Sitting of 14 June 1978

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  COMMONS REGISTRATION (CARDIGANSHIRE) BILL
  Lords amendments agreed to.
  CHRIST CHURCH WOBURN SQUARE AND SAINT MATTHEW OAKLEY SQUARE BILL [Lords]
  As amended, considered; to be read the Third time.
ORAL ANSWERS TO QUESTIONS
  ENVIRONMENT

    Inner Urban Areas
    Mr. Silvesterasked the Secretary of State for the Environment what advantages he intends for those city dwellers living in the 14 partnership areas which will be unavailable to those living in the 15 programme districts or the recently announced 14 designated districts and London boroughs.
    Mr. Steenasked the Secretary of State for the Environment what advantages he intends for those city dwellers living in the 14 partnership areas which will be unavailable to those living in the 15 programme districts or the recently announced 14 designated districts and London boroughs.
    The Secretary of State for the Environment (Mr. Peter Shore): All the authorities—partnership, programme, and designated districts—will benefit from Clauses 2, 3, 4, 5 and 11 of the Inner Urban Areas Bill. The 15 programme authorities will between them receive £25 million a year for three years from the urban
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    programme. The seven partnership areas —where the problems of urban dereliction are greater in scale and intensity—will receive additional powers under Clauses 8, 9 and 10 of the Bill, industrial development certificate preference over other areas in the same region for those outside assisted areas, and an annual allocation of £66 million per annum for three years from the urban programme, related to a programme agreed between central and local governent through the partnership committee. Central Government's main programmes are also being adjusted to reflect the new priority being given to tackling inner city problems particularly for partnership and programme authorities.
    Mr. Silvester: Does the Minister not agree that the growing complexity of the various powers, the extension of towns and the fact that there is, in many of these areas, a proliferation of committee and bureaucratic work are making many people doubt whether this scheme will ever produce anything on the ground? Will he say something about progress?
    Mr. Shore: There is far less complexity in the minds of the district and county councils which are the recipients of the powers than in the minds of some hon. Members. We have announced a number of decisions and people have tended to become a little confused about them. I note in particular the reference in the Question to "14 partnership areas" when, of course, there are in fact only seven. I do not see any reason why we should not clear these matters up in the House, and I do not accept that there has been any proliferation of bureaucracy in the partnership arrangements.
    Mr. Steen: As Government policy is to bring back business to the inner city areas and to build factories on some of the vacant areas and derelict sites that abound in those areas, can the Minister explain how the Government can announce the granting of finance for building a new Lucas factory on the edge of Liverpool, on a green field site in Huyton, which is in total contradiction to the partnership aims and objectives, and flies in the face of the provisions of the Inner Urban Areas Bill?
    Mr. Shore: I do not necessarily accept that this is in total contradiction. The hon. Member is entirely correct in saying

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    that we are trying to give an impetus to development in inner city partnership areas, particularly development areas, such as Merseyside, or special development areas. But it would be wrong—although we must look at particular cases —to say that new developments of factories should not take place in other parts of the development area itself.
    Mr. Christopher Price: Is my right hon. Friend aware that much as the London borough of Lewisham welcomes the Inner Urban Areas Bill it believes that the proof of the pudding will be in the eating? Is the Minister willing to ensure that his Department will be very flexible and particularly speedy in the operation of this Bill, so that, if a situation arises in which it is necessary at very short notice to save employment, his officials will be able to move at the necessary speed so that employment can be saved before it is too late?
    Mr. Shore: I accept what my hon. Friend said. We had the first partnership meeting in any part of the country only as recently as last October. In that period the authorities have themselves allocated the money that we have allocated to particular projects, running into many tens of millions of pounds, which is actually being spent now. There has been no loss of urgency or speed on our part. The Bill to which my hon. Friend has referred is in another place. As soon as it receives Royal Assent we shall use its powers and make the designations with all possible speed.
    Mr. Alison: Does the right hon. Gentleman remember telling the House on 9th February that the 15 programme areas —the second XI—were to get £25 million starting in 1979 over a period of three years? Will the £25 million now have to be shared by the third XI, the 14 extra designated areas, which he has introduced? What does he intend to do about the fact that the whole of the enhanced urban programme—the £66 million plus the £25 million—will be more than accounted for by the extra money that will have to be found by local authorities as a result of the 2½ per cent. surcharge on national insurance?
    Mr. Shore: I think the last point made by the hon. Gentleman was a little tortured, because the increase in local authority costs will be treated as eligible
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    expenditure. We shall make decisions on that matter at the time of the increase order in the ordinary course of events later in the summer. The designated areas under the Inner Urban Areas Bill will be eligible for that part of the urban area programme that is still uncommitted. The House should bear in mind that the whole programme has been increased from the figure of £30 million which we inherited from the Conservatives to £125 million per annum as from next April.
    Mr. Joseph Dean: How are my right hon. Friend's negotiations with Leeds progressing? Is he aware that misgivings are being expressed by voluntary associations in the area that their submissions have been completely ignored? Whether or not he approves the schemes, will he give an undertaking to examine them closely and ensure that there is no overindulgence by the present political leaders of the city towards the areas which they represent?
    Mr. Shore: We are in touch with all the programme authorities. There is not the same ministerial input into those programmes as there is in the seven partnership areas. Nevertheless, I shall consider my hon. Friend's comments. I am sure that his remarks will be brought to the attention of the leaders of the Leeds City Council. All programme authorities need to extend their contacts with the voluntary bodies in their areas if they are to have effective inner city programmes.

    Sports Council
    Mr. Crawfordasked the Secretary of State for the Environment when he will next meet the chairman of the Sports Council.
    The Minister of State, Department of the Environment (Mr. Denis Howell): I shall keep in close touch with the new chairman, through regular informal meetings, as I have done with his predecessors.
    Mr. Crawford: Will the Minister do everything in his power to emphasise to the chairman of the Sports Council that, in turn, he should do everything in his power to ensure that FIFA does not exclude Scotland from future World Cup competitions just because Scotland does not yet have its own sovereign Parliament?
    Mr. Howell: The fact that this matter has been raised by the hon. Gentleman and his hon. Friends has not been very helpful. When I was recently in the Argentine and spoke to FIFA officials, I found on their part a disposition to abandon their previous attitude on this matter. I encouraged them in that direction, and this means that the home countries will continue to compete separately.
    Mr. Buchan: In considering future training programmes for footballers or others, will my right hon. Friend consider including some of our sporting journalists, who, having for 12 months lauded a team, found the day afterwards that astonishingly it seemed to be the wrong team? Would not a course in constructive criticism before the event have been as useful as the continual practice of destructive criticism after the event? Does my right hon. Friend agree that in political as well as sporting affairs the left wing is very important?
    Mr. Howell: Wingers of both sorts are important in a football team. I agree with my hon. Friend; I found that the depressive effect of the feed-back from the wives of footballers on what they read in our newspapers was not helpful to the Scottish players.
    Mr. Alexander Fletcher: Is the Minister aware that the subject of football is totally devolved? In view of the Scottish team's rather poor performance in the Argentine, does he agree that devolution is not such a good idea after all?
    Mr. Howell: I am not sure where the logic of that argument takes us, since most of the members of the Scottish football team play for English football clubs.
    Mr. James Johnson: Has the Minister at his meetings discussed the position of the amateur Rugby League game and its position in relation to Rugby Union?
    Mr. Howell: I am glad to say that the new chairman of the Sports Council is a well-known Rugby Union international. He is getting on extremely well and is very acceptable to the Rugby League. I hope that these matters will be allowed to take their time. I am sure that satisfactory results will emerge.
    Mr. Monro: I welcome the chairman of the new Sports Council in his new
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    post. The Minister has just announced the new full grant for the Council. Will he have discussions with the chairman to see whether it is possible in practical terms to plan and construct new facilities within the 10-month remaining period of the grant, and will he consider having discussions with the Treasury about a rollover period?
    Mr. Howell: This is a very difficult problem, but as it is intended that most of the additional £2 million is to be spent in small sums, mainly for the employment of specialised sports people and footballers to whom ordinary people might well respond, I do not think that the difficulty suggested by the hon. Gentleman will arise. I shall continue to examine the matter and if necessary I shall talk to the Treasury.

    Sheffield and South Yorkshire Navigation
    Mr. Hardyasked the Secretary of State for the Environment if he will now announce his decision in regard to the proposed improvement of the Sheffield and South Yorkshire Navigation.
    Mr. Edwin Wainwrightasked the Secretary of State for the Environment, in the light of the fact that Yorkshire County Council has decided to contribute £1 million for the improvement scheme for the Sheffield and South Yorkshire Waterways, if he will now give a firm decision in full support of this navigation scheme.
    Mr. Shore: I hope to announce my decision shortly.
    Mr. Hardy: Does my right hon. Friend accept that the delay in this matter has already been outrageous; that seasons rather than weeks have now elapsed since he met the united interests of South Yorkshire; and that the environmental and economic needs of our area are such that a favourable decision is needed without further delay?
    Mr. Shore: I understand my hon. Friend's desire and, indeed, impatience to have as quick a decision as possible, but I wish to point out that I met the deputation from South Yorkshire County Council on 2nd February. Arising out of that meeting there were a number of further questions on which we needed to

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    be clear. We have been in touch with the authority since and I hope soon to be able to make my decision.
    Mr. Wainwright: Does my right hon. Friend realise that it is about three years since the Minister with responsibilities for sport came to Rotherham and gave this scheme his wholehearted support? Is he aware that we thought the influence of his right hon. Friend on the Secretary of State was greater than it is? Is he further aware that this scheme has been discussed for a long time and that Yorkshire seems to have been very much neglected—not just by my right hon. Friend's Department but by other Departments? Is this taking place because we in Yorkshire are so wholeheartedly in support of the Government that we are being ignored? If so, let me warn my right hon. Friend that we are reaching the end of our tether and that if he does not do something in our favour we shall have to fight on?
    Mr. Shore: I am aware that my hon. Friend has taken a great interest in this matter, as have many people in South Yorkshire. I am also aware that this matter has been discussed for a very long time and that proposals for such a canal have been put to my predecessors and turned down. I am telling the House that I am taking a further look at the matter. We are trying to obtain the additional necessary information about the scheme, and I still hope to make a decision shortly.
    Mr. Durant: Is the right hon. Gentleman aware that this scheme has implications even beyond South Yorkshire? If it proves to be a success, the scheme will have implications for other areas where such schemes might be forthcoming to implement the greater use of the inland waterways.
    Mr. Shore: That is a point very much in my mind. As a country we have not thought through sufficiently the possible future use of our national waterways.
    Mr. Woodall: Is my right hon. Friend aware that the improvement of the canal is necessary as one of the steps towards the economic revival of the southern part of Yorkshire? Is he aware that some parts of the area have the highest rates of unemployment in the country and that
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    improvement of the canal would greatly help its economic prospects?
    Mr. Shore: I am well aware of the problems of the area, which I visited only a few months ago. I accept that a successful extension of the canal system would give a welcome economic boost and a psychological stimulus to the area.
    Mr. Woodall: Then let us have it.

    Rent Acts (Review)
    Mr. Stephen Rossasked the Secretary of State for the Environment whether he anticipates publishing his review of the Rent Acts before the Summer Adjournment.
    Mr. Bodyasked the Secretary of State for the Environment when he expects to publish the results of the Government's review of the operation of the Rent Acts.
    Mr. Shore: I have not yet reached conclusions on this review. I shall, of course, report to the House as soon as I can do so.
    Mr. Ross: The Secretary of State will be well aware that that is a profoundly disappointing answer. Is he aware of the situation in the provinces, where there is urgent need to experiment in loosening some of the controls of the Rent Acts to bring some of the property now standing empty into beneficial use? Contrary to that, is he aware of the position in Inner London, where statutory tenants and long-leaseholders are facing equal difficulty, and where there may be some need for increased control? Surely these matters cannot be left any longer, especially now that the right hon. Gentleman has decided to carry out rating revaluation on a rental basis.
    Mr. Shore: As the hon. Gentleman knows—I have had the opportunity of exchanges with him—this is an especially complex matter. I agree that there are different situations in different types of private rented property, and even in different areas. We have received a large number of responses to the major questionnaire that we issued. There are many differences of view in the submissions, which we shall have to think through and of which we shall have to take account.
    Mr. Douglas-Mann: Does my right hon. Friend agree that while the major strategy of the Rent Acts is nearly right, a number of minor defects have appeared, many of them being virtually drafting defects? I refer to the second fixed term letting anomaly, in terms of private residential tenants and the abuse of licences and holiday lettings by many landlords, which have greatly reduced the beneficial effects of the Acts. Does my right hon. Friend agree that regardless of the full review minimum measures should be taken to remedy the minor defects and to introduce minor changes? Will he at least consider whether discussions should be held with important and interested parties to decide what changes may be made quickly?
    Mr. Shore: As my hon. Friend well knows from his experience in these matters, these are extremely technical and complex areas. The number of loopholes, or whatever term one might use, to which my hon. Friend referred are extremely difficult to put right unless it is done within the framework of a general review. However, I accept his welcome opening remark that the major strategy of the Rent Acts is a correct one and should be sustained.
    Mr. Rossi: Will the Secretary of State give the House a firm date, preferably before the House rises for the Summer Recess, for the announcement of his conclusions? Is he aware of the considerable hardship that has been caused and is being caused owing to the drying up of the supply of rented accommodation because of the Rent Acts? Is it his intention to ensure the death of the private rented sector, as was the Labour Party's evidence in connection with the rent review? As a consequence, does he feel that the longer he delays taking remedial action the more likely he is to bring about the end of the private rented sector?
    Mr. Shore: I cannot give the hon. Gentleman a firm date but I shall take into account what he says about the 'Summer Recess, as I have tried to take account of that factor in the questions that others have put to me. I think that the House will agree, on looking back over a long period, that it is easy to get Rent Act legislation wrong. I remind (the hon. Gentleman that the largest and, in a sense, the most wrong of all Rent
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    Acts was the 1957 Act. It was designed to sustain the private rented sector but it accelerated its decline on a massive scale. That was the effect as people moved into owner-occupation, quite apart from the effects on tenants.
    Mr. Frank Allaun: Is it not a fact that the number of families made homeless through eviction since the Act has fallen sharply? Secondly, far from emasculating the Act as most Conservative Members want, should it not be greatly strengthened to block the loophole recently brought to light in a most exceptional legal case, where security of tenure and rent control were avoided by a trick in a lease in which the landlord required the right to sleep alongside his tenant in a one-room flat?
    Mr. Shore: My earlier replies were addressed to the whole complex of Rent Acts. My hon. Friend rightly reminds the House of the most recent Rent Act, the 1974 Act. There is no doubt that the number of evictions of those previously in furnished tenancies has greatly diminished. To that extent, that effect is greatly to be welcomed. However, we have to try to get the balance right. There is the legitimate and proper interest of tenants, which the House, as in the past, has to safeguard and defend. We must also consider the workings of the Act and how we can achieve a better balance between landlord and tenant. We should try to achieve that.
    Mr. Speaker: Order. We are running very slowly today.

    Rents (Public Housing Sector)
    Mr. Hal Millerasked the Secretary of State for the Environment when he envisages that new town and council house rents will be raised to cover 50 per cent. of current public housing costs.
    The Minister for Housing and Construction (Mr. Reginald Freeson): The Government's existing rent policy and the proposals in the Green Paper are not related to any particular percentage. Gross rents already meet over 50 per cent. of public housing costs.
    Mr. Miller: How is the right hon. Gentleman to get out of the dilemma that if rents are not raised the taxpayer and the ratepayer will not go on footing the

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    bill indefinitely, as his predecessor recognised? Alternatively, if he does increase rents the tenants will not be able to afford them. Is not the way out of the dilemma to sell council houses, especially to those living in older ones on pooled rents?
    Mr. Freeson: I have given the answer to the hon. Gentleman that was implicit in his Question—namely, that at present levels the "over 50 per cent. of costs" that he was inquiring after is already covered. Secondly, I find his logic rather tortuous. He suggested that if rents are increased further to reduce the burden on ratepayers and taxpayers it would not be possible for tenants to afford them, yet his answer is to sell them at, no doubt, a higher cost per week, month or year for the persons concerned.
    Mr. Loyden: Does my right hon. Friend agree that one of the major problems facing local authorities in terms of housing revenue accounts is not the relationship between the historical value of the properties and the rents being asked for them today but increasing interest charges that are placing a heavy burden on authorities? Does he agree that those charges are charges to which tenants contribute and are not something that is beneficial to tenants? In other words, they are paying the landlords over 60 years for properties built for about one-twentieth of their present cost.
    Mr. Freeson: It is true that interest costs on local housing revenue accounts provide a high proportion of the costs that have to be covered by rents. It is also true that as and when they vary up and down they have a marked impact on the level of rate support in contributions to housing revenue accounts and Exchequer support. However, interest charges are covered by all people who borrow, not merely those who borrow to provide rented accommodation. Owner-occupiers are included, too. For a large proportion of local authority tenants the levels of rent that are charged go more to reduce the burden of costs on recently provided dwellings at a higher cost than to pay for interest charges, on any analysis.
    Mr. Budgen: Will the Minister confirm that the last time the element of indiscriminate subsidy to council house tenants was increased in a big way was in 1974, when the Government decided to
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    bribe council house tenants with the taxpayers' money to win the October 1974 election? Has he any proposals for similar bribes before the next General Election?
    Mr. Freeson: As a matter of fact, the Housing Act 1974 provided for considerable assistance in the provision of increased housing association dwellings and considerably increased assistance by way of improvement grants. The hon. Gentleman may be referring to the Housing Rents and Subsidies Act 1975, which provided a simpler structure to subsidise capital investment to boost the provision of council housing, which had dropped markedly under the Conservative Government. I have no reason to be ashamed of the results of that Act.
    Miss Maynard: To come back to the interest question, does the Minister agree that although private owners pay interest they do not pay it over a 60-year period? Will he confirm that people who are buying houses privately get almost as much, if not as much, in tax relief on their mortgages and that it is not only council house tenants who get public money but private industry, at the rate of about £11 million a day?
    Mr. Freeson: I shall confine my reply to housing. It is difficult to make absolute comparisons between general financial assistance to the private and public sectors, but, on balance, the kind of subsidy that is provided to owner-occupiers is, on the whole, as great as, and at times in history has been greater than, that which is provided to local authority and housing association tenants.
    Mr. Heseltine: If, as the Minister suggests, the proportion of rents to costs is already over 50 per cent., why did the Government's 1976 White Paper on the subject assume that it was possible to achieve economies of £180 million by moving to that target?
    Mr. Freeson: First, it did not do so. In any case, the figures provided at that time, to which constant reference has been made and no doubt gave rise to the original Question, were not target figures. They were forecasts which were based on the likelihood of certain interest rates being charged over a given run of months and years. That is always difficult to forecast. A change in interest rates can

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    have a marked impact on the level of aggregate subsidy being paid. That has been the major cause of change.

    All-Electric Council Houses
    Mr. Beithasked the Secretary of State for the Environment when he expects to publish advice to local authorities from the working party which is considering remedial measures to deal with the problems of all-electric council houses.
    The Under-Secretary of State for the Environment (Mr. Ernest Armstrong): The work on this subject is nearing completion and a domestic energy note will be published as soon as possible.
    Mr. Beith: I thank the Minister for that reply and for his interest in this matter. Does he recognise how important it is to give tenants on estates which have had real problems an alternative to electricity as a heating fuel? Will he try to ensure that local authorities get encouragement and help to do just that?
    Mr. Armstrong: I am certainly aware of the seriousness of the problem. The working party is considering the whole range of options, choice of fuel and so on related to the high cost, which is one of the causes of the serious position of many tenants now, particularly those in houses centrally heated by electricity.
    Mrs. Bain: May we expect to have legislation brought forward on this matter before the winter? As the Minister is aware, the problem of condensation is much higher during the autumn and winter months, and houses with electric central heating seem to be more deeply affected than houses with other forms of central heating. Will the Minister pay special attention to the problems of houses which have electric ceiling heating? Because of the high cost involved, many tenants cannot afford to meet the bills and find themselves living in intolerable circumstances.
    Mr. Armstrong: The hon. Lady has highlighted a growing problem with regard to ceiling heating. Legislation is not required. The working party hopes to publish its advice and proposals before the winter.
    Mr. Ashton: Is my hon. Friend aware that when council houses were first built
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    they had chimneys and many had coinin-the-slot electricity meters? There seemed then to be far fewer cases of hypothermia and cut-offs. Would it be asking too much to return to the original good idea of burning coal in view of the stocks that we have and to ask the Electricity Council to put in more slot meters?
    Mr. Armstrong: As one who comes from the Durham coalfield, I have considerable sympathy with what my hon. Friend said. That point has been made to the working party. The heating system in public sector houses is a matter for local authorities, but we want to give as much choice as possible. That matter will be considered when we issue advice.
    Mr. Rossi: Does the Minister agree that ceiling heating was the consequence of cost yardsticks? The capital cost of installing ceiling heating was much lower than for other kinds of heating. Therefore, the tenants, in effect, through the exaggerated bills that they are now having to pay, are subsidising those false capital economies. Do the Government recognise that they have a responsibility to help tenants in those instances?
    Mr. Armstrong: We share responsibility with local authorities on all housing matters, and we would not try to run away from it. As the hon. Gentleman knows, I should not blame the yardstick. The yardstick is of long practice. We are anxious to maintain standards. That is important. The Green Paper indicated that we are also considering whether we can disengage from the detailed financial control that the yardstick envisaged. The difficulty was that installation was comparatively cheap. But we constantly remind authorities that running costs are even more important than the original costs of installation.

