such a long time and paying heavy fees, probably from overseas and therefore bringing money into the country, should be given only two years where there is to be this relaxation of his monopoly rights, and not five years."
The clause to which this is now an Amendment was brought in by the Government at the Report stage. It includes relevant and, if I may say so, very effective provisions dealing with the rights of licensees and safeguards to people who are working in the other field. Now comes the question: Should this patent be free to the licensee, subject to certain safeguards already in the Bill, for five years or should it be limited to two years? The Standing Advisory Committee have said that it is a five-year period; in other words, they want the figure "11" to he in the Bill, as it is at present. I have suggested that they leave out "eleven" and substitute "fourteen", which will give the two years, because the life of the patent is 16 years.
The position varies from industry to industry as to the value placed on patents. In some industries all patents expire after seven years, but particularly in the chemical industry and the pharmaceutical industry it is difficult to get the patents worked and operated on a commercial scale. In the pharmaceutical industry not only have they to do a lot of work in connection with research and development but they also have to conform with very stringent tests rightly imposed upon them by the Government and other bodies for reasons of safety. Therefore, on balance, it seemed to us on these Benches that it

607
would be right to limit the period over which there was freedom from monopoly to two years (subject to the usual safeguards) rather than five years.
With the leave of the House I should like to speak also to Amendment No. 66. In the Bill as at present drafted there is a clause which, as indicated at the Report stage, is a safeguard to people who have been operating in the same field as the subject of the patent. It says in effect that in this period of five years to which I have referred, and which we now want to reduce to two years, the patent should be subject to licences of right. That is to say, anybody who has been standing by for years, waiting for this patent to lapse, suddenly comes along and says, "I want to get into this field" and therefore he can go to the Patent Office and say, "I must have a licence". The patentee could not prevent him from having a licence and the licence would be granted by the Comptroller-General after a hearing, subject to certain terms.
In my submission there is already a proper safeguard in this clause as at present in the Bill to look after the interests of licensees. Therefore, this Amendment seeks to delete the subsection which says that anybody may come along to have a licence of right. To put the matter quite graphically, this Amendment is in favour of the patentee who has a good invention, so good that he has kept it going almost to the end of its term, and therefore provided there are safeguards for the licensees and persons operating in the same technological field, two years' safeguard is sufficient and not five, as in the Bill. But even in that last period the copyists and the people who want to "muscle in" in that field, perfectly properly no doubt, should not be allowed to do so at the expense, in effect, of the innovator. In other words, this Amendment encourages the innovators and not the copyists. I beg to move Amendment No. 65.
4.59 p.m.
The LORD CHANCELLOR: My Lords, the subject of the term of patents granted under the 1949 Act was debated at some length on Report in connection with Amendment No. 158, also moved by the noble Earl, Lord Halsbury, and the
608
noble Lord, Lord Lloyd of Kilgerran,and I would not wish to cover all that ground again today. I would however say this. Between the two extreme positions of doing nothing about the term of existing patents and of increasing them all unconditionally to 20 years there is almost an infinity of intermediate points. Assuming, as I think it is fair to do, that no one is seriously urging adoption of either of the extreme positions, the problem becomes one of choosing an intermediate solution that gives as much all round justice as can be obtained when one is changing from one system to another.
As I ventured to say during the debate on Report, the Government's proposals in the Bill are based on consultation with industrial and professional bodies concerned with patents, and represent a compromise between the interests of patentees and non-patentees. Of course, as of most compromises, it may be said that this one would be improved if it were shifted a bit in one direction or another, and I am sure that the purpose of the present Amendments is to obtain an even better compromise.
I would venture to repeat what I said on the earlier occasion during debate on Report. If the Government's proposals are acceptable, as they are, to those most affected by them, then, unless there are compelling reasons to the contrary, I think it would be most unwise to change them. I cannot put the matter more simply than that, and I hope that, in the light of that appeal to the desirability of supporting this consensus, noble Lords will feel able to withdraw Amendment No. 65.
Lord NORTHFIELD: My Lords, may I interrupt my noble and learned friend. When he says that the Government's proposals are acceptable, could he tell us more specifically which organisations have said that they accept them, because the information that many of us have had is that considerable lobbies of interested parties are in fact wanting a much better compromise than the Government are offering.
The LORD CHANCELLOR: My Lords, I cannot specify the organisations at this moment of time, but before we have ceased discussing this Amendment I shall be able to do so. My understanding is that they are the professional

609
bodies concerned and a number of industrial organisations as well, but it may well be that before we finish with this Amendment I shall get from a certain place further and better particulars of the matters my noble friend has asked for.
Paragraph 4(2)(c) of Schedule 1, which Amendment No. 66 would delete from the Bill, is an integral part of the provisions relating to the term of existing patents, since its effect is that a patentee cannot during the increased term of his patent stop anyone else from using the invention of the patent provided that he is willing to pay for doing so. This is the meaning of a licence of right. The royalty rate in default of agreement may be determined by the Comptroller under Section 35 of the 1949 Act. So I fear that I must also resist that Amendment.
Lord BELSTEAD: My Lords, may I say a word about this, if only because I rather discourteously had to leave your Lordships' House at Report stage before the noble and learned Lord moved the Government Amendment which writes in paragraphs 3 and 4 into Schedule 1. On that occasion, the noble and learned Lord very fairly admitted that the only controversial aspect of the Government Amendment to which he was speaking at that time was that it restricted the increased term of 20 years to patents having more than five years to run; in other words, the Government were drawing the line between old and new patents at live years.
This Amendment, as Lord Lloyd has explained, draws the line at two years, and the first thing I want to say is that so far as I can see that is really all it does. I am leaving aside for the moment the second Amendment, No. 66, about which I think the noble Earl, Lord Halsbury, will probably say a word, among other things, when he winds up. Taking it in the main, this Amendment really draws the line at two years and it does nothing else. Otherwise the Government's wording is left exactly as it is, with the safeguards for Crown use and for people wishing to work a patent during the increased term of a patent untouched, and leaving in the text of paragraph 4(4), which enables anyone who suffers loss or liability because of the increased term of the patent to apply to the court for restitution. All that stays in.
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There are two points I would make without going into any of the arguments, for or against the claims of patentees and the problems of licensees, because Lord Lloyd has referred to those. First, I would apologise to the Lord Chancellor for querying at Report stage the noble and learned Lord's statement that the Government Amendment then was in line with the views of the Standing Advisory Committee on the subject. The noble and learned Lord was absolutely right and I was entirely wrong, because I was in error in thinking that the Government Amendment only allowed extension of an existing patent on the grounds provided by Section 23. Of course that was not the case; I am afraid I misread the Government Amendment. The right to extension in the Government Amendment at that time depended on the patent having five years or more to run.
Having said that, with regard to Lord Northfield's intervention just now, it may be that the Standing Advisory Committee's view on this subject is a majority view and not an absolutely total view. I do not know, and think perhaps your Lordships do not know, although we are aware that there are different views on what at the end of the day has to be an arbitrary decision. But even though the Standing Advisory Committee, either by majority or in total, supports the five-year term, I am bound to say that my noble friend and I on this Bench believe that the noble Lord, Lord Lloyd, has made out a strong case in moving that the two-year term be written into the Bill. If this Amendment errs, it is going to err on the side of the inventor, and really that is no bad thing.
The other point I wish to make is this. I think there is some Parliamentary advantage in accepting this Amendment. The Government Amendment was brought forward at fairly short notice, and I do not cavil at that because I know under what pressure Ministers and members of the Civil Service have been. But it was brought forward at less than a day's notice so far as we were concerned. There was not much time to consider the Government Amendment on its merits. But there will be plenty of time for the Government to consider the merits of this Amendment between now and the Committee stage in the House of Commons.

611
Indeed, agreement with this Amendment in this House will require the Government to consider the matter all over again, and I do not think that that would be a bad thing. Then if the Government genuinely believe that on grounds of equity, and in response to the Standing Advisory Committee, the Bill should once again revert to the five-year term, I suggest that the Government have only to use their majority, which they have combined with the Liberal Party, in the House of Commons in order to write the five-year term back into the Bill. If they did that, I feel sure that when the Bill comes back to this House, the noble Lord, Lord Lloyd, the noble Earl, Lord Halsbury, and my noble friends and I would then certainly accept the final verdict of the Government.
The Earl of HALSBURY: My Lords, I have, naturally, listened very attentively to all that has been said, particularly by the noble and learned Lord. I did not press our own Amendments on the last occasion, because I thought it wrong to do so when we had Government Amendments, as it were straight from the draftsman's pen. Therefore, I went along with them at Report stage. But having considered what was said then, I realise that there is a certain common ground between myself and the noble and learned Lord, in the sense that there are no magic numbers—five is not a magic number; two is not a magic number—and I am also swayed by the noble Lord, Lord Belstead, into remembering that I am not having the last word on this subject; the Bill now goes to another place. I concede that we need a dead zone for readjustment. You could argue that we should not by Statute intermeddle with the equity of established bargains between citizens, but that view has not been taken; the Government have yielded on that point and those concerned have yielded on that point. It is only a question of how long, with no magic numbers. From my own experience, I should have thought that two years was quite sufficient for the purpose of adjustment.
On the question of where the balance of opinion lies, I am a bit sceptical about the views collected by the Government from their advisers, from professional bodies, from the Standing Advisory Committee
612
and so on. There are three groups of self-interest that have to be balanced against one another. One is the self-interest of the operator-inventor, a big chemical company, say, who are manufacturing the subject matter of the products of their own laboratories, and their interest is clearly to extend the patent for as long as possible. Then there is the licensee for royalties receivable on possibly foreign manufacture, and he may tend towards indifference, because the foreign patent may already exist for 20 years under foreign patent law. So he is anything from an interested to an indifferent party. Then there is the licensee in this country under foreign inventions for royalties payable to a foreign firm or possibly an English one. He would naturally like to see the extension minimal because it would terminate his liability to pay earlier. If I cast my mind along the list of companies with which I have been associated at one time or another, it seems that they are all quite different—their self-interests are different.
I do not think that I can regard as valid a kind of pseudo-plebiscite simulated by the Government's advisers when I know that my own experience is in quite sharp contrast with that. There is variation from industry to industry. For example, two firms which I have been advising in the heavy engineering industry have to pay heavy royalties abroad. That is due to lack of investment by the British steel industry in steelmaking plant. Most of our firms have not built a blast-furnace for years and have to go to America or Japan for the know-how and licences with which to do it. They are heavy royalty payers.
The operator-inventors will, of course, want to extend their term. I was once associated with a firm in the chemical industry whose receivable royalties were so great that they paid for the whole of the research laboratory expenditure in this country so that the advantages of operating patents were, as it were, a free issue.
My Lords, I feel inclined to stick to my guns and convictions on this matter. I have received some support from the noble Lord, Lord Belstead, and I am joining battle with the noble Lord, Lord Lloyd of Kilgerran—we are the usual pair of twins in this debate. If he is agreeable to going ahead, I shall express

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myself content that the Amendment should be put.
I believe that, as it stands, Amendment No. 66 and paragraph (c) is a rather characteristic piece of legislative legerdemain in which the Government gives away with one hand what it takes back with another. At one time we all felt, without wishing to raise old quarrels, that the Government had made a sensible gesture in consenting not to nationalise the shiprepairing industry. It was only when we read the small print that it was found that a very large proportion of the shiprepairing industry would be nationalised notwithstanding. I do not see the point in giving the operator-inventor a four-year extension of the life of his patent and then saying, "But everybody else can work it too". Where is the sense in that? I beg to support the Amendment standing in my name and that of my noble friend.
The LORD CHANCELLOR: My Lords, with the leave of the House, perhaps I may briefly answer the debate. It might seem almost a heresy to challenge the wisdom of the heavenly twins, if I may so describe them, but challenge them I shall. I do so because, in spite of the intervention of my noble friend Lord Northfield, the Government's proposals amount to a compromise which emanated from the Standing Advisory Committee bodies. Perhaps I may remind your Lordships of the composition of that Committee, which is quite formidable. It comprises the Confederation of British Industry, the Association of British Chambers of Commerce, the International Chambers of Commerce, the Bar Council, the Law Society, the Chartered Institute of Patent Agents, the Institute of Patentees and Inventors and, last but by no means least, the Trades Union Congress. Therefore, it was quite a formidable body that
argued over this for, I think, some considerable time.
To call it a pseudo-plebiscite, which is an attractive turn of phrase, is a little unkind to the deliberations of that sombre and responsible body of men. The compromise is not merely an idea that has sprung into the head of the Government—if I were to rest the matter on that foundation it would not necessarily appeal to all parts of the House. However, it has a good parentage and, accordingly, I hope that it will be accepted.
I am advised that perhaps the noble Lord, Lord Lloyd of Kilgerran, has misunderstood Amendment No. 66. It does not allow a third party to exploit the invention until after the 16-year period is up. It is only then that he "muscles in" and even then he has to pay a royalty, which is fixed by the comptroller under the licence of right. I do not know whether those observations may induce the noble Lord, Lord Lloyd of Kilgerran, not to press Amendment No. 66, but I am afraid that I must resist Amendment No. 65.
The Earl of HALSBURY: My Lords, if the noble and learned Lord had simply said that one adviser of merit had been unanimous on this point, he might have carried me with him but the list is so long that its lack of unanimity is almost guaranteed. Perhaps I may quote from Pooh-Bah in saying that it seems to do no more than:
"…give artistic verisimilitude to an otherwise bald and unconvincing narrative".
My Lords, I shall stick to my guns.
5.16 p.m.
On Question, Whether the said Amendment (No. 65) shall be agreed to?
Their Lordships divided: Contents, 89; Not-Contents, 51.

CONTENTS

Aldenham, L.

Belstead, L.

Darwen, L.

Alexander of Tunis, E.

Berkeley, B.

Daventry, V.

Allan of Kilmahew, L.

Boothby, L.

Davidson, V.

Alport, L.

Bullock, L.

de Clifford, L.

Amherst, E.

Byers, L.

De Freyne, L.

Amory, V.

Carrington, L.

Drumalbyn, L.

Ampthill,L.

Cathcart, E.

Ebbisham, L.

Auckland, L.

Chelwood, L.

Ellenborough, L.

Avon, L.

Clifford of Chudleigh, L.

Elles, B.

Banks, E.

Cork and Orrery, E.

Emmet of Amberley, B.

Barnby, L.

Cullen of Ashbourne, L.

Energlyn, L.

Falkland, V.

Macleod of Borve, B.

St. Aldwyn, E.

Ferrers, E.

Mancroft, L.

St. Davids, V.

Gainford, L.

Mansfield, E.

Sandys, L.

Glenkinglas, L.

Marley, L.

Seear, B.

Gray, L.

Merrivale, L.

Spens, L.

Greenway, L.

Morris, L.

Stamp, L.

Gridley, L.

Mottistone, L.

Strathcarron, L.

Hailsham of Saint Marylebone,L.

Newall, L.

Strathcona and Mount Royal, L.

Northchurch, B.

Strathspey, L.

Halsbury, E. [Teller.]

Nugent of Guildford, L.

Trefgarne, L.

Harmar-Nicholls, L.

Nunburnholme, L.

Tweedsmuir, L.

Hawke, L.

O'Hagan, L.

Vickers, B.

Hemphill, L.

Orr-Ewing, L.

Vivian, L.

Killearn, L.

Platt, L.

Wade, L.

Kimberley, E.

Porritt, L.

Ward of North Tyneside, B.

Lindsey and Abingdon, E.

Rankeillour, L.

Ward of Witley, V.

Lloyd of Kilgerran, L. [Teller.]

Rochester, L.

Wigoder, L.

Long, V.

Ruthven of Freeland, Ly.

Windlesham, L.

Lyell, L.

Sackville, L.

Young, B.

NOT-CONTENTS

Arwyn, L.

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

Phillips, B.

Aylestone, L.

Gaitskell, B.

Ritchie-Calder, L.

Balogh, L.

Glenamara, L.

Shepherd, L.

Blyton, L.

Gordon-Walker, L.

Shinwell, L.

Boston of Faversham, L.

Greenwood of Rossendale, L.

Stedman, B.

Brimelow, L.

Hale, L.

Stewart of Alvechurch, B.

Bruce of Donington, L.

Henderson, L.

Stone, L.

Burntwood, L.

Kilbracken, L.

Strabolgi, L.

Castle, L.

Leatherland, L.

Taylor of Mansfield, L.

Champion, L.

Lee of Newton, L.

Wallace of Coslany, L. [Teller.]

Chorley, L.

Listowel, E.

Walston, L.

Collison, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L. [Teller.]

Cooper of Stockton Heath, L.

Lovell-Davis, L.

White, B.

Crowther-Hunt, L.

Milford, L.

Willis, L.

Davies of Leek, L.

Oram, L.

Wise, L.

Davies of Penrhys, L.

Pannell, L.

Wootton, of Abinger, B.

Donaldson of Kingsbridge, L.

Parry, L.

Wynne-Jones, L.

Resolved in the affirmative, and Amendment agreed to accordingly.
5.24 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 66:
Page 103, line 35, leave out head (c).
On Question, Whether the said Amendment (No. 66) shall be agreed to?
Their Lordships divided: Contents, 80; Not-Contents, 45.

CONTENTS

Aldenham, L.

Emmet of Amberley, B.

O'Hagan, L.

Alexander of Tunis, E.

Falkland, V.

Orr-Ewing, L.

Allan of Kilmahew, L.

Ferrers, E.

Platt, L.

Alport, L.

Foot, L.

Porritt, L.

Amherst, E.

Gainford, L.

Rankeillour, L.

Amory, V.

Glenkinglas, L.

Rochester, L.

Ampthill, L.

Gray, L.

Ruthven of Freeland, Ly.

Auckland, L.

Gridley, L.

Sackville, L.

Avon, E.

Halsbury, E. [Teller.]

St. Aldwyn, E.

Banks, L.

Harmar-Nicholls, L.

St. Davids, V.

Barnby, L.

Hawke, L.

Sandys, L.

Belstead, L.

Killearn, L.

Seear, B.

Berkeley, B.

Lindsey and Abingdon, E.

Spens, L.

Boothby, L.

Lloyd of Kilgerran, L. [Teller.]

Stamp, L.

Carrington, L.

Long, V.

Strathcarron, L.

Cathcart, E.

Lyell, L.

Strathcona and Mount Royal, L.

Chelwood, L.

Macloed of Borve, B.

Strathspey, L.

Clifford of Chudleigh, L.

Mancroft, L.

Trefgarne, L.

Cork and Orrery, E.

Mansfield, E.

Tweedsmuir, L.

Cullen of Ashbourne, L.

Marley, L.

Vickers, B.

Daventry, V.

Merrivale, L.

Vivian, L.