    Rented Accommodation
    Mr. Sainsburyasked the Secretary of State for the Environment how much the number of private rented properties to let has diminished since the Rent Act 1974 came into force.
    Mr. Durantasked the Secretary of State for the Environment how much the number of private rented properties to let has diminished since the Rent Act 1974 came into force.
    Mr. Freeson: From current estimates, there appears to have been no significant change since 1974 in the rate of decline in private lettings. We shall have a better idea of the decline since 1971 when we have the results from the national dwelling and housing survey later this year.
    Mr. Sainsbury: Does the Minister agree that his reply shows that there is a continuing decline? Does he accept that, whatever may have happened to the level of evictions, the availability of accommodation has continued to decline drastically, to the disadvantage of all those who are looking for homes, particularly the young? Does he further agree that, unless something can be done to make better use of our available housing stock and keep it in good condition, particularly in the inner city areas, he will not succeed in his policy for inner urban areas?
    Mr. Freeson: I take the last point first. I accept that there is a great need to improve the physical condition of the amenities of large numbers of rented properties, and, indeed, some owner-occupied houses, particularly in, but not confined to, inner areas.
    On the central point of the supplementary question, the private rented sector has been declining steadily for at least half a century. For many years it has been declining at about 100,000 or more per year. The biggest single decrease, as has been stated by my right hon. Friend, occurred in the wake of the 1957 Act. The rate of decrease per year almost doubled.
    Although over many years there has been a major decrease in the size of the private rented sector, broadly speaking the total number of rented dwellings is the same today as it was 30 years ago. It is in the region of about 8 million. The difference is that most of them are owned and provided by local authorities.
    Mr. Durant: Despite the Minister's protestations on this matter, does he accept that in areas, such as Reading, which are attractive areas for people to come and work in there is a desperate shortage of accommodation for single persons and for students? Will he, in his rent review, look at short-term leasing, because it could be (ne of the cures to this problem?
    Mr. Freeson: The question of short-hold tenancies or lettings has been raised on more than one occasion in the last year or two years in the House and elsewhere. The general view that we have expressed ahead of any final conclusions that we may reach on the Rent Act review is that, as at present and as previously postulated, such ideas would undermine the whole concept of security of tenure generally and, therefore, could not be accepted.
    Mr. Ovenden: Does my right hon. Friend accept that the real problem with the Rent Act is not its harshness but its inadequacy to protect tenants and their right to security of tenure? Does he agree that the recent judgment in Somma v. Hazelhurst, together with the growth of agencies dedicated to the evasion of the Rent Act, makes amending legislation to protect tenants far too important to await the outcome of the review body's report?
    Mr. Freeson: I cannot usefully add to what has been stated by my right hon. Friend in answer to a previous Question. I urge my hon. Friend not to overstate the position. If it were true that the Rent Acts had not served their purpose in establishing security of tenure, there would be urgency. Loopholes have been established recently in certain court cases which have brought certain aspects of the legislative drafting into question, but that does not alter the fact that in the last 10 years or more since 1965 there has been security of tenure. That has benefited hundreds of thousands of families. We intend that it should continue to do so.
    Mr. Costain: Will the Minister come out of cloud-cuckoo land? Does he realise that his enthusiasm for security of tenure is causing thousands of houses to be left empty? Will he answer a simple question? Why is it that once upon a time houses for rent were owned by pension funds, including trade union pension funds, but pension funds are now buying antiques instead of providing houses for the working class?
    Mr. Freeson: I shall not enter into that argument. I cannot answer in one sentence the first part of the question about the original source of private rented accommodation. These questions lead me to ask Opposition Members on the

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    Front and Back Benches whether it is the intention of the Conservative Party to abolish security of tenure. Until now, at successive General Elections they have issued statements denying any such intention. Perhaps we can be told what their intention is.
    Mr. Ronald Atkins: Is it not true that the decline in the private rented sector has occurred since the First World War, when it was decided that if we were to have houses fit for people—let alone heroes—to live in they would have to be Government-assisted by helping with mortgages and subsidising the council sector? Is it not true that the Labour Party has done this consistently in order to improve standards?
    Mr. Freeson: My hon. Friend is right. That is what gave rise to the information that I provided earlier. There are today about 8 million rented dwellings. There were about 8 million rented dwellings 30 or more years ago. The bulk of them today are provided to good standards by the local authorities. In earlier days the bulk of them were provided by the private sector to bad standards.
    Mr. Heseltine: Instead of throwing spurious charges at the Opposition Benches, the Minister would do better to answer the question which has been put to him repeatedly: when will he show real concern for the 750,000 empty houses in which people could now be living if he published the review of the Rent Acts, which are a major cause of the problem?
    Mr. Freeson: I do not accept that the Rent Acts are a cause of the problem. More action has been taken under the sponsorship of this Government to tackle the problem of empty properties in the stress areas than was ever taken when the Conservatives were in office. I have made no spurious charges. I asked a simple question. Is it the Conservative Party's intention to abolish security of tenure for tenants?

    Building Societies Association
    Mr. McCrindleasked the Secretary of State for the Environment when he last met the leaders of the Building Societies Association.
    Mr. Newtonasked the Secretary of State for the Environment what recent
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    consultations he has had with the Building Societies Association.
    Mr. Shore: I met the chairman and deputy chairman of the Building Societies Association on Thursday 8th June.
    Mr. McCrindle: Is it not ironic that as Government policy permits the phasing out of the request to the building societies to reduce their lending to first-time buyers and others, the same people will now be subject to an increase of between £5 and £10 a month on the average mortgage as a result of the defects in Government policy in another sphere?
    Mr. Shore: Of course, I regret the increases in mortgage rates. The hon. Member is right. The effect on the average £10,000 mortgage—which is roughly the sum that people were taking out in April this year—for first-time buyers is about £5 a month net of tax. The hon. Member will agree that if building society rates were at the level at which we inherited them from the Conservatives the increase that first-time buyers would have to pay would be not £5 a month but £10.
    Mr. Grocott: Was the recent increase in the mortgage rate in the public interest? If it was not, will my right hon. Friend tell the House what powers he requires to ensure that the Building Societies Association acts in the public interest?
    Mr. Shore: The public interest in relation to building societies and interest rates cannot easily be defined. There are at least two or three major considerations which must be balanced. First, and obviously, everyone is anxious to have the lowest possible lending rate. Secondly, we have a strong interest in seeing that there is an adequate supply of building society money so that would-be owner-occupiers can receive the mortgage money that they need. Thirdly, we must ensure that the money market is not swamped with building society money. If it were there would be a house price explosion of the kind that we experienced when we had a Conservative Government.
    Mr. MacKay: Does the Secretary of State appreciate that his intervention which led to the drying up of mortgage funds was completely counter-productive? Does he agree that it increased prices

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    considerably and caused suffering to those who wanted a second mortgage? In the interests of house buyers will he guarantee the building industry and the public that there will be no further Government interference in an area about which they know absolutely nothing?
    Mr. Shore: I find that question extraordinary. I assume that the hon. Member was referring to the time when, three or four months ago, I asked the building societies to look at the pace and level of their lending because I was anxious about the sudden escalation in house prices. I asked them, and they agreed, to reduce the rate of lending. Had I not asked them to reduce the rate of lending, I can assume only that they would have less money today than they have and that the shortage would be greater.
    Mr. Stoddart: Is my right hon. Friend aware that the composite rate of tax charged to the building societies will fall significantly this year, bringing them a substantial windfall? Under those circumstances, does he not believe that the increase in the mortgage lending rate of 1¼ per cent. is exorbitant? Will he see the building societies again and ask them to give the benefit of their privileged tax position to house buyers and borrowers?
    Mr. Shore: I am aware of the point about the composite rate, but I am also conscious, as the House has to be, of the competitiveness of other claimants on the savings of the country. We wish to maintain a situation in which we do not have a famine of mortgage money. There is a difficult judgment to be made about precisely what is the right rate at any moment.
    Mr. Heseltine: When the Secretary of State saw the building societies' leaders, did he not agree with them that they had no choice but to put up the interest rates in the way that they did? They are forced to compete with the rates which the Government are paying for the vast excesses in borrowing in which the Government are indulging and which are forcing up interest rates throughout the whole economy. Did he also tell them that the problems of the building societies are symptomatic of the declining confidence in the Government's overall economic policies, which have led to an increase not only in building society rates but, bank and other rates?
    Mr. Shore: I think that later today we shall hear a rather different version of recent events in the economy than that put forward so briefly and inaccurately by the hon. Member for Henley (Mr. Heseltine). I believe that when the minimum lending rate went up, as it did on Thursday, some increase in the building society rate was almost impossible to avoid. Nevertheless, the extent of the increase is a matter for considerable discussion and one upon which difficult judgments have to be made.

    Rent Allowances
    Mr. Jesselasked the Secretary of State for the Environment what measures he intends to take in order to encourage the take-up of rent allowances.
    Mr. Armstrong: In addition to the existing measures of promotion by central and local government, which have produced a steady and substantial rise in take-up over the last four years, I have commissioned new studies and am preparing further guidance to local authorities.
    Mr. Jessel: As the take-up rate for rent allowance is only about 30 per cent. still, and as the private rented sector has a far larger proportion of poor and old people relative to other sectors of housing, does not this mean that a lot of people are suffering hardship who are unaware of their rights to rent allowances? Why are the Government so slack about doing something energetic to inform tnese people of their rights?
    Mr. Armstrong: The hon. Member is out of date about the take-up. In the past two years, ending April 1977, there was a rise of between 30 per cent. and 35 per cent to 50 per cent. and 55 per cent. in the unfurnished sector. We are glad about that, but we are far from satisfied. We issue a leaflet each year and I have commissioned a study to discover why people are not applying for their entitlement to rent allowances.
    Mr. Sainsbury: Does the Minister agree that the existence of a scheme of rent allowances makes it seem illogical to hold down so severely the level of rents in the private rented sector, which has the inevitable effect of discouraging a valuable supply of homes?
    Mr. Armstrong: That matter is being considered in the Rent Act review.
    Mr. Loyden: Will my hon. Friend consider the confusion that exists among many tenants about the difference between a rent rebate from a local authority and a rent allowance from the DHSS? Is he aware that in many cases one bestows an advantage compared with the other? Will he see what can be done, so that a tenant is properly informed either of the advantage of a rebate or the advantage of a DHSS allowance?
    Mr. Armstrong: That is a difficult matter. We find that tenants are confused, which is why I have commissioned more research to find out whether we can simplify matters.

    Local Authorities (Contracts)
    Mr. Tebbitasked the Secretary of State for the Environment if he now expects to be able to give any advice to local authorities concerning the blacklisting of companies which have breached phase 3 of the Government's pay policy, on the lines of the circulars which he issued concerning phases 1 and 2 of the policy, before the end of phase 3.
    Mr. Shore: New clauses in Government contracts were introduced in April. I am still considering the question of advice to local authorities, following up that given in circulars 123/75 and 103/76.
    Mr. Tebbit: Is the right hon. Gentleman not aware that he has been telling me that for months and that there are now only a few weeks left to the current pay round in which he has time to issue advice? Has he not been advised that councils which incurred needless extra expenditure through refusing the most advantageous tender, merely to comply with a Government policy which lacks the force of law, would risk a surcharge of their councillors for that offence? Is not that why he has failed to issue a circular so far?
    Mr. Shore: No. The hon. Gentleman is right to say that we are coming towards the end of the current pay year—that is a perfectly legitimate point to make—but there has been a long series of negotiations with both sides of industry. The Government did not make clear or decide about their own clauses in contracts between Government Depart-
    996
    ments and agencies and the building industry until, I think, the end of March and the beginning of April. So there has not been all that much time since then. There is something in the further point that the hon. Gentleman made. It would be for a council to decide whether its actions could be justified if they were challenged by a district auditor or in a court of law. Since the whole purpose of pay policy is to achieve what we consider to be a major policy in the national interest, I should be most surprised if local authorities were to get into any difficulty on that account.
    Mr. Molloy: Is my right hon. Friend aware that a much more serious issue affects the London borough of Ealing through the activity of the council? Since we have had the new Conservative council there has been the cancellation of large council housing estates and swimming pools, which had been designed and for which the contracts had been signed and building firms engaged. Compensation is to be paid, but the council is to deny people these amenities and will make its contribution to rising unemployment.
    Mr. Shore: I know very well the misfortune that Ealing suffered in the May elections, but I was not aware of the matters raised by my hon. Friend. If he would like to give me further details I should be glad to receive them.
    Mr. Rossi: Is it the Government's policy to set up a public procurement agency for the co-ordination of the laying out of contracts in the public sector, as required by the unanimous vote at the Labour Party conference last October? Would such an agency have regard to the black list of companies when coordinating the offering of contracts for public works?
    Mr. Shore: I do not think that I can help the hon. Gentleman on the last part of his question, because he is raising hypothetical matters. However, if he is asking whether we are thinking how best we can co-ordinate purchasing for public contracts, I can tell him that in so far as we are able to smooth the flow of orders nationally and regionally, that would be of great benefit to everyone, but no one should pretend that that is easy to achieve.

    Council House Rents
    Mr. George Rodgersasked the Secretary of State for the Environment if he will seek powers to modify excessive increases in the level of council house rents imposed by individual local authorities.
    Mr. Freeson: I see no reason to extend existing powers to restrict council rents.
    Mr. Rodgers: Does my right hon. Friend agree that many council house tenants are the captives of reactionary Tory councils, and is it not true that many of these councils have imposed massive rent increases in spite of the windfall brought about by reduced loan charges in the last year? Do not rent increases of this nature stimulate both inflation and wage demands? What steps are being taken to protect those tenants?
    Mr. Freeson: Under the Housing Rents and Subsidies Act 1975, which we introduced, we treated as a central issue the return to local authorities of the right to fix rents. That right was taken away by the previous Conservative Government's Housing Finance Act 1972. We would therefore be loth to increase powers in this direction. On the general question of rent levels this year, as I understood the position earlier this year, when decisions were being made by local authorities. I did not expect exorbitant increases to be proposed. There may have been one or two, but I believe the vast majority were very moderate. I cannot tell at this stage whether there have been any changes in policy subsequent to recent events, so I am not yet in a position to judge.
    Mr. Tebbit: Will the right hon. Gentleman tell his hon. Friend the Member for Chorley (Mr. Rodgers) that many ratepayers are the prisoners of Labour-controlled councils and that they are getting pretty fed up with the situation in which under many authorities the rents from council housing do not even cover the current costs of running the estates, let alone the capital and interest charges that are due upon them?
    Mr. Freeson: That is a most exceptional situation. It is not common. It happens most commonly among Conservative-controlled authorities in Greater
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    London. Generally, the level of rate fund contributions varies enormously across the country regardless of the political nature of the control in the town halls. To my knowledge it is not the case that all Conservative-controlled councils avoid any kind of rate fund contribution, any more than it is true that all Labour-controlled councils make such contributions. It depends very much on local costs and difficulties.

    Housing Action Areas
    Mr. Whiteheadasked the Secretary of State for the Environment what recent progress has been made in declaring housing action areas.
    Mr. Armstrong: Up to the end of May 282 housing action areas have been declared in England, 43 of them since 1st January this year.
    Mr. Whitehead: In order to build upon that impressive rate of progress, will my hon. Friend give sympathetic consideration to those groups of householders and tenants who wish to make joint opposition at local inquiries to plans for wholesale demolition and clearance, rather than simply opposing piecemeal the categorisation of their own houses, and to put forward alternative proposals for housing action areas?
    Mr. Armstrong: I am aware of the situation in the Derby City Council area, but we have no power to compel a local authority to declare a housing action area. It is a matter for the local authority. However, I shall certainly consider what my hon. Friend has said.

QUESTIONS TO MINISTERS
Mr. Hal Miller: On a point of order, Mr. Speaker. I should like to seek your guidance regarding the tabling of Questions. I had occasion to write to you yesterday about a number of Questions—which I do not wish to pursue publicly. However, I should be grateful for your guidance because, as I understand it, the present practice is that the Table Office accepts Questions over one Member's name signed by another Member, or in some cases not even signed. I should be grateful for your guidance, Mr. Speaker, as the Third Report of the Select Committee on Procedure, dated 11th

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November 1976, recommended that Questions should be accepted only when signed by the Member concerned.
Mr. Speaker: The House has not reached a decision to which the hon. Gentleman has just referred. But it is obligatory on every hon. Member who tables a Question in the name of another hon. Member to make sure not that he believes that that hon. Member would support the Question but that he actually approves of it and wants the hon. Member to act on his behalf.
The Table Office cannot be expected to do more than to take the word of the hon. Member who tables the Question in a colleague's name. The practice has worked well. I hope that it will continue.
Mr. Arthur Lewis: Further to that point of order, Mr. Speaker. Will you take the opportunity of expressing to the staff of the Table Office what is the view of, I am sure, the whole House about the excellent manner in which the Table Office goes out of its way to try to assist Members in any way that it possibly can, both by advice and by trying to stretch the rules in favour of any hon. Member? I hope that that will continue. Those of us who have been Members of the House for some time know that the Table Office goes out of its way to be helpful to hon. Members.
Mr. Speaker: The hon. Member for Newham, North-West (Mr. Lewis) is one of the longest serving Members of the House, and I am deeply grateful for what he has said about those who serve us in the Table Office.
Mr. Rooker: On a point of order, Mr. Speaker. Today we seem to have reached an all-time low in taking only 13 Questions to the Executive—one Member was absent—and I cannot for the life of me see who is responsible for that. Will you let me know to whom I can complain about this state of affairs?
Mr. Speaker: First of all, I suggest that the hon. Member lobbies all those who were in the Chamber at Question Time. If he had listened to the length of questions and answers, he would know the answer to his own question.
Secondly, 17 Questions were answered today, not 13, as there were Questions bracketed together. Even as it was, at
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the end of each Question there were still Members on their feet and disappointed that they were not called to ask supplementary questions.

CHRYSLER UK LTD. (LINWOOD PLANT)
Mr. Henderson: 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 decision of the Secretary of State for Industry to release Chrysler UK Limited from its undertaking to build the 1979 light model car at Linwood."
The three criteria laid down in Standing Order No. 9 are that the matter should be specific, should be important and should be urgent.
First, this is a specific matter because it relates to a clearly identifiable decision about a clearly identifiable matter. The decision was announced yesterday by the Secretary of State for Industry, as recorded at column 390 of Hansard, in reply to a Question from the hon. Member for Coventry, South-West (Mrs. Wise). The relevant part of the Secretary of State's reply to her is the last two sentences, at column 391, where the Secretary of State is reported as saying:
"For sound commercial reasons, Chrysler will not introduce a new small light car next year at the company's Linwood plant as originally envisaged.
I am satisfied that the plans are now more favourable as well as being more practicable, and offer better prospects for the future of Chrysler operations in this country and for the security of the Government's loans to the company."—[Official Report, 13th June 1978; Vol. 951, c. 391.]
The second criterion is that it should be a matter of importance. I believe that that test is satisfied on two particular grounds. The first and most important is, of course, the future of approximately 9,500 employees at the Linwood plant, which is now one of the major employers in Scotland, and whether they are to continue and to improve their output and productivity. I believe that this decision by the Secretary of State for Industry is an attempt to pull the rug from under them and to undermine the efforts that have been made by all concerned to make Linwood a viable proposition. I find it

1001
difficult to understand how the Secretary of State can say that these plans are now more favourable that the previous plans.
On the second ground, there is a question of the honour and truthfulness of ministerial assurances in general and those of the Secretary of State for Industry in particular You will perhaps recall, Mr. Speaker, the debate in December 1975 when the Government secured a majority of 12 to vote funds up to £162·5 million to Chrysler UK Limited under the Industry Act 1972. Thirteen of my right hon. and hon. Friends voted for that proposition on the basis of the assurances that we received from the Secretary of State at that time. He then referred specifically to a point that I had put to him, and he said:
"The hon. Member for Aberdeenshire, East asked about models for Scotland, and mentioned the declaration of intent. The declaration of intent says that a new small conventional-drive car will be introduced in 1977. That will be produced in Scotland, as also will the new light car to be introduced in 1979. I hope that that is the information that the hon. Gentleman required."—[Official Report, 17th December 1975; Vol. 902, c. 1559.]
I must say that in my innocence I accepted such a solemn and relatively unambiguous assurance as being sufficiently unusual to come from the Government Front Bench as to carry considerable weight. I recommended to my right hon. and hon. Friends that we should support the Government in that operation in order to protect the livelihoods and jobs of the workers at Linwood.
I therefore believe that this matter is urgent. It has come before us only yesterday. We have only just heard the information. As I say, there is a question of the honour and truthfulness of Ministers of the Crown and of the Secretary of State for Industry in particular.
There is a question of the Scottish people being treated with contempt, because it is significant that this decision was announced after the Hamilton by-election and not before it. It is our fear that this presages further attacks on the living standards of the Scottish people by a Labour Government who now show a complete contempt for them.
On that basis, therefore, I seek your consent, Mr. Speaker, to having this important, urgent and serious matter debated as soon as possible.
Mr. Speaker: The hon. Member for Aberdeenshire, East (Mr. Henderson) gave me notice before 12 o'clock today that he would ask leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
"the decision of the Secretary of State for Industry to release Chrysler UK Limited from its undertaking to build the 1979 light model car at Linwood".
I listened carefully to what the hon. Gentleman said. As he knows, under Standing Order No. 9 I am directed to take into account the several factors set out in the order but to give no reasons for my decision. I have to rule that the hon. Gentleman's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.
Mr. Powell: On a point of order, Mr. Speaker. Is there anything which it is in your power to do to protect the House against the abuse of Standing Order No. 9 procedure by being made the occasion for an ex parte statement, not debatable or refutable at that time, being made in the prime time of the House under cover of the form of asking for leave to move the Adjournment of the House?
Mr. Speaker: The House will know that there has been a report from a Select Committee dealing with this very point. Unfortunately, the House has not yet discussed the matter. I would very much welcome an opportunity to have a decision from the House on this question.