Davidson, V.

Morris, L.

Ward of North Tyneside, B.

de Clifford, L.

Mottistone, L.

Ward of Witley, V.

Drumalbyn, L.

Newall, L.

Wigoder, L.

Ebbisham, L.

Northchurch, B.

Windlesham, L.

Ellenborough, L.

Nugent of Guildford, L.

Young, B.

Elles, B.

Nunburnholme, L.

NOT-CONTENTS

Arwyn, L.

Gaitskell, B.

Ritchie-Calder, L.

Aylestone, L.

Glenamara, L.

Shepherd, L.

Balogh, L.

Gordon-Walker, L.

Shinwell, L.

Blyton, L.

Greenwood of Rossendale, L.

Stedman, B.

Boston of Faversham, L.

Hale, L.

Stewart of Alvechurch, B.

Brimelow, L.

Henderson, L.

Stone, L.

Bruce of Donington, L.

Kilbracken, L.

Strabolgi, L.

Castle, L.

Leatherland, L.

Taylor of Mansfield, L.

Chorley, L.

Lee of Newton, L.

Wallace of Coslany, L. [Teller.]

Collison, L.

Listowel, E.

Walston, L.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Wells-Pestell, L. [Teller.)

Davies of Leek, L.

Lovell-Davis, L.

White, B.

Davies of Penrhys, L.

Oram, L.

Willis, L.

Donaldson of Kingsbridge, L.

Pannell, L.

Wise, L.

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

Parry, L.

Wynne-Jones, L.

On Question, Amendment agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
Schedule 2 [Application of this Act to existing patents and applications]:
5.33 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 66A:
Page 104, line 37, leave out ("20, 21").
The noble Lord said: My Lords, I have already spoken to this Amendment. Itisconsequential on the action of the House in deleting Clause 20 and, subject to any reservations that the noble Lord, Lord Oram, may have on behalf of the Government in the matter, I beg to move.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 67:
Page 104, line 37, leave out ("68") and insert ("51").
The noble and learned Lord said: My Lords, this is a drafting Amendment consequential on changes to Schedule 4.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 68:
Page 104, line 46, at end insert—
("(cc) a reference to the grant of a patent under this Act includes a reference to the sealing and grant of an existing patent").
The noble and learned Lord said: My Lords, this Amendment is necessary so that in applying the provisions of the Bill to existing patents, which is the purpose of Schedule 2, a patent sealed and granted under the 1949 Act shall be treated as if it had been granted under the Bill.
Schedule 3 [Repeals of provisions of 1949 Act]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 69:
Page 105, line 21, leave out from ("by") to ("shall") and insert ("Schedule 2 above and Schedule 4 below").
The noble and learned Lord said: My Lords, Schedule 3 relates to repeals of certain provisions of the 1949 Act and paragraph 1(1) of the Schedule as drafted referred to provisions superseded by the operation of Schedule 2. However, Schedule 4 also supersedes some of the provisions of the 1949 Act, and a reference to that Schedule is therefore appropriate in Schedule 3, and that is the effect of the Amendment.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 70:
Page 105, line 23, after ("11(3)") insert ("13(4)").
The noble and learned Lord said: My Lords, this Amendment complements Government Amendment No. 64 to Schedule 1. Both are consequential on Government Amendment No. 73 which redrafts the transitional provisions of Schedule 4 relating to infringement.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 71:
Page 105, line 25, at end insert—
("(3) The repeal of sections 13(4), 46 to 49 and 59 to 67 of the 1949 Act shall not affect the application of those sections in relation to existing patents and applications for patents.").
The noble and learned Lord said: My Lords, Schedule 3 has the effect of repealing the Crown use and infringement

619
provisions of the 1949 Act. However, since those provisions will continue to have force in relation to acts done before the coming into force of the new Act, it is necessary for those purposes to except them from the general effect of the Schedule. This the Amendment does.
5.36 p.m.
Lord LYELL Lord LYELL moved Amendment No. 72:
Page 105, line 33, leave out from ("Court),") to end of line 36 and insert ("subsection".)
The noble Lord said: My Lords, with the permission of the House, I shall speak at the same time to Amendment No. 76. I spoke to two Amendments identical to these on Report and the argument I put forward then was that the grounds of revocation of a patent should not be changed or be capable of being changed in the middle of revocation proceedings, especially in the case of existing patents, which are of course revocable on the grounds set out in Section 32 of the 1949 Act.
Practioneers, be they the noble Lords, Lord Lloyd of Kilgerran and Lord Cawley, or patent agents or inventors, like the noble Earl, Lord Halsbury, are all concerned to give good advice to inventors or clients. Suppose a patent can be revoked on Section 32 grounds, it can be clearly seen that the patent is invalid. Along comes an inventor and consults an expert adviser who tells him that a patent is indeed invalid and that he, the inventor, can make use of a certain process. This measure will in due course become an Act and, when that happens, that particular patent will become validated and cannot be revoked, with what we regard as two potentially grave consequences.
First, anyone who makes secret prior use of a process can easily find that that process becomes valid, whereas under Section 32 the process is not patentable or the patent is not valid on the grounds of secret prior use. How can that be reconciled with expert advice which is at present given under the provisions of Section 32? The second grave consequence which we believe is liable to arise is the possibility of the removal from the
620
grounds of objection of the lack of fair basis under the 1949 Act, or, as we have it in this Bill, the lack of support in the description.
In my remarks on Report I mentioned the case of secret prior use and I wish to develop those remarks a little further, though I shall do so briefly. The grounds of secret prior use are spelt out in Section 32(1)(l), but in sub-paragraph (l) we we find that secret prior use is not to be taken as grounds for revocation under sub-paragraph (e), which is novelty, and (f), which is obviousness. The law as it stands under the 1949 Act, in subparagraph (l), forbids secret prior use, but the Bill would tolerate and, I believe, even permit it. The Bill also seeks to repeal Section 32 (2), in which we find mention of secret prior use. For this reason, we believe that subsection (2) should stay in the provisions of the 1949 Act as they are to he repealed, or not, by the Bill.
I should like now to turn to the question of lack of fair basis. This ground in the 1949 Act has no counterpart in the European Patent Convention and I wonder whether it was really the intention of the Standing Advisory Committee that everything in this particular category should be omitted from the Bill. I and my noble colleagues hardly think so. An extra wide claim as part of an invention which might aggrieve a third party intending to use a certain process could be seen to offer the possibility that the inventor would find himself obstructed. Could this inventor be caught by the grounds of insufficiency in the Bill? That is one point that worries us. Secondly, it seems that the new Bill will enable interested parties to see patent files in the Patent Office. We believe that this will help in two ways: first, the applicant's comments and descriptions will be able to be closely examined and, secondly, a third party will be able to apply for an order of prohibition or certiorari. This would occur if a claim seemed likely to be granted which was not supported by the description. Under the 1949 Act such files were not open to the public, and I venture to suggest that the patent examiners were more lenient than they will be under the new Bill. Thus, I feel that the grounds of lack of fair basis can and, indeed, ought to be retained in the Bill as an objection to existing patents.
At Report stage, I was delighted and even encouraged by the comment of the noble and learned Lord that there was, as he put it, some theoretical force in my Amendment. I am afraid that I could not entirely agree with the noble and learned Lord when he said on Report that the grounds for revocation that were to be repealed were of limited importance. It appeared to me that he was not entirely convinced that the injustices that I brought forward in the Amendment were to outweigh the need for harmonisation. However, the practitioners, be they qualified or not, are convinced that the grounds of fair basis and secret prior use should remain in the 1949 Act as it applies to existing patents.
I hope that the noble and learned Lord or the noble Lord, Lord Oram, if he is to speak for the Government—I see a look of dissent on the face of the noble Lord, so I shall continue to address my remarks to the noble and learned Lord, whose comments we await with expectation—will say that the Government intend to examine more closely the provisions of Section 32. We believe that, even at this late stage of the Bill—and it is only late in the life of the Bill in this House—this battlefield will be fought over (I hope in a genteel and civil manner) in another place. At this stage we look forward to hearing what the noble and learned Lord has to say. I beg to move.
The LORD CHANCELLOR: My Lords, as has been pointed out by the noble Lord, Lord Lye11, Schedule 3, paragraph 2(2)(b) abolishes certain of the grounds on which an existing patent may be revoked under Section 32 of the 1949 Act, because those grounds are not available as grounds for the revocation of European patents and Community patents or of patents granted under the new law. The first Amendment would have the effect of re-introducing these grounds (except the ground of Section 32(3)) and the second Amendment is consequential.
We discussed this during the Report stage and I am afraid that I am still unable to accept the Amendment. During the period leading up to this Bill, there was much discussion with the several patent interests represented on the Standing Advisory Committee on Patents concerning the policy which should be adopted as regards existing patents. On the point
622
to which this Amendment relates, the Committee clearly advised that, except for prior claiming, revocation of an existing patent should not be possible on grounds which will have no counterpart in the new law. That advice was reflected in the Green Paper published in 1975. It is true that the Chartered Institute raised objection on this particular point to the proposed policy there set out. However, this time no criticism of this policy was made by the organisations representing industry, although another professional body urged that the Bill grounds of revocation should be applied to existing patents. In view of this balance of views, and particularly having regard to the absence of objection from industry, it was decided to retain the policy of the Green Paper and this is now contained in Schedule 3 to the Bill.
I believe that there are good reasons to maintain the provisions of Schedule 3. It would be unjust to revoke an old patent after entry into force of the new law on a ground which is not available for the revocation of new patents. Apart from that, it is highly desirable to harmonise, so far as possible, the grounds for revocation of European, Community and all British patents and so avoid confusion in the public mind. I do not think that that objective would be served by preserving obsolescent grounds of revocation for 20 years after the Bill comes into operation.
The Amendment seeks to reverse this policy on the general ground that the Bill as it stands would validate old patents that could be invalidated on the existing grounds of Section 32. I do not find this argument attractive because we are dealing with a situation where existing patents have not as yet been held to be invalid; the thought that a patent may on some ground be invalid is far removed from a judgment that holds that this is in fact in law the case. As I said during the Report stage and as has again been pointed out today, the argument may have theoretical force, but in practice the revocation grounds which the Bill abolishes are of very limited importance.
The noble Lord, Lord Lyell, put it to the House that his main disquiet with the Bill concerned the abolition of the ground of secret prior use. Noble Lords on this side of the House and those who are advising the noble Lord, Lord Lye11, appear to

623
think it inequitable that an inventor who has not applied for a patent and is relying on secret use of his invention should suddenly find that he is liable to be attacked by the proprietor of a patent which, under the 1949 Act, the secret user could have invalidated. My Lords, this is a true statement of the position so far as it goes, but I should like to say that this secret user is compensated under the Bill by the fact that he is given a right in Clause 61 to continue the use that he had begun. In view of this, I do not feel that the contention of the noble Lord has a great deal of force.
I should perhaps add that, where the secret prior use was the patentee's own secret use before he applied for a patent, then it is true that he obtained his patent knowing it to be invalid. I do not condone that, but bearing in mind that in such cases, as far as they exist, the evidence necessary for the revocation of the patent is usually known only to the patentee, the invalidity of his patent is, in consequence, more notional than real. Having regard to the history of the provision to which this Amendment relates, I regret that I cannot agree to this Amendment.
Lord LYELL: My Lords, I am even more grateful than I was at Report stage for the very full explanation that we have received from the noble and learned Lord. There is only one point that I should like to raise. I wonder whether the noble and learned Lord really believes, as I think he said, that it is undesirable that a patent that is in existence under the 1949 Act should, because of the repeal of the provisions of Section 32, be unable to be revoked under the provisions of the 1949 Act.
As the noble and learned Lord said so nicely, the advisers have given my noble friend Lord Belstead and myself, and indeed other noble Lords, so much advise in these matters of patents. It is these practitioners, if I may call them such, who have expressed disquiet. It seems that the laws relating to revocation of patents are being changed; indeed when the patent was granted it was seen that revocation was as set out in Section 32. I wondered merely whether the noble and learned Lord was entirely satisfied on this question. It seemed not to be justified.
624
Of course, in matters of law I must take guidance from the noble and learned Lord. I take with respect and humility all his comments. However, I think it would not be right to continue this argument, nor to push it further. We have received a considerable amount of further information today from the noble and learned Lord, and for that reason I beg leave to withdraw the Amendment, without reluctance.
The LORD CHANCELLOR: My Lords, I have little doubt that this matter will be returned to in another place.
Amendment, by leave, withdrawn.
Schedule 4 [Transitional provisions]:
5.52 p.m.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 73:
Page 106, line 11, leave out paragraph 2 and insert—
("Use of patented invention for services of the Crown
2.—(1) Any question whether—

(a) an act done before the appointed day by a government department or a person authorised in writing by a government department amounts to the use of an invention for the services of the Crown; or

(b) any payment falls to be made in respect of any such use (either to the patentee or to an exclusive licensee);

shall, subject to sub-paragraph (3) below, be determined under sections 46 to 49 of that Act and those sections shall apply accordingly.
(2) Sections 52 to 56 above shall apply to an act so done on or after the appointed day in relation to an invention—

(a) for which an existing patent has been granted or an existing application for a patent has been made; or

(b) which was communicated before that day to a government department or any person authorised in writing by a government department by the proprietor of the patent or any person from whom he derives title;

and shall so apply subject to the modifications contained in paragraph 2 of Schedule 2 above and the further modification that paragraph (b) of section 52(4A) above shall not apply in relation to an existing application.
(3) Where an act is commenced before the appointed day and continues to be done on or after that day, then, if it would not amount to the use of an invention for the services of the Crown under the 1949 Act, its continuance on or after that day shall not amount to such use under this Act.
Infringement.
2A.—(1) Any question whether an act done before the appointed day infringes an existing patent or the privileges or rights arising under a complete specification which has been published shall, subject to subparagraph (3) below, be determined in accordance with the law relating to infringement in force immediately before that day and sections 13 (4) and 59 to 67 of the 1949 Act shall apply accordingly.
(2) Sections 57 to 68 above shall apply to an act done on or after the appointed day which infringes an existing patent or the privileges or rights arising under a complete specification which has been published (whether before, on or after the appointed day) as they apply to infringements of a patent under this Act or the rights conferred by an application for such a patent, and shall so apply subject to the modifications contained in paragraph 2 of Schedule 2 above and the further modification that paragraph (b) of section 66(2) above shall not apply in relation to an existing application.
(3) Where an act is commenced before the appointed day and continues to be done on or after that day, then, if it would not, under the law in force immediately before that day, amount to an infringement of an existing patent or the privileges or rights arising under a complete specification, its continuance on or after that day shall not amount to the infringement of a patent under this Act or, as the case may be, the rights conferred by a published application for such a patent.").
The noble and learned Lord said: My Lords, this is a technical Amendment of some complexity. It has two purposes. First, it introduces into the Bill a transitional provision governing the Crown use of patented inventions which are the subject of existing patents and applications. Expressed briefly, this provides that questions relating to the use of inventions for the services of the Crown, and payment for such use, shall be determined under the relevant provisions of the 1949 Act where the use took place before the appointed day, but shall be determined by the provisions of the Bill where the use takes place after the appointed day.
Secondly, the Amendment redrafts and, simplifies the transitional provisions of Schedule 4 relating to the infringement of existing patents and applications. Again, the appointed day marks the divide—the old law on infringement applies to acts done before that day, and the Bill provisions to acts done after it. This, however, is subject to the important proviso of paragraph 2A(3), according to which an act begun before the appointed day, which was not an infringement of an existing patent, shall not be an infringement if continued after that day. This
626
is a matter of some complexity, but not, I think, controversial.
Before I formally move the Amendment, I should like to say that there was a point raised by the noble Lord, Lord Lloyd of Kilgerran, about Amendment No. 14 breaking new ground. Perhaps I should point out in connection with Amendment No. 73, that the transitional provisions relating to Crown use, which it introduces into the Bill, do not break new ground but are the natural analogue of the infringement transitional which was in the Bill as published. I beg to move.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 74:
After Schedule 4, insert the following new Schedule: Consequential Amendments—
Registered Designs Act 1949 (c. 88)
1. In section 32(1) of the Registered Design Act 1949—

(a) in paragraph (a), for "the Patents Act 1949" substitute "the Patents Act 1977" and

(b) in paragraph (c), after "1949" insert "or section 106 of the Patents Act 1977".

2. In sections 42 and 44(1) of the Registered Designs Act 1949, for "the Patents Act 1949" there shall be substituted, in each case, "the Patents Act 1977".
Defence Contracts Act 1958 (c. 38)
3. In subsection (4) of section 4 of the Defence Contracts Act 1958, for the words from "Patents Act 1949" to the end there shall be substituted "Patents Act 1977".
Administration of Justice Act 1970 (c. 31)
4.—(1) In subsections (2) and (3) of section 10 of the Administration of Justice Act 1970 for "either" there shall be substituted, in each case, "the".
(2) In subsection (4) of the said section 10, for "(as so amended)" there shall be substituted "(as amended by section 24 of the Administration of Justice Act 1969)".
(3) For subsection (5) of the said section 10, there shall be substituted:—
"(5) In subsection (8) of the said section 28 (which confers power on the Tribunal to make rules about procedure etc.) there shall be inserted at end of the subsection the words "including right of audience".".
The noble and learned Lord said: My Lords, I beg to move Amendment No. 74 formally. I have already spoken to this Amendment.
Schedule 5 [Enactments repealed]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 75:
Page 111, line 18, at end insert ("Section 13(4), subject, however to paragraph 1(3) of Schedule 3 above").
The noble and learned Lord said: My Lords, it might be convenient if I speak to Amendment No. 77 as well as this Amendment. These Amendments to Schedule 5 are consequential upon Government Amendments which have already been adopted. I beg to move.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 77:
Page 111, line 43, at end insert:—

("1 amp; 2 Eliz. 2. c. 52.

The Enemy Property Act 1953

Section 8, so far as it relates to the Patents Act 1949, subject, however, to paragraph 1(3) of Schedule 3 above.

5 & 6 Eliz.2.c. 13.

The Patents Act 1957

The whole Act, except in relation to existing applications.

2 & 3 Eliz. 2. c. 32.

The Atomic Energy Authority Act 1954

In Schedule 3, the entry relating to the Patents Act 1949, subject, however, to paragraph 1(3) of Schedule 3 above.

6 & 7 Eliz 2.c.38.

The Defence Contracts Act 1958

Section 1, so far as it relates to the Patents Act 1949, subject, however, to paragraph 1(3) of Schedule 3 above.

9 & 10 Eliz. 2. c. 25.

The Patents Act 1961

Section 2.

10 & 11 Eliz. 2 c. 30.