STATUTORY INSTRUMENTS, &c.
Ordered,
That the draft Social Security (Maximum Additional Component) Regulations 1978 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Foot.]

DIRECT LABOUR (RESTRICTION OF WORKS)
3.40 p.m.
Mr. Michael Morris: I beg to move,
That leave be given to bring in a Bill to impose conditions on the employment of direct labour by local authorities and other statutory authorities.

1003
The purpose of the Bill is threefold. Its first purpose is to preclude any direct labour department of any public undertaking from carrying out any form of new construction work. Secondly, the Bill will lay down that every construction contract valued at over £5,000 shall have to go out to competitive tender, that direct labour operations shall become separate trading services, and that model accounts based on proposals of the Chartered Institute of Public Finance and Accountancy in its documents of 1975 and of last week shall become law. Thirdly, the Bill will specify certain specialist maintenance functions that must be undertaken by approved outside contractors.
This is not the first time the subject of direct labour has been debated in the House. Indeed, Mr. Speaker, you will recall the passage in Her Majesty's speech opening the 1976–77 Session stating:
"Legislation will be introduced to remove unnecessary restrictions on the powers of the local authorities to undertake construction work by direct labour."—[Official Report, 24th November 1976; Vol. 921, c. 8.]
That is one Government promise that clearly will not be fulfilled. Had the House known the true picture of direct labour, as I shall now outline it, I wonder whether even this Government would have had the gall to go ahead with their Bill.
Direct labour is no new phenomenon. There were complaints about its activities as long ago as 1920. Today direct labour accounts for 13 per cent. of the total output of the construction industry and uses about 20 per cent. of the industry's manpower. Its output was valued in 1977 at £1,640 million of which local authorities accounted for the bulk, at £1,265 million—significant sums in anybody's reckoning.
What I am concerned about, first, is new construction work, which accounts for about 20 per cent. of the total. Over time, there have been scandals involving direct labour contracts. In the 1960s there were the horrors of Southwark, including the Sunday when 21 men were recorded as having 574 hours of overtime, most of them being credited with 22 hours or more.
There was Leicester, where the direct labour force was said to consist of just nine men and yet was awarded a contract
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for a housing scheme at £3·2 million. There was also Salford, with its estimated loss of over £1 million, resulting in its having to close its capital works section in 1967. Those losses and many others in that period and since have run into many hundreds of millions of pounds.
More recently we have had the scandals of Glasgow, with its Darnley housing scheme, where £2·2 million is being written off. There is also Wandsworth, with over £ 1 million of losses in the past two years, despite a forecast by the local Labour Party of a surplus.
Over the past few years I have been collecting data. I have also had the benefit of studies carried out at Durham by Professor O'Brien and at Loughborough by Michael Fleming. Those studies are immensely helpful in giving an objective assessment of direct labour. Their evidence is that it is in new construction work that direct labour is least efficient. In this area the private sector's productivity is at least a third greater, and on many accounts can be as much as 50 per cent. greater. This correlates with my own ad hoc assessment. It is for this reason that I seek to preclude any direct labour organisation from doing any new construction work. Not the least important matter to consider is the fact that that would result in a direct saving to the Exchequer of over £100 million.
I now turn to the case for competitive tendering and model accounting. There are today local authorities, such as Sunderland and South Tyneside, where only contracts of over £100,000 go out to tender, and others, such as Manchester, where the figure is £50,000 and over. It is little wonder that those are the authorities with some of the worst records of direct labour losses.
The case for competitive tendering has been made strongly over the years by the district auditors. Over 10 years ago the District Auditors Society called for competitive tendering, and every year since then there have been reports from district auditors critical of direct labour.
The Layfield Committee was equally critical, stating in paragraph 23 on page 7 of its report:
"The operations of direct labour organisations were singled out as particularly bad examples of a failure to control costs."

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That was emphasised by the Government in the Department of the Environment's circular 57/69, but the hard truth is that many councils simply ignored that circular. The evidence is that in South Tyneside the manual of principles is totally ignored, and that authority is not alone. The matter was gone into in detail by CIPFA in its 1975 report and now in its report issued this week.
Given all that evidence, I find it astonishing that the Minister for Housing and Construction has taken no action in four years, except to set up a working party. Few could quarrel over the need for legislation in this area.
I turn next to the aspect of certain specialist maintenance functions. I give as an example lift maintenance, a highly skilled job involving people's safety. There are in this country a number of efficient and respected lift manufacturers who carry out contract lift maintenance. In recent years some of this work has been winkled away by direct labour organisations, which use semi-skilled men —until something major goes wrong with the lifts. The House has rightly been concerned through the Health and Safety at Work etc. Act with problems concerning industry. We should be no less vigilant over the safety of the public in lifts.
This is the first of several Bills that I hope to introduce to control and restore accountability of direct labour. For too long it has gone unfettered, to all intents and purposes unaccountable. The total cost of direct labour in terms of losses and inefficiency has been calculated by others than myself to be as high as £400 million.
Losses on that scale are happening not just occasionally but year in and year out. This is a national scandal, the scale of which knows no precedent. It is no less than a financial disaster. Hon. Members, particularly on the Labour Benches, should put aside party interests and agree to reform direct labour. My modest Bill will make a start. It will save the Government £100 million, lead to more competition and improve the safety of lifts in this country.
3.49 p.m.
Mr. Frank Allaun Mr. Frank Allaun (Salford, East) rose—
Mr. Speaker: Is the hon. Gentleman rising to oppose the motion?
Mr. Allaun: I wish, Mr. Speaker, to oppose this reactionary attempt to stop councils building their own council houses.
The fear of and hostility towards direct labour among directors of building firms and Conservative Members have three causes. First, they hate the check it provides against price rings and monopolies, which are holding the community to ransom, as I shall show. Secondly, they want to grab contracts from direct labour organisations in order to make more money. Thirdly, they are politically motivated by animosity towards any form of public ownership.
There has been a £500,000 levy on building firms to pay for this current campaign. Last year, a similar campaign by a sister organisation also cost £500,000. The building firm chiefs also make hefty donations to the Tory party. Donors include such well-known names as Rugby Portland Cement, Costain, Steetley, Tarmac and Bryant.
Some of those firms are in no position to criticise. Are they so proud of the British building industry today? Consider what is coming to light in the ready-mixed concrete and tarmacadam spheres of that industry. Can one really believe that those scandals are confined to those two sections?
Proof is now coming forward of price rings on a huge scale in this business. In many towns the representatives of the firms meet weekly and decide which of them will be allowed to get a particular contract with a corporation and at what price. The other firms then quote a higher price and the council has no alternative but to accept the selected tender. As a result, ratepayers and tenants have to pay millions of pounds a year more than they should. No fewer than 133 such rings have been revealed in 133 towns, involving some of the biggest firms in the industry. A total of 65 agreements relating to asphalt have also been uncovered. Whatever the hon. Member for Northampton, South (Mr. Morris) says, he can make no such accusation against DLOs. There have been building disasters of the magnitude of Ronan Point.
It goes further than that. Although I would not accuse most building firms

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of corruption, there has been a remarkable incidence of it in the industry. I could refer to Poulson, Bryant, Murphy and many others.
Direct labour building brings important benefits to the community. It saves for tenants and ratepayers the profits which would otherwise go to the shareholders. [HON. MEMBERS: "Rubbish."] I listened in silence to the hon. Member for Northampton, South and I hope that hon. Gentlemen, will do the same for me. It is an understanding with Ten-Minute Bills that one does not interrupt the hon. Member who has the Floor.
The competition that direct labour provides helps to cut the prices tendered by private builders. Those ardent believers in competition—the Tory MPs—are not over-eager for it when it hits their profits.
The DLOs have a magnificent record in the employment and training of apprentices. Municipalised building has far better safety and welfare conditions. I have photographs of men working with no scaffolding on houses being built by private firms.
I would ask hon. Members to consider the remarkable success, for example, of the Manchester undertaking. It employs 4,500 operatives. In the last 17 years, it has built 19,000 new homes, 56 schools and public buildings such as fire and police stations and has maintained 104,000 council houses. It has saved the city's coffers £4 million. Allowing for interest for 60 years, that means a total saving of about £12 million. There are excellent, strike-free relations between management and workers. That is the kind of undertaking that the Bill would slaughter.
Then there is an awkward fact which the hon. Member for Northampton, South omitted to mention. In case it is not generally known, I would point out that the customary practice in the building industry is for a contract to be allocated by competition to the lowest tenderer. Then that contractor can secure the next two contracts by negotiated tender. That applies equally to DLOs and to private industry. So unless DLOs can compete successfully in terms of price and performance with building firms, they do not get the work.
One part of the Bill is breathtaking in its impudence. That is the provision that
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in special functions—for example, lift maintenance—it would be mandatory for work to be carried out by specialist outside contractors. Two firms dominate lift maintenance—the Express Lift Company and Otis. In Salford, the tower blocks were supposed to be maintained under a contract with Express. The record was so appalling and there were so many complaints that outside experts had to be called in to examine the lifts. Some were in a positively dangerous condition and others were out of use for months at a time, causing serious hardship to tenants, including young mothers and the aged.
The contract was ended and now the work is done successfully by Manchester DLO lift maintenance department. Rochdale and Conservative-controlled Trafford—the latter represented by the hon. Member for Stretford (Mr. Churchill)—have followed suit and halved their expenses.
That brings me to my final point — [HON. MEMBERS: "Hear, hear."] I have only ten minutes: I could go on for much longer.
Far from restricting building by municipalities, the Labour Party and the trade unions wish to extend it. At present, although building firms may contract to build houses in any part of the country, DLOs may not. They are confined to their own limited council area. That is an unfair restriction. There is no good reason why DLOs should not be allowed to compete for and undertake the building of houses for neighbouring local authorities, as many of them wish to do.
What I have said can be confirmed by such experts on direct labour as my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), a former chairman of the Liverpool DLO, who recently chaired the committee which drew up Labour's construction proposals, and my hon. Friend the new Member for Lambeth, Central (Mr. Tilley), who was also a chairman of a big London DLO. For all these reasons, I ask the House to throw out this Bill.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nomination of Select Committees at Commencement of Public Business):—
The House divided: Ayes 198, Noes 212.

Division No. 230]

AYES

[4.00 p.m.

Alison, Michael

Grieve, Percy

Onslow, Cranley

Atkins, Rt Hon H. (Spelthorne)

Grist, Ian

Page, John (Harrow West)

Atkinson, David (B'mouth, East)

Grylls, Michael

Page, Rt Hon R. Graham (Crosby)

Awdry, Daniel

Hamilton, Archibald (Epsom & Ewell)

Pardoe, John

Baker, Kenneth

Hamilton, Michael (Salisbury)

Penhaligon, David

Banks, Robert

Hampson, Dr Keith

Peyton, Rt Hon John

Beith, A. J.

Hannam, John

Price, David (Eastleigh)

Bell, Ronald

Harrison, Col Sir Harwood (Eye)

Prior, Rt Hon James

Bennett, Sir Frederic (Torbay)

Harvie Anderson, Rt Hon Miss

Pym, Rt Hon Francis

Benyon, W.

Haselhurst, Alan

Raison, Timothy

Berry, Hon Anthony

Havers, Rt Hon Sir Michael

Rees-Davies, W. R.

Biffen, John

Hawkins, Paul

Renton, Rt Hon Sir D. (Hunts)

Biggs-Davison, John

Heseltine, Michael

Renton, Tim (Mid-Sussex)

Blaker, Peter

Higgins, Terence L.

Rhodes James, R.

Boscawen, Hon Robert

Holland, Philip

Ridley, Hon Nicholas

Boyson, Dr Rhodes (Brent)

Hooson, Emlyn

Rifkind, Malcolm

Braine, Sir Bernard

Howe, Rt Hon Sir Geoffrey

Roberts, Michael (Cardiff NW)

Brittan, Leon

Howell, David (Guildford)

Roberts, Wyn (Conway)

Brocklebank-Fowler, C.

Howells, Geraint (Cardigan)

Rodgers, Sir John (Sevenoaks)

Brooke, Hon Peter

Hutchison, Michael Clark

Ross, Stephen (Isle of Wight)

Brotherton, Michael

Jessel, Toby

Rossi, Hugh (Hornsey)

Bryan, Sir Paul

Johnson Smith, G. (E Grinstead)

Rost, Peter (SE Derbyshire)

Buchanan-Smith, Alick

Jones, Arthur (Daventry)

Royle, Sir Anthony

Bulmer, Esmond

Joseph, Rt Hon Sir Keith

St. John-Stevas, Norman

Burden, F. A.

Kimball, Marcus

Shelton, William (Streatham)

Butler, Adam (Bosworth)

King, Tom (Bridgwater)

Silvester, Fred

Chalker, Mrs Lynda

Kitson, Sir Timothy

Sims, Roger

Clark, Alan (Plymouth, Sutton)

Knight, Mrs Jill

Skeet, T. H. H.

Clark, William (Croydon S)

Knox, David

Smith, Cyril (Rochdale)

Clarke, Kenneth (Rushcliffe)

Lamont, Norman

Smith, Dudley (Warwick)

Clegg, Walter

Langford-Holt, Sir John

Smith, Timothy John (Ashfield)

Cooke, Robert (Bristol W)

Lawrence, Ivan

Speed, Keith

Cope, John

Lawson, Nigel

Spicer, Michael (S Worcester)

Costain, A. P.

Le Marchant, Spencer

Sproat, Iain

Crouch, David

Lester, Jim (Beeston)

Stanley, John

Dean, Paul (N Somerset)

Lewis, Kenneth (Rutland)

Steel, Rt Hon David

Douglas-Hamilton, Lord James

Loveridge, John

Steen, Anthony (Wavertree)

Drayson, Burnaby

Luce, Richard

Stewart, Ian (Hitchin)

du Cann, Rt Hon Edward

McAdden, Sir Stephen

Stradling Thomas, J.

Dunlop, John

McCrindle, Robert

Tapsell, Peter

Durant, Tony

Macfarlane, Neil

Taylor, R. (Croydon NW)

Eden, Rt Hon Sir John

MacKay, Andrew (Stechford)

Taylor, Teddy (Cathcart)

Edwards, Nicholas (Pembroke)

Macmillan, Rt Hon M. (Farnham)

Tebbit, Norman

Elliott, Sir William

McNair-Wilson, M. (Newbury)

Temple-Morris, Peter

Emery, Peter

Madel, David

Thatcher, Rt Hon Margaret

Eyre, Reginald

Marten, Neil

Thomas, Rt Hon P. (Hendon S)

Fairgrieve, Russell

Mather, Carol

Thorpe, Rt Hon Jeremy (N Devon)

Farr, John

Maude, Angus

Townsend, Cyril D.

Farr, John

Maudling, Rt Hon Reginald

Trotter, Neville

Fell, Anthony

Mawby, Ray

van Straubenzee, W. R.

Fletcher, Alex (Edinburgh N)

Maxwell-Hyslop, Robin

Viggers, Peter

Fletcher-Cooke, Charles

Mayhew, Patrick

Wainwright, Richard (Colne V)

Fookes, Miss Janet

Meyer, Sir Anthony

Wakeham, John

Forman, Nigel

Miller, Hal (Bromsgrove)

Walker, Rt Hon P. (Worcester)

Fox, Marcus

Fraser, Rt Hon H. (Stafford & St)

Miscampbell, Norman

Wall, Patrick

Freud, Clement

Mitchell, David (Basingstoke)

Walters, Dennis

Gardiner, George (Reigate)

Monro, Hector

Weatherill, Bernard

Gilmour, Rt Hon Sir Ian (Chesham)

Montgomery, Fergus

Whitelaw, Rt Hon William

Gilmour, Sir John (East Fife)

Moore, John (Croydon C)

Whitney, Raymond

Glyn, Dr Alan

Morgan-Giles, Rear-Admiral

Wiggin, Jerry

Goodhart, Philip

Morrison, Charles (Devizes)

Winterton, Nicholas

Goodhew, Victor

Morrison, Hon Peter (Chester)

Young, Sir G. (Ealing, Acton)

Goodlad, Alastair

Mudd, David

Younger, Hon George

Gow, Ian (Eastbourne)

Neave, Airey

Gower, Sir Raymond (Barry)

Nelson, Anthony

TELLERS FOR THE AYES:

Grant, Anthony (Harrow C)

Neubert, Michael

Mr. Michael Morris and

Gray, Hamish

Newton, Tony

Mr. Tim Sains bury.

NOES

Abse, Leo

Bates, Alf

Bray, Dr Jeremy

Allaun, Frank

Bean, R. E.

Brown, Hugh D. (Provan)

Armstrong, Ernest

Benn, Rt Hon Anthony Wedgwood

Brown, Robert C. (Newcastle W)

Ashton, Joe

Bennett, Andrew (Stockport N)

Buchan, Norman

Atkins, Ronald (Preston N)

Bidwell, Sydney

Buchanan, Richard

Atkinson, Norman (H'gey, Tott'ham)

Bishop, Rt Hon Edward

Butler, Mrs Joyce (Wood Green)

Bagier, Gordon A. T.

Blenkinsop, Arthur

Callaghan, Jim (Middleton & P)

Bain, Mrs Margaret

Booth, Rt Hon Albert

Cant, R. B.

Barnett, Guy (Greenwich)

Boothroyd, Miss Betty

Carter-Jones, Lewis

Barnett, Rt Hon Joel (Heywood)

Bottomley, Rt Hon Arthur

Cartwright, John

1010

1011

Castle, Rt Hon Barbara

Howell, Rt Hon Denis (B'ham, Sm H)

Richardson, Miss Jo

Clemitson, Ivor

Hoyle, Doug (Nelson)

Roberts, Gwilym (Cannock)

Cocks, Rt Hon Michael (Bristol S)

Huckfield, Les

Robertson, George (Hamilton)

Cohen, Stanley

Hughes, Robert (Aberdeen N)

Roderick, Caerwyn

Coleman, Donald

Hughes, Roy (Newport)

Rooker, J. W.

Colquhoun, Ms Maureen

Irving, Rt Hon S. (Dartford)

Rowlands, Ted

Concannon, Rt Hon John

Jackson, Miss Margaret (Lincoln)

Sandelson, Neville

Conlan, Bernard

Jay, Rt Hon Douglas

Sedgemore, Brian

Cook, Robin F. (Edin C)

Jeger, Mrs Lena

Sever, John

Corbett, Robin

Jenkins, Hugh (Putney)

Shaw, Arnold (Ilford South)

Cowans, Harry

John, Brynmor

Sheldon, Rt Hon Robert

Cox, Thomas (Tooting)

Johnson, James (Hull West)

Shore, Rt Hon Peter

Craigen, Jim (Maryhill)

Jones, Alec (Rhondda)

Short, Mrs Renée (Wolv NE)

Crawford, Douglas

Jones, Barry (East Flint)

Silkin, Rt Hon John (Deptford)

Cronin, John

Jones, Dan (Burnley)

Silkin, Rt Hon S. C. (Dulwich)

Crowther, Stan (Rotherham)

Kelley, Richard

Silverman, Julius

Davies, Bryan (Enfield N)

Kinnock, Neil

Skinner, Dennis

Davies, Rt Hon Denzil

Lambie, David

Smith, Rt Hon John (N Lanarkshire)

Davies, Ifor (Gower)

Lamborn, Harry

Snape, Peter

Davis, Clinton (Hackney C)

Lamond, James

Spriggs, Leslie

Deakins, Eric

Latham, Arthur (Paddington)

Stewart, Rt Hon Donald

Dean, Joseph (Leeds West)

Lee, John

Stewart, Rt Hon M. (Fulham)

Dewar, Donald

Lestor, Miss Joan (Eton & Slough)

Stoddart, David

Doig, Peter

Lewis, Ron (Carlisle)

Strang, Gavin

Dormant), J. D.

Loyden, Eddie

Swain, Thomas

Douglas-Mann, Bruce

Luard, Evan

Taylor, Mrs Ann (Bolton W)

Dunn, James A.

Mabon, Rt Hon Dr J. Dickson

Thomas, Dafydd (Merioneth)

Edge, Geoff

McCartney, Hugh

Thomas, Mike (Newcastle E)

English, Michael

McDonald, Dr Oonagh

Thomas, Ron (Bristol NW)

Ennals, Rt Hon David

McElhone, Frank

Thompson, George

Evans, Fred (Caerphilly)

MacKenzie, Rt Hon Gregor

Thorne, Stan (Preston South)

Evans, Gwyntor (Carmarthen)

Maclennan, Robert

Tinn, James

Evans, Ioan (Aberdare)

Madden, Max

Tomlinson, John

Evans, John (Newton)

Mallalleu, J. P. W.

Torney, Tom

Ewing, Harry (Stirling)

Marks, Kenneth

Tuck, Raphael

Fernyhough, Rt Hon E.

Marshall, Dr Edmund (Goole)

Urwin, T. W.

Fitt, Gerard (Belfast W)

Marshall, Jim (Leicester S)

Varley, Rt Hon Eric G.

Flannery, Martin

Mason, Rt Hon Roy

Wainwright, Edwin (Dearne V)

Fletcher, Ted(Darlington)

Maynard, Miss Joan

Walker, Harold (Doncaster)

Foot, Rt Hon Michael

Mellish, Rt Hon Robert

Walker, Terry (Kingswood)

Forrester, John

Millan Rt Hon Bruce

Ward, Michael

Freeson, Rt Hon Reginald

Miller, Dr M. S. (E Kilbride)

Watkins, David

Garrett, John (Norwich S)

Mitchell, Austin (Grimsby)

Watkinson, John

George, Bruce

Gilbert, Rt Hon Dr John

Molloy, William

Welsh, Andrew

Ginsburg, David

Moonman, Eric

White, Frank R. (Bury)

Golding, John

Morris, Rt Hon Charles R.

Whitehead, Phillip

Gourlay, Harry

Mulley, Rt Hon Frederick

Wigley, Dafydd

Graham, Ted

Newens, Stanley

Willey, Rt Hon Frederick

Grant, George (Morpeth)

Noble, Mike

Williams, Rt Hon Alan (Swansea W)

Grant, John (Islington C)

O'Halloran, Michael

Williams, Alan Lee (Hornch'ch)

Grocott, Bruce

Orbach, Maurice

Wilson, Gordon (Dundee E)

Hamilton, James (Bothwell)

Orme, Rt Hon Stanley

Wilson, William (Coventry SE)

Hamilton, W. W. (Central Fife)

Palmer, Arthur

Wise, Mrs Audrey

Hardy, Peter

Park, George

Woodall, Alec

Harper, Joseph

Parker, John

Woof, Robert

Harrison, Rt Hon Walter

Parry, Robert

Wrigglesworth, Ian

Hart, Rt Hon Judith

Pendry, Tom

Young, David (Bolton E)

Hattersley, Rt Hon Roy

Perry, Ernest

Healey, Rt Hon Denis

Price, C. (Lewisham W)

TELLERS FOR THE NOES:

Heffer, Eric S.

Radice, Giles

Mr. George Rodgers and

Henderson, Douglas

Rees, Rt Hon Meriyn (Leeds S)

Mr. John Ovenden.

Hooley, Frank

Reid, George

Question accordingly negetived.

ORDERS OF THE DAY
  SUPPLY
  [20th Allotted Day]—considered

  ECONOMIC SITUATION
  4.11 p.m.
  Sir Geoffrey Howe: I beg to move,
  That the salary of Mr. Chancellor of the Exchequer should be reduced by half.
  We are dealing this afternoon with the man who over the last four years, under two successive Prime Ministers, has been in charge of the economy of this country. Looking at him alone, aside from the record of the Government, one begins by saying at once that there is little, if anything, of which he can be proud in the record of the last four years. Indeed, there appears to be so little confidence by the Prime Minister and his colleagues this afternoon in the capacity of the Chancellor to defend himself against that charge that no more than 60 minutes before this debate was due to begin we heard the astonishing intelligence that the debate was to be made an issue of confidence in the Government.
  It is a remarkable development that, unwilling and unconfident of their capacity to defend the Chancellor in his own rights, at this eleventh hour the Government have decided to invoke the tattered remains of what is left of the Lib-Lab pact, seeking, so it seems, to save themselves by summoning the rats to rejoin the sinking ship and man the pumps.
  Let us consider the record of the Chancellor. Let us begin with the moment when he last secured, or succeeded in obtaining, the confidence of the people of this country in the election of October 1974. The House will well remember that that was the time when he told the people of this country, with all the confidence which he can command, that inflation was then running at a rate of 8·4 per cent, a year.
  My hon. Friend the Member for Blaby (Mr. Lawson) secured an interesting answer not many days ago from the Chief Secretary about calculating inflation on the basis of the figures over three months. The Chief Secretary had this to say:
  1014
  "because it is based on such a short period, this figure is an unreliable indicator of current trend."—[Official Report, 24th May 1978; Vol. 950, c. 619.]
  It is wholly characteristic of the Chancellor of the Exchequer that he should have chosen precisely that basis on which to make his most well-remembered and most misleading boast to the people of this country. It is wholly right that he should be judged by that same standard today. Over the last three months on that same basis, after four years of the Chancellor's tenure of the Exchequer, inflation is still running at 11·2 per cent, a year.
  A year after he made the boast, it was running at 26 per cent, a year. Over the last four years the price which the people of this country have had to pay for food has gone up by more than twofold, unemployment has risen from 600,000 to 1·3 million—that also has more than doubled—and production remains up by just 1 per cent, over four years as a result of the Chancellor's tenure of office. It is still well below what it was in 1973.
  Only the Chancellor, after that kind of record, would have the gall now to seek to rescue his economic performance by urging the German economy to risk its stability by raising its annual rate of production from 3½ per cent, to 4½ per cent, a year. Only the Chancellor would dare to behave in that way. Even by the standards of his service to his own party, the Chancellor has failed to achieve anything of significance at all. Was 1978 not the year to which politicians were meant to be swimming for survival—the year in which any Government who had lasted this long would be able to bask in the surplus of North Sea oil revenue? Yet today's trade figures produce a current deficit on the month of May of £49 million and all the signs suggest that over the next year the Chancellor will be achieving a deficit over the entire year.
  Even by the standards of those who sit behind him, who were at least hoping to be able to congratulate the Chancellor on having contrived to deliver a modest, bogus boomlet with which to beguile the people into returning this Government to office, the Chancellor has failed, because his policies announced last week have destroyed even that last hope.

  1015
  For the nation the outcome has been a great deal worse. Over the last four years taxes per household have risen from £389 a year to £939 a year, even after taking credit for the cuts which we imposed only a month ago. They are up by more than £10 a week. Over the last four years the living standard, after payment of tax, of a building labourer has dropped by about 8 per cent., of a foreman in the building industry by about 27 per cent. and of a chief executive of some of our leading companies by up to 50 per cent. That is the standard by which the Chancellor should be judged.
  The more valuable the contribution which a citizen has had to make to our economy, the more severely he has been punished by the Chancellor. He has succeeded only in laying the foundations for a stagnant economy and an impoverished society. The charge which we make against the Chancellor this afternoon is that this disastrous record is a consequence of a combination, fortunately so far unique in British history, of ignorance matched with incompetence and of recklessness matched with deceit. They are made even more unattractive because the Chancellor has acted out the whole sorry saga with an air of unrepentant arrogance which has made him as unappealing even to his own party as to those of us on this side of the House.
  One of the interesting questions is what view the Liberal Party will take with regard to today's motion. The House will remember that the hon. Member for Cornwall, North (Mr. Pardoe), in an article in the News of the World on 9th April, pronounced his then verdict on the Chancellor. He said that the first three years of the Chancellor's performance have been the worst in economic history since the war. He added that it had been
  "a saga of economic blunders, wrong forecasts, misplaced optimism, poor judgment and sheer wrong-headed dogmatism unmatched in modern times."
  That is quite a fair commentary. We now see today in that important organ of national opinion—Liberal News—the headline—which plainly sets out what we had understood to be the intention of the Liberal Party:
  "Healey must go is call from Libs".
  Shall we see that clarion call delivered in the Division Lobby tonight? I wonder. One looks at the small print of the
  1016
  statement issued by the leader of the Liberal Party on the day of the announcement of the Chancellor's last measures. It begins by saying that the whole episode is a sad commentary on the Chancellor's handling of the Finance Bill and concludes with these words:
  "The shaking of confidence and the denting of the government's standing through the two defeats on the Finance Bill are entirely the responsibility of the Chancellor".
  The closing sentence stated:
  "It is perhaps time he was shifted to another post."
  We shall judge that "perhaps" when we vote tonight. We hope that the Liberal Party will have the courage of its quavering convictions when the time comes.
  But let us look at the record of the Chancellor simply for the sake of example of one or two incidents and go back to the 1974 Budget. The House will remember that in that Budget he announced triumphantly the establishment and introduction of capital transfer tax. That was a vindictive and destructive measure which has wrought untold damage to the business of this country. The Government know it. What has the Chancellor of the Duchy been doing ever the last six or nine months? The Chancellor of the Duchy of Lancaster has been wheeled out from whatever back room he was lurking in and set to work to undo the damage done by the Chancellor of the Exchequer, ably assisted by the Chief Secretary who is sitting beside him.
  The people of this country, for that one mistake of the Chancellor, have had to pay a high price in lost business opportunities and the destruction of jobs. That is a high price to pay for the misguided incompetence of the Chancellor.
  And in the same Budget, the Chancellor set about savaging the companies and businesses of this country by raising corporation tax and by providing for the payment of advance corporation tax, so that within six months of the Chancellor's first Budget, British industry was on the verge of bankruptcy.
  The election of October was hardly over before the right hon. Gentleman came rushing forward with his November Budget to undo the damage done by his Budget of April 1974. Once again, there was a catastrophically high price to

  1017
  pay for the Chancellor's performance in weakening confidence and destroying jobs throughout the company sector of our economy.
  The Chancellor might be expected to have learned after 12 months "running-in" to avoid some comparable excesses of the same kind. Not in the least: the 1975 Budget came along and he charged into the arena determined to introduce value added tax at the rate of 25 per cent., under some ignorant illusion that, for example, the television set was a wicked luxury instead of being a necessity enjoyed in every pensioner's home. As a result of that, thousands of jobs were destroyed in the boat and caravan building industries. Thousands more jobs were destroyed in the television construction industry. The hon. Member for Ormskirk (Mr. Kilroy-Silk) is not the only Member who has seen a television manufacturing factory close in his constituency as a direct result of that piece of folly on the part of the Chancellor.
  A year later, when the Chancellor had succeeded in savaging the television manufacturing industry, he repented and cut the rate back to 12½ per cent., only to open the gate for a flood of Japanese imports to replace those which had formerly been made by British manufacturers.
  The building industry was not to be left alone. Development land tax at penal rates was imposed to clobber that. The motor car industry was not to be left alone. He introduced a tax on benefits in kind to cause great disturbance in that area. One could go on with these examples of incompetence. The Chancellor, who has probably talked more than any other member of the Government about the importance of the so-called industrial strategy, has in practice presided over a strategy for the demoralisation and destruction of British industry.
  It is not only ignorance and incompetence with which we charge the Chancellor. We charge him specifically with recklessness and deceit. I should like him to examine with the House the events of 1976, which are of great importance in that respect. The House will remember that in the Budget of 1976 the Chancellor was talking, not for the first time,
  1018
  about the economic miracle that shortly lay ahead of the British people. He stated to the House in his Budget Statement on 6th April 1976:
  "confidence in our future has been transformed both at home and abroad".
  and we could look forward to
  "further substantial progress in this coming year".—[Official Report, 6th April 1976; Vol. 909, c. 238.]
  That was the picture that the Chancellor was painting in his Budget of April 1976. He should remember that when we reflect on his habit for almost the whole of the four years that he has been in office of ever claiming credit for the miracles that are to come and ever blaming his predecessors for their failure to arrive.
  What was the position two months later, by 7th June? Far from any improvement, the pound had lost 25 cents against the dollar since March. The Chancellor came to the House on 7th June and announced, with his customary sense of pride, his success in getting a stand-by credit from the international banks. He refused then to accept the case that I pressed upon him that public spending cuts were necessary and expressed himself totally satisfied with his action up to that date.
  By 22nd July, in the Chancellor's eighth Budget, he was back before the House announcing a programme for public spending cuts of £1,000 million in a full year and the introduction of the first 2 per cent. surcharge on national insurance contributions. Once again he expressed himself totally satisfied with his performance. Within the next three months we had the spectacle of the Chancellor, clad in his tropical suit, all set for a holiday in Manila, cancelling his visit to the International Monetary Fund conference and flying straight from the battlefield, as he put it, to another battlefield at the Labour Party conference and announceing that he was flinging himself upon the mercy of the IMF. He told the conference that he was doing so on the basis of his existing policies.
  A week later, the minimum lending rate went up to 15 per cent. Within those months the pound had sunk as low as $1·60. By the end of the year, the Government's economic policy had been entirely reshaped to the dictates of the IMF. Excise duties were increased by 10 per cent. and there were further reductions

  1019
  in the public sector borrowing requirement of £2 billion.
  One further fact has since come to light about that period of history. In the three interesting and, so far as I know, unchallenged articles in The Sunday Times last month entitled:
  "The day the £ nearly died"
  we are told that two days before the Chancellor came to the House on 7th June, he had signed a letter in response to the US Secretary to the Treasury setting out specifically the terms to which he and the Prime Minister had agreed, namely, that if any money had been drawn from the stand-by credit which he had arranged and not repaid, the Government would seek a long-term loan from the IMF.
  When I charge the Chancellor with recklessness and deceit in this matter, the House is entitled to have some answers from him to certain important questions about that period in our history. When he went to the Labour Party conference in September 1976 and said that he was to negotiate with the IMF on the basis of existing policies, which we now know was untrue because it did not happen, did the Chancellor believe that he was telling the truth or not?
  When he came to the House on 7th June to describe the stand-by credit, I suggested that the position was not quite as rosy as the Chancellor then tried to paint it. The Chancellor rebuked me with characteristic arrogance and said that I should recognise what he described as
  "this massive international endorsement of sterling."—[Official Report, 7th June 1976; Vol. 912, c. 916.]
  Did he believe that to be true?
  When he was asked on the same day by his hon. Friend the Member for Birmingham, Handsworth (Mr. Lee) whether there were any strings attached to the loan then taken by the Government, the Chancellor said:
  "there are no strings to this money at all."—[Official Report, 7th June 1976; Vol. 912, c. 926.]
  That does not begin to withstand examination. We know the terms of the letter that he signed in answer to the Secretary to the Treasury of the United States. Did the Chancellor believe it when he told the House that there were no strings attached to the money? Did he believe, in
  1020
  the days before the pound when on slumping still further downwards, that the international community had produced a "massive endorsement" of sterling? Did he believe when he went to the Labour Party conference that he could negotiate with the IMF on the basis of existing policies? If the Chancellor believed any of those things, he was recklessly foolish and unfit to hold the office which he then held. If he did not believe those things, he gravely deceived and misled the House and the nation and is equally unfit to hold that office.
  The more immediate past is almost more interesting. For a year or so after Christmas 1976 there was some improvement in the financial condition of the country—though in very little else. Why? It is because oil had begun to flow and produce revenues before the Chancellor had begun to spend them all again. It was because the Chancellor, as he told the House and the country on many occasions, was achieving a levelling off in public expenditure which he described as essential for a few years if he was to achieve what was necessary.
  In other words, from Christmas 1976 onwards, belatedly and finally, the Chancellor had accepted the advice proffered by the Conservative Party for the previous two years. Monetary targets were set and were being strictly observed. Public expenditure was being controlled and reduced. This was not because of a sudden rush of wisdom to the Chancellor's reckless head. True, he had accepted our advice. It was only because of the imposition of that advice by outside forces —by the International Monetary Fund.
  The verdict of The Sunday Times story is clear and important. It says:
  "Although British Ministers will go to their graves denying it, the facts of this story suggest that without American and IMF pressure, the Cabinet would not have taken the measures which, with remarkable speed, stabilised the currency."
  The Government and the Chancellor were saved from the consequences of their own worst excesses not because of their repentance, but because of the imposition of discipline from outside this country.
  In the months since then, everything has begun to go wrong again. Until the autumn of last year, the Chancellor struggled with great energy, so it seemed, to hold down the sterling exchange rate

  1021
  and he took credit for doing so. Too late he changed that policy, relented and allowed it to rise. Until Christmas, he insisted on maintaining the entire apparatus of exchange control without relaxation. Too late he relented on that, but not sufficiently.
  Throughout the latter part of last year, the Chancellor was building up in his coffers a huge and wholly misleading surplus of foreign funds and destroying the monetary policy by which he had set so much store only a few months earlier. We see the consequences of that in what happened in the year that ended in April.
  The growth of money supply, over a year when the Chancellor took pride in setting a target of 9 per cent. to 13 per cent., turned out, over the full year, at 16 per cent.—more than 50 per cent, above the central target. Over the last six months, the growth has been at an annual rate of 20 per cent. and over the last three months, it has been at an annual rate of about 24 per cent.
  The Chancellor had succeeded in destroying his own monetary policy and in laying the foundations of the increased inflation which lies ahead, which the Prime Minister is doing his best to deny and the Secretary of State for Prices and Consumer Protection is doing his best to distort, but with which the next Conservative Government will have to cope. The important point of that story is that the seeds of the crisis that broke last week were sown by that misconduct by the Chancellor. They had nothing to do with votes of the House or the attitude of the Conservative Party.
  Those seeds were fertilised by the Chancellor's decision, when he published the public expenditure White Paper, deliberately to go for an increase in public spending in this year over last year of more than 8 per cent. According to an assurance published by the TUC after the Chancellor and the Chief Secretary had met union leaders on 10th May:
  "They reaffirmed the Government's expectation that here would be a real increase of public expenditure of 6 per cent. between 1977–78 and 1978–79."
  That is a commitment to an increase in public spending at least twice as large as the Chancellor's most optimistic expectations of the growth of the economy and probably three times as large as the
  1022
  likely out-turn. It sits oddly alongside what the Chancellor said in his letter to the Director of the IMF on 15th December 1976. Then, in extremis, when seeking the loan that he eventually received, the Chancellor said:
  "an essential element of the Government's strategy will be a continuing and substantial reduction over the next few years in the share of resources required for the public sector."
  There we have a characteristic insight into the mind of the Chancellor. In December 1976, the Chancellor gave an undertaking to the IMF to reduce the share of resources taken by the Government. In May 1978, he gave to the TUC an undertaking—totally in conflict with his earlier undertaking—to secure an increase in the share of resources being taken by the Government. By which does he stand? Whom will he deceive and let down? The Conservative Party and the House have no responsibility for any of those foolish things done by the Government in the last six months.
  In his last Budget the Chancellor set out to increase the public sector borrowing requirement, deliberately and in the teeth of his own advice, to a figure of £8,500 million. No one but the Chancellor was surprised by the reaction to his Budget. On Budget day, the Stock Exchange index fell by 10 points and the value of the pound fell by 20 points. The Chancellor himself thought it prudent to raise the minimum lending rate by 1 per cent. and since then minimum lending rate has gone up by 2½ per cent.
  All those things are the judgment not of the Conservative Party or of the House but of the world with which the Chancellor has to deal upon the recklessness of his Budget judgment. They show the extent to which he got it wrong. To make matters worse—and hon. Members opposite will remember this better than we do —on the day after he had announced his Budget, the Chancellor went to a meeting of the Parliamentary Labour Party, apparently euphoric to the point of recklessness, blowing kisses at his hon. Friend the Member for Coventry, South-West (Mrs. Wise) and with a song in his heart, and let it be known—according to all the papers—that he was hoping to introduce another economic package later in the summer and hoped that it would be a very nice one. Irresponsibility knows nothing more absurd than that.