The Northern Ireland Act 1962

In Schedule 1, the entries relating to section 61 of the Patents Act 1949, subject, however, to paragraph 1(3) of Schedule 3 above, and the entry relating to section 84 of that Act.

1967 c. 80.

The Criminal Justice Act 1967

In Schedule 3, in Parts I and IV, the entries relating to the Patents Act 1949.

1968 c. 46.

The Health Services and Public Health Act 1968

Section 59, subject, however, to paragraph 1(3) of Schedule 3 above.

1969 c. 58.

The Administration of Justice Act 1969

In section 24, in subsection (1), the words "85 of the Patents Act 1949 and section" and "each of", in subsections (2), (3) and (4) the words "of each of those sections" and in subsection (4) the words from "as subsection (11)" to "and" and the words "inthe case of the said section 28".

1970 c. 31.

The Administration of Justice Act 1970

In section 10, in subsection (1), the words "Patents Appeal Tribunal or the" and in subsection (4), the words from "the Patents Appeal" to "and".

1971 c. 23.

The Courts Act 1971

Section 46.

Page 111, leave out lines 32 to 34 and insert—
("sections 34 to 45.
Sections 46 to 49, subject, however, to paragraph 1(3) of Schedule 3 above.
Sections 54, 57 and 58.
Sections 59 to 67, subject, however, to paragraph 1(3) of Schedule 3 above.
Section 68").
The noble and learned Lord said: My Lords, I have already spoken to this Amendment. I beg to move.
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 78:

1973 c. 4.

The Atomic Energy Authority (Weapons Group) Act 1973

In section 5(2), the words "any provision of the Patents Act 1949 or", "section 46(3) of the Patents Act 1949 and" and "each", subject, however, to paragraph 1(3) of Schedule 3 above.

1973 c. 41.

The Fair Trading Act 1973

Section 126.

In Schedule 3, in paragraph 16(2), the words from "of section 40" to "Commission", where first occurring.

In Schedule 12, the entry relating to the Patents Act 1949.

1974 c. 47.

The Solicitors Act 1974

In Schedule 3, paragraph 3.").

The noble and learned Lord said: My Lords, I have already spoken to this Amendment. I beg to move.
An Amendment (privilege) made.
5.57 p.m.
The LORD CHANCELLOR: My Lords, I beg to move that this Bill do now pass. This matter has been not a war of attrition, but a struggle of endurance and, speaking for the Government, I should like to express our gratitude to noble Lords who have taken part in this difficult operation, so full of technicality, and so wearisome at times to the spirit. I understand that we have achieved, if that is the right word for it, a record number of Amendments to the Bill, not exceeded in modern times, as somebody has said. I am not quoting that as necessarily a merit, but it is a measure of the burden which has been placed upon noble Lords during the six days of discussion in Committee and the three days of discussion on Report.
There were two reasons for this, if I may plead some elements in mitigation. First, there was the extreme technicality of the subject matter; and the other reason for the multiplicity of Amendments was, frankly, the time factor and the need, which was recognised generously by noble Lords, to introduce the Bill in the House before Christmas so that it would be enacted in time for us to become founder members of the European Patent Convention.
My noble friend Lord Oram and my noble and learned friend Lord McCluskey will, I am sure, be happy to join in my expressing gratitude to noble Lords for the assistance they have given. Perhaps
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I may mention one matter about which we had our differences; namely, over the former Clause 49, which dealt with compulsory licences for pharmaceutical products. Noble Lords will remember that I undertook that the Government would move an Amendment to leave out that clause if a satisfactory voluntary agreement was reached with the pharmaceutical industry, but I was unwilling at that moment that the Government's hand in the negotiations should be jeopardised, as I feared it might be, by thr premature removal of that provision. However, all has ended happily and, in the event, despite the demise of Clause 49—or indeed, no doubt some would say, because of it—a satisfactory agreement with the pharmaceutical industry has been reached; and that is a matter which I am happy to record.
My Lords, I should like to express my gratitude for the helpful and constructive suggestions of the noble Lords, Lord Lyell, Lord Belstead, Lord Cawley and, last but not least, Lord Lloyd of Kilgerran. We are grateful also for the interventions from the noble Earl, Lord Halsbury, the noble Lord, Lord Nelson, and other speakers; and I think we can reasonably claim that on this occasion, in the case of this Bill, the House of Lords has greatly improved it from the time of its First Reading in the House. I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(The Lord Chancellor.)
6.1 p.m.
Lord LYELL: My Lords, it falls to me to represent on these Benches the noble Lord, Lord Belstead, and to reply to the very kind and fulsome tributes and comments which have been made by the

631
noble and learned Lord who is at this moment sitting upon the Woolsack. As we have come to this stage in the life of the Bill, I must say that I feel a twinge of sadness, and I wonder about the feelings of your Lordships, in or out of the House, not closely connected with inventions, with shoes, with blinds, with car hoods or, indeed, with the wonders of modern science. I have seen it written that many of the proceedings in your Lordships' House were akin to a ritual clog dance, but certainly I could not come to that conclusion having so often discussed the attachment of soft uppers to stiff backing, certainly from our Benches.
My Lords, I and, I suggest, many others in your Lordships' House were reminded of St. Luke's Gospel, in the New Testament, when we heard that this was the tenth session of the Patents Bill; but I wondered who would fulfil the part of the tetrarch and who else would rule various sectors of your Lordships' House. But, certainly, as the noble and learned Lord mentioned, on this Bill we have had six sessions in Committee and three more on Report, and we have also had Second Reading as well as today's very full afternoon. Indeed, Amendments were moved right through the Bill. It seems light years ago since we started, which I think was the 24th January. In fact, it was a mere 16 weeks when we set out on what I would call our Odyssey. My colleagues and I have learned, we have concentrated, we have laughed from time to time, we have listened a great deal and we have wondered. I believe that all of us have done valuable work.
At this stage we have spent at least 37 hours on the Bill. We have covered a very great deal which is of scientific interest. Let us not forget polytetra-fluoroethylene, chains of polymers and the like, which came in, I think, with the law of confidentiality. The noble and learned Lord pulled me up sharply on that; however, he is his usual charming self today. Above all, my Lords, I have to thank my noble friend Lord Belstead and the noble Lord, Lord Cawley, who unfortunately has not been able to be with us today, as he warned us. Certainly, too, the noble Lord, Lord Lloyd, and the noble Earl, Lord Halsbury; and the members of what I would call the Government triad. The noble and learned Lord, Lord McCluskey, is, I believe, otherwise
632
occupied today, but nevertheless I hope that he would feel part of the House for the purposes of these tributes. Also, of course, I should like to thank all those who have been connected with our work on the Bill, both in your Lordships' House and outside. I would add my support to the Motion of the noble and learned Lord, that this Bill should, at last, after 37 hours and ten minutes, now pass.
6.4 p.m.
Lord LLOYD of KILGERRAN: My Lords, may I also thank the noble and learned Lord for his kind words, and add my thanks and praise to that trinity of noble Lords from the Government Front Bench who have worked so hard in this matter. We have had two noble and learned Lords and the noble Lord, Lord Oram; and I see a spirit of devolution having descended upon the Government Benches in this connection. Indeed, from the Benches on the opposite side, too, because those of us who have participated so much have connections with each country of Great Britain.
My Lords, on Second Reading I referred to the Patents Bill as another monster in the jungle of international and national patent law. Since Second Reading this monster has grown from 96 pages to 111 pages—over 16 per cent. inflation in five months, which must bring alarm to all Members of this House and elsewhere. But, as the noble and learned Lord has said, the Bill has been very much improved, and I think it is fair to say that this monster is now far more manageable than it was when it came to us on Second Reading. But whether it will be less expensive in operation, I doubt; and the more I reflect on the patent law the more I am convinced that more will have to be done to simplify procedure and reduce costs than is contained in this Bill. The White Paper on Patent Law, if I may remind your Lordships, said in paragraph 21:
"Existing arrangements for dealing with disputes over patents and appeals from Patent Office decisions are unsatisfactory".
I feel that at least there should be experiments aimed at finding alternative and more rational methods of dealing with patent disputes. It may be that, when the rules associated with this Patents Bill are formulated, that aspect will be borne in mind.

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My Lords, I feel very sincerely, as a person who has spent most of his working life at the patent and trademarks bar, to the exclusion of every other part of the law, that the United Kingdom methods of dealing with patent disputes do not really match up to the needs of industry in the 20th century. In conclusion, I should also like to thank the noble Lords, Lord Belstead and Lord Lyell, for the great courtesy they have shown to me, and for the tremendous work that they have done, not being experts in this field, in assimilating basic matters in a difficult technical field.
6.7 p.m.
The Earl of HALSBURY: My Lords, if an intervention from the Cross-Benches is permitted, I should like to refer to what the noble and learned Lord said about this having been a rather rushed Bill in the first place. He put us on notice in this respect at Second Reading, and we all understand that the rush was due to meeting our international obligations and also our legislative programme. That is an extenuating circumstance, obviously, though I do not think that our proceedings have been a model for such proceedings in the future. This is not the time to argue the recommendations of the First Report of the Committee on Practice and Procedure, which was published, I think, the day before yesterday, but I believe that those of us who have, as it were, borne the burden of the battle and the dust and the heat of the day could have done it in a Select Committee, round a table together. There were ten of us altogether. There were, first, two highly-skilled professionals, the noble Lord, Lord Lloyd of Kilgerran, and the noble Lord, Lord Cawley, who has been backing up and assisting the noble Lords, Lord Belstead and Lord Lyell. Then there were three what I might call experienced amateurs: Lord Brown and Lord Nelson, and I think I could come into that category.
The Government Bench had full backing from the Government machine, obviously, but, even so, the way they mastered their briefs was something to which one should pay a tribute. But I am really lost in admiration for the noble Lords, Lord Lyell and Lord Belstead, for the way they mastered the details of this extremely tricky, technical subject; and I think the Government, the House and the other place
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ought to be extremely grateful to them for the hard work they have done in licking this Bill into shape. I think we have all done our best in a spirit of amity, and we can now send the Bill winging on its way to another place, hoping that, like a homing pigeon, it will return to us in due course, hopefully in recognisable shape.
The LORD CHANCELLOR: My Lords, may I, on behalf of my two noble friends, express our gratitute for the kind remarks which have been made about us. I share the encomiums placed upon the noble Lords, Lord Lyell and Lord Belstead. Their efforts have really impressed me enormously, and I am most grateful to them. May I also thank those who have instructed the Ministers in this matter for their forbearance and patience in introducing me to what has been, too often, very much virgin ground. I am most grateful to them.
On Question, Bill passed, and sent to the Commons.

REDUNDANCY REBATES BILL
6.10 p.m.
Lord WALLACE of COSLANY: My Lords, I beg to move that the Bill be now read a second time. This Bill, which is comparatively simple, is intended to vest in the Secretary of State for Employment the power to vary the amount of rebate payable to employers under the Redundancy Payments Act by order subject to the approval of both Houses of Parliament. In other words, this is simply and purely an enabling Bill; although I suspect the Opposition may challenge the use of the word "purely". Many noble Lords will already be familiar with the way this Act works, but for those who are not it may be helpful to have a short explanation. In 1965, legislation was introduced which guaranteed the worker unfortunate enough to be made redundant a payment on losing his job. Although the employer is liable to make the payment in the first instance, at present he may recover 50 per cent. of the cost by way of rebate from the Redundancy Fund.
What the Bill does is to allow this rate of rebate to employers to be varied between one of 10 different rates over the range of 35 per cent. to 80 per cent. Put

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very simply, the Bill enables rebate to be varied by the substitution in Schedule 5 to the Redundancy Rebates Act of any one of the 10 sets of fractions appearing in the Schedule to this Bill. The 10 different rates of rebate span the range 35 per cent. to 80 per cent. in 5 per cent. intervals, save that the second set of fractions has been calculated to produce a rate of 41 per cent. This is quite deliberate. On an earlier occasion and in another place a Bill to reduce rebate to 40 per cent. was defeated at its Second Reading. Accordingly, at no time in the future will it ever be possible under this Bill as drafted to introduce a rebate rate of 40 per cent. It is not for me to comment on this situation, but I thought it only right to make clear to your Lordships why it had not been possible to adopt precise intervals of 5 per cent. throughout the 10-stage scale.
I would also draw noble Lords' attention to one special feature of the Bill which will not have gone unnoticed. It will amend the Northern Ireland legislation. Northern Ireland is not covered directly by the Redundancy Payments Act 1965, but by parity legislation in the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965. The two schemes really are run side by side. In many respects they are operated as a single system, as provided for in Section 58 of the Great Britain Act, which authorises reciprocal arrangements to be made with the appropriate Northern Ireland authority for ensuring full co-ordination. In happier circumstances, it would have been right for Northern Ireland to follow the practice of the past and seek a similar enabling power. However, it was thought right on this occasion to extend a helping hand in the Westminster legislation thus avoiding the lengthy Order-in-Council procedures which otherwise would have had to be adopted. Clause 2 of the Bill, therefore, will, in effect, give the Northern Ireland authorities a similar power to vary rebate, so ensuring that any changes can be effected both here and in the Province from a common date, thus removing the risk of anomalies.
My Lords, I would also wish to be quite open with the House about the immediate use to which the powers in this Bill will be put on receiving the Royal Assent. On 22nd July 1976, the
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Chancellor of the Exchequer made a statement on public expenditure. As he made abundantly clear at that time, reductions in public service borrowing requirements and cuts in public expenditure were essential if the prosperity of our economy was to be restored and unemployment was to be reduced. The point was also firmly made that a shift of emphasis towards selective assistance to industry would have to be offset by certain other measures, including a reduction in the employer's rebate from the Redundancy Fund. Accordingly, the first action to be taken under the proposed legislation will be the introduction of an order reducing rebate to 41 per cent.
Measured against over-all public expenditure and borrowing requirements, the savings which will result from the reduction are not large. The full year saving for a reduction to 41 per cent. is approximately £16·2 million, or approximately £1·35 million a month. I give these figures because I think they may be helpful. It is, of course, impossible to estimate the actual amount which will be saved during the coming financial year, since this must depend on how soon it is possible to reduce the rebate.
Compared with the figure of £1,000 million mentioned by the Chancellor in his July package, these figures are very small beer indeed. But I would emphasise that they must be considered as part of an over-all package which is vital to the healthy economy of this country. However, ever, I do not propose to talk at length on this point. As I said earlier, the Bill provides for an enabling power. It does not, of itself, change rebate in any way. Any such changes will have to be made under the Affirmative Resolution Procedure and noble Lords may consider it appropriate to reserve their comments on this point until such time as an order is laid and the Motion put. In turn, I would ask for your Lordships' tolerant understanding for having departed from the direct scope of the Bill itself. Nevertheless, it seemed both important and right, to me personally, at any rate, that there should be, even at this early stage, a clear understanding of the proposed first use of the enabling power and the underlying reasons. But even putting these considerations on one side, I remain firmly convinced that the Bill itself is an eminently sound piece of legislation.

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The Redundancy Fund is financed by an allocation made from the employer's share of Class 1 earnings-related contributions. This allocation is at present 0·2 per cent. The Fund is intended to be self-supporting. Given the variations which can occur in the number of redundancies each year—and I have with me figures showing that, over the life of the Act, total payments were made from the Redundancy Fund in respect of a maximum of some 370,000 employees in 1971 and a minimum of approximately 177,000 in 1973—it is impossible so to regulate in come that it precisely matches outgoings. For this reason, the Act contains provision for the Fund to be financed by borrowing from National Loans Funds if it is in deficit and for the investment of surplus if it is in credit. But these are intended as relatively short-term measures. In the longer term, it is necessary to have adequate machinery for controlling the flow of income and expenditure so that the Fund may remain in reasonable balance. One way of doing this would be to vary the 0·2 per cent. allocation. But a simpler alternative would be to vary rebate under the provisions of this Bill.
My Lords, let there be no misunderstanding about the state of the Fund at the present time. It stands in credit to the extent of approximately £13 million. If rebate is reduced, the surplus will increase. Although there can be no doubt that this surplus will have a direct beneficial effect on the Public Sector Borrowing Requirement, if it is allowed to grow beyond reason it could certainly give rise to problems in the future. In such circumstances, there is a great deal of merit in a measure, such as that contained in this Bill, which permits changes to be made within the minimum of delay according to the requirements of the economy and the state of the Redundancy Fund.
My Lords, I would commend this Bill to the House as a useful instrument in the administration of the statutory scheme. Through the Affirmative Resolution Procedure, it will ensure the retention of adequate Parliamentary control. It will in no way prejudice or alter the entitlement of employees to their redundancy payments. Its effects will be limited solely to employers. In the short term it will be used to help reduce the Public Sector Borrowing Requirement, thus making its contribution to the Chancellor's July
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package, the importance of which it is difficult to overestimate. But looking ahead into the future, it will also make it both quicker and easier to restore rebate to its present level and to make future necessary changes as and when the economy and the state of the Fund permits.
My Lords, I should like to make a correction. I said that the Fund stands in credit at approximately £13 million. That was what I was advised in the first instance. I have now been advised that the surplus is £11 million.
As I said before, looking ahead into the future, it will also make it both quicker and easier to restore rebate to its present level and to make future necessary changes as and when the economy and the state of the Fund permits. I have no reservations in asking for the support of this House for this enabling measure. I beg to move that this Bill be now read a second time.
Moved, That the Bill be now read 2a.—(Lord Wallace of Coslany.)
6.21 p.m.
Baroness ELLES: My Lords, the noble Lord, Lord Wallace of Coslany, has of course put his finger right on it: he said that this was purely an enabling Bill but he was sure that the Opposition would not agree. If he had read the Official Report of another place of 21st March, he would have seen that at col. 919 the Government declared:
"initially, we propose to make an order reducing rebate to 41 per cent.".
So of course we do not accept that this is purely an enabling Bill and that the matter will stop there, because obviously the Government are not interested in passing such a Bill if they are not going to do something with it.
The noble Lord referred to the Chancellor's speech of July 22nd last year, when pressures were put on the Government by the IMF to cut public expenditure in exchange for what might have been regarded as a life-saving loan. While we on this side of the House agree with the urgent necessity for making cuts in public expenditure—and I think we are all agreed about this in this country—and reducing the PSBR, we must question the validity of the statement and the wisdom underlying it:

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"…that a shift of emphasis towards selective assistance to industry would require certain savings in expenditure, which included a reduction in the employer's rebate from the Redundancy Fund from 50 per cent. to 40 per cent.".
That was said by the Minister on 7th February in another place at col. 1126 discussing the Bill in its original form.
My Lords, assistance to industry is not achieved by imposing further restraints and increased expenditure, not only on industry in general but in particular on those firms which are suffering acutely from the economic climate and having to reduce their labour force. They are surely precisely the firms which need help, not further burdens, and we must ask whether Mr. Varley's statement to the American multi-national companies made on 11th May and quoted in the Financial Times of 12th May to the effect that:
"Industrial profits are necessary to pay for social objectives and the Government are giving priority to industry over social objectives".
can really be endorsed by a Bill of this kind.
If Mr. Varley's statement reflects the Government's view, this Bill of course has no basis for implementation. If it does not represent the view of the Government, the sooner the truth is told, the better. The Government are taking every means to expunge the private sector of industry to the great detriment of this country as a whole, and to the workers in particular. The bankruptcy figures tell their own story: in 1973 there were about 3,900 bankruptcies and about 2,500 liquidations. By last year this figure had risen to over 7,000 bankruptcies and over 6,000 liquidations. Each of these figures in themselves represent the human drama of several hundred—if not thousands—of workers having to lose their jobs, and not because of the fault of the employers.
So first it should be clarified that the whole of any redundancy payment is made by the employers. Up to now, 50 per cent. has been borne by the individual employer who has had to make the redundancy, and 50 per cent. has come from the Redundancy Fund to which of course contributions are paid, as the noble Lord correctly and clearly explained to your Lordships. These contributions are paid entirely by employers right across industry under the National Insurance scheme.
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The Fund is not only composed of payments made solely by employers—and perhaps the noble Lord did not mention this but the costs of running the Fund are also borne by the employers, although in fact it is run by the Government. The Government claim back the costs from the employers. It is questionable whether redundancy payments in principle are the right way to set about curing the chronic unemployment which is besetting this country and indeed other countries in Europe, but I do not wish to enlarge on this particular aspect at the moment. I should like to put to the noble Lord that this is surely a subject which should be discussed in a much wider context than just the question of the Redundancy Rebate Fund. I believe that this is a whole area which should be fully debated by this House, another place, and by all those sectors of industry which are concerned, whether unions, workers who are not in unions, the CBI, the Government and so on.
The original Bill, which was defeated on Second Reading, sought to reduce the payment from the Fund from 50 per cent. to 40 per cent. The Bill now before your Lordships' House has much the same effect but under another guise. It is an enabling Bill, as the noble Lord rightly said. As I have indicated, the Government have already declared their intention to introduce an order to reduce the payment to 41 per cent.
In the process, the Government claim that a saving of about £18 million will be made this year by this reduction, and it has now been changed to about £16½ million by the reduction to 41 per cent. My honourable friend Mr. Hayhoe in another place pointed out that the Fund was said to be running at a deficit of about £1½ million per month, which would have totalled £18 million last year, the amount which the Government claimed would be saved. According to my honourable friend in another place —and in fact it was confirmed in a Written Answer he had put down which appears in the Commons Official Report for 2nd May at column 1137—the Fund was in credit to the amount of over £5 million by the end of the year, and the noble Lord has kindly informed your Lordships that it is now somewhere near £11 million. This is despite the new provisions of Sections 63 to 69 of the

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Employment Protection Act, increasing the spectrum which will be covered by the Fund to include insolvency provisions.
So will this Bill in fact make the savings on the PSBR which the Chancellor claimed? Despite the very serious decline in viable businesses which I mentioned in connection with a number of bankruptcies, the Fund has managed to be in credit. By the end of April, we had this figure of over £10 million. Is it not a fact that the basis on which contributions now have to be made by employers—another increase in their outgoings, by the way—that is, on an earnings-related calculation, makes it much more likely that the Fund will remain in credit? Is it not therefore all the more unreasonable—and I use specifically a word which may be possibly acceptable to your Lordships rather than using some stronger term—that the Government should put their hands into a Fund which is contributed to by a specific sector of the community for a specific purpose; that is, to look after those employees who are declared redundant because of the impossibility of surviving the financial and economic difficulties of today?
Therefore, it would seem reasonable to me to ask the Government to reconsider their position in the light of the figures produced by the Answer to that Written Question, which indicated that since the end of December the Fund has always remained in credit. Surely, as a minimum, the Government should undertake not to reduce the amount of rebate from 50 per cent. so long as that Fund is in credit, particularly taking into account the new form of contribution that has been introduced. So there can be no justification for this Bill or for the introduction of an order under the Bill, as has been indicated by the Minister in another place, not only on account of the state of the Fund but also on account of the very detrimental effect it will have, particularly on small businesses; for example, those firms with a few employees, especially family firms, trying to keep their employees and trying to keep going, but being forced to make some redundancies in the present unfavourable economic climate. In fact, they are torn between having to declare their employees redundant and having to carry on with enormous difficulties towards bankruptcy or insolvency, because they have not the funds to make the redundancy
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payments which have to be made, not only under the old Act but also possibly under the potential order which the Government have indicated they will introduce.
Here, what I find so remarkably lacking in understanding is the statement of the Minister in another place on 21st March, reported in the Official Report at column 922. He said then:
"Additional costs of this order should not be difficult to assimilate".
Are your Lordships aware that the present payrolls of large companies which are on the borders of bankruptcy amount to several thousands of pounds a week and the decrease in rebate from 50 per cent. to 40 per cent. of course makes a corresponding increase in the amount the firms have to pay out? That can mean several thousand pounds added to the costs of a firm which regrettably has to declare its employees redundant. I do not think that the Government seem to be at all preoccupied by that or have taken into account the effect it will have on an enormous number of businesses. So this measure, allied to the immediate stopping of the regional employment premium and the new 2 per cent. payroll tax, have all combined to discourage further the private sector of industry. One indeed must ask: in present circumstances and considering the projected plans of the Government, who in this country would be willing to invest in industry?—investment which is so badly needed.
In conclusion, my Lords, the Chancellor's measures of July 22nd now seem totally inadequate, totally irrelevant and indeed, if I may be allowed to use such a word, misleading, when he announced that his so-called package, which included the reduction in the redundancy repayment rebate,
"…will enable us to maintain steady and continuous progress towards full employment without refuelling inflation…".
I quote from the Official Report of 2nd August 1976, Column 1237. Ten months later, with unemployment increasing, nearly half a million young people who are said to be out of employment at the end of this school-leaving year and with inflation running now at over 16 per cent., the Government introduce what can only be called a rather spiteful and harmful Bill, which will do

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nothing to reduce the borrowing requirements of the Government or help the workers of this country who, more than any other sector of the population, stand to benefit not from industrial decline but from industrial prosperity.
6.34 p.m.
Lord ROCHESTER: My Lords, as the noble Baroness, Lady Elles, has just reminded us, the Government have made it plain that, although this Bill is an enabling one, it is the intention that under it in the first instance an order should be made, reducing the amount of rebate payable to employers from 50 per cent. to 41 per cent. under the Redundancy Payments Act 1965. We on these Benches feel, as clearly does the noble Baroness, Lady Elles, that that is wrong in principle for a number of reasons, which I should like briefly to speak about—briefly, because the noble Baroness has covered many of the points I might otherwise have made.
The Government are constantly saying that a basic tenet of their economic policy is to promote investment by transferring resources to industry; with that aim we on these Benches are certainly very much in agreement. But those words, we have so often found, are not matched by deeds; and the action that is now contemplated is to take money away from industry. The amount involved is not large, particularly when compared with the 2 per cent. surcharge on employers' National Insurance contributions, imposed last autumn, and which employers are now having to pay. But it is no more desirable for that, and surely this further imposition will add, however marginally, to unemployment just at the time when all our efforts should be bent towards creating new jobs. As the noble Baroness has already said, it is just those firms which are in the greatest financial difficulty, and which, therefore, are having to declare redundancies, which will have to find this additional money.
Secondly, when the original Act of 1965 was introduced, it was made plain that the Redundancy Fund would not be used for any purpose other than to finance a redundancy payment. Yet it is the Government's avowed intention, we have just heard from the noble Lord,
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Lord Wallace of Coslany, to use that saving they will now achieve to reduce the public sector borrowing requirement and to use that money for other purposes. There may be a case for reducing the rebate to employers when there is a deficit in the Redundancy Fund. There can surely be no case when it is in surplus to the extent that it is—of more than £10 million—and when, as we have been reminded, that surplus is growing.
Thirdly, the Bill in its original form at least had the straightforward aim of reducing the rebate from 50 per cent. to 40 per cent., but, as the noble Baroness has said, that Bill was rejected only three months ago in another place. To put it bluntly, we dislike the way in which the Government are now seeking indirectly to achieve an aim which was then out-voted in principle. The dilemma in which the Government therefore find themselves is well illustrated by the complicated fractions to which reference has been made in the Schedule to the Bill, so as not to fall foul of the Public Bill Office.
Finally—and this is the point on which I feel most keenly: it was touched on by the noble Baroness, but I should like to elaborate on it a little—it would surely have been much better for the Government, before seeking again and so soon, to effect a saving which anyway is of a relatively small amount, to have embarked on a thorough-going review of redundancy and indeed of other payments which are related to this great problem of unemployment.
In a recent debate in your Lordships' House on unemployment, I made the suggestion that it would be better that those aged, say, 60 should be encouraged to retire prematurely rather than that there should continue to be so much unemployment among young people. To a limited extent, voluntary early retirement to achieve that aim was the stated purpose of the Job Release Bill, which we discussed soon afterwards.
But one of the difficulties which arose in discussion of that Bill, about getting elderly people in employment to accept the financial inducement which would enable them to retire early, was the adverse effect which they felt this might have on their occupational pensions. If the problem cannot be resolved in that way, what

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about making lump sum redundancy payments relatively even more attractive for people in their late fifties and in their sixties, so as to achieve the same end in another way? This has proved a paying proposition in many progressive firms, and is equally acceptable to the employees of those firms. Why should it not have more general application?
I found it very depressing to read in one of this evening's newspapers, a report that the Union of Post Office Workers has today approved a deal which goes in precisely the opposite direction, in allowing them, as I understand it, to work until at least the age of 65, instead of retiring now, presumably, at 60. What possible justification can the Post Office have, in times of heavy unemployment such as those we are now in, for doing this? And what of the further demoralisation of young people which this may bring about—young people on whom the future of our social democratic way of life quite literally depends? That is a digression from the Bill, but not I suggest completely irrelevant to it.
The basic point I was seeking to make is that it is high time for the Government to undertake a comprehensive review of the effect of payments, under a number of apparently unrelated schemes, on this fearsome problem of unemployment, particularly among young people, rather than that they should go on dealing with it in what we can only regard—and I am sorry to say this—as a piecemeal and ineffective way. It is on account of that basic failure, as we see it, and for the reasons that I gave earlier, that we on these Benches do not feel able to support this Bill, nor the immediate use that it is intended to make of it.
6.44 p.m.
Lord GEORGE-BROWN: My Lords, I am very grateful to the Minister for being kind enough to withhold his reply for a minute or two, while I— although I have not put my name on the list—intervene briefly. I do so because what, with the exception of what the noble Lord, Lord Rochester, said at the end of his speech, seems to me the attitude of mind of those who have taken part in this debate is quite contrary to the approach which, with respect, we should now be making. Because we have a very
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high apparent level of unemployment, measured by those who sign on at the labour exchanges, we become led, as I think the noble Baroness allowed herself to be led, into the thought that we must at all costs try to avoid that number increasing, and we do that by keeping people in their present jobs in their present industries. I should have thought that that was totally contrary to any economic industrial strategy that the country should at this moment be following. We are at the moment using too many hands to do too little. That is what we mean when we say that our productivity is so much less than that of our competitors on the Continent.
The immediate corollary of that is that any steps we take should be such as will encourage—to use a phrase which the noble Viscount, Lord Amory, will recognise—the shaking out of people, who are at the moment not fully employed, from their posts in industry. If that increases the numbers signing on at what I believe are now called employment centres, but which are known better to me as labour exchanges, then we must find other ways of dealing with that. One of them, to which the noble Lord referred, and which the Post Office workers seem to have gone against, is of course to make early retirement easier and more comfortable. Another, which he personally will know very well, is to provide much more adequately for the retraining of those who are retrainable—not everybody is; it would be hard to train many of us for much else, at our age of life—by a massive increase in the finance and the facilities for doing that. It is still ridiculous that we compare so inadequately with what a little country like Sweden does in this regard.
There are many ways by which one can deal with the consequences of high unemployment. But if we are very cruel, in order ultimately to be kind, a large increase in unemployment is an immediate and necessary requirement if we are to make industry more competitive. My difficulty with this Bill is that it seems to me to do exactly the opposite. I do not necessarily follow the noble Baroness and the noble Lord in their cries on behalf of the hard-done-by employer—I am happy to leave that to them—but I share the ultimate conclusion, even if I reach it by different steps, that this is not the

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moment at which to make it more costly for an employer to declare redundancy. If anything, this is the moment to make it more cheap for him to declare redundancy, so that we encourage him to do so, and you certainly will not do that by increasing the amount which he has directly to find, which is what this Bill does.
We are all full of the inequities—to take a less important sector, perhaps—of over-manning in Fleet Street. We have all been made very aware of it in the last week or so, because of the London Evening Standard and Evening News situation. The manning is simply enormous. The amount that would have to be paid for redundancy, to those who lost their jobs because of the merger, would run into millions and millions of pounds. A similar situation, applies to the knowledge of many of us, in manufacturing industries and people tend not to face what would, industrially, be a dreadful headache, of persuading the trade unions to allow the redundancies to be created, because, in addition to that, they then have to find a very large additional sum of money if the 50 per cent. rebate is cut to 41 per cent.
So that, without developing the point at great length—and I did come in rather late, and was tempted to speak by having heard what there has been of a debate—I thought I would say to the Government, very firmly, that even if they get this Bill they ought to think very hard before they make the order. If we have to make savings, I would much rather see a cut in the employment subsidy except in those areas where, for social reasons, we want to attract new industry. I would much rather see an increase in the payment out for retraining and the maintenance of, or even an increase in, the payment out to encourage redundancy.
Viscount AMORY: My Lords, I am sure that what the noble Lord is saying is extremely relevant to the general problem we are discussing. Am I right in thinking that the noble Lord is saying that more emphasis should be put upon the creation of new jobs rather than upon the preservation of existing jobs?
Lord GEORGE-BROWN: My Lords, exactly so. I wish I had put it so succinctly. Indeed, the noble Baroness used the phrase, "the creation of new
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jobs" when she was speaking about the encouragement of people to stay in their present jobs. I agree entirely with the noble Lord's formulation. Emphasis must be placed upon getting people out of where they cosily are and into new jobs and new places where they will exercise new aptitudes, if not skills, even at the cost of disruption to their lives.
Putting it as responsibly, respectfully and affectionately as I can to the Government, I believe that this Bill has got it frighteningly wrong. I suspect that what happened was that they came up against a practice which most of us who have been Ministers know has operated many times in the past. In the old days it was our own Treasury, but in this case I suspect that it was the IMF who went along to the Government and said that the public sector borrowing requirement would have to be cut by X hundreds of millions of pounds, correct to the final 50p. We have just seen how impossible this is, for the Minister reduced the figure of £13·5 million to £11 million in the space of one sentence. But never mind! The IMF want it to be done and they fix a figure; then every department has to contribute towards the cut.
In the days of the 1945 and 1964 Governments, of which I was a member (happily in one way and regretfully in another, because it makes me seem so old) we were always in the position of trying to make up the last £10 million or £11 million —as though it mattered a tuppenny damn in the end! Therefore we did things which, because they made the sums come right—E&OE—were in themselves wrong. I believe that this is what has happened here. The Government have satisfied the IMF by reducing their total requirement for PSBR by the agreed figure, and in the course of doing so have been reduced to a form of economic strategy or strategic planning which makes a nonsense of everything else that they are trying to do and that the IMF wishes them to do. If somebody were to put this to the IMF team, who are either here or on their way here, I am quite sure that they would see the point.
I shall not go to the extent of voting against the Bill, although I think there is a great case for doing so. However, I urge that further thought should be given by the Government to the question of

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whether we should rush into making an affirmative order. I wholeheartedly support the two previous speakers when I say that perhaps we should have a much wider debate about economic and strategic thinking and the place that all these various parts play in it. Since the Government are not in a hurry for legislation at the moment, I understand, perhaps it might be put to the legislation committee of the Cabinet, if such a body still exists, that this is a very good way in which, from the Party managers' point of view, they could waste Parliamentary time. Then we might do a useful job in guiding them on the steps they should take on both this and various other subjects. I am very much obliged to the Minister for allowing me to say this.
6.55 p.m.
Lord WALLACE of COSLANY: My Lords, I have a rather difficult job to tackle in summing up the debate on an obviously unpopular measure, so far as the Opposition are concerned, which is before the House. Perhaps I may deal first with the remarks made by my noble friend Lord George-Brown, because he is an old colleague. He and I are, I hope, still members of the same trade union. I am a life member of it.
Lord GEORGE-BROWN: My Lords, I still pay!
Lord WALLACE of COSLANY: My Lords, my union did me an honour. Perhaps my noble friend will deserve his later. My noble friend has touched upon a very important point. So far as the employment and economic situations of the country are concerned, there is an urgent need to retrain our young people and to train semi-skilled people to do skilled jobs. There will be a further opportunity to debate this matter. I am awaiting—as, indeed, many are—the recommendations of the Manpower Services Commission. The noble Lord, Lord Rochester, may have better information than I about this. However, it is conceivable, although I have no authority to say so, that before very long the Government must state their conclusions. That will give us a peg on which to hang a major debate on the employment situation on the lines that the noble Lord, Lord Rochester, wants. I agree with this,
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because many problems are left unsolved, even after our unemployment debate and today's tiny debate.
A great deal of huffing and puffing has been done tonight by the noble Baroness, Lady Elles, and the noble Lord, Lord Rochester. The Bill is designed to allow the Minister to introduce an order, subject to the approval of both Houses, which (who knows?) they may accept or reject. It will not be at an enormous cost to the employer.
Baroness ELLES: My Lords, perhaps the noble Lord will allow me to intervene. Is he then able to withdraw the statement made by the Minister in another place that initially an order would be introduced to reduce the borrowing power from 50 per cent. to 41 per cent.? It would give us great encouragement if we knew that an Affirmative order was not going to come early.
Lord WALLACE of COSLANY: My Lords, I stated in my opening speech that once the Bill is passed an order will be introduced but that it will be subject to the approval of both Houses. Then we shall see whether both Houses accept it. The purpose of the debate today is to allow the Bill to go through, and then to see what happens to the order when it is laid. The average redundancy payment, in round figures, is about £600. Under the present rebate scheme, the employer gets a rebate of £300. Under the 41 per cent. proposals—and more of that in a moment—it would be reduced to £240, resulting in a drop of £60. This is not much more than an average employee's wages, anyway.
The noble Baroness made a strong attack, as I expected, because I have read Hansard and I know about the fun and games that another place had over the Bill. Incidentally, I understand that the first defeat arose as a result of one of the Conservative colleagues of the noble Baroness in another place. It was a complete surprise both to the Opposition and to the Government. The colleague concerned went home, not thinking that there was to be a vote. Apparently the Whips got their arithmetic wrong and consequently there was a defeat. However, we have the new Bill which contains some improvements, because the Affirmative Resolution is now embodied in it. The noble Baroness asked whether employers can afford this.
Baroness ELLES: No, my Lords, I did not say that.
Lord WALLACE of COSLANY: Then, my Lords, she suggested that it would be a strain on employers. As I have already said, it should be borne in mind that the average redundancy payment at the moment is £620, of which half can be recovered from the Redundancy Fund. Therefore in many cases an employer will recover the additional costs through wage savings over a comparatively short period. It is also true that employers have continued to make payments in substantial numbers, and I have no firm evidence that the cost of the statutory payment has proved to be an active deterrent. If real financial difficulty exists, then the Redundancy Fund may bear the whole cost of the redundancy payment and recover the employer's share at a later date. It is true that the total cost is borne by the employer, and in this case paragraph 95 in the redundancy scheme booklet says:
"An employer who admits liability for a redundancy payment but is unable to meet it because of financial difficulty, should explain his problems to the nearest employment office of the Employment Service Agency and be ready to send to the specialist officer of the Department of Employment, a statement of account or a written statement from an accountant or a solicitor, stating the position".
So that in times of acute financial pressure on a small employer there is some relief for him.
It has been suggested generally that there is no relief of public expenditure and that in fact there will be no real savings. It is true that public expenditure is of different kinds, and there is plenty of scope for argument about whether transactions should be included in public expenditure figures; but it is a matter of fact that the expenditure of the Redundancy Fund in respect of rebates to employers has been counted within the public expenditure programme for some years, including during the time of the last Conservative Administration. Income to the Fund is also taken into account in the Financial Statement and Budget report, together with any other income such as taxation, and if the Fund is in deficit it can borrow from the National Loan Fund, which involves a direct charge to public funds by any definition. On the other hand, if it is in surplus, the surplus has the effect of reducing the public sector
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borrowing requirement. How does it do that? When the Fund is in surplus the monies are handled in what may be regarded, for the sake of easy understanding, as three separate accounts: a current account, a deposit account and an investment account. The first or current account is operated by the Paymaster General as the paying authority and is fed only with sufficient funds to enable the day-to-day outgoing payments to the Fund to be met.
The second account, which can be regarded broadly as a deposit account, is used for surplus which may be needed fairly quickly or which has to be held temporarily until investment can be made. In short, the money is put into Ways and Means, which is part of the Consolidated Fund and results in the payment of interest, usually a little below the Treasury rate for bills. The third or investment account is that operated under the authority of Section 26(3) of the Redundancy Payments Act 1965. Investment is made through the National Debt Office, usually in either Treasury bills or Treasury stocks, and any surplus in the Fund therefore will become available through the public sector use, which in turn must reduce the borrowing requirement. That, basically, is the reason why this Bill is before the House, and the Affirmative Resolution will be placed before the House in due course. So there is some small—certainly not very large—saving, but small savings as well as large savings are important in the present economic situation.
As usual, the noble Lord, Lord Rochester, made some interesting suggestions, and certainly with the last one about age 60 retirement I have a degree of sympathy, but of course in this matter sympathy is not enough. He has made the proposal before and it is an interesting one, but it would mean a major change in social security policy, as I think he will readily admit, and it is certainly outside the scope of my Department. This is a line which is being put forward by many organisations and individuals but, quite frankly, at the moment the economic position does not warrant acceding to it.
The noble Lord suggested that there should be an overall review of all the various schemes, some of them temporary

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and some of them permanent, that the Department of Employment is putting forward at the present time to relieve the employment position. The blunt fact is that all employment measures are under constant review. The machinery exists in the Department to do this, and there is a regular routine review of all the various forms and measures that are being employed at the present time. Although it does not come in as a form of review, the noble Lord and other noble Lords will he interested to know that there is a possibility shortly of the Employment Protection Bill 1977 being considered by the Joint Committee on Consolidation Bills, which will bring together convenient statutory provisions covering employers' rights as contained in the following Acts: The Redundancy Payments Act 1965, the Contracts of Employment Act 1972, the Trade Union and Labour Relations Act 1974 and the Employment Protection Act 1975. The first two Acts will be consolidated in full, the last two Acts will he consolidated to the extent that they are only concerned with the individual rights of the employee. The Bill which will come forward will in no way change employees' rights but it is a useful step forward in making them easier to identify and understand. The Bill does not cover any provisions relating to trade unions, employees' associations and collective bargaining, which it is proposed to consolidate later. At least the consolidation is a move to get things on a simpler basis and we all wish for some improvement in the employment situation. Any constructive suggestion will never be neglected.
I do not think we should make too much heavy weather over this Bill. It is an enabling measure. It is true that in the present economic situation there will be a move to bring in the Affirmative Resolution to reduce to 41 per cent. On the other hand, it must be recognised that the enabling Bill also allows an Affirmative Resolution to be passed, to put it back as soon as the opportunity arises to 50 per cent. and indeed, if the economic situation improves still further, even to go a little above that. That is possible, so it is not a Bill which is brought in simply to achieve one objective, as may be suggested by some noble Lords. It is a Bill to assist—in a small way, I frankly admit—the present economic situation, but, on the other hand,
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the Bill will allow quick and prompt adjustment in the, I hope, not too distant future when, as we all hope, things improve economically in the country.
There will he an opportunity for further debate at the Committee stage, when no doubt Amendments will be put forward, but I ask the House to give this Bill a Second Reading. It had exhaustive examination in another place, as noble Lords who have read Hansard of another place will have seen, not only on Second Reading but in Committee and on Third Reading. It was subjected to a vote; it has been carried in another place. I ask your Lordships to allow a Second Reading now, and we may have our arguments in Committee.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

NORTH SEA OIL BLOW-OUT
7.10 p.m.
Baroness WHITE: My Lords, I beg to put the Question standing in my name on the Order Paper: namely, to ask Her Majesty's Government what lessons have been learnt as a result of the recent oil platform blow-out in the North Sea.
My Lords, as this is a debate to which I have no right of reply, perhaps I could at the very outset thank my noble friend Lord Strabolgi for the immense amount of work that I know he has put into this subject, and also thank all noble Lords who will be taking part in the debate.
One should at the very outset make it clear that Her Majesty's Government have no responsibility whatever in the matter of the Ekofisk incident. It did not occur in the part of the Continental Shelf for which we have responsibility. We offered assistance to the Norwegian Government, whose responsibility it mainly was, apart from the responsibility of the operator himself, but I understand that we were not able to offer the Norwegians any assistance for which they could find any use, and therefore we have not been directly concerned.
But, plainly, further incidents are to be expected, and sonic of them in the normal course of events are likely to take place on our side of the line. Therefore, it

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behoves us to learn all the lessons which we can from this experience. My right honourable friend Mr. Wedgwood Benn, in reply to Questions in the other place yesterday, said:
"We must see that should such a thing occur again our resources will be adequate. I am not entirely satisfied that this is now so".
It is, of course, too soon to expect a complete evaluation of the experience gleaned from the Ekofisk mishap. It was three weeks ago, on 27th April to be precise, since Mr. Wedgwood Benn announced the setting up of a study group drawn from six Departments, including his own, plus the Health and Safety Executive, to go into the matter. One could not help asking oneself what was the relation of this study group to the body known as Scopcas, which is under the surveillance of the Department of Trade. Then, of course, the United Kingdom Offshore Operators Association has been busy. There is the North Sea Operators Clean Seas Committee. The Norwegians have been making their investigations. The non-governmental bodies, such as the Advisory Committee on Oil Pollution of the Sea, of which I have the honour to be chairman, its Nordic counterpart, and other voluntary organisations, such as the European Environmental Bureau, have all been trying to learn what they can. I understand that the Norwegians have called for a conference to be held in June to sum up the matter. Signor Natali, the Commissioner in Brussels responsible for EEC environmental affairs, has suggested it should be referred to the meeting of environment Ministers also to be held in June in Brussels. In other words, there are very many fingers in the oil slick, and one cannot help being somewhat concerned at the plethora of committees, investigations and other bodies which are concerned, and which are likely to spend a great deal of time travelling to one another's countries to tell one another what they think. So I shall be glad to know how Her Majesty's Government view all this, and what element of co-ordination we are succeeding in establishing within our own domestic regime.
But before I put some specific questions on that point, I think one should perhaps put the Ekofisk incident in perspective.
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I think we would all agree that the main risk with such volatile oil was of fire. Thanks to the care and skill of Mr. Adair and his team, this major risk was avoided. But much North Sea oil is of a similar character to that of the Ekofisk field, and we might not be so lucky next time. my first question is, therefore, whether Her Majesty's Government are satisfied that the fire-fighting vessels povided by the various operators are adequate in themselves—that is, in equipment, in speed and the like—that they are sufficient in number and suitably placed to reach any accident at a North Sea oil installation in time to be effective, that communications and agreed chains of command between the individual operators are such that difficulties can easily and quickly he overcome.
I understand that earlier there was talk of a combined North Sea fire-fighting force, but I understand that this proposition fell through and that operators have been making their own individual plans. This division of responsibility does cause many of us considerable disquiet. The Department of Energy is responsible, with the Health and Safety Executive, for safety on oil installations within the British zone and lays down conditions for the offshore operators. But, if things go wrong, what happens occurs not on land but in a marine environment, and this is extremely important. It is an environment with which the Department of Energy, a land-based Department, is not necessarily familiar. Responsibility for dealing with oil on the sea—that is, with oil pollution in all its manifestations—rests with the Department of Trade, and one would like to know what is the relationship between these rigs and platforms, which seem to be regarded as tiny areas of land within the marine environment, and the sea-based services on which they may have to depend in case of any major disaster. Do they understand one another's language, and I mean this almost literally. Do they have joint inspections? How close in practice and at operational level is the co-ordination between land-based and sea-based administration? What instruction or training in sea safety practices is given to oil rig crews? Such may be needed in North Sea conditions, which are very different, of course, from conditions in the Gulf of Mexico, to which many of the American operators are accustomed.

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May I mention one area of doubt. I have recently had discussions on communication systems between shore and sea in oil pollution situations. I was astonished to find, for example, that the system of VHF communication normally used by helicopter crews is not compatible with that commonly employed at sea. Aeronauts and mariners apparently have gone their different ways. Are British communication systems compatible with those of our North Sea neighbours? The oil rig operators are accustomed, of course, to communicating direct with their tower block offices on land. They are required, I believe, to keep marine equipment to hand; that is, equipment suitable for marine communication. But it seems to me very doubtful whether they pay much regard to its maintenance, or conceivably whether they know how to use it. That is one small, but in certain circumstances possibly quite significant, example of the difficulties which can arise when one is dealing with industrial organisations in the middle of the sea.
I do not know whether my noble friend would be in any position to say what stage has been reached in discussions on another matter which is germane to the fire risk especially; that is, whether or not separate platforms are likely to be required—I must say at vast expense—as potential refuges in case of the kind of disaster which might have happend at Ekofisk, although in fact most happily it did not. I shall be surprised if he can given any definitive answer; but if he were able to give us any indication of Government thinking it might be very helpful.
The fire risk, as I say, was quite obviously the main concern at Ekofisk. But, of course, we have to consider the fact that quite a considerable amount of oil was lost. It is true it was only something in the neighbourhood of 20,000 tonnes, which is not much by comparison with nearly 120,000 tonnes which was lost from the "Torrey Canyon". Nevertheless, it is too much, and I shall return to oil recovery problems in a moment. Then, of course, the third area of concern was the possibility of environmental damage by oil which reached the shore, by damage to marine food chains, by direct effect on birds and on fish, including spawn and fish lavae. In this context one must say that if we had to have a North Sea blow-out, then the Ekofisk field was probably as good a place
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to have it as any and the time of year could have been much worse than the end of April—because at that time relevant fish spawning was not endangered and the most important seabird groups were at their breeding grounds and not on the open sea.
The amount of oil to reach either British or Norwegian shores seems likely to be a very small proportion indeed of the total. Therefore, in this case, this does not seem to be any major problem. I have heard that the sliktrak forecast put the figure of possible 40 tonnes reaching the British eastern seaboard, with Lincolnshire as the most vulnerable area. Possibly my noble friend has more up-to-date information. In any case, the quantity is far smaller than the total loss would suggest. It is estimated that a considerable proportion of the oil evaporated within the first few days, and although the residue might thicken somewhat if it reached the shore—it may have become compacted—it is not the tarry, treacly stuff which one sometimes gets from other sources which can be so disagreeable and damaging.
That brings me to the controversy and the difference in emphasis between the Norwegians and ourselves over mechanical versus chemical methods of treating oil spills at sea. I am sure that we should all be extremely grateful if my noble friend can enlighten us further on this situation. Everyone acknowledges that the chemical dispursants which are now in use are very much less harmful than those used at the time of the "Torrey Canyon" disaster just over 10 years ago. Nowadays they are also used much more sparingly. Happily, we no longer have rockpools and beaches drenched with chemicals which are often more harmful than the oil itself.
In this country we have accumulated and distributed to the various local authorities concerned considerable stocks of improved dispersants. However, some of us question to what extent commercial considerations have entered into this These dispersants are manufactured and may well be a profitable product; this may, perhaps, colour the attitude towards their use. They are relatively simple to employ. The oil companies themselves make some of them. As we know, our Norwegian neighbours—and this has been much publicised in the Press—refuse to touch them. This obviously makes one question

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their use, because no chemical dispersant is likely to be completely harmless. I believe that that is recognised.
However, I should like to know what research is in hand on the long-term effect of chemicals on the marine food chain, on fish spawn and young fish, and in what circumstances Her Majesty's Government consider that that they should properly be used. What research is taking place on the effect of the chemical residues of oil after evaporation? Is there any synergistic effect between dispersants and the chemical residues of oil. To what extent do we have a scientific basis for our policy in this matter? It is important to recognise that one cannot generalise on this; one must particularise because, for example, what could be damaging inshore to molluses could he tolerated perfectly well in mid-sea by adult fish. In fact, up to a point fish seem to thrive on oil.
However, there are many different varieties of oil. I have been surprised to learn, for example, that Kuwait crude is less toxic to fish than the lighter aromatic oils of the North Sea. In my innocence and ignorance, I had supposed that it would be the other way round. What analysis do we have of the oil at each well point—in our section, at any rate, of the North Sea—of its dispersal characteristics, its toxicity and possible effects in relation to marine life?—because each oil may be different as, for example, the products of the Ekofisk Field and the products of the Mesa Field are radically different. One is a light aromatic oil; I am told that the other is like liquid boot polish. The danger of the Mesa Field is that it is so close inshore that anything that went wrong in that particular situation, very close to the Moray Firth—which is an ecologically vulnerable area—might be very serious indeed.
That brings me to a further question. How adequately is knowledge made available to oil well operators, who are basically engineers, of the particular ecological hazards relating to their own type of oil in its particular location at various seasons of the year? I fully recognise that in practice one should call in the experts when things go wrong and that the judgment of lay people with dangerously little knowledge can be much at fault. However, I also believe that in
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an emergency the expert can make his points and give his advice or instructions more effectively and intelligently to someone who already has enough background information to grasp what he is talking about and to appreciate the reasons for certain requests or requirements. In my experience, engineers and ecologists seldom meet unless somebody brings them together. I should like to know who is doing that in the context of the North Sea.
In some areas fish matter most; in others it can be birds. I speak now of the ecological and wildlife aspects. Internationally, it is Britain's seabird population that is regarded as our most important contribution to the world's dwindling resources of wildlife. I am told that although our ornithologists, and in particular The Royal Society for the Protection of Birds, know a great deal about the habits of birds on land and inshore, and especially about their breeding colonies, far less is known about their habits in the open sea, the routes they take and the timing of their operations. If we should he unfortunate enough to have another blow-out towards the end of July or early in August, I believe that many birds of certain important species could be trapped at sea when the adults are moulting and the young birds not yet able to fly strongly, so that they remain for long periods on the water.
But we do not know enough, and this is a field in which the National Environment Research Council could perhaps step in and help us to find out. Perhaps my noble friend could ask the Council whether it proposes to do so. It seems that we need a great deal more basic knowledge of the kind to which I have referred if we are to make sound judgments as to the methods to be used to deal with large-scale oil spills, which we must expect from offshore operations in the future. The ecology of the North Sea is known in certain aspects, but hitherto it has not been studied adequately in relation to these offshore oil operations.
That brings me back to the question of oil recovery versus dispersants. In pursuit of both methods, British scientists and technologists have put in a great deal of work in the 10 years since the "Torrey Canyon" disaster. I, personally, should like to pay particular tribute to

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the staff at the Warren Spring Laboratory as well as to the staff of certain of the leading oil companies and to some enthusiasts in the Royal Navy. I have indicated the sources of our disquiet about the use of chemical dispersants, although in some situations I am sure that they may be regarded as essential. However, in the open sea nature takes a hand and disperses much oil without aid. But oil dispersed, whether chemically or naturally, is oil lost to use by man. One cannot help asking whether we have put enough money and manpower into our research and into mechnical recovery. I cannot help doubting it. So far we have nothing effective in sea states likely to be found in the North Sea, though several devices can work reasonably well in harbour or in calm or closed waters.
The Norweigians used their devices on the Ekofisk slick. We sent our Warren Spring vessel "Seaspray", though frankly it was not expected to be operational; it was exclusively experimental. I have heard various figures mentioned of the amount of oil actually recovered. Somewhere between 800 and 1,000 tonnes I think is the most reliable. But I should like to ask my noble friend whether he can give us any indication as to how seriously the Government are taking this matter and how much further effort and resources they hope to put into it.
I should like to mention one matter about which I have been in correspondence with the Departments concerned; namely, the proposal put to me that if we are to take seriously possible recovery of oil on the high seas, then it is essential to have vessels large enough to receive any of these residues. For this purpose, the most likely solution would be to use some of the laid-up tankers which have been displaced by modern giant oil carriers, and to use them as reception vessels into which one could pump the oil and water mixture for separation, if possible on the spot, if we find ourselves able to gather it by improved boom and skimmer devices.
The disappointment some of us have felt so far about the lack of success of these devices may perhaps be short lived if more recent experiments prove to be successful. The real problem of trying to gather oil together in the North Sea, quite apart from weather conditions, is that most of the North Sea oil is so
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thin and spreads so rapidly. I am told that the thickness is not more than 0·1 millimeter. You cannot gather that quantity of oil unless somehow you can mechanically concentrate it. That seems to be a major technological problem, but I cannot believe that it is beyond our resources to find some method of doing it.
I should mention a matter which did not arise out of this particular incident but might have arisen in so far as Ekofisk is connected by pipeline to land; that is, how adequate do Her Majesty's Government believe inspection of pipelines is in North Sea conditions. I do not profess to have any technical knowledge about this matter, but one hears constantly rumours and suggestions—I do not put them higher than that—that accidents could occur; that the conditions in the North Sea are such that the casings of these pipes could be damaged; that, although they have arrangements for metering the oil flow, these can be affected by temperature and are not entirely reliable; that they have safety valves which should come into operation if there were to be a leak, but if there were a slow leak again they may not be sensitive enough.
What one is concerned about here is the pipelines not so much in the open sea but as they come inshore where you have ecologically very vulnerable areas. One is thinking of places, for example, like Sullom Voe. I should like to be reassured that the Government are satisfied that adequate tests are taken and adequate inspections made of the pipelines as well as the other installations on the platforms themselves because there is a good deal of anxiety about this. Some of it may be ill-founded. It would be helpful if we could know more about it.
Finally, I want to come to some organisational and legal matters. First, the relationship between Her Majesty's Government and the oil operators. I understand that safety and pollution avoidance plans are submitted to the Department of Energy as part of the licensing procedure, but these are submitted on a commercial in-confidence basis. Outside organisations who may be interested in the matter have no right to be informed. How can we be satisfied, for example, that adequate account is taken of the need to safeguard areas that