  1023
  Does the Chancellor deny that he gave that sort of impression and that it was reinforced by the Chief Secretary in the House on the same day? Does he still intend before the summer is out to introduce another very nice economic package—or are 14 enough for the time being? Does he intend to deceive his hon. Friends in the PLP? Are they still looking forward to another very nice package before the end of the summer, or must they settle for what they have before them?
  The man responsible for the destruction of the Chancellor's Budget strategy and for the aborting of Labour's pre-election boom is the Chancellor himself. The Labour Party is suffering from self-inflicted wounds—wounds inflicted by the Chancellor on his own party as well as on the country.
  We in the Conservative Party make no apology for the changes we were able to persuade the House to impose upon the shape of the Chancellor's Budget.
  Mr. William Molloy: The right hon. and learned Gentleman should be ashamed of himself.
  Sir C. Howe: If hon. Members opposite have any real contact with the feelings of the people they claim to represent, they will know that nothing is more necessary than to restore the prospect of real rewards for hard work, enterprise and success. Every party on this side of the House took that view and voted with us. It was not the Conservative Party alone that drove that hole in the Chancellor's Budget strategy; it was the House of Commons speaking on behalf of the people of this country.
  If the Chancellor takes counsel with the Chancellor of the Duchy of Lancaster, he will surely recollect that on 23rd April of this year, the Chancellor of the Duchy, in a moment of candour of the sort that we have come to associate with the right hon. Gentleman, though not with the Chancellor of the Exchequer, said in an interview on London Weekend Television that the No. 1 priority was for the higher rates of tax to be cut substantially as soon as possible. Why does the Chancellor of the Exchequer complain when the House takes the Chancellor of the Duchy at his word and does just that? If the framed Budget has been shattered in that way it
  1024
  is because the Chancellor so framed it that it is impossible to make in it the changes that are necessary for the economic health of this country.
  Of course we made plain that the Chancellor was responsible for the judgment up to that point and that he had to take whatever action was necessary, either to reduce public spending or to recoup the consequences of the tax cuts that we had made, but the Conservative Party did the right thing on behalf of the people of this country in making those modest changes which are the first of many steps that are necessary to restore some sense and sanity to the tax system of this country.
  Of course the introduction of a package such as that outlined by the Chancellor last week was necessary to correct the consequences of the Chancellor's misjudgments and mismanagement of the economy over the preceding six months, but the package could not have been more badly designed. It strikes at the heart of economic sense, in particular because of the attempt to recoup £1,500 million by the imposition of a 2½ per cent. employers' surcharge. Never have truer words been spoken than when, in his Budget Statement just two months ago, the Chancellor said of suggestions that the surcharge should be increased:
  "I do not believe it would be right to increase it so soon after it has been introduced, and at a time when unemployment is our major problem. It would increase industrial costs at a time when it is essential to improve our competitiveness and it would ultimately be largely passed on in higher prices at a time when the fight against inflation is at a crucial stage."—[Official Report, 11th April 1978: Vol. 947, c. 1204.]
  The tax that the Chancellor has sought to introduce is one which will come through in higher prices, but not yet. He hopes that he may gain something from that. It will come through in higher unemployment, but once again he hopes not yet. It is a tax which applies to exports but not to imports. On the other hand, value-added tax applies not to exports but only to imports and home sales.
  The increase in the national insurance surcharge, which the Chancellor has chosen, does not apply to imports save to the cost of handling them once they come into the country. It is a most astonishing change to make. It cannot be measured in its effect by itself.

  1025
  It is very interesting to consider just what this Government have done in imposing tax after tax after tax after tax upon jobs since they came into office. First of all we saw the withdrawal of the regional employment premium by the Government. Secondly, we saw the increase in national insurance contributions to pay for higher pensions, and I make no complaint about that. But beyond that—and the Chancellor must accept responsibility for this—in the summer of 1976 he chose deliberately to tax jobs by a further 2 per cent. increase in the national insurance surcharge and last week to add another 2½ per cent. to the cost of employment. The cost of employing a man or a woman, of maintaining a job, under this Government as a result of the deliberate decisions of the Chancellor has risen by a 5¾ per cent. impost on the employers' pay bill, and by the withdrawal of the regional employment premium.
  While the Chancellor has been moving in this wrong direction, increasing the cost of employment by imposing a tax upon jobs, other countries, because of the changed economic environment, have been moving in the opposite direction. The employers' surcharge—the social security contribution—has been reduced in recent months in France, Finland, Italy, Norway, Spain and the United States. It is coming down in all these countries while the Chancellor is putting it up. While other countries are moving in the direction of sanity, the Chancellor is doing that which he was not elected to do because he has not got the courage to do anything else.
  Consider the effect of this change on just one aspect of our market. One of the main competitors for the markets of British manufactured motor cars is Japan. As a direct result of the taxes and conditions placed on the cost of employment, the average cost of a British motor car—a Cortina or Marina—has been increased by £95. This is the direct result of taxes imposed by this Government on employment within the country. They could have done something quite different by ensuring that the tax burden fell equally on imports as well as exports. It is not just a higher price, but a prescription for fewer jobs.
  1026
  Surely it is ludicrous for the Government to subsidise jobs in uncompetitive industries while taxing jobs in productive ones. Consider the effect of these changes on the job market in Scotland, Wales or Northern Ireland. It is true that some jobs now receive a subsidy of £20 a week in temporary employment subsidy, but all jobs now do without the REP of £3 and all of them pay the additional tax to which I have been referring. This means an additional cost of £7·50 a week, so that the net annual tax on jobs amounts to £386 per job. Is it any wonder that the Director-General of the CBI said last week—I believe rightly—that the measures introduced by the Chancellor last week would destroy 100,000 jobs. What an absurd way of conducting an economy.
  We have advised the Government to restrain public spending, to set about restoring incentives and to reduce taxation to make it worth while once again to work instead of taxing the creation of work. The Chancellor has been following, throughout his time in office, economics through the looking glass. What he did last week is not good politics; it is not even good cosmetics.
  Members of all parties on this side of the House should now make a judgment about the disastrous consequences of the four years during which the Chancellor has been in the Treasury. At the beginning of my speech I charged the Chancellor with ignorance and incompetence, with recklessness and deceit. I charge him additionally with cowardice and conceit. His record speaks for itself. The fact that the Government have chosen to make it a vote of confidence shows how little confidence the Government have got in their capacity to defend him. I call upon the House to pass this motion and find the Chancellor guilty as charged.
  4.45 p.m.
  The Chancellor of the Exchequer (Mr. Denis Healey): The Government have decided that the issues raised by the Opposition today are too important to be treated other than as a matter of confidence with all that that implies. The Prime Minister will wind up the debate. I shall deal with the economic issues raised by the right hon. and learned Member for Surrey, East (Sir G. Howe) which are presumably behind his motion of censure.

  1027
  I start with the measures which the Government announced last Thursday and which are the immediate occasion of today's debate. The right hon. and learned Gentleman finally got round to them, a trifle nervously I thought, after ploughing through a tedious and tendentious farrago of moth-eaten cuttings presented to him by the Conservative research department. That part of his speech was rather like being savaged by a dead sheep.
  When I presented my Budget to the House two months ago I did so against a background of the dramatic turn around in our financial situation. The pound was strong, interest rates had fallen substantially from the high point of October 1976 and were well below the level which I inherited from the Conservative Party. Our foreign trade was well in balance—I inherited a deficit of £3·5 billion from the Conservatives—and our reserves were at an all-time high, high enough to enable me to announce a repayment of $2,000 million worth of IMF borrowing ahead of time.
  In these circumstances I judged it right that the Budget should offer a stimulus to demand and output so that the real economy could reflect the improvement which had already taken place on the financial scene. In fact, as we now know, output had already started moving up steadily in the first quarter of this year. Therefore, I announced very substantial cuts in personal taxation which, together with the reliefs for small businesses, gave a demand stimulus amounting to £2,000 million in the current financial year.
  I concentrated these tax reliefs in areas where I judged the need was greatest. In particular I introduced a lower-rate band to help the low paid and an additional increase in child benefit, bringing it to £3 a week tax-free for every child. This will take place in November when the pension for a married couple will also be increased to £31·20 a week. It was essentially a family budget. It was not only in the nation's social interests but in its economic interest as well that it should have been so.
  Wage earners are already receiving in their pay packets the benefits of the increased personal allowance which is worth 50p a week for a married man and 25p for a single person. In a few weeks time the benefit of the lower-rate band will be felt which will give a rebate of
  1028
  about £18, and a continuing further weekly reduction of £1·30. Such tax reliefs and improvements in benefits have played an essential part in achieving a far better out-turn in the current pay round than most hon. Members believed possible when we promulgated our pay policy last summer. They will play the same role in the next round.
  Britain has learnt from bitter experience in recent years that the prime task for any Government must remain the control of inflation. This is an indispensable pre-condition for a return to high employment. Just as we learnt four years ago that massive pay increases were worthless if they resulted in massive price increases, so I believe we have learnt that it is far better to make moderate and responsible pay settlements, since the lower inflation which results from them makes it possible for the Government to cut income tax. Working people have been able to achieve increases in their living standards in the last 12 months averaging 5 per cent. in real terms, although the level of pay settlements at the beginning of the round was very much lower than the level of inflation at that time. It was above all to encourage moderation and responsibility in pay settlements in the coming wage round that I concentrated my tax reliefs last April on the ordinary family and avoided any Government action to increase prices, except for the health tax on high-tar cigarettes.
  The control of inflation depends not only on moderation in pay bargaining but on firm control of the monetary aggregates. That is an area in which the present Government have a consistent record of firmness and responsibility, particularly by comparison with our predecessors. In the last two years of the Conservative Government, the money supply increased at about twice the rate of money national income. In the first four years of the present Government it increased at only about half the rate of the increase in money national income.
  When I presented my Budget last April, it seemed likely that the increase in sterling M3 for the fiscal year 1977–78 would be under 14 per cent.—only slightly above the upper level of the range which I announced a year ago, although large inflows of foreign currency last summer and autumn must have contributed several percentage points to the

  1029
  increase in sterling M3. But it became apparent some weeks after the Budget that the seasonal correction for the money supply in the early months of this year and the increase in money supply in April must bring the increase in sterling M3 last year to 16¼ per cent.
  Even this did not in itself present an overwhelming case for further action in monetary matters. A number of countries have been able to accept very substantial increases in their money supply in recent months without concern for its impact either on their inflation rate or on their exchange rate. For example, in Germany, which is always being quoted to us, the central bank money stock, which according to the target laid down should be increasing at an annual rate of between 5 per cent. and 7 per cent. at the present time, has been running twice as high—at an annual rate of 12·8 per cent. in the last three months. Switzerland, which is aiming at a 5 per cent. increase in Ml, its measure of monetary control, has from January to March found M1 running at 13 per cent. —well over twice as high. Yet as the chairman of the Central German Bank, Dr. Emminger, pointed out in Munich the other day, there does not seem great reason for alarm at present, either about the Swiss rate of inflation, or about the exchange rate of the Swiss franc. Furthermore, there is not much worry about Germany's inflation rate or exchange rate either.
  But in Britain high money supply figures have been aggravated by the addition of nearly £500 million to the public sector borrowing requirement as a result of the Opposition's irresponsibility over the Finance Bill. As a result the financial institutions failed to buy Government stock in the necessary quantities, and this in itself led co a further increase in the money supply figures. At the same time bank lending to individuals and services, though not to manufacturing industry, was beginning to accelerate and retail sales have been rising exceptionally fast.
  The Government therefore decided to take action in good time to break the deadlock in the gilts market and to demonstrate their determination to maintain control of the monetary aggregates
  1030
  so as to restore the integrity of the Budget judgment in both fiscal and monetary matters. Our action last Thursday proved that we shall not allow the PSBR ceiling of £8,500 million to be breached, and that we shall maintain the growth of sterling M3 within the range of 8 per cent. to 12 per cent.
  For the reaction of the financial market since Thursday, let me quote one of the city circulars:
  "Tough action has been taken in an election year—totally refuting suggestions that vote-catching considerations would deter the Government from doing the right thing."
  As the Opposition Front Bench knows, our measures have already been a resounding success.
  I now wish to deal with each of the three measures in turn. First, we raised the minimum lending rate to 10 per cent. in order to bring it into line with the rates already ruling in the market. The Governor of the Bank of England and I have thought it better that we should take direct responsibilty for changes in the minimum lending rate. The last Government sought to shuffle them off.
  The decision we took last Thursday to raise the rate by 1 per cent. to 10 per cent. proved that we did not do so because we believed that it might be an easy way of evading responsibility for unpopular decisions. That was the reason that inspired the Conservative Government to introduce the previous system for determining the minimum lending rate.
  I know that my hon. Friends are concerned about the increase in mortgage rate which followed last week's increase in MLR, but they will have seen from the newspapers that the chairman of the Building Societies Association, Mr. Ralph Stow, has made it clear that the societies intended to go for a 1 per cent. increase in the mortgage rate in any case, even before last Thursday's increase in MLR.
  I do not believe the building societies needed to add the extra ¼ per cent. Events in the financial market have shown that the effect of my measures has been to reduce the uncertainty which has faced the societies and others in those markets. The Financial Times rightly pointed out on Saturday:
  "the market expects that the first of what is usually a long series of cuts in the lending

  1031
  rate can be expected in a matter of days, or at most a few weeks."
  I believe that to be true. But in any case the effect of the MLR increase is to add only about £1 a month to the average cost of a new mortgage. If, as I hope, interest rates soon fall to a more satisfactory level, I trust that the building societies will once again adjust their rates and bring them down accordingly. Even so, the House will know that at 9¾ per cent. the present level of mortgage rates is still 1¼ per cent. below that which we inherited from the Conservative Government.
  The second measure introduced by the Government last Thursday was the scheme for supplementary special deposits —the so-called "corset". As I mentioned, there was some evidence in last month's clearing bank figures that the banks had been lending too much in recent weeks. There have also been signs that, in case the Government might ultimately introduce the corset, some banks have been artificially inflating their eligible liability. For both these reasons, and as a further reinforcement of our control of the monetary aggregates, we decided that the time had come to introduce the corset. But we are confident that there will be room within the corset for sufficient lending to British industry to keep expansion on the path laid down in the Budget.
  If, as now seems likely, the restoration of confidence in domestic and external markets leads to substantial gilt sales, so reducing the public sector's need to borrow from the banks, the corset should have no damaging effect on industry since there will then be sufficient room within it for the banks to satisfy industry's requirements—and industry's requirements are the first priority under the Bank of England's directional guidance to the banking system.
  If we take the increase in MLR and the corset together, the Financial Times was right to say on Saturday, in the leader to which I have already referred, that this squeeze is quite a mild one judged by the standards of the past—for example, the Barber squeeze in 1973—and it will have little effect either on growth or on the sharp rise in industrial investment which is now accepted both by the CBI and by the Department of Industry.
  1032
  I now come to the third measure announced last Thursday, the decision to ask the House to recoup the revenue lost by the Opposition amendments to the Finance Bill by an increase of 2½ percentage points in the national insurance surcharge to take effect on 2nd October.
  Mr. Nicholas Ridley Mr. Nicholas Ridley (Cirencester and Tewkesbury) rose—
  Mr. Healey: I am delighted to give way to the hon. Gentleman, whose views on the trade unions and the nationalised industries have so endeared him to the mass of the British people.
  Mr. Ridley: The Chancellor said that he did not think it mattered that the Swiss and German authorities had exceeded their money supply targets. Nor did he think that it mattered that he did so in a rather reckless way last year. He also said that he wished strongly to adhere to the monetary targets. Will he say which of those two contrasting views he holds?
  Mr. Healey: I spoke of the views of the chairman of the German Bundesbank about the excessive increase in the Swiss and German money supply. I have made clear on many occasions—I did so last when I announced the new money supply figures, the target range, in the Budget—that the Government did not consider it necessary to be disturbed by a temporary blip in the money supply figures, even if it lasted for two or three months. That is the view of every monetary authority in the world that operates monetary targets. The hon. Gentleman knows that. He should not intervene half an hour after I have made a point merely to show that he has woken up.
  I come to the third measure, the 2½ per cent. increase in the national insurance surcharge to take effect on 2nd October. It will reduce the public sector borrowing requirement by about £500 million in the current financial year, and would yield £1,500 million net additional revenue in a full year. The House should understand that my Budget next year may be able to offset some or all of the revenue from the national insurance surcharge by cutting tax or by some other means.
  The Opposition—I am glad that the right hon. and learned Member for Surrey, East admitted this—are fully in agreement with the need to recoup the money

  1033
  that their own irresponsibility added to the PSBR. However, they believe that we should have found the money either by immediately increasing prices through an increase in value added tax or by immediately throwing people out of work through cuts in public expenditure. I shall describe the reasons that led the Government to opt for the increase in the national insurance surcharge and what I believe the effects are likely to be on the economy.
  It would have been a good deal easier from the administrative point of view to recoup the money by an increase in value added tax, although to follow the Opposition's advice and unify the rates of value added tax at 10 per cent. would have fallen well short of what we need this year to offset the cost of the Opposition's irresponsibility.
  To have increased value added tax now sufficiently to cover the PSBR cost of the Opposition's amendments in the current financial year would have raised the retail price index immediately by over 1 per cent. I cannot believe that that would have made sense at a moment when we are seeking the understanding of working men and women of the need for moderation and responsibility in wage settlements.
  As matters now stand, and as my right hon. Friend the Secretary of State for Prices and Consumer Protection demonstrated in detail last weekend, the country may look forward confidently to inflation remaining roughly where it is now until at least the end of the year after a a further fall in the next month or two. From the end of the year onwards the rate of inflation will depend increasingly on the level of wage settlements after the new round begins in August. If we can maintain and improve on the present level of inflation, it will be of immense value to our economic performance for many years to come.
  Throughout the Western world the greatest single task facing Governments is to break the vicious circle of inflationary expectations that has so damaged economic performance throughout the world in the past few years. We are beginning to break that vicious circle in Britain. As the Bank of International Settlements said this week, our pay policy has played a vital role. I believe that it would be
  1034
  disastrous for the British Government to jeopardise that achievement now by administering an immediate increase in prices, especially at a moment when discussions on the next wage round are in full course.
  It would be no less disastrous to seek cuts of £500 million in public expenditure to take effect in the current financial year. We are still waiting to hear the Opposition tell us from where the cuts will come. I have asked the question in every economic debate for the past three years and I still have not had a reply. Let them tell us this evening. Are they planning, for example, to oppose any of the increases in social benefits that the Government introduced in the Budget? If not, do they want us to cut current or capital expenditure in the public services or the nationalised industries?
  The Opposition never cease to attack us for making cuts in capital expenditure. It can only be concluded that their intention is to slash current spending. Apart from its immediate effect on the level and standard of public services, cuts in current spending would mean immediately throwing men and women out of work in large numbers. If that is what the Opposition really mean, for heaven's sake let them have the courage to tell us.
  I went through these arguments in detail before the House voted on the Opposition's amendments on 8th May. I said on that occasion that I would consider, instead of taking action on public expenditure and indirect tax, the possibility of increasing the employer's national insurance surcharge, although that presented daunting administrative difficulties in the middle of the fiscal year, and despite the effect on prices and industrial costs to which I refered in my Budget speech.
  The administrative difficulties are real. They have needed careful examination by officials in the Departments involved. There are no administrative problems for the Inland Revenue, which collects the proceeds of the surcharge along with PAYE payments and national insurance contributions. However, there are problems for the Department of Health and Social Security, which has responsibility for the national insurance contributions machinery. Nevertheless, with the advice of my right hon. Friend the Secretary of

  1035
  State for Social Services, I think that the problems are manageable.
  I know that the increase in the surcharge will also impose an additional administrative burden on employers. However, that will not be a serious difficulty. The method of collection that we have chosen will minimise the administrative burden falling on employers. It is a matter of substituting new tables for those that are now in use.
  I made it clear in my Budget Statement that there is a price to be paid for an increase in the national insurance surcharge at this time. That is why I told the House that I did not want to increase it. I should not have done so if I had not had to find the least damaging way of offsetting the Opposition's irresponsibility. Nevertheless, the effects of the 2½ per cent. increase in the national insurance surcharge on the economy are much smaller than some of the claims that I have read in the newspapers in the past few days.
  The CBI, for example, has suggested that the surcharge will increase prices by 1½ per cent. within a year, will worsen the balance of payments and reduce employment by 100,000. I am bound to say that I find such estimates difficult to reconcile with the way in which I believe the economy works and the way in which we have seen it working in recent years. Even if the increase in the national insurance surcharge is considered separately from other aspects of the economy—I will make it clear that that is quite an unrealistic assumption to make—its effect on prices and unemployment is likely to be substantially less than has been claimed.
  If employers pass on the surcharge in their prices, they will take time to do so. Prices would scarcely be affected this year, and would rise by three quarters of a per cent. by the end of next year, in 18 months' time. Of course, as the price effects come through so demand will fall and unemployment rise.
  The CBI seems to forget that the surcharge has been imposed reluctantly by the Government to offset the increase in demand that was caused by Opposition amendments for which the CBI was pressing. By the end of the next financial year —namely, in the first quarter of 1980—the two measures combined could still add some thousands to the number of unemployed. However, that is a fact of
  1036
  which I shall take account when I come to my 1979 Budget. As I explained, I may be able to increase employment by tax cuts or other means in offsetting part or all of the £1,500 million increase in the yield of NIS in a full year.
  In so far as the surcharge is not reflected in prices, the payment will represent a reduction in companies' cash flow over the same period. In practice some firms will be prepared to accept the decision without attempting to increase their prices. Other firms may look for increased productivity or a reduction in their work force. I do not deny that, but there is no reason to expect that companies will behave differently over the surchage than they have responded to increases of the same sort in the past. A squeeze on company financing is usually followed by a price adjustment.
  The House should recognise—we published the figures last week—that the liquidity of the 200 largest companies increased by well over £1 billion in the six months before the Budget. Therefore, I am confident that companies' investment and production plans will not suffer.
  What I have just been saying is what might happen if we could realistically consider the effect of the national insurance surcharge interest in the abstract, entirely on its own. But it is not realistic to look at the NIS separately from everything else that happens in the economy.
  I expect that the House can remember very well the cries of disaster, the predictions of catastrophe and the chorus of calamity which accompanied our decision to introduce the 2 per cent. surcharge in the summer of 1976. That surcharge came into effect in April 1977, and it is still in effect.
  But what has happened over that period? Inflation has not risen; it has fallen. It has fallen by over half. The balance of payments has not been worse. It was £700 million better in 1977 than we predicted in last year's Budget. Unemployment has been falling steadily since last September, not rising. Job vacancies have been increasing, even though 170,000 extra men and women are coming on to the labour market every year. Private manufacturing investment has risen in volume by 13 per cent.—faster than most other countries that compete with us.