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are ecologically vulnerable? What action is taken to ensure that these statements of intent prior to licensing are, in fact, carried out?
What is the nature of the inspection procedure, and again what reports, if any, are available to interested bodies? Are Her Majesty's Government satisfied that all oil spills are reported? Even a small spill can be informative. We have some reason to think that not all oil spills are, in fact, reported. If they are fairly small they are apt to be concealed. Is there any central register of spills, which could of course include ship generated as well as offshore generated? If so, should it not be an open one? The total figures of ship generated oil spills at any rate are issued from time to time by the Department of Trade, but the number reported by them is five to six times fewer than the number reported, mainly by local authorities and Her Majesty's Coastguards, to the Advisory Committee on Oil Pollution in the Sea for its annual review of oil spills off United Kingdom shores.
This may be due partly to spills being, what you might call, "twice sighted" as they move along the coast, but one cannot tell without an open register. The public has a right to know the true position. But the inspection procedure is of paramount importance. In using even tried technology in unfamiliar conditions, which is the state of affairs in the North Sea, a highly qualified inspectorate could be extremely helpful to operators as well as safeguarding the public interest. For example, one cannot help asking whether, if inspection were adequate, the upside-down incident would have ever occurred. Someone not there just for the daily job but coming in with open eyes from outside might possibly have spotted the danger of such an item of equipment.
What is the standing of inspectors who visit the oil platforms? Are they concerned solely with safety of operation or do they take environmental factors into account as well? Do they have, in other words, a role comparable with that in other circumstances of Her Majesty's Alkali Inspectorate? In addition to inspectors, one also needs adequate monitoring. By that I mean being able to identify oil spills on the water. This can no doubt
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best be done from the air. What plans do the Government have for such a service, and what collaboration or co-ordination is there in this and comparable matters with our North Sea neighbours? Possibly this is a matter which could be dealt with under the Bonn Agreement of 1969. I was glad to be informed only today that Her Majesty's Government are now satisfied that the Bonn Agreement will cover offshore as well as ship-generated pollution in the North Sea.
Finally, can my noble friend give even a rough estimate of the cost of the Ekofisk incident? Does this experience in any way modify the views of Her Majesty's Government on the liability limits included in the 1976 Convention on Civil Liability for Oil Pollution Damage, about which some of us have been fairly sceptical?
I have given my noble friend notice of a further question which frankly does not arise out of the Ekofisk incident and, therefore, is perhaps strictly not in order; but as he has had notice of it if he were able to reply it would be helpful to many of us interested in oil pollution matters. What action do Her Majesty's Government contemplate to secure observance in the congested Strait of Dover of the traffic separation schemes which come into force in July next, but which do not appear to be binding on flagships of States not a party to the international regulations under which schemes have been made? These ships are just as likely, some much more likely, as ships of the contracting parties, to be involved in collisions which could involve oil pollution.
I have asked a great many questions and I would not expect my noble friend necessarily to be in a position to answer them all; but except for the last one, they all come under the umbrella Question concerning the Ekofish experience and all are germane to the problems which are being studied by Her Majesty's Government and by the other Governments concerned with conditions in the North Sea. I am sure that any answers my noble friend can give will be read in many quarters with the greatest interest and attention. Fortunately, this incident has been nothing like as serious as it might have been. We do not know what the next incident might he and therefore to learn the lessons from Ekofisk is, we would all agree, extremely worthwhile.
7.41 p.m.
Lord STRATHCONA and MOUNT ROYAL: My Lords, predictably the noble Baroness, Lady White, used to good advantage the rather more ready availability of time in this House to raise this Question. She did so in an extremely comprehensive manner and some of us will be in a little difficulty to avoid repeating many of the questions she asked. I hope she gave the Minister a certain amount of notice of her questions, otherwise I suspect he will be in grave difficulty, because some of them were highly technical, particularly those outside his immediate Departmental interest. It may well be that this matter should be tackled by a series of Written Answers, but perhaps this is something that can go into a comprehensive report that we shall get about this incident in due time.
It is worth starting by making the point that we have known from the outset that the North Sea operations were on the frontiers of technology, and I think we can count ourselves as having been fortunate so far. Perhaps this is largely due to the cleverness of the extremely brilliant technicians who have been working there—we do not want to overlook what they have achieved in a remarkably short time—and in a sense we can draw a certain amount of encouragement and cautious confidence from what has happened. Nevertheless, as Lady White said, this has been a salutary warning to us against over-confidence and I hope we shall profit by studying what has happened and learn the lessons from it.
When does the Minister think a report is likely to be produced? After all, a comprehensive report in two years' time will, frankly, be far too late. We want something reasonably quickly, even if it is not totally comprehensive and complete. It is also probably true to say that it will be more interesting to know how we feel we reacted to the emergency than to have a complicated analysis, which I am sure many of us would not understand, as to exactly what the cause was, although I fully accept that the main emphasis in all our thinking about this sort of affair must be on precautionary measures to prevent it happening.
On the credit side, let us remember that only one well was affected in this case and, as Lady White said, there was
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no fire. Noble Lords may have seen on television the pictures of the platform on fire in the Gulf of Mexico, and there a large number of wells took fire. I understand that it is much less likely to occur now because there are downhole preventers which, in this particular instance, had already been removed so that the fishing operation could take place for the piece of equipment that had been lost.
We must remember, too, that we have the advantage of this being a light oil in turbulent waters, and from the narrow interest of this country I suppose that we must be grateful that we live in an area of prevailing south-westerly winds, although as a gardener I have become painfully aware in recent years that at just about this time of year we seem to get a great deal of easterly wind, and yesterday was perhaps an example of what we can expect. I am being thoroughly parochial in saying that because this would affect Britain more adversely than it would the countries on the other side of the North Sea.
We can take some encouragement, too, from the actual oil pollution figure; it was about 16,000 tons spread over about ten days and it is an interesting thought—I admit that I have not checked this with the experts—that, according to my understanding, if one has to drill a diversion well one is involved in about six weeks of work. It would appear likely, therefore, that even if one has to drill a diversion well, one is still involved with only the amount of oil that came out of the "Torrey Canyon" disaster. Goodness knows! that was bad enough, but we must try to keep a sense of proportion about these things. There is an important proviso about this to which I shall come later—and, of course, this is all on the assumption that the equipment to deal with such incidents is readily available when they happen.
I do not know whether the Minister will tell us what the statistical forecasts warn us is likely to occur. The noble Lord, Lord Ritchie-Calder, who will speak later, is something of a dab hand in this connection, so perhaps we shall hear more about it before the evening is out. It is clear that we shall have to deal with this kind of happening again. My impression is that the oil companies are taking the

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view that the difficulty about being adequately prepared to deal with every contingency is that there are so many different possible crises that could arise that it is very difficult to standardise one ship that is sufficiently comprehensively equipped to deal with all emergencies which can arise. One must therefore have a very wide range of equipment available.
Added to that is the fact that these fields are quite widely scattered over a considerable area, across the North Sea and it is obviously important to have emergency equipment quite near at hand when there is a disaster or potential disaster. We know that BP have the "Forties Kiwi", which I think cost them £3 million, and they have announced the possibility of building a further ship costing £20 million, so it is clear that the oil companies take an extremely serious view of their responsibilities in this matter.
I gather also that when this incident took place much more equipment was offered by the various companies than was used or was considered to be needed. What I am not clear about is what financial arrangement is made between the companies when this sort of incident occurs. If equipment is called up to stand by, is it paid for by the company responsible for operating the platform and, if it is used, is it then paid for by the company or its insurance company? Red Adair was called in this instance and I understand that he has a fixed fee, whereas the salvage tugs, which conceivably might be a comparable kind of organisation, normally work on a no-cure-no-pay basis. I am not sure which arrangement we think would be most satisfactory for the kind of thing that we foresee in the North Sea.
Here, I am in danger of sounding a little controversial, which I do not wish, but I felt that the Ministerial reaction to this episode was rather interesting. It did not seem that it showed a totally relaxed confidence in the contingency plan if the first thing that the Minister felt he had to do was to climb into an aeroplane and open up conversations with his opposite number in Norway. It may be that he felt he had to demonstrate public concern and show that he was doing something but, personally. I should have been happier if he had said, "All this has been
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foreseen. We know exactly what to do and we are now going to go ahead and do it". Similarly, it seems curious that he now announces that he is to set up a study group. Should we not have set up that study group two years ago when the whole operation first got under way?
Lord STONE: My Lords, would it not be advisable to get evidence of what research is needed? Also, was it not the events that stimulated the idea rather than having the whole thing in theory?
Lord STRATHCONA and MOUNT ROYAL: I accept that up to a point, my Lords, but I had been going to go on to say that we now hear that Red Adair is to be called in as a consultant. Although it may have been something of a sales pitch, Red Adair has been saying for a long time that something like this was going to happen. I should have thought that, if we had really been thinking forward properly, he should have been consulted long ago. Maybe he has been, in which case—
Lord PARRY: My Lords, I wonder whether the noble Lord would give way? It seems to me a pity that his speech is wandering into an area of discussion that should best be left at this point because constructive points have been made up till now which seemed extremely helpful. It is a pity that we are now entering into this argument when the whole expertise in the North Sea has been purchased in order that the techniques that have been practised elsewhere may be developed off our shores and, in the long run, be to the advantage of our economy. Red Adair was acting in an incident that was totally unexpected, and the expertise that he has gained elsewhere was equally brought in order to be of future use. It would be squandering that very expensive experience if we did not use it in the advisory committee that is to be set up.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I do not know that I follow the noble Lord. It seems to me that we have brought in this gentleman and have said that we intend to use him as a consultant in the future. He has said for a long time that this kind of thing would happen. If that is so, I really cannot understand why we did not—if, indeed, we did not—consult him a long

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time ago. I am not trying to be destructive but merely saying that it is perhaps salutary that we have been reminded that we have been remiss in our duty. Of course it is true that one has to say that that is the Government's responsibility.
I hope that the noble Lord will also take this opportunity to deal with the rather enigmatic Press reports which have been ascribed to the Minister and which have certainly been taken in some quarters as indicating that he is considering the possibility of making the expenses incurred in dealing with this type of situation not deductible for tax. I cannot believe that that could possibly be the case, but it is certainly an interpretation that has been put upon some of the Press reports that I have seen. Clearly, insurance and precautionary measures are desirable and must be considered as an oil company's operating expenses. We should indeed be working in the wrong direction if we did anything to prejudice that.
I was also struck by a point raised by the noble Baroness when she asked what practice crews were given. I wonder whether we might not go even further, and whether there is any mechanism for a joint Ministry/oil company system of exercises in dealing with major crises of this kind. Such crises will certainly occur again, and it seems to me that we could learn something if we staged a military type exercise to see how effective our measures were.
In that connection, I should also like to underline what the noble Baroness said about the importance of the communications system. How well did it work? Did we have any difficulty with non-compatibility of equipment, whether airborne, seaborne or company equipment as opposed to national telegraphic equipment? It is most important that we should have a net of compatible equipment so that everybody can be co-ordinated and can know what everybody else is doing. Here again, that equipment must be regularly exercised so that we are sure that it works when we need it. One knows that standby equipment is frequently neglected unless somebody is made to check it.
Can the noble Lord also tell us a little more about how the costing of this type of operation is carried out? I imagine that the oil company is responsible for
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the expenses of cleaning up the mess which it is responsible for making. Who assesses what has been the damage and what are the appropriate measures to take, and who decides what measures are demonstrably sensible but not extravagant? The noble Baroness asked what had been the total cost, and I suppose that I am asking how this is allocated.
That raises the further question of how the assessors and inspectors dealing with this kind of situation are trained. Have they yet had time to get any specialised training in this field? Can we be told of the progress of the discussions with the Norwegians? The noble Baroness spoke of the mechanical versus the chemical approach: is it a fact that the Norwegians still rely on skimmers and are still rejecting dispersants? Is it also true that we still look at it the other way round? And what evidence have both our countries for their particular point of view? I do not wish to try to indulge in a lot of technical stuff which we should in any case probably not understand. Should we not also he talking with the Danes, the Germans and the Swedes, all of whom are potential sufferers from this kind of episode, as well as the Norwegians?
Lord HALE: And the Dutch, my Lords.
Lord STRATHCONA and MOUNT ROYAL: Yes, my Lords. If we look much further ahead, although at the moment we have many support ships as well as drilling rigs on station in the North Sea, the time will come when a great deal of that equipment will have been dispersed and will have moved on somewhere else. Have we thought at all about how we are to be sure of having the equipment that we need when it becomes necessary later on?
To finish, I should like to return to my starting point by saying that this episode has demonstrated that there is no cause for panic. It seems that the plans worked well at a technical level, and I believe that we shall be interested to know whether the Government think that there is room for improvement before the next crisis hits us. We must not be surprised if it happens again, which it surely will.
7.59 p.m.
The Earl of KIMBERLEY: My Lords, I should like to congratulate the noble

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Baroness, particularly on some of the very penetrating questions which she has put to the noble Lord, Lord Strabolgi, this evening. I wish also to say how grateful, I am sure, are noble Lords in the House that this Question has been put; and the general public will be grateful, too. The Ekofisk incident, apart from any physical damage, has brought home to the public in no uncertain way the dangers of these problems. I believe that at a meeting between the Department of Energy and the United Kingdom Offshore Operators Association on 5th May, it was stated that, with the exception of one, all the vessels which were used were capable only of supplying large quantities of water to keep the platform cooled.
The noble Lord, Lord Strathcona and Mount Royal, said that it is very difficult to have the right kind of vessels everywhere at the right time, and I must agree with him, because there are so many types of trouble. But I am led to believe that there is only one specific anti-blow-out vessel under construction, and that has been commissioned by Phillips, although yesterday's Times reported that there were some informal talks taking place with BP about building a £25 million offshore maintenance safety and fire-fighting vessel. Should this go ahead I sincerely hope that it will be built by British shipyards.
In the report from the Department of the Environment last year, entitled Accidental Pollution of the Sea, it was stated, as has been said previously, that there is a 50/50 chance of a blow-out in the next five years, but I should think that the probability is that it will be less than five years. The report stated that the safety precautions were adequate. I am glad that the Secretary of State for Energy said the other day that he did not necessarily think that they were adequate, and it would be interesting if the noble Lord, Lord Strabolgi, could confirm this. Perhaps the Government could specify whether there are any new anti-pollution measures for when the next blow-out should occur. Would it not possibly be a sensible idea to have a conference of the oil-producing nations who operate in the North Sea area? I believe that such a conference could do three things. It could co-ordinate the monitoring of oil spillage, try to prepare an almost instantaneous reaction to deal with a blow-out
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wherever it may occur, and, lastly, possibly train a European "Red" Adair. On the BBC programme "The Energy File" the other day Mr. Adair said again that he did not think that the safety precautions in the North Sea were adequate, but, as I have said, it appears that the Government are inclined to agree with this.
So what have we learned? We need, if it is humanly possible, better and more adequate fire and anti-pollution precautions. But alas! no precautions will be 100 per cent. effective because blow-outs are usually the result of a human error. Therefore the optimum must be to provide measures to contain the disaster until the well can be killed. As the noble Baroness said, we are woefully behind in combating pollution at sea, so we must improve existing measures, together with the fire and blow-out preventive measures. I say this because a disaster like Ekofisk, small as it was, is international. Norway really needed outside help, and so would we if it were on one of our rigs. It would be no good saying that the artificial boundary line, such as the median line between the United Kingdom and Norway, is safe; that "it is your problem on your side, or our problem on this side".
In my very humble opinion the reason for the deficiency and lack of a lot of the right equipment is that it has never yet been clearly defined as to whose is the responsibility; whether it is that of the Government or of the oil companies. Neither can sit idly by waiting for something to happen, but so far, on the whole, neither has been prepared to undertake the necessary capital expenditure on the best possible offshore anti-blow-out equipment. The oil companies have no statutory obligations in this regard, except those which were granted licences in the last licensing round; and although some equipment and chemicals are available in Aberdeen and various other ports, very often they would probably be totally insufficient in a major emergency. Perhaps this could almost be termed as a public relations exercise, as it must be open to doubt how quickly and effectively the equipment could be brought to bear. I believe that recently a more substantial scheme has been started, known as OPOL (the Offshore Pollution Operators' Liability) which could be likened unto an insurance policy. But it is not yet fully

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implemented, and it is not supported by all the offshore operators, and I believe that the subscription to it is voluntary.
So to clarify the situation, we must try to determine whose is the responsibility in the event of a blow-out. If it is the operators' responsibility, it must be specifically defined and written into their licences. If this were done it would precipitate rapid action, which could be taken jointly, and some form of mandatory insurance. I do not think that the Government should leave the oil companies holding all the responsibility, because the Government take large fees and royalties and taxes, and some of this money should be allocated towards protective measures. Therefore, in practice the Government's responsibility could, in part, be exercised by BNOC, which has a 51 per cent. share in the existing production, and it would then bear its share pro rata of any measures and/or expenditure which would be required.
I have one slight doubt or feeling of unhappiness about this. Does BNOC have the technical ability? I ask this because, without wishing to denigrate it, I must say that it is a company which is directed by politicians and economists who may well not have the necessary expertise. Much more research must be done in clearing up the oil slicks, and this research can be improved. Here again, responsibility will have to be defined.
Lastly, there is the question of sabotage. Security has been taken to prevent sabotage, but it must be remembered that this threat is always present, and therefore the security must never be allowed to slacken off. The risk of sabotage is great, but probably a far greater risk is possible collision in poor visibility by ships, especially fishing vessels. It seems to me that the Government, unless they specify whose responsibility it is to provide equipment and take action in the event of a major blow-out, must be at fault. It is urgent that this be rectified, because there is bound to be a repetition of the Ekofisk incident, even if only because of the human element, and it could happen tonight or tomorrow.
8.7 p.m.
Lord RITCHIE-CALDER: My Lords, I follow the noble Earl, Lord Kimberley, in the ominous note on which he finished
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his speech. Is it not rather frightening to think that one man, "Red" Adair, stands between us and catastrophe? I applaud what he did in capping the blow-out in the Ekofisk field, but I would remind your Lordships that he is continuous, he is in demand all over the world. Why is he in continuous demand all over the world? It is because, as others have suggested, there are blow-outs onshore and offshore all over the world, and as things stand at the moment we will go on having blow-outs on and offshore all over the world. Whenever and wherever there is a blow-out, people say, "Get 'Red' Adair". I notice that my right honourable friend the Minister of State for Energy, Dr. Dickson Mabon, has invited "Red" Adair to advise the Government on how to cope speedily with emergencies like Ekofisk, if such a thing should occur in the British sector. I want to follow what the noble Earl, Lord Kimberley, said on this matter. Where are the other "Red" Adairs? Why do we not have them in this area? Why do the Americans not have them in various areas? He is practically unique.
Another matter, which is much more important, is the question of why a blowout should occur. Is it not really frightening that a valve should be installed the wrong way round? We have heard about inspection and so on, but this is almost primitive engineering that we are talking about. We talk about human error as though it were a legitimate excuse. There is no legitimate excuse for the kind of errors which can create the situations such as we have seen.
Remember, my Lords, that we are multiplying the risk of human error every day as the oil programme expands, and we are also magnifying the risk. The expertise of the oil industry is being spread extremely thinly, and risks are being taken with inexperienced so-called experts. For example, the death toll of divers in the North Sea grows every day. We find that many of them—and I speak as an expert in the British Sub-Aqua Club—are little better than amateurs, improperly trained and certainly, so far as I can gather, with very little insight into what they are doing except by specific instruction. They are willing, it is true, to risk their lives, but they are that amateurish that they are putting many more at risk.