  1037
  Of course, I am not claiming that the national insurance surcharge is responsible for these improvements in our performance. The hon. Member for Worthing (Mr. Higgins), whose exile to the Back Benches I deplore just as much as he must, knows perfectly well that we cannot isolate so small an element in the economy from everything else which is going on.
  This year, for example, the effect on jobs of the increase in the national insurance surcharge will be offset by the extra tax reliefs which it has been imposed to replace. The effect on sterling and the financial confidence of last week's package as a whole—we have plenty of evidence of that—should easily make up for the price effect of the extra surcharge. In other words, the effect of the whole package—surcharge and all—will be to restore the outlook for the economy to what it was when I announced my Budget on 11th April.
  Even after the addition of 2½ per cent. to the existing national insurance surcharge, Britain will be getting less of her total revenue from the employers' contribution to social security or payroll taxes than any of her main competitors in Europe. Germany, Belgium and Holland will be getting significantly more than Britain, and France and Italy more than twice as much. That is even after the reduction to which the right hon. and learned Gentleman referred.
  What would have happened if we had followed the advice of the Leader of the Opposition and increased value added tax? Prices would then be rising more in one month than the maximum that they are likely to rise after two years under the surcharge. If we had cut public expenditure, the loss of jobs would have been immediate.
  Meanwhile, the measures that we took last Thursday have already achieved their objective. The effect on the gilts market was immediate and electric. We are already well ahead of our funding programme, and doubts which may have existed earlier about the Government's ability to reconcile a PSBR of about £8½ billion with a target range for sterling M3 of 8 per cent. to 12 per cent. should have been dispelled.
  We acted to restore control of the monetary aggregates immediately it
  1038
  became clear that it was necessary. The Conservative Opposition, which let the money supply grow at a record 26 per cent. for two years before taking action, have chosen this moment to mount a personal vote of censure against me and the Government's economic policy. I am not surprised that they have chosen this device rather than to put down a motion which might compel them to reveal their own views about economic policy.
  In recent weeks, the Conservative Opposition have not even troubled to offer a semblance of unity on this or any other question. Indeed, the fact that they have chosen the right hon. and learned Member for Surrey, East to open the debate and the right hon. Member for Lowestoft (Mr. Prior) to close it demonstrates once again that they can achieve a factitious unity only by the juxtaposition of opposites. If the right hon. Member for Lowestoft does not agree with me, I hope that when he winds up the debate he will explain whether he supports the view of the right hon. and learned Member for Surrey, East about pay policy. Only a year ago the right hon. and learned Gentleman said that pay policy was
  "an onslaught on the British people's standard of living and freedom generated and forced down their throats by ageing, doctrinaire, prejudiced, Socialist trade union leaders".
  I confess, I wonder somehow how they can sit together in any semblance of amity and even appear to belong to the same party.
  So far as I could detect a consistent theme in the right hon. and learned Gentleman's speech, it was that the public sector borrowing requirement was still too high and should be further reduced by slashing cuts in public expenditure. But the Opposition still refuse to tell us the level of PSBR at which they aim, with the one honourable exception of the hon. Member for Blaby (Mr. Lawson) who, in the Budget debate, defined it with gay abandon as something between £4,000 million and £8,000 million.
  Mr. Nigel Lawson: The Chancellor of the Exchequer knows perfectly well that I was quoting the margin of error that the Chief Secretary had quoted of £2,000 million either way.
  Mr. Healey: Certainly the hon. Gentleman referred to a margin of error. I

  1039
  should say that the margin of error is even larger than £2 billion each way. If that was the basis on which he put it, he appeared to be aiming at a PSBR of £6 billion. In that case, he must tell us how he would make cuts of £2½ billion in the PSBR consistent with cuts in taxation and increases in public expenditure to which the Opposition have already committed themselves.
  Concerning the central proposition put forward by the right hon. and learned Member for Surrey, East—that the PSBR is too high to be consistent with the target range for money supply—I quote to him the words of his hon. Friend the Member for St. Ives (Mr. Nott) who, God bless him, five years ago was a Treasury Minister and unable to luxuriate in the irresponsibility of Opposition. He said:
  "It is wrong to think that an increase in the public sector's borrowing necessarily means an increase in money supply… the size of the borrowing requirement, although large need not necessarily lead to inflation as long as it is financed with the non-hank public."— [Official Report, 8th March 1973; Vol. 852, c. 721.]
  Of course, that is true. We have already met this condition for some months ahead of time this year through the market's response to last Thursday's measures.
  In any case, as Chancellor Schmidt pointed out the other day, Britain's public sector deficit is a smaller proportion of her GDP than is German's, and it is very much lower still than the deficit of Japan. Yet both countries, I am glad to say, are following the advice offered to them by the IMF, the Bank of International Settlements, OECD and myself, and are contemplating an increase in their deficits as a contribution to the concerted action at the summit in July.
  In fact, the Opposition have committed themselves to economic policies which would substantially increase the PSBR without giving us any convincing indication of how they would offset these increases.
  Only last Friday, the right hon. and learned Gentleman, who always takes refuge by chatting to one of his neighbours on the Opposition Front Bench when he is embarrassed, pledged the Conservative Party to massive cuts in income tax, capital gains tax, capital transfer tax and the investment income surcharge. All that is on top of the com-
  1040
  mitment to abolish the rates and to introduce a tax credit system which alone could this year cost £6,000 million if it followed the lines of the scheme announced to the House by the last Conservative Chancellor of the Exchequer. The right hon. and learned Gentleman then said that these cuts in direct taxation must be financed by higher taxes on what we spend. He did not tell his audience that that would mean increasing indirect taxation to a level which raised the cost of living by 8 per cent. "at a stroke" That phrase might be familiar to the right hon. Member for Sidcup (Mr. Heath). On top of these tax cuts the right hon. and learned Gentleman for Surrey, East and his colleagues have committed the Conservative Party to massive increases in public expenditure—£l,600 million, through a 4 per cent. increase, on the Armed Forces, on the police and in a dozen other ways.
  I am sorry that the Leader of the Opposition is not here. I was looking forward to having a word with her She was questioned on this matter, I gather from Monday's The Times, when she spoke to the Welsh Conservative conference at Llandudno on Saturday. I shall quote from the report in The Times of that auspicious occasion:
  "One questioner wanted to know where Mrs. Thatcher was going to cut public expenditure after her cuts on all taxes, in order to pay more for defence, the police and housing."
  What a sensible question.
  "Mrs. Thatcher began a list. Enormous funds went out through the National Enterprise Board. They would be stopped."
  She did not explain that this would mean the collapse of Rolls-Royce and British Leyland. I resume the quotation.
  "There would be cuts regarding the Community Land Act."
  But this would raise at most £50 million She went on to say:
  "And then there would be administrative-savings. Mr. Leslie Chapman, a former civil servant had suggested that up to £1,000 million could be saved in that way."
  But the right hon. Lady was too modest to point out that Mr. Leslie Chapman resigned from the Civil Service at the end of 1973 because he could not stomach the failure of the Conservative Government to act on his ideas in three and a half years of office.
  I am bound to say that the hon. Member for Southend, West (Mr. Channon),

  1041
  the Minister at the time, estimated that if Mr. Chapman's methods were applied all over the country they would achieve savings of between £25 million and £30 million a year. That is a far cry from the £1,000 million quoted by the Leader of the Opposition. But she is a little given to exaggeration when she is among the Welsh Conservatives. The report concluded:
  "Mrs. Thatcher admitted that there was a certain amount of risk about it but we have got to get production up."
  That is no way to approach the problems of the nation's economy.
  The fact is that the Opposition have not the slightest idea what policies they would follow on tax or public expenditure or anything else. They have already abandoned policy as an element in their appeal to the British people. They rely instead on an advertising agency called Saatchi and Saatchi to market them by the same techniques as it used for marketing Penguin biscuits, Quality Street chocolates, Fairy Snow and, appropriately, "Schhh ….. You know who".
  I do not believe that one can win the confidence of the most mature electorate in the world by selling a political party like a soap powder. Yet the Conservative Party offers nothing else, except one thing —the personality of its leader whose natural instinct is to divide rather than unite, to confront rather than co-operate, to exploit fear and prejudice rather than appeal to responsibility and tolerance and who, I am glad to say, is steadily losing ground both in the country and inside her own party as a consequence.
  The Labour Government can offer an alternative. It is an alternative which has been proved to work. Only four and a half years ago many observers wondered whether the democratic system itself would survive the strains imposed by years of confrontation. They wondered whether the United Kingdom could remain united in the face of the refusal of the Conservative Government to contemplate devolution for Scotland and Wales. They wondered whether the economic problems facing us were soluble at all within the constraints of our constitution.
  Our policies have brought Britain through the severest crisis since the 1930s, with its social structure not only intact
  1042
  but strengthened. Government and people are now working together for the common good. The trade unions have accepted responsibility for the welfare of the nation as a whole in return for the Government's commitment to further the aspirations of working men and women.
  The rewards are there for all of us to see in falling inflation, falling unemployment and rising living standards. Britain is now paying her way in the world again. To the financial transformation that we achieved last year we can now add the first evidence of a steady improvement in the real economy. Confidence has returned. Britain's inflation rate is still falling at a time when it is beginning to rise again in many of the countries which compete with us. Last Thursday's measures guarantee that we can preserve and build on this achievement.
  The issues that are at stake today far transcend these economic matters, vitally important as they are to our health and prosperity. They go to the root of the sort of people that we want to be. Do we want the forces of division and distrust to take over, to determine relations between Government and people, between the two sides of industry, between the races which contribute to the richness of our community, between the nations which compose our State? I believe that we do not. I believe that we seek moderation, not extremism, construction not destruction, co-operation not confrontation. In that belief I ask the House to reject the Opposition's motion.
  5.28 p.m.
  Mr. David Steel: I am deeply moved by that reception. Last week we were told that this would be a general debate on the economy at the request of the Official Opposition. Whatever else the debate is, it has not been that so far. I do not see how it could be expected to be a general debate on the state of the economy given the nature of the motion tabled by the Opposition.
  I have noticed that of the 17 Supply Days that we have had so far this Session —the days when the Official Opposition have chosen the subject for debate—only five have been on positive policy resolutions. Of the others, eight have been

  1043
  debates on the Adjournment and four on Ministers' salaries. This approach lies at the root of one of the defects in the Conservative Party. It is, as the Chancellor said, that the Conservatives do not put forward positive alternatives to the House for its consideration. Very few propositions are advanced on which we can pass our judgment.
  We know why: there is a lack of positive and agreed policy within the alleged alternative Government for us to consider. Plenty of kites are flown outside the House. We are told that we do not discuss immigration and race relations enough and yet, when we ask for a debate in Opposition time, it is not given. We are told that there may be a referendum on capital punishment. We do not debate that. There is also the Ridley Report, although that may not have been so much a kite that was flown as a kite that escaped. None of these policies is ever put forward for discussion in the Opposition's time.
  We then come to the question of public spending. We are constantly told that the Conservative Party believes in reducing public expenditure. I could hardly believe my ears when I heard the right hon. and learned Member for Surrey, East (Sir G. Howe) castigate the Government for having abolished the regional employment premium, as he did this afternoon. Its abolition represented a substantial reduction in public expenditure—one with which I did not agree—and it conies ill from the Opposition to complain since at the last election they campaigned for the phasing out of REP.
  When one boils down the Conservatives' criticisms on public expenditure, one comes back always to their points about curbing the National Enterprise Board and the associated agencies in Scotland and Wales. I must tell the right hon. Member for Lowestoft (Mr. Prior), who is to wind up the debate and who is responsible for employment matters on the Opposition Front Bench, that during the recess I visited two of the four mills in my constituency which are now owned by the Scottish Development Agency. It has a majority shareholding in the parent company under the Act. I was asked on my visit, both by workers and by management, what would happen if the Conservative Party came to office and carried out its pledge. They were anxious to know what would happen to their jobs
  1044
  and to the companies. I was unable to give them an answer. What is more distressing, the Conservative Party dues not give them an answer either.
  Every time we hear these calls for reductions in public expenditure we learn of yet new campaigns for increases. It was discovered the other day that the hon. Member for Glasgow, Cathcart (Mr. Taylor) had led a deputation to the Scottish Office to seek the expenditure of £20 million on Hampden Park. That is a drop in the bucket considering the present state of Scottish football. That is another item of public expenditure proposed by the Conservatives.
  Some of the newspapers, commenting on a speech of the Leader of the Opposition, said that there was a veiled suggestion that if a Conservative Government had been in office troops would have been sent to Zaire. I do not know whether that is true, but each time we hear these speeches the theme is for more public expenditure in particular and less in unspecified and general terms.
  Therefore the Opposition must understand that if we are to have these debates they must be regarded either as a ticking off of the Chancellor—and I have the feeling, especially having listened to him this afternoon, that he would not know a penitent's stool if he saw one—or as serious economic debates in which the Opposition of the day put forward alternatives.
  The fact is that today's debate is neither of these things. If this had been a debate simply ticking off the Chancellor I have no hesitation in saying that my colleagues and I would have voted against him tonight—[HON. MEMBERS: "Oh"]—for reasons that I shall explain in a moment. But the Prime Minister and the Government consider for reasons that I understand that a defeat against the Chancellor would be the equivalent of a defeat for the Government as a whole. They are right so to consider it. That would cause havoc in the markets and they would be right to go to the country if a motion of censure on the Chancellor were carried.
  My colleagues and I therefore have to consider whether we should allow our natural irritation with the Chancellor to bring about the downfall of the Government as a whole, to destroy the programme of legislation upon which we are

  1045
  embarked and to destroy all that has been achieved over the last 18 months.
  When the right hon. and learned Member for Surrey, East talks about the Healey formula for inflation he always fails to tell us what was the rate of inflation during the last three months of the Conservative Government. Does he have that figure in his mind? If not, I certainly do. It was 18·9 per cent.
  Mr. F. A. Burden: No, it was not.
  Mr. Steel: Yes it was. It was 18.9 per cent.
  Mr. Burden: Will the right hon. Gentleman give way?
  Mr. Steel: No, I will not. In the last three months before the Lib-Lab agreement the three-monthly rate of inflation was 21·6 per cent. That was the state of crisis that the country faced in March 1977. I have no hesitation in saying that even though it may not have done my party any great good we were absolutely right to stick through a programme of economic recovery which has at least brought the inflation rate down to about 8 per cent. That achievement should not lightly be thrown away.
  I turn to our reasons for our irritation with the Chancellor. Unlike the Opposition, we published comprehensive Budget proposals. We may have been open to criticism for that. The Press and hon. Members may have taken up points and argued against them. But at least we produced something that was open to argument, and we produced a balanced Budget. In fact, the Economist, the Financial Times and a number of independent commentators described what was called the Pardoe Budget as the best on offer. I hope that my hon. Friend the Member for Cornwall, North (Mr. Pardoe) will forgive me saying that it was not very high praise because there was none on offer from the Conservatives and only one on offer from the Chancellor. Nevertheless, it was considered to be superior to the Chancellor's.
  Among the proposals that we published and discussed with the Chancellor was a fundamental switch in the burden of taxation away from incomes and on to expenditure. The whole list of our pro-
  1046
  posals was published, and I shall not go into the details here. But the one point about our discussions with the Chancellor —and I am sure he will not mind my making this known because he has indicated this fact himself—was that he rejected various of our proposals because they would have had a direct and immediate effect on the retail price index. We understood that objection. However, we stuck by the integrity of our Budget proposals, but we understood the Government's difficulties at a time, as the Chancellor said, when we were trying to counter inflation and enter into wage negotiations.
  It was for that reason that, after a series of discussions that my hon. Friend the Member for Cornwall, North had with the Chief Secretary and the Chancellor, we tended to focus on the proposal for an increase in the national insurance employers' contribution. We were proposing a 1½ per cent. increase. The Chancellor and his colleagues told us, first, that it was wrong because it was a tax on employment and, second, that if it had been right it would be impossible to do this year. That was in April. In June we find that it becomes possible, and at the higher rate of 2½ per cent. There is a big difference between the 1½ per cent. increase that we advocated as pact of a Budget change and as a quid pro quo for cuts in taxes at the higher rate, and the 2½ per cent. increase, without the changes in the higher rates of tax and after a 3½ per cent. increase in the minimum lending rate with the effect that that has had on industry.
  The other reason for our irritation was that when I and my hon. Friend went to the Treasury to have detailed discussions on our proposals with the Chancellor just before the Budget, we had an amicable discussion. The next morning my hon. Friend and I were astonished to read the front-page headlines in the newspapers. The Guardian carried the heading,
  "Anti-Budget vote means General Election —Healey, Liberals get poll warning".
  and The Times said,
  "Election if Liberals oppose the Budget"
  "Mr. Healey rejects Steel tax plan".
  Unlike with any other discussion that has taken place between myself and the Prime Minister, in the consultative committee that was set up between us, or in

  1047
  the consultations with Ministers, we experienced here a one-sided leak intended to try to discredit the Liberal proposals. That was the reason for the justified anger among my colleagues.
  Faced with that, we in the Liberal Party had to stick to our line, and we did so. We did exactly what we said we would. We voted for the tax reductions in the Committee stage of the Finance Bill, and the Government suffered two defeats which were entirely unnecessary. They arose because we had failed to reach agreement on the Budget. We then had a month's delay before the Chancellor announced the measures that he was going to take to restore the public sector borrowing requirement to its proper level. During that month there was no consultation with my colleagues, and confidence in the City began to ebb from the Government.
  That is the reason why we are angry with the Chancellor. That is why I believe that I was right, in the statement that the right hon. and learned Member for Surrey, East quoted, to complain about the way in which the Chancellor handled the Budget judgment.
  What is the conclusion, therefore, to which we come? I believe that the Chancellor has still got to learn—maybe he has learned now, rather late in the day—that minority Government is a very different art from majority Government, and that in minority Government, whether or not one likes it, one has to pay rather less attention to one's own past speeches and one's own manifestos and far more to the prevailing opinion in Parliament.
  What is incontestable is that a reduction in taxes on incomes was not only though to be desirable by commentators outside but was the majority view in the House, and was known to be the majority view in the House at the time when the Chancellor was preparing his Budget, but he appeared to make no concession to it. But it was not only the majority view in the House. As the Chancellor of the Duchy of Lancaster confirmed, only on Monday of this week at Question Time, it was also his publicly stated view as well and, I suspect, the view held among others in the Government.
  Indeed, any of us who visit industry from time to time, knowing that it has to compete now internationally, particularly
  1048
  within the European Community but internationally in general for middle management posts and promotions, know the extreme difficulty of having a tax system that is so hopelessly out of gear with the rest of the industrialised states.
  The case for reducing income tax was well known and well argued, yet the Chancellor chose to ignore it. I hope that he will not ignore that sort of position in the future.
  If the Chancellor will take independent advice, rather than advice from the Liberal Party, I should like to refer him to the article headed "Minority is Beautiful"—a sentiment with which I do not expect him to agree—on Friday 12th May in the Financial Times by Mr. Joe Rogaly. He said:
  "Britain has now been blessed with nearly a year and a half of minority Government. It has been a salutary experience.
  This is a far happier state of affairs than the one that is customary in this country. It is usually held that the Government must govern' or that if 'A Chancellor cannot get his Budget through unamended the Government ought to resign' or some such nonsense.
  Britain is the only West European country in which it is assumed that it is a disaster when the Executive cannot have its will worked without question by a complaisant legislature. In all the others there must always be some kind of horse-trading."
  Mr. Rogaly concluded:
  "The need to keep some sort of peace with the Liberal Party has done the Labour Government a power of good over the past year."
  I do not necessarily expect the Chancellor to admit that in public. But if as a result of today's events he is a sadder but wiser man, the Opposition's motion will not have been entirely wasted.
  5.42 p.m.
  Mr. Douglas Jay: Although I do not agree with a great deal of what was said by the right hon. Gentleman the leader of the Liberal Party, I at least agree with him that the Prime Minister is entirely justified in making this debate a matter of confidence. The proposal to reduce the salary of the Chancellor by half is clearly a matter of confidence, and it is only reasonable that we should treat it as such.
  I also agree with the leader of the Liberal Party that it is time that the country came to understand what a Tory

  1049
  Government would mean in present conditions and with the present leaders of the Conservative Party. It is quite clear that a Tory Government, for one thing, would propose to close down the National Enterprise Board, British Leyland, Rolls-Royce and Chrysler and would withdraw most of the finance now enjoyed by the steel and shipbuilding industries. That would not be a very wise contribution to full employment in Britain.
  Having listened to the right hon. and learned Member for Surrey, East (Sir G. Howe) this evening, I thought that the most remarkable thing about his speech was that he justified the large reduction in income tax voted by the Opposition, which has raised the borrowing requirement by about £500 million, he argued that that gap had to be filled and the cut in the borrowing requirement restored, he opposed the increase in the national insurance surcharge which the Government have proposed in order to fill that gap, and he gave absolutely no account of what the Tory Opposition would urge should be done to fill the gap.
  That seems to me to be the height of irresponsibility in what is, I suppose, intended to be a serious economic debate. Indeed, having listened for many years to economic debates in this House, I can hardly ever remember such a story of irresponsibility by any Opposition as we have witnessed in recent weeks.
  It was obvious this spring to anyone who understood the situation that sudden tax reliefs of £500 million over and above what was given in the Budget would risk upsetting the hard-earned stability which this country had achieved in the last two years. It was not hard to see that in April and May this year. I am not being wise after the event. I was bold enough to say in the debate in May, when we discussed income tax cuts, that I thought that it would be imprudent to increase the borrowing requirement still further at a time when interest rates were tending to rise here and in the United States and when the balance of payments could so easily slip out of control.
  Of course, the Conservative Party entirely ignored the real situation. The Conservatives pressed on with the tax cuts, and they must bear the main responsibility for the measures that the Gov-
  1050
  ernment have now been forced to introduce.
  But the even more remarkable fact about the Opposition is that they are not merely continuously demanding lower taxes but are also proposing major increases in public expenditure all the time. Every day at Question Time more proposals for higher Government expenditure, on almost every subject, come from the Conservative Party, in almost every Question asked.
  I ask the Opposition Front Bench just this one question. I am sorry that the right hon. and learned Gentleman has disappeared. How large is the increase in defence spending that the Conservative Party proposes? Is the hon. Member for Blaby (Mr. Lawson) prepared to tell us now? Is the figure of £1,600 million given by the Chancellor today the correct figure for the increase in defence spending proposed by the Opposition?
  It is very evident that the Opposition Front Bench are not prepared even now to answer the question. The right hon. and learned Gentleman accused the Chancellor of ignorance. It is very evident that the hon. Member for Blaby is entirely ignorant of the increase in defence spending that the Conservative Party is proposing, because if he knew the answer he would presumably give it to us.
  But I also noticed that the right hon. and learned Gentleman showed himself ignorant of a number of the salient facts in our present economic situation which any reasonably serious review would have included. First, I mention what he appeared to regard as a minor matter and did not even mention—the gold and dollar reserve of this country. When the Tories left office in 1974, the gold and dollar reserve stood at rather less than $7 billion. Today, after all the efforts of the Conservative Party to disrupt stability and confidence in the last few months, it stands at $16 billion—far higher—
  Mr. Lawson: What about the debts?
  Mr. Jay: —than at any time since the war. The latest figure is $16,661 million, one of the highest figures in the world. That is at least one factor in the situation.