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We are told that, undeterred by Ekofisk, the Norwegians are going ahead with plans to lay pipelines across the Norwegian Trench— that deep seabed which shears the Continental Shelf—but we should remember from our debate here on the future of the hydrography service that in the North Sea and around the Orkneys and Shetlands we are laying massive pipelines in areas which, in many instances, have been inadequately surveyed. If every half-mile has to be resurveyed, I hope they are doing it, because what we heard here disclosed a very disquieting picture in relation to what we know about the seabed in the areas in which they are laying the pipelines.
My Lords, we are pushing ahead with an oil programme on which, we are told, a geat deal, including the future solvency of Great Britain, depends. We are doing it considerably through oil companies which claim to have the expertise, but that expertise is only commensurate with the experience of the experts, and we have a right to ask: How expert are the experts? I think this has come through, with some disquiet, from the speeches of previous speakers. I do not think I am exaggerating when I say that, so far as the North Sea is concerned, much of what has been done—and I say this advisedly—has been improvisation. These giant platforms are only scaled-up versions of the kind of installations which have been employed in the Gulf of Mexico and in other shallow areas. I have no doubt that structurally they conform to the ready-reckoners of the civil and mechanical engineers, but the North Sea is one of the most storm-driven seas in the world. The engineers may be getting out of their depth. Obviously, the installations should not be standing on stilts or forming artificial islands: they should be encapsulated on the seabed. Then, my Lords, we are back where we started. How can we ensure that these unmanned, remote-controlled installations, which will come, will be safe, maintainable and repairable?
My Lords, my right honourable friend the Minister of State for Energy, speaking last Friday at the opening of the Department of Petroleum Engineering at Heriot Watt University, Edinburgh, insisted that we, the British, should be "the pioneering
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entrepreneurs of the oil industry", and went on to say:
"We intend that Britain should be firmly established in the oil business long after the last drop of North Sea oil is gone".
He was opening a pioneer department which provides facilities for 20—I repeat, 20—postgraduate petroleum engineering students at present on their master of engineering courses. My Lords, if we are going into the business we need many times more qualified people than that. I do not want to imply any disrespect to the universities and the technical colleges which are undertaking this, but I do say that we want to have a great deal more knowledge and insight than we either have or are giving them.
I would go further, much further, than my right honourable friend and say that we need an ocean industry in which we, Britain, should take the lead in another Industrial Revolution. An ocean industry would mean much more than oil exploitation. It would mean human effort on the seabed itself—a transfer to a new living environment, and not just, as at present, ad hoc recruiting and training of adventurous divers. It means, among other things, the regulated development of seabed minerals, the harnessing of energy from the sea and (and this is the point I am trying to make) not just oil drillings; that is to say, energy from oil drillings. We are now getting into wave-generated electricity, heat transfer systems and so forth. Above all—this, I think, is the lesson of Ekofisk, and I would warn anybody who ignores the warning that it will be serious consequentially—training for an ocean industry should lay paramount importance on the ecological and environmental safeguards. We cannot afford to take chances. The oceans are our last resort. We have been outrageously reckless and extravagant with our land resources. We cannot, we must not, mismanage our ocean resources through cynical commercialisation, whether in the petroleum industry or in seabed mining.
I am specially sensitive about this subject, my Lords. Nearly 10 years ago, as was referred to earlier, we had the "Torrey Canyon" situation. At the same time, or immediately after, I recall very vividly that I left a debate in your Lordships' House and I flew to California. A friend had given us a house right on the

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beach. We arrived after dark, and in the morning we pulled back our curtains to admire the beauties of the Santa Barbara channel and the offshore islands. We could not see out. The windows were smothered in oil spray from the incoming waves. This had been the night of the Santa Barbara blow-out—an earlier Ekofisk. From then on we had the torment of thousands of dying sea-birds before our very eyes and a beach on which we could not even walk because it was smothered deep in oil. I am not going to repeat that outrageous story in which the oil company had taken risks which a schoolgirl geologist could have foreseen. One would have thought that the lesson would have been learned, and yet 10 years later, and obviously with very little sense of what actually happened—I am sorry; it is true—we are now, in a different dimension and in different places, facing the kind of things that we are talking about here.
My Lords, we think of oil as polluted beaches, dead sea birds, and as the destruction of marine life. I would put it tonight in another dimension—no less than a threat to our continued existence, and not just in terms of recreational pleasure or of sea food. The ocean is part of that elaborate and balanced system which generates and regenerates our atmosphere. It is a source of oxygen indispensable to all life on earth. If we curtail that oxygen supply, we impair and ultimately destroy our means of respiration. Oil released from the vaults of millions of years ago is an intractable chemical. I am very grateful to my noble friend Lady White for her extremely interesting and differentiating account of the nature of the oils of the North Sea, but I would remind anyone here that it is an intractable chemical. We are told very glibly that, apart from decomposing it with detergents, nature will biodegrade it. But I would remind your Lordships that to biodegrade oil needs a great oxygenation process, using up the oxygen in nature. The extent of this process is still not fully understood, but that does not mean that we have to overlook it or pretend it is not there, because the implications are certain.
I was very interested, also, that my noble friend Lady White brought out this question of synergistics in relation to oil and other chemicals, because I would remind your Lordships that there is an
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unholy alliance in a strange way between oil and DDT. In the Mediterranean—and I wrote a book on the pollution of the Mediterranean—we found the trees of the Bourbon Forest in the Tyrenian coast had been destroyed because they had been enamelled, I repeat "enamelled", with a combination of oil and DDT which had stifled and smothered the leaves of the trees.
This is all part of the story of which we have no adequate or properly adequate information today. The implications go further: the implications of a film of oil spreading, as Thor Heyerdahl told us from his experience of raft-crossing the Atlantic, for thousands of square miles over the surface of the oceans. That layer can act like the filter of a camera and cut out the sun's rays which are necessary for the photosynthetic process in the upper waters where the phytoplankton and the zoo-plankton grow, not only to supply part of the food cycle but to release oxygen into the atmosphere.
My Lords, this is a very, very serious problem, which in the haste and hurry of our development of oil (for the imperative reasons which are always justified) we are at the moment, in the scientific and technological history, at least, only beginning to glimpse. But it is so important that—and I am not asking my noble friend on the Front Bench to answer this—among those who are concerned with this (in the multiplicity of Departments mentioned by my noble friend Lady White, which fills me with dismay) somebody, somewhere, somehow should be looking not just at the immediacies of the Ekofisk but the certainty—and I say this to the noble Earl, Lord Kimberley—of repetitions. It is not just what Red Adair has said: it is a mathematical certainty that the way things are going now we will have repetitions on a world scale. I cannot conceive of what would happen if we had a repetition in the North Sea of what happened in Saudi Arabia with a backflash fire through an entire oilfield. What would happen to Piper Field and all the others if we had that?
The noble Earl, Lord Kimberley, was asking who should share the responsibility. It is a Government responsibility. It is government by catastrophe when you must wait for something like this to

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happen before something is done about it. But, also, the burden of this responsibility must lie with those people who are on the job, doing the job, and with the experts and expertise that they are supposed to be able to muster. To the noble Earl, Lord Kimberley, I would say that I do not think that it was the chartered accountants and the civil servants who discovered the BP oilfield in Alaska. There was a good deal more expertise than there was bookkeeping or civil servants.
My Lords, the question is this. Who will deal with it? First, I put the responsibility squarely on the Government. It is their job to see that if we have not enough adequate experts—and 20 MSc's is not good enough for me—we should be encouraging and developing as quickly and as thoroughly as we can the kind of people who, as my noble friend Lady White suggested, will be standing at the elbows of the engineers to see that they know what it is that they are talking about in relation to these things.
Dr. Mabon, the other day, said that frankly we would hope to get more co-operation from the oil companies than we have had so far. If the Government, he said, had to make arrangements, then the oil companies would be charged; if compulsion is wanted then we have ample powers provided by Parliament—and the oil companies know it. This should not be a confrontation. Everybody's interests are at stake and I am going to stake a claim for the most important interest of all. It is that we are watching, in this situation of oil blow-outs, of tankers sinking, of the dumping of waste and of all the other forms of oil pollution, in our own time a tragedy which can put prosperity itself in hazard.
8.25 p.m.
Lord AUCKLAND: My Lords, it is a pity that this very important debate has to take place at a very late hour and in a thin House because I believe this is one of the most important topics that Parliament has discussed for a very long time. It is true that the question concerns a very narrow geographical area but, as has already been stated, it has implications for a very much larger area not only in this country but in many other countries.
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The nearest I have been to an oil rig is flying over one of the oil rigs in the North Sea in a helicopter on a fine summer's day. Possibly if some of us—and, indeed, Members of the other place—were able to visit an oil rig from time to time to see for ourselves what really happens it might be very educational for us; because it is a handicap to speak on a topic of this kind if one has not been on the scene.
It so happens that today's Financial Times carries an excellent supplement on Norway. There were two important points borne out about Ekofisk. First, the point already mentioned; that is, that the blow-out took place in fine weather. What might have happened had there been a gale, or if there had been an ignition of inflammable gases, was also mentioned as part of the supplement. It is not difficult to imagine what the consequences could have been. Also, it is perhaps cruelly ironic that, according to another part of the supplement, Norway's oil explorations are almost at a standstill now—not, one hopes, due entirely to Ekofisk, but because of the labour market. And this could have serious implications. The risks have already been mentioned and it is not difficult to envisage what could cause future disasters of this kind, because this very nearly was a disaster.
As one who works in the insurance market, I can tell your Lordships that there was a great deal of apprehension when this incident was reported. Had the worst happened, the insurance market could have had a crippling loss at a time when (as I mentioned in a debate yesterday) it is contributing vastly to our invisible exports. Of course, that is why insurance markets exist. This is a perfectly rational point. It could have had terrible consequences and there could have been heavy loss of life, as the noble Baroness, Lady White, mentioned. The effect on bird life could also have been dreadful. As it happened, according to reports which I have read, the loss of life among birds was mercifully small. There could have been a really major disaster.
The noble Lord, Lord Strabolgi, has had a surfeit of questions thrown at him, some of which no doubt he has been given notice, but others not. I should like to ask the noble Lord a question and I apologise for not giving him notice.

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I will understand if he is not able to answer it this evening. Section 6 of the Mineral Workings (Offshore Installations) Act 1971 imposes specific duties on inspectors regarding the safety aspect of oil rigs. Are the noble Lord and the Department of Energy satisfied that the Inspectorate are strong enough? This Act has now been operational, as I understnd it, since 1974. This is an important point.
The rupture of a platform by a trawl, an anchor or ramming by a vessel could easily cause a similar or worse disaster of the kind we have been discussing; and, of course, human nature being what it is, human error cannot always be avoided. Safety is all-important, and it is clear that one of the lessons which one hopes any Government must have learned from this blow-out, and previous blow-outs, is that existing legislation, such as the 1971 Act, must be looked at carefully and the terms of the Act enforced strongly. Parliament will need to debate a much wider measure than this in the future. As has already been said, there is little doubt that there will be further accidents of this kind. I will not pursue the question which has already been adequately pursued as to whether there are sufficient experts like Mr. Red Adair on hand if a serious blow-out occurs, whether it is in Scotland, Norway, or elsewhere. It is clear that if there is not expert help on hand and the weather is bad, and things are not in one's favour—and in Ekofisk they seem to have been—the worst could happen.
Anybody reading this debate may well say that this House is crying woe. That may be the case, but we are discussing an incident which could have been desperately serious. It is to be hoped, my Lords, that, as a result of this Question, the Government, oil companies and all concerned, will do all that is humanly possible if not to avoid another disaster of this kind then to minimise its effects.
8.35 p.m.
Lord HALE: My Lords, the noble Lord, Lord Auckland, called our attention to, I think, the financial section of The Times of this morning which I have not had the opportunity to see and probably shall not see, because I do not have occasion to read the financial pages of any newspaper. He referred to one of the points which is of serious anxiety to me: it is
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the way that this matter is being taken in Norway. We all know that Norway is a very ecologically conscious country and that the question of going into North Sea oil was a controversial one and is still a highly political one.
But here we have a blow-out disaster. Everybody agrees it has to be expected and has to be regarded to some extent as inevitable, though most of us believe that the new and elaborate blow-out controls provide a much greater measure of safety, and it may be that many of them do. We have a situation in which the Minister closes down the Ekofisk field the moment he has seen it. He says: "You must not apply the modern chemical detergents" if that is what they are—"because they will do more harm than good." The Phillips Company, in desperation, brought out a complete new drilling rig near the point of the disaster ready to bore new pipes by way of relief, an operation which would have taken 40 days.
Were they really expecting, or preparing for, the possibility of this going on for 40 days? What would go on for 40 days? The noble Baroness said this general type of oil, which varies in the North Sea, tends to be highly inflammable. In articles in the Press it has been suggested that if you really get a spark lighting up a blow-out, a gush of oil pouring out at immense speed and power into the sea, the spark might—and I hope it is not true—cause a fire. Presumably the immense heat could melt some of the adjoining contents and could set light to the whole of the well being served by that platform. This was Bravo 14; there are 15 wells going down an immense distance serving that platform. It is almost impossible to visualise what a fire like that could do and how far it could spread.
My Lords, before this incident, I was one of those who thought—not professing to know much about it but having taken a considerable interest in accidents and the sacrifice of life—that, so far as the North Sea Oil operation was concerned, which appeared to have been conducted with very considerable ability, in spite of grave danger of deep-sea diving, the work of an old friend of ours, Professor J. B. S. Haldane, among others, had gone very far to minimise the probability of loss of life. The additional provisions

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for rescue, the use of such things as undersea television and so on, going right down to the bottom of the pipe, were all providing considerable safeguards. I was one of those who would certainly have said then, and would probably say now, that in the absence of some catastrophic and unnecessary disaster, which could not be prevented in any of the operations of life, the loss of life from North Sea operations was not likely to be nearly as much as from the operations of half a dozen asbestos factories. I was certainly one of those who would have said that, ecologically speaking, the damage to be done by the Liberian Navy, sailing 2,000 ton vessels near our coast—vessels which are incapable of being navigated with safety or with accuracy—is likely to be much more disastrous.
The noble Baroness, Lady White, said that the Ekofisk site is perhaps the most convenient for such a disaster to take place, because it is so situated that it does not threaten immediate damage to any coast—although the Norwegians may rather think they would have preferred a slightly different one—and, of course, the "Torrey Canyon" was pouring out immense quantities of very heavy, very viscous and highly damaging oil, 16 miles from the coast. But in fact, apart from this inflammability, most of the North Sea types of oil have some considerable advantages in this connection and, indeed, in the Claymore and Piper fields of the Occidental Oil Company which I visited, the viscosity of the North Sea oil is stated to be less than that of sea water. This, of course, can result in increased energy coming from the less viscous oil through the mud; but, generally speaking, it can be handled fairly easily.
My Lords, my only previous experience of oil-getting was at Maracaibo, and although that is immensely useful and immensely profitable, it is really a series of comparatively small derricks in what is almost an inland water. When I went to Claymore, we came down on a drilling rig —the Ocean Victory—a tiny spot, looking down from the helicopter. It looks very small until you get to it and then it turns out to be rather bigger than a 23-storey building with a considerable area and an immense degree of technical provisions for communications, with an office and a
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computer, which was then employing about 70 men with fairly ample accommodation.
I took some pains to check up as far as I could, with my limited knowledge, on the provisions. There were two blow-out containers, both sub-sea, because it was a drilling machine: one with a resistance up to 2,000 pounds per square inch and another with a resistance of 10,000 pounds per square inch. The figure of pressure quoted in the many, varying and different accounts of the Norwegian water explosion was, I think, 3,500. There is to be an investigation, and one hopes that more facts will come out. Once this is done, and once the Norwegian Government have taken this grave view of the situation and once they have, as the noble Lord said, as reported, come to the conclusion that this is a major disaster for Norway, and not only politically—well, one has got to have a look again.
There is the Occidental Company, the Thomson Company and the Getty Company—which have united to finance the Ocean Victory operation. The Ocean Victory was costing 50,000 dollars a day to run. It had been boring, I think, for two and a half years at the end of its stay, and made only two finds, one of which was regarded as a substantial prospect and the other is just about good enough. Fortunately, it was made good enough by the fact that it could be served by the same oil terminal.
The other strange and worrying thing was that they were prepared to build an immense "reaping" platform with 24 wells, I think; and they have laid down 137 miles—my Lords, I fear that I am taking up too much time—of tube. I ought, to do justice, say this. So far as Flotta is concerned, I saw the opening from a comfortable armchair at the Dorchester Hotel on film, with speeches and so on. It may be said that the provision of Flotta for the containing of 500,000-gallon tanks its their services, which will employ 100 Orcadians among the 160 workers, and so on, is good publicity.
All those things were fought by the Government; they were fought by the Ornithological Association; they were the result of long discussions. They have given, we are told, great satisfaction in Orkney. Their industries are being developed, and Orkney is to have its art

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gallery containing the famous pieces of the well-known Margaret Stuart, who has been living there for some years and has offered to give her pictures. Also, the legendary Mr. Arnold Hammer, who used to be a friend of Lenin, is building a theatre, and so on. It is good publicity. It is very convincing, too. I am quite sure that my noble friend will give all the information that he can.
What I meant was that they did not speculate about this or that. I have a set of illustrated booklets issued by Occidental. I have not been a friend in the past to big companies, and I am not a friend now. I do not know them from Adam, except in two senses. But the booklets are impressive. They show the construction, the siting of the end of the 30-inch pipe, with its immense capacity, the wells, the refinement and the provisions in every way for dealing with the ecological problems. It is an impressive document and they are entitled to the credit. Of course, this is a very well-financed operation.
I agree in every way, in view of the attitude of the Norwegian Government, in view of some of the descriptions that are given, in view of the allegation of a valve being fitted upside down—which I think is quite impossible—or a faulty blow-out container, that all of this is subject to argument in the various camps. We want a lot of information. But this operation has started and it will not be stopped, in view of the immense amount of capital now invested. What we can concentrate on doing is seeing that all possible steps are taken, and I am quite sure that my noble friend Lord Strabolgi will give assurances that that is being done.
8.53 p.m.
Lord STRABOLGI: My Lords, this is a very important matter, and I think that we have had a notable debate. I am very glad that my noble friend Lady White put down her Unstarred Question and I have listened with great interest to the speeches made, demonstrating as they do the concern we all feel about the actual effects of the Ekofisk blow-out, because this Question is about Ekofisk and its lessons and the potential problems that any future blow-out might cause.
Before dealing with the various points raised—and I am grateful to my noble friend Lady White for giving me notice of
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some of the questions that she would ask—I should like to make a few general points. It might help, first, if I tell the House what seems to have happened at Ekofisk Bravo which, as your Lordships know, is part of the Norwegian Ekofisk oilfield. Late on Friday evening, 22nd April, a routine operation on well maintenance went wrong, when the mud which was in the well started to flow. Immediate attempts to stem the flow were unsuccessful and, of course, a blow-out ensued. The cause of the blow-out has not yet been established with any degree of certainty. The Norwegian Government have announced the setting up of an independent judicial inquiry to establish the facts, and we all await the outcome.
Before describing what the Government are doing in the meantime, I should like to say in answer to the noble Lord, Lord Strathcona, whose very constructive speech I greatly welcome, that our own full report will depend upon the progress of the Norwegian inquiry, and we do not yet know when the results will be made available to us. Although the blow-out occurred on the Norwegian Continental Shelf, all North Sea States are, of course, involved in the effects of the pollution and concerned about the measures taken, both to minimise the pollution and to deal with the capping of the well. The Secretary of State for Energy flew to Norway and, as near as flying restrictions would allow, around the Ekofisk oilfield. My right honourable friend discussed with the Norwegian Minister of industry the steps being taken to control the well and the pollution, and he confirmed the offers of United Kingdom assistance.
My noble friend Lady White—rather surprisingly, I thought—asked in a rather dubious tone, if she will allow me to say so, how seriously the Government are taking this matter. On the other hand, was chided by the noble Lord, Lord Strathcona who mentioned the fact that my right honourable friend had immediately flown over to Norway. So that, between the two of them, I hope that I have managed to convince your Lordships that the Government take this incident very seriously indeed. I think that your Lordships' House has not had the benefit of the log which has been placed in the Library of another place and I will, if your Lordships wish, see that that is put

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in your Lordships' Library. Your Lordships will see the very instant action that was taken, showing how very seriously we take these matters.
Tribute has been paid, and rightly so, to Mr. Red Adair and his team from Redco, and I should like to join in this. The working conditions for those bravemen who took on the job of capping the well, having flown in at very short notice from Texas, were hazardous and uncomfortable. Hot oil was pouring out from the well and explosive gas concentrations were present. The job itself is difficult and the risks high. However, as we all know, Mr. Adair and his team were successful—happily for all of us concerned about the possibility of two or three months of continued oil pollution, if the capping had failed.
During the following week, Her Majesty's Government set up an interdepartmental study group to evaluate departmental responses to Ekofisk, and the implications for our national interests offshore, including fisheries. Of course, this is not the first time that this has been done, as I thought the noble Lord, Lord Strathcona, implied. A study group had been in existence for over a year looking at the oil pollution hazards to United Kingdom waters. The Pollution Hazard at Sea Exercise, which reported its findings in Pollution Paper No. 8 last August and the information on blow-outs, was based on United States experience. The study group just set up can now look at the real blow-out, and see what additional lessons are to be learned from what is in many ways rather a new field. The special group, set up after Ekofisk, completed its first task a week later when it published on 6th May a log of the responses by the various Departments concerned. This showed that the Departments involved reacted promptly and effectively, activating the necessary contingency plans and offering a wide range of help to the Norwegian Government.
The second part of the study group's task, to review our response to any incident, is still under way. My right honourable friend the Secretary of State for Energy has already had two meetings with the United Kingdom Offshore Operators' Association, resulting in the formation of joint industry/Government
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groups to examine, in particular, the following matters: first, the provision of fire-fighting and emergency vessels. The Ekofisk blow-out has focused attention on the need for capable vessels to provide a supply of water for fire-fighting or cooling purposes, as well as providing a working platform with suitable crane facilities for lifting heavy gear. In the United Kingdom sector, three operators provide vessels with monitors capable of cooling a platform, as was done on Ekofisk, and four more are now being provided. The working group will consider this issue in some detail and recommend the type of vessel and facilities required.
Then there is the question of drilling and production well control. The procedures commonly adopted for controlling oil wells will be reviewed to see whether a common practice needs to be set down and if improvements can be achieved. There is also the question of the oil spill clean-up. The major issue here is what role, if any, skimmers and booms have in assistance such as that planned in the United Kingdom, based on the use of dispersants. I shall have a little more to say later about dispersants versus the containment and recovery which was alluded to by my noble friend Lady White.
The bulk of the equipment deployed to clean up the oil released at Ekofisk consisted of booms and skimmers. The Norwegian authorities permitted the use of dispersants only in the immediate neighbourhood of the platform, to minimise the fire risk. Several skimmers with a claimed capacity of 8,000 tons a day were sent out to Ekofisk by the operators and the Norwegian Government. The operators were able to deploy only two at any one time. Very little oil was collected during the first few days when the skimmers were used. However, there were indications towards the latter end of the clean-up operation that significant amounts of oil were being collected. The improved performance is attributed to favourable weather and experience in operation. A total of 800 tons of oil was collected over a seven day period, and 1,100 tons were estimated to have been dispersed by the limited spraying activity. Once the well had been capped, the size of the main slick rapidly shrank. Some three days after the flow

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had ceased, the oil had spread to such a thin layer that the skimming operations were abandoned. Throughout the clean-up operation and afterwards the position of the slick was monitored by Norwegian ships and aircraft as well as by an American space satellite.
The Norwegians prefer the use of mechanical means, such as booms and skimmers, and at Ekofisk they tried out a number of pieces of equipment. The performance was not such as to convince our observers that the equipment was fully effective. It may be, however, that the use of a combination of a mechanical system, together with dispersants for the amount of oil and type of slick caused by a blow-out, might be successful. The Warren Spring Laboratory is currently carrying out a programme to evaluate these different methods. The Warren Spring vessel "Seaspring" carried out some promising trials with one such system in the Ekofisk spill. The results obtained with the equipment used and tested at Ekofisk will be closely examined by the groups assessing the requirements for dealing with any spill in United Kingdom waters.
The Government agree in principle that the removal of oil from the sea is to be preferred to dispersion of the oil by chemicals. However, a reliable containment and recovery system for the turbulent waters of the North Sea is yet to he proved. Hence the reliance on dispersion, both by the Department of Trade and the industry. Much is said about the toxicity of dispersant chemicals. Those in current use are much less toxic then those used at the time of the "Torrey Canyon" disaster, which has been referred to by several noble Lords today. Warren Spring have established by full-scale experiment that dilution of the chemicals into the water column is extremely rapid. Recently a new form of concentrate dispersant was developed which is dilutable in the ratio 1:10 with sea water at the time of application. The amount carried by a vessel of this type is therefore ten times as much as conventional dispersant and is, therefore, particularly attractive to operators at a great distance from the shore.
My noble friend Lady White asked a number of questions, and I think that at this point I should perhaps try to answer
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some of them. I will answer others later. My noble friend asked me first of all about the cost of Ekofisk. So far as it is known, the cost is about 10 million dollars. My noble friend also asked me about pipelines. The Department of Energy require that pipelines should be tested and inspected when laid and should be regularly inspected during their life. These include inspection by mini-submarine. Cathodic protection is applied to all pipelines and is monitored. World experience is that, provided this is done, the chances of leakage from pipelines are minimal. Even if a leak should occur, instrumentation on the pipeline would result in the pumping being stopped, and the amount leaked would be small.
My noble friend also raised the very interesting question of offshore installation communications. The position is that there are statutory requirements upon installations, under the Offshore Operational, Safety. Health and Welfare Regulations, and the Offshore Installations Emergency Procedures Regulations, to have appropriate communications with land, vessels and helicopters, and these regulations are enforced by the Petroleum Engineering Inspectorate of the Department of Energy. My noble friend also asked whether we have a guide to advise on treatment strategy to take into account. There is no universal guide. However, much of the information is readily available. The individual operators know the characteristics of their crude and the fishery interests around their platforms. NCC advice is also taken into account.
Many of the North Sea crudes are similar to Ekofisk. Warren Spring have carried out a number of sea trials with this crude and found that the spill from the blow-out behaved broadly as would have been expected from their trials. Further trials are planned with other crudes. The existence and availability of a viable clean-up method is regarded as an essential part of any oil spill contingency plan.
My noble friend also raised the question of superannuated tankers for use with pick-up equipment, but it appears to us that the principal problem to be overcome is the collection of oil from the surface of the sea rather than its treatment once it is aboard the ship. This is something that is being considered. Then my noble

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friend asked what measures the Government propose in order to improve the inspection of oil platforms. Inspection is one of the topics that will be looked at by the study group set up to learn the Ekofisk lessons. There are currently regular inspections by petroleum, mechanical, electrical and structural engineers and regular checks on the quality of the discharges and production and displacement of water.
I should like now to say something about the anticipated effects of a blowout on the environment and the steps that have been taken by the Government to assess what actually happened in the sea around Ekofisk. The principal effects were of course expected to be on fisheries, marine life, sea birds and, if the oil persisted on the surface of the sea, rocks and beaches. The marine organisms most at risk from spilled oil are those at, or very close to, the sea surface. In the Ekofisk area this means, essentially, the eggs and larvae of mackerel. The mackerel spawning starts about now and reaches its peak in July. However, the possibility of damage must be put in perspective; spawning takes place over a huge area and even if damaging concentrations of oil had persistently been discharged it would have affected only a small fraction of this area. As it is, because the slick has diminished, the overall effect on fisheries, compared with natural mortality and deaths resulting from fishing activities themselves, will be negligible. In relation to wild life, a number of factors prevented serious damage to sea birds and pollution of ecologically sensitive coasts, in particular: the small number of birds present in the area at the time; the weather conditions, which kept the oil in the central part of the North Sea, and the rapidity with which the oil evaporated and dispersed naturally.
If the oil had been of a heavier grade of a more persistent character, or had the incident involving Ekofisk oil occurred at another time of the year, for example, when young flightless auks, together with their moulting and flightless parents, were migrating across the open sea, oil left on the sea surface would undoubtedly have posed a serious threat and, untreated, could have led to serious bird mortality. The Nature Conservancy Council, who
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sent a task force to Norway, are studying the incident in depth to reassess the priorities required within programmes of research on sea bird ecology and to review the wild life contingency planning, particularly in relation to international co-operation.
During the week of the blow-out and the one following, three Government research vessels also went to the area. The two fisheries vessels, the "Correla" and the "Explorer", undertook a programme of sampling and fish collection in collaboration with two Norwegian vessels. The Warren Spring ship "Seaspring" went to study what happended to the slick and to try out a promising oil collection method. A Nature Conservancy Council ornithologist who had been lent by the Royal Society for the Protection of Birds was aboard "Seaspring" throughout and confirmed, as experts had predicted, that few birds would be affected on this occasion. Many samples were taken by each of the vessels and those samples are currently being analysed. I think it is too early to make firm statements but there are strong signs that the overall impact will be slight, due to the high rates of dissipation of oil through evaporation and the action of sea and weather.
My noble friend asked a question as to whether too little is known of bird habits while at sea. It is clear that there is a very detailed knowledge of the distribution of birds around our shores, and I know the great interest that my noble friend takes in these matters, while information on birds at sea is very sketchy. This information is necessary if the Nature Conservancy Council is adequately to advise on the threat to birds posed by a spill in a particular area, and I can assure my noble friend that this is being studied.
Much has been said about the cost of any incident. This point was mentioned by the noble Lord, Lord Strathcona and Mount Royal, the noble Earl, Lord Kimberley, and by my noble friend Lord Ritchie-Calder; and the question was asked: Who foots the bill? The operator would be liable for the clean-up costs and for any damage that may have resulted from the incident. Some of these costs may be covered by insurance; other operating costs incurred may not be and so will affect his liability. There is of course

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the question of corporation tax and whether that can be offset against the costs. These are important questions which are being considered by the Government, but I must stress that the initial responsibility is that of the operator. In fact it is written in his initial licence that he must take all steps to prevent damage to the environment and to the sea through any spill-outs of this kind. But, of course, as my noble friend Lord Ritchie-Calder has said, there is cooperation between the Government and the operators, and the Government are doing all they can to advise and help; but they require operators to submit contingency plans as soon as possible on what steps they wish to take and intend to take.
Lord STRATHCONA and MOUNT ROYAL: My Lords, may I pursue this for one moment with the noble Lord, because I think it is rather an important matter. As I understand it, he is saying that there is some doubt as to whether these costs would be deductible before paying corporation tax. That seems a very odd situation, because surely these are operating costs which would normally be taken before any tax liability would occur. He is really confirming the doubts which have been sown in some people's minds by Press reports. I do not think we can very well deal with this matter tonight, but I would be most grateful if the noble Lord could write to us, because I believe it is very important.
Lord STRABOLGI: My Lords, what I can say quite categorically is that the responsibility falls on the operators. It does not fall on the general Exchequer; it falls on the operators for any clean up operation. They, of course, will seek to cover themselves by insurance and will recover their costs in that way. Whether they will be able to offset this against tax is not something on which I should like to pronounce. All I can say, and all I did say earlier, was that all these matters were being considered between the Government and the operators. I cannot, I think, be fairer than that. But there is also, of course, the present compensation scheme drawn up and operated by the offshore industry, known as OPEL, which will eventually be replaced by an international convention concluded in December 1976.
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My noble friend Lady White asked me a number of questions. She asked what measures are contemplated to improve monitoring of offshore-related and ship-generated pollution incidents. Facilities for aerial surveillance are already an essential feature of the Department of Trade's plans, and will be a compulsory ingredient of operators' plans. Infra-red techniques would appear to offer promise for following oil spills. Warren Springs again are actively interested in this technique. The Government are co-operating in oil spill clean-up with the French authorities, who are also interested in this method of following slicks.
My noble friend also asked whether there is a central register of oil spills. The Department of Trade collect reports of slicks derived from coastguard reports, from military and civil ships and aircraft. With regard to the Bonn agreement of 1969, at a recent meeting in Hamburg of officials from the eight North Sea States it was established that all the States will regard the agreement as applying to spills from offshore installations as well as from ships. The timing of the next official meeting will be discussed when Ministers of the North Sea States meet in Oslo in June.
My noble friend also asked about collisions at sea. The vast majority of shipping will be subject to the 1972 Collision Regulations when they come into force. Observed violations of the traffic separation scheme in these international waters would be reported to the Flag State for appropriate action, whether or not that State is a party to the regulations.
My Lords, I think I can say in conclusion that the Ekofisk blow-out has provided a reminder that offshore oil production is a potentially dangerous business. While the human element remains, the possibility of further such incidents occurring cannot be eliminated. The importance of the training and supervision of the people on the spot, as has been mentioned in this debate, cannot be over-emphasised.
We can, I think, take encouragement from the fact that nobody was hurt in the evacuation operation and that the initial indications are that there will be little

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impact on the environment. But perhaps they were lucky this time; in fact, we were all lucky. The picture may not have been the same had there been a fire or had the incident occurred in an area where there were high concentrations of bird life.
The initial indications are that most of the mechanical clean-up equipment employed did not work well. The United Kingdom appears right at this stage to place its major emphasis on dispersion for oil spill clean-up, provided that the environmental interests are fully consulted on when to utilise this. The Secretary of State for Energy is taking all steps—and I stress all steps—to identify what further measures can be taken to prevent such an incident occurring on the United Kingdom Continental Shelf. He will examine, along with the Secretary of State for Trade and also, as has been announced, possibly with Mr. Red Adair—the world's greatest expert—and of course the industry, its capability to respond, should a blow-out nevertheless occur.

SPEAKER OF THE HOUSE
The LORD CHANCELLOR The LORD CHANCELLOR acquainted the House that Her Majesty had (by Commission) revoked certain Letters Patent and had appointed the Chairman of Committees for the time being, the Earl of Listowel, the Earl St. Aldwyn, the Lord Airedale, the Lord Douglas of Barloch, the Lord Strang, the Baroness Wootton of Abinger, the Viscount Dilhorne, the Lord Champion, the Earl of Shannon, the Lord Derwent, the Lord Henley, the Lord Gardiner, the Viscount Hood, the Lord Alport, the Lord Maybray-King, the Lord Hailsham of Saint Marylebone, the Baroness Llewelyn-Davies of Hastoe, the Lord Nugent of Guildford, the Lord Segal, the Baroness Tweedsmuir of Belhelvie, the Lord Amherst of Hackney, the Earl of Cathcart, the Lord Jacques, and the Lord Wigoder, Speakers of the House in the absence of the Lord Chancellor. The said Commission was read.
House adjourned at twenty minutes past nine o'clock.