  1051
  Another salient factor in the situation, secondly—which the right hon. and learned Gentleman never mentioned—is that unemployment has now been falling for nine months. Of course it is much too high. Nevertheless, it means something that we have had a nine-month steady fall in unemployment and a rise in the figures for unfilled vacancies.
  Thirdly, the right hon. and learned Gentleman never mentioned the enormous burden now falling on our balance of payments as a result of the terms of EEC membership negotiated by the Conservatives. Failure to mention that burden is characteristic of economic debates nowadays. I am always struck by the fact that in such debates we hear nothing about the EEC from all those hon. Members who were arguing three, five and 10 years ago that membership would mean an enormous gain to this country. We all remember the great market of 250 million of which so many people spoke.
  The truth is that we are now wasting all or possibly more than all our balance of payments gains from North Sea oil in bearing the balance of payments cost of EEC membership. I give the figures only briefly. The net cost to us of the EEC budget—these are Government figures—has risen to nearly £700 million in the present year. The total balance of payments cost of the EEC budget plus the common agricultural policy was recently estimated in a report of the Cambridge department of applied economics at about £1,000 million in the present year.
  In addition to that £1,000 million, we have incurred, as some of us predicted, a huge deficit in trade in manufactured goods with the rest of the EEC. The relevant comparison here is in our trade with the Six rather than with the Eight, because we were in free trade relations with Denmark and Ireland before we joined the EEC. Here the figures are equally remarkable.
  In 1970, before we joined the EEC, our trade with the EEC Six in manufactured goods showed a small surplus, of £160 million. By 1977 that same trade exchange had been turned into a deficit of £1,399 million. In spite of statements that this is now diminishing, the reverse is true. For the first four months of this year the provisional figure, which I have
  1052
  had from the Department of Trade today, is that our deficit in manufactured goods with the Six is now running at an annual rate of £2,160 million, worse than at any time before. The "great home market" is now costing us a deficit in manufactured goods of about £2,000 million a year, which implies much higher unemployment in manufacturing industry than we should otherwise experience.
  It may be that the whole increase in the deficit in manufactured goods is not entirely due to EEC membership, although the greater part of it must be, because one of the consequences of membership was that we reduced higher tariffs on manufactured goods than were reduced in return on the goods we exported. But even if one attributes only half the present deficit in manufactured goods to membership—and that is an obvious underestimate—it still follows that the total burden on our balance of payments due to EEC membership is now running at about £2,000 million a year.
  That burden is therefore eating up the whole or rather more than the whole of our earnings from North Sea oil. If my right hon. Friend the Chief Secretary cares to give his estimate of earnings from North Sea oil on the balance of payments this year, I shall be glad to know what the latest figure is.
  The consequence of what I have described is that we are only barely in surplus now on the balance of payments, with all that that means, when we should be earning a comfortable and established surplus. The result is that our whole economy is held back and unemployment is much higher that it need be.
  The report of the Cambridge department of applied economics estimated that the £1,000 million burden on the balance of payments meant a loss of GNP of about three times that figure—about £3,000 million a year. The House can easily see what that means in terms of production, employment and exports.
  I shall pursue the argument no further this afternoon, but I do not believe that the country can much longer bear the burden of that trade deficit on top of the cost of the CAP and our rapidly rising contribution to the EEC budget. Nor shall we get unemployment down as long as we go on importing that huge volume

  1053
  of manufactured goods from Continental Europe.
  Mr. Molloy Mr. Molloy rose—
  Mr. Jay: I shall not give way, as I had better finish now.
  If we are serious about this country's future economic fortunes, it is surely to the removal of those gratuitous and unnecessary burdens that we should turn our minds, rather than to short-term wrangles about tax rates, the money supply and the borrowing requirement, which by comparison will have far less effect on our long-term economic fortunes.
  5.56 p.m.
  Mr. Reginald Maudling: The debate began as a debate on a motion of no confidence in the Chancellor of the Exchequer. I gather that now the Division will be a vote of no confidence or confidence in the Government. That does not make much difference, because the Chancellor is so central to the whole of Government policy that the one is commensurate with the other. However, it seems to have affected the Liberal Party, which I gather might have considered censuring the Chancellor but could not censure the Government. I have never seen a more obvious example of being
  "Willing to wound, and yet afraid to strike".
  In his robust—as usual—and inaccurate —as usual—defence of his policies, the Chancellor said a good deal about the most recent measures and a certain amount about the extended past. I want to deal mainly with the most recent measures. All I would say about the Chancellor's whole past record is that it was summed up with great force and detail by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) and was not answered by the Chancellor. It is the reason why confidence in the Chancellor has gone. The overwhelming reason why we should declare today that we have no confidence in the present Chancellor is that everyone outside the House has already said precisely that.
  No Chancellor can succeed if he has lost the confidence of the financial community here and abroad. It may be unjust, it may be unfair, and one may say that markets are more concerned with what they think is true than with what in
  1054
  fact is true, but, whether it be unjust or unfair, it is the basic truth. A Chancellor who does not command confidence cannot be successfully responsible for this country's finances.
  I believe that there is no economic justification for the Government's recent measures. They have been made necessary solely by the Chancellor's mismanagement and the subsequent collapse of confidence in his ability. He confirmed that very point this afternoon, when he said that Switzerland and Germany can have a big increase in the money supply and no one worries. Why is that It is because in Switzerland and Germany people have confidence in their Governments' financial management and confidence in their Finance Ministers.
  The only cause of the recent measures was the collapse of confidence in the Government. The public are being asked to pay the price of the Chancellor's failure. We must make it absolutely clear that the price falling upon the public results solely from the Chancellor's failure.
  There is no economic case now for a serious credit squeeze and the effects it will certainly have on employment, investment and expansion. If there were such a case, there must have been one a few weeks ago, when the Chancellor introduced his expansionary Budget If there is an economic case now for a credit squeeze, there was no case at all for that Budget.
  The Chancellor argues that the measures that he has just introduced have been made necessary by Opposition amendments reducing the rates of income tax. That is totally, palpably and demonstrably absurd. I argued on 8th May in supporting the reduction in income tax rates that the cost of our amendment fell well within the margin of error in the public sector borrowing requirement. I did not expect to have such early and complete confirmation of that from the Chancellor himself.
  I wonder whether the Chief Secretary has read the main story in the City columns of The Times today. I hope that it is accurate. It makes very interesting reading:
  "Public spending this year is now expected to be about 1 per cent. less than forecast at the time of the April Budget. This could cut as much as £700 million from … the

  1055
  PSBR … Mr. Healey yesterday let slip the news of the latest official revision",
  at a trade union conference, in
  "… an apparently unplanned comment".
  I bet it was unplanned.
  If this story is accurate—I assume that it is, because it has obviously been written after consultation with the Treasury—I hope that in replying the Government spokesman will say so. If the story is true and there has been such a reduction in the Government's own estimates of public spending, the whole argument that the surcharge is needed to mop up our £500 million totally falls to the ground. Either the Government must deny that story completely today or they must accept that their aguments are totally bogus. One or the other they must do.
  Coming to the Chancellor's measures, the employers' surcharge is utterly misguided. Of course it will put up prices, unless the Government plan to tell employers not to put up prices as a result of this increase in their costs—although why this increase should be sacrosanct, I do not know.
  But the point which the Chancellor totally ignored today is that, if employers do not pass on this increase in their costs, it will not counteract the reduction in income tax; it will only reduce corporate savings and the effect on inflation will be nil. The Government can have brought in this measure only if they intended to put up prices as a result; otherwise, it is totally meaningless.
  But the measure is more dangerous than just being meaningless. It is fundamentally wrong from the point of view of the management of the economy. The Government say—I agree, and have always agreed, about this—that it is essential to restrain wage increases. They are asking the unions to restrain their demands because the cost of labour must not go up. At the same time, they are taking deliberate action to put it up themselves.
  How can the Government say to the unions, "You must not ask for more wages because that will raise the cost of labour to the employers, but, by the way, you may not have noticed that we ourselves are putting it up by 2½ per cent."? No Government can possibly hope to conduct a consistent incomes restraint policy if they are deliberately doing the
  1056
  opposite thing. That has always been the fundamental, and I believe valid, argument against any sort of poll or employment tax since it was first suggested by Lord Selwyn-Lloyd many years ago as the first regulator.
  It is clear what happened in the last few weeks. The Chancellor and the Prime Minister—he is a downy bird if ever there was one—faced with the collapse of confidence in their own policies at home and abroad, decided that something had to be done. They thought that they saw a wonderful opportunity: they could restore confidence in the financial markets for a few months—they are only thinking about the end of the year—certainly past October, by an overkill of this character and blame it on the Tories for reducing income tax. That was the scheme. It was a clever bit of political planning, but a poor way to run a country.
  The main components of prices are profits and costs. I see no danger of a profits boom in the near future. I do not think that raw material prices are likely to rise much in the light of the slackness of world trade. The only increase will come from weakness in sterling, arising once again from loss of confidence in the Government.
  The real danger of a renewed inflation rate comes from a new wages explosion. By this measure, the Chancellor has done all he possibly could have done to encourage a renewed wages explosion and to work against a policy of restraint.
  The Prime Minister was right to say that inflation need not go up again, but that is not the same thing as saying that it will not go up again. One thing is crystal clear: if the rate of inflation rises again, the blame will rest there—on the Government Front Bench.
  6.5 p.m.
  Mr. George Robertson: I do not need to underline to this House the pride I have in being elected as Member of Parliament for Hamilton. I hope that my presence here and the result in that constituency are of some little relevance to this debate.
  It is a great honour for me to follow in the footsteps of the late Member for Hamilton, Mr. Alexander Wilson. I knew him well and I know that he was widely respected in the House. He was a man of dignity and integrity, who worked

  1057
  quietly and without fuss in his constituency and in the House pursuing the interests of the people of Hamilton and of Larkhall. He did so diligently, without publicity and with honour.
  The work which Mr. Wilson did quietly was all designed to help the people of the area and to further the interests of his constituents. I know from the volume of work which is there and the catalogue of achievement mentioned to me during the by-election that he was a man who clearly made an impact in the House and had much to offer.
  Although I am proud to be the new Member for Hamilton, I am aware that that is possible only due to the tragic and untimely death of Alex Wilson. I know that he also made a considerable contribution within the parliamentary mining group. That is an industry which he knew well and from which he came. He is well remembered within the industry in Scotland, throughout Scotland and in the mining group.
  At this stage in history it is also a pleasure for me to represent Hamilton because the features of that part of Lanarkshire show all the promise of the new Scotland which lies ahead. It is an exciting mixture of ages, of classes, of population and of industry. In that mix it has changed dramatically from the older and more traditional industries of the past—especially that of mining, on which Scotland's economy previously relied—to light engineering, electronics and the production of sophisticated clothing. In those areas it is excelling. The character of Hamilton is an indication of the way in which Scotland will go in future—not just electorally but in the areas of industry and of technological progress.
  During the by-election, as perhaps during any by-election, local circumstances and problems were highlighted. Although there is much of promise in the area, one of the greatest causes for concern is unemployment. As an aspiring Member, I made it my duty and obligation to pursue the subject of joblessness in the community. We cannot rest, in the House or throughout the country, as long as the present level of unemployment continues.
  At 11 per cent., unemployment in Hamilton is considerably above the Scottish and national average. It is a sub-
  1058
  stantial problem. The most serious aspect is youth unemployment. The prospects for young people leaving school this year and in future without jobs are a matter of concern for them, for their parents and for us in society as a whole, because the future of the country and the future stability of society will be largely dependent on the sort of future that we can offer to young people.
  I feel that we have in the country as a whole to make a concerted effort to ensure that the problems of unemployment that we now face are purely temporary, and that we can build a future prosperity which will mean that especially the young people will be assured the jobs, the training and the prosperous future that they would wish for themselves, and that their parents would wish for them.
  However, I fought a campaign based on the Government's record. I did it not uncritically but not apologetically, and I asked the people to give their assessment of the situation and their view of the future and to say which party they would trust to run the country's affairs in the future. In the context of this debate, it is instructive and relevant to remember the answer that the people gave.
  However strongly we feel about the present position of the economy, we must recognise that locally and nationally much has been done to alleviate the problems of unemployment, and especially to look after the needs of young unemployed people. In the Hamilton area, much has been done about unemployment as a whole. In the past five months there has been a positive increase in employment and a very clear decrease in unemployment which has been greater than the national trend, which in itself is welcome. As for youth unemployment, over half those between the ages of 16 and 17 registered as unemployed are already involved in job creation schemes and Government-assisted programmes. We were able to show that, although there was a level of concern that we should not in any way attempt to disguise, there has also been positive Government action to make sure that the impact was the least that was possible in the circumstances.
  The area also shows other signs of Government intervention, and of the intervention of a Government in regional policy which has made a serious impact

  1059
  on the problems of Central Scotland. The Scottish Development Agency—of which I was privileged to be a board member until I came to Parliament—had quite a significant impact in the area. Its industrial estates employ the vast majority of the people in the area, and in companies in which investment has taken place in surrounding areas jobs have been safeguarded for people who work within Hamilton. In the steel industry—one of the largest employers in Hamilton, although it is marginally outside the constituency—investment by the Government has assured the future of Ravenscraig and associated industries.
  Although temporary Government measures are not an answer, there are all the signs in the area that the jobs which are necessary for the future, the growth that is needed and the hope that is desired by the people are being promised by the Government. The people in my area gave a pretty clear and decisive answer as to which party they would trust for the conduct of their affairs in the future.
  The acid test at the end of the day is the will of the people, and there have not been very many tests of public opinion in Scotland where the issue has been put to the country. Not only has the Government's record been judged and, I think, honourably tested in this election. The future of the constitution of the country was also put to the test in the circumstances here. The policies of separation and of the disintegration of the United Kingdom as we know it were clearly put to the electorate. The electorate gave an answer which shows that people in that area, as throughout Scotland, want to see Britain united and the problems faced head on.
  I also feel that one of the lessons of that by-election, and its result in my presence here today, is that the people of Britain and of Scotland are tired of the cynical manipulation of policies by whichever party may choose to pursue them. They have rejected confrontation quite clearly and precisely whether it be in industry or within the separate parts of this country. If there is an answer to be taken from any of the election results that we have had recently, it is that the constitutional settlement proposed by the Government is necessary, desirable and in keeping with the desires of the peoples
  1060
  of this country, who are looking for a different constitutional set-up.
  The Government's resolve in this area of the constitution, despite the frustrations with which they have clearly met so far, has been of enormous consequence in stemming the tide towards the break-up of the United Kingdom. I believe that the lesson of the present period is that the British people are tired—and clearly tired—of confrontation, and that they will in future continue to put their trust in this Government, believing as they do that only this Government's competence, conviction and philosophy will be relevant to the problems of all these islands in the 1980s.
  6 15 p.m.
  Mr. J. Enoch Powell: The hon. Member for Hamilton (Mr. Robertson) has come to this House fresh from a by-election which was of more than passing importance and on which the eyes of all parts of the United Kingdom were directed. He has plunged straight into a debate which we learn is on a matter of confidence, and into the heart of political controversy. He has thereby given a sign of possessing at any rate one of the indispensable political qualities—that of courage.
  The hon. Member referred in fitting terms to his predecessor's devotion to the interests of his constituents, and he mentioned that his predecessor had gone about that part of his work very quietly Indeed, I happen to believe that our work for our constituents, individually and locally, is, on the whole, best and most sucessfully achieved if it is pursued quietly. But the hon. Member will he called upon to display the quality of political courage in facing the questions of the age into which we have entered. It is a time when questions which go to the very existence of the United Kingdom, and the powers of this House, divide not only the two sides of the House but the individual parties. We shall look forward to watching the hon. Member's progress and his development in that environment
  Time was, I believe, when a member of the Government who was the object of a motion of personal censure would consider it incumbent upon him, so far as he possibly could, to be in attendance upon the House throughout that debate, to hear what might be said, and to hear

  1061
  it said to his face. Although one recognises, of course, the other calls upon the time of an exalted Minister such as a Chancellor of the Exchequer, I think it should be said that throughout this debate his place primarily is on the Front Bench. I am not sure that the Chancellor, as the occupant of his office, has not relied too much, or more than he ought to have done, upon the loyalty and, I may say, upon the ability and the diligence of the team by which he has been supported. We could have done, and I think they could have done—perhaps he could have done—with his presence in the House more often during economic debates.
  If the right hon. Gentleman were here now, as he ought to be, it would be useful to remind him of what he appeared to have forgotten, that is to say, what he forecast on 8th May when the debate took place of which this debate is in a sense a continuation and an intensification. When he spoke at the beginning of that debate he envisaged the possibility of the amendments being carried against him. We should remember what he then told the House the Government would do if those amendments were carried. He said, no more than just over a month ago:
  "The Government would thereafter watch the situation closely both as regards the development of the economy in the coming months before the payments to which I have referred are made"—
  those were the repayments of tax in the autumn—
  "and as regards any further irresponsibility in Finance Bill debates."
  The Chancellor went on to say:
  "As I have explained, the outlook for the PSBR is inevitably uncertain. I shall monitor its movements continuously to ascertain whether it is likely to exceed £8½ billion. If it seems likely to do so, the Government will take all necessary steps to correct it."—[Official Report, 8th May 1978; Vol. 949, c. 817.]
  That was the position five weeks ago in the first half of this debate. The Chancellor did not consider that the carrying of those amendments, at a cost of £500 million in the current year, called for any immediate action. The Government would stand back and watch the development of this situation over the coming months; but if the PSBR of £8½ billion was going to be exceeded, they would have to
  "take all necessary steps to correct it."
  1062
  It is pertinent to inquire what has happened since to alter the course of action which the Chancellor then foresaw. It was certainly not that the total PSBR for the financial year is now foreseeably going to exceed £8½ billion. The right hon. Member for Chipping Barnet (Mr. Maudling) pointed out, and again it bears quotation, the news attributed to the Chancellor himself in The Times this morning that
  "Public spending this year is now expected to be about 1 per cent. less than forecast",
  which would be equivalent to a reduction of £700 million, not £500 million, in the PSBR.
  Be that right or wrong, the fact is that at this stage in the year the fluctuation in the various items of expenditure and in the rate of the various items is such as to throw up alterations in magnitude far greater than £500 million—the point upon which the Government have sought to base the pyramid of their accusation against the Opposition. In any case, the Prime Minister himself only last week put an end to any idea that the condition precedent, set by the Chancellor, might have been fulfilled; for in his excitement over his usual duel with the right hon. Lady the Leader of the Opposition he put his foot through his own hoop. He was talking about the borrowing requirement:
  "it is true",
  he said,
  "that both last year and this year it was estimated at £8·5 billion. Last year, it turned out to be about£5 billion, or perhaps a little lower."
  Then he went on:
  "Because of the difficulties of estimating these borrowing requirements, no one can say to what extent it will be accurate this year, but £8·5 billion is a reasonable figure to take and to work on. No one can say at this stage that it is likely to be over the top."—[Official Report, 8th June 1978; Vol. 951, c. 363.]
  So we have the authority of the Prime Minister himself not only for the complete uncertainty—on a scale far exceeding a mere £500 million—of what will be the PSBR out-turn for the current financial year, but also for the proposition that, at any rate, so fax nothing has happened to force upon the Government the urgent conviction, calling for instant action, that the £8½billion limit is to be overshot.
  What happened? I do not think one can describe more concisely what happened than in terms—I am sorry to quote

  1063
  The Times twice in one debate; I apologise for that—in its report on Friday 9th June. It ran as follows:
  "In recent weeks the Government has found itself trapped in a vicious circle in which institutions have not bought gilt-edged stock because they felt that money supply was growing too fast, and the failure of gilts to sell was forcing the Government to expand the money supply to pay its bills."
  What happened, in short, was that the Government found that they could not borrow. They suddenly found they did not have the credit to be able to sell Government stock. There was a collapse in the Government's borrowing power which they had not expected—the less so because a month ago the Chancellor took additional credit for the fact that this year, in the few weeks since the Budget, the movements of the exchange rate had been such as to diminish his borrowing needs rather than to increase them, as had been the case the previous autumn. Still, there was the fact, staring the Government in the face, a fact which they could not banish and in the face of which they had to take action—the action announced last week, including the imposition of additional taxation, which happens to be a sum calculated to offset the cost of the amendments carried on 8th May.
  The reason why the Government found themselves unable to borrow, the reason why they ran out of credit, was not that people said "Aha, this year, as a result of what happened on 8th May in the House of Commons, the PSBR will not be £8½ billion—Heaven help us, it will be £9 billion! It will be one-seventeenth greater than the Government had anticipated". To suggest that this was a disastrous turn-round in face of which confidence of course ebbed away and the Government were unable to sell their stock is ludicrous. The inability of the Government to borrow was not the result of £500 million more or less upon the prospective out-turn of the PSBR, come the time when it is all added up next March or April. It was due to the fact that the Government are already borrowing hugely more than can be sustained over a period.
  No one can foresee or predict—no one could have predicted—exactly at what point of time that excessive borrowing would produce its inevitable effect. But it produced it right enough. The symp-
  1064
  toms appeared last week. Year after year the Chancellor has come to this House with the air of a boy riding a bicycle with his hands off the handlebar saying "See, no hands. Whatever the PSBR is, I get away with it". This time he has not got away with it. It is not the £500 million, more or less, involved in the decision of the House on 8th May. It is the fact that for this country, in our circumstances, a PSBR of the dimensions of £8 billion is unsustainable. It is that borrowing requirement, that balance of our public finances, which destroys what my old friend and colleague, now the noble Lord Lord Rhyl, once described as
  "one of the conditions of civilised life that the Government should be able to borrow"—
  —that is, able to borrow genuinely, not to borrow through the banks and thus create new money.
  It is, therefore, a sentence upon the whole financial policy and management of the Government which has been pronounced in these last days by the behaviour of the market, and the reaction of the Government themselves to it. But it is not something which has come suddenly or unexpectedly. This is not an irruption from outer space or an act of God. This is something which sooner or later was bound to come home. We could not go on—and I am not the only person who said it, although I have said it year in and year out—budgeting annually for that size of borrowing requirement and hope to get by, taking one year with another, without being forced to create inflation.
  It is no use expressing the borrowing requirement as a fraction of the gross national product and then engaging in one of these silly international comparisons and saying that the Germas do it or the Swiss do it. Perhaps the day will come when the credit of this country and the expectations as to its financial management and its standards are so restored that, if necessary, we can borrow with safety the same proportion of the gross national product as they can borrow in the Swiss Confederation or in the German Federal Republic. But that is not our situation and we have known that it is not our situation these many years; for it is not only the present Government who have been gambling. For years both parties have gambled knowingly and it is catching up with us at last.

  1065
  Two questions were opened in the debate on 8th May. The first was answered by the decision of the House on that occasion. It was answered to the effect that in the view of the House a greater priority should have been accorded to the reduction of personal taxation especially on the higher incomes.
  But there was a second decision, which was left open—whether, in consequence, it was necessary that an adjustment should be made in the revenue. That was the second half of the debate.
  Before, however, that second half came up, it was overtaken by a verdict not upon the minute financial consequences of the decision of 8th May, but upon the whole financial management over the past five or seven years of the Chancellor of the Exchequer and, I am prepared to say, of his predecessor.
  Dr. Jeremy Bray: It seems to me that, however low the borrowing requirement, if the Chancellor has to specify a target the gilt-edged market will speculate about it and the interest rate will go all over the place, anyway. Surely this arises from having a target at all, rather than any level of target.
  Mr. Powell: I cannot agree with the hon. Gentleman that the financial consequences for Government of a borrowing target of £1,000 million are the same as those of a target of £10,000 million. The hon. Gentleman waves his hand airily; but there comes a point, and we now know that we are past it, at which saturation has been reached. We knew that we were going to reach that point, and now we have got to it.
  In these debates we have for a long time, perhaps deliberately and perhaps out of a certain sense of delicacy, been dealing in magnitudes which were not the important magnitudes. The PSBR in itself is not significant: it is how the PSBR is financed that is significant. The Chancellor of the Exchequer is right in saying that there is no necessary connection between the size of the PSBR in any one year and the growth of the money supply that year or the rate of inflation at whatever is the appropriate time lag thereafter. That depends upon the extent to which the borrowing requirement is
  1066
  financed by genuine borrowing or has to be financed by inflation.
  Similarly, there is no real meaning in talking about the injection of stimulus into the economy of so much and no more—£2 billion but not £2½ billion—for that £2 billion or £2½ billion is only the marginal element of the total borrowing requirement, so that again we are brought back to the question of the possibility and practicability, one year with another, of borrowing the sums required from the non-banking sector.
  We are coming to the point when we have to acknowledge that our budgeting and the conduct of our finances have for long been unbalanced. We can now restore it only if we are prepared to give back to the Government the control over the money market. There is only one way in which the Government can have control over the money market. There is only one way in which the Government can decide how much extra money they will create. It is all very well to have these targets of 8 per cent. or 12 per cent. of M1 or M3, but the decision on the matter will rest with the Government only if they are not forced to borrow an excessive sum month by month and year by year to get through. If they need to borrow no more than they are in a position to borrow on their own terms, only then can they genuinely decide what stimulus they will give to the economy by an increase in the money supply. Then and only then will the Government be the masters, and not the forces which create inflation.
  This is a vote of censure, of censure upon the management which has brought us to the necessity for last week's events. It is also a vote of censure upon a House which has been content to walk the edge of a precipice year after year, considering that the lesser evil was the wobble from time to time into a greater or lesser degree of inflation.
  I hope we are coming to the end of that phase. Knowing now that we shall have to produce a different balance between revenue and expenditure, I hope we are coming to the end of the phase in which we have these silly exchanges of taunts between the two Front Benches in which they ask "What would you cut? Where would your control of public expenditure be?" I hope that we are coming to the

  1067
  end of the era in which Government and Parliament were at the mercy of inflationary forces and to the beginning of the next era in which, in the name of the people of this country, we in this House, and the Government through us, take real control.
  6.37 p.m.
  Mr. John Evans: It is a great privilege to follow in debate my hon. Friend the Member for Hamilton (Mr. Robertson). Like my hon. Friend, I am also a member of a trade union. His magnificent maiden speech shows the tremendous strength of the British trade union movement when it can bring forward men like my hon. Friend who speak with such clarity.
  My hon. Friend referred to work done by his predecessor, and we all knew Alec Wilson very well. I am sure that Alec Wilson would be proud to know that his constituency was being served so well by the man who has followed in his footsteps. We look forward to further speeches in the House from my hon. Friend the Member for Hamilton on the economy and on industrial affairs. He has also strengthened the trade union group in the House and we look forward to his participation in the activities of the trade union group. We sincerely hope that after the next General Election more trade union members will come forward and represent the Labour movement in the next Labour Government.
  The remarkable speech of the right hon. Member for Down, South (Mr. Powell) aroused much interest on the Conservative Benches. It seemed to arouse more interest than the speech made by the right hon. and learned Member for Surrey, East (Sir G. Howe). But the right hon. Gentleman did not tell us how he and his colleagues will vote tonight. He has once again left us in a cliffhanger situation. Sometimes ordinary people understand and appear to agree with the right hon. Gentleman's views on race, but they have not the faintest idea of what he is talking about on the subject of economic affairs.
  One of the problems of ordinary people when attempting to follow economic affairs debates is deciding whether politicians are talking gobbledegook when they refer to the PSBR, the M1 and the M3. It would help if Members talked in ordinary language so that ordinary people might
  1068
  understand them. I say that of every hon. Member who considers himself an economic expert—and I hasten to add that I do not consider myself to be an economic expert. Indeed, when I survey the ruins to which the economic experts have reduced this country I sometimes think that it would be better to get rid of at least half of them.
  The motion is probably the most cynical that the Opposition have ever put before the House. I am forced to wonder why they did not table a motion of censure but sought to treat this debate as a personal attack upon the Chancellor of the Exchequer. The right hon. Member for Down, South referred to the Chancellor's absence from the debate. It is only fair for me to point out that he is now back in the Chamber listening to the views of hon. Members. The Opposition tabled the motion with their usual cynical approach and tried to suggest that the minority parties should support them in this venture. It is right that the Government should have turned it into a motion of confidence, and we shall watch with interest to see how the minority parties vote.
  There is no doubt that the people of this country accept the arguments and policies put forward by the Government. The victory of my hon. Friend the Member for Hamilton, at the by-election is evidence of that fact. I am confident that we shall win the next General Election on the policies of the Government over the past two years. If the minority parties do not follow the Government into the Lobby they will earn the wrath of the British people when they give their opinion of the performance of respective parties in the difficult circumstances of the last four years. I hope that the Opposition parties will have enough acumen to join us in the Lobby. Otherwise they may be charged by their own supporters with naivety and opportunism.
  Of course, Opposition parties have the right to be critical of the Government, as the leader of the Liberal Party was earlier. Indeed, I am sure that Ministers appreciate that many of their own Back Benchers are sometimes critical of the Government. I wonder what last week's measures, which seem to have been received with such glee in the City, will do for employment or the confidence of the trade union movement in agreeing to

  1069
  another round of pay policy. I am sure that no one will suggest that those measures will improve employment opportunities at a time when unemployment is still far too high, particularly in the region that I represent. They will certainly do nothing to produce a better climate for another phase of pay policy. When we consider the effects on mortgages and local authority borrowing and the likely impact on council house rents and rates, we can hardly suggest that the people who normally vote Labour will be delighted by the performance of the Government in the past week.
  However, I recognise that the Government had to repair the hole that the Opposition blew in the Chancellor's strategy, and it is irresponsible for the Opposition to suggest that the Chancellor's salary should be reduced when he is attempting to make good the hole that they blew in his strategy.
  The main subject with which I wish to deal is pay policy. It is obvious that, in one form or another, we shall have another round of pay policy. I do not criticise the Government for attempting to achieve another round of the policy, but I am entitled to criticise the fact that after three years of pay policy we have still not worked out a strategy on pay policy with the trade union movement and employers.
  I thought that in the last three years the Government would have had a public debate with Parliament, the trade union movement and employers about the sort of economic contract that the people of this country would like to enter into over the next decade. We hear a great deal about the City, the public sector borrowing requirement and the money markets, but it is the strength, ability and courage of the British people that will put this country on its feet. As an old trade union leader once said, if the City of London caught the flu tomorrow and dropped dead nothing much would change, but if there were a flu epedemic that killed all the workers the country would go bankrupt overnight.
  It is essential to start a debate with the trade union movement and employers about what we mean by pay policy. Certainly a long-term policy would be better than a policy that was entered into
  1070
  in July or August and seemed to settle the markets and steady the pound until after Christmas but then created uncertainty because of the media contemplating whether there would be a further round of pay policy in the next July. It is time that the Government embarked upon a debate with the trade union movement on the need to work out a policy.
  There have been three years of non-statutory sanctions-backed, allegedly voluntary—but often compulsory—policies which have been relatively successful and have played a major part in reducing inflation. I am sure that we all agree that maintaining the level of inflation at that of our competitors should be our aim, but we must ask where we go in the future. What are we aiming at for our society? Is it to maintain unemployment at more than 1 million or to maintain the trade union movement shackled into a position that causes considerable controversy in industry?
  The Opposition are happy to talk about the country being in the grip of militant trade union leaders, but we sec at Leyland that tool room workers are taking action against their own union—my union—which is trying to suggest that the men should return to normal working. That is the sort of problem that we face at present.
  Everyone agrees that across-the-board pay policies are fair—provided that they do not apply to him. As long as they apply to everyone else, pay policies are acceptable, but everyone regards himself as a special case needing a special deal. We hear that approach time and again from the Opposition in relation to the police, the Armed Forces and various sectors of industry. All the opinion polls bear out that everyone agrees that pay policies are necessary, but not if they apply to him.
  We must also recognise that the term "free collective bargaining" is meaningless in the public sector. It has never existed in the public sector because that sector has always been restrained by the Treasury, the ratepayer or, sometimes, by a combination of the two. In the private sector free collective bargaining is acceptable, but it is often unfair and in many places workers doing similar jobs in different firms receive different levels of

  1071
  income, often for historical reasons. In addition, free collective bargaining in the private sector can create problems and unfairness for public sector workers, and one group of workers is therefore set against another.
  We must also appreciate the special position of workers in certain nationalised industries. Coal, steel, railway, gas and electricity workers are virtually operating in the industrial sector. They are industrial workers and want to be treated as such, certainly for comparison with other workers doing similar work.
  We must recognise that there is a very large element of the population for which only the Government can cater—the pensioners, the sick, the disabled and the unemployed. Their income can come only from the Government and the Government can provide it only through taxation. Often anti-inflation measures introduced by the Government create hardship and unemployment for those at the bottom end of the ladder. Those whom the Government must look after are often the first to feel the effects of the anti-inflation measures such as those which were undoubtedly necessary when we were going through the period of 25 per cent. inflation.
  A healthy public sector paying excellent wages and providing excellent conditions for its workers requires a healthy industrial sector, both public and private, which is winning orders abroad and improving its productivity. Whilst the rest of the world certainly admires much that is British, other countries certainly will not stand by and allow markets to be given to us. We shall have to fight other nations in the best possible way by winning orders in open competition.
  Therefore, there will have to be a dialogue between the Government and the trade union movement about incomes. While the trade union and labour movement talks a lot about a planned economy, the fact remains that we cannot simply talk about planning agreements for industry, equitable taxation policies, a fair comprehensive education system, compassionate social service and pension policies, just housing policies, a thriving National Health Service and a massive reduction in unemployment and at the same time say that wages can be
  1072
  left to the law of the jungle and that only those who have muscle shall benefit from whatever is going. Therefore, in that context there must be a dialogue which must be based on an equitable share of the national cake. Through dialogue we can discuss all the policies which are involved and we can then achieve what I believe is possible in this country—a steady and a prosperous future.
  We in the labour movement have seen the alternative. The report which the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) leaked to the Press gave to the working people of this country a glimpse of what would happen if the Opposition were returned to power. We should have industrial anarchy, confrontation, the law of the jungle and unemployment. I am sure that the British people do not want that. Therefore, it is up to my Government to ensure that we enter into a meaningful dialogue with the organised working people of this country.
  6.45 p.m.
  Mr. Donald Stewart: I congratulate the hon. Member for Hamilton (Mr. Robertson) on his maiden speech. It was a very lucid, well delivered speech, and, although I know that he has considerable experience in public speaking, that is rather different from rising to one's feet for the first time in the House of Commons. It was a very robust speech, and the fact that I disagreed with 80 per cent. of it makes me all the more keen to hear the hon. Member again so that we may have a chance to cross swords. Also, as one of the friends of our late colleague Alec Wilson, I support the hon. Member in the fine tribute he paid to his predecessor.
  The right hon. Member for Battersea, North (Mr. Jay) made a very good point when he drew attention to the fact that the United Kingdom's membership of the EEC is hardly ever mentioned in economic debates. He laid strictures on the Conservatives, quite correctly, for their negotiation of our entry. Unfortunately, too many of his right hon. and hon. Friends shared the same delusions, and this has caused great discomfort to all of us.
  In his speech today the Chancellor painted a picture of a country that has

  1073
  been transformed from near bankruptcy—without ever mentioning how we came to be in that position—to prosperity. That is a totally false picture. He also gave us additional forecasts today, something which he does frequently. I expect that there will come a time when he will come to the House after Question Time and present us with a fresh Budget as an application under Standing Order No. 9.
  Successive Tory and Labour Governments have claimed that unemployment and raging inflation are the products of a world-wide economic recession, but the fact remains that we have fallen catastrophically behind our industrial competitors. Our economic success, in terms of income per head of population—and that is a fair gauge—can be measured by the fact that the United Kingdom was fourth in the world league table in 1960. We were behind only the United States, Sweden and Canada. By 1975 the position had deteriorated dramatically. We had crashed to seventeenth place behind all our major European competitors, apart from Italy.
  A belief has been fostered by the Government and swallowed by the credulous that our economic difficulties have been overtaken. However, almost every economic forecast, apart from the Government's, underlines the stagnant level of our production—still about the level of the three-day week—the low levels of investment, the high level of inflation, and the balance of payments difficulties in the offing. All these point to the paucity of the claim that the situation has been satisfactorily improved.
  My party has taken a decision to vote tonight on the Government's record in Scotland. It is based on three basic points. The first is the misuse of the oil resources, which were diverted to the Treasury, bypassing Scotland. We have a country with mass deprivation, unemployment and lack of opportunity, yet the resources from the Scottish sector of the North Sea—the terms of the Government's own document—have been taken away to the Treasury in London. Mr. Peter Balfour, chairman of the Scottish Council (Development and Industry), said on 9th March:
  "The bonus of oil revenue must not only be invested to secure our long term position, but should also be sepaartely identified and
  1074
  accounted. It should not be allowed to disappear like some maxi road fund into the maw of the Treasury and disappear without trace. Nor should it in my view be used to finance programmes in which the Government would have been obliged to invest anyway, but should be spent on imaginative new projects which would otherwise be beyond our capacity to finance."
  I believe that the Government's decision to divert these resources to the Treasury will simply mean that they will he raided and looted by the Government as the road fund was in the 1920s. At a time when Scotland has the first chance in two centuries to restructure her economy, little or nothing has been done about it. In the absence of a Scottish oil fund, Scotland has no access to the investment benefits of oil revenue. Where is the economic plan? It is non-existent. Does that demand a vote of confidence from my party?
  Social deprivation in the west of Scotland is still largely unchanged. It is an appalling shame, unequalled by almost any country this side of the Iron Curtain. The Government have only toyed with the problem. They have had four years to mount a real offensive on these conditions, but they have done little about it. Does that qualify for a vote of confidence?
  The Labour Party manifesto for October 1974 stated:
  "The first and overriding priority facing Scotland in the next five years will be to create more and better jobs. We shall act to protect our existing jobs and expand our existing industries, as well as attract new industries and new jobs to Scotland."
  That promise has been totally betrayed. In February 1974 the unemployment figure in Scotland was 93,000. In February this year it was 196,000—more than double. We have seen a breach of faith by the Department of Industry following the pledge given by the Secretary of State that the new Chrysler model would be built at Linwood.
  In these areas—unemployment, the misuse of oil resources and social deprivation, not to mention all the others—the Government's record in Scotland is totally without redeeming features. The Government have been faithless and they have abandoned their election promises. There is not a scrap of evidence to justify the support of my party in a vote of confidence, and my party will refuse to supply that support.
  The Minister of State, Scottish Office (Mr. Gregor MacKenzie): Before the right hon. Gentleman resumes his seat, may I put one point to him?
  Mr. Deputy Speaker (Sir Myer Galpern): The right hon. Gentleman has resumed his seat.
  7.0 p.m.
  Mr. Archibald Hamilton: I am grateful to be called to speak in this important debate and for this opportunity to make my maiden speech to the House.
  I was lucky enough to have been elected in the recent by-election to a constituency in one of the most pleasant and sought-after areas of the country. But, in common with most places, Epsom and Ewell has its problems, and the one that has been most persistent is that of rogue gipsies. Gipsies have historic rights to make use of Epsom Downs at certain times of the year, but today constituents are faced with the problem of rogue gipsies many of whom are not proper gipsies at all, who camp in the centre of the area the whole year round. Many of these people openly flout the law and are a source of great aggravation to shopkeepers and townspeople alike. At the same time, they claim protection under ancient Acts of Parliament.
  Epsom and Ewell is associated with the Derby and has an extremely fine racecourse. Only last week 250,000 people cheered home an English horse and an English jockey in an extremely exciting finish to what is without doubt the most famous race in the world. Racing and British bloodstock remain an important industry in the constituency, and play a significant role in helping our balance of payments, but it is regrettable that the number of Epsom trainers in the post-war years has declined from 22 to eight, with the inevitable loss of jobs that has resulted.
  In the seventeenth century Epsom was a fashionable spa favoured by royalty, which is how we come to have Epsom Salts. Unfortunately the salts, renowned for their properties as a purgative and chemically known as magnesium sulphate, are no longer produced in Epsom but are more likely to be imported from West Germany. One wonders whether this is a case of misrepresentation under the Trade Descriptions Act. However, the
  1076
  constituency continues its association with the health of the nation, and today has four large mental hospitals serving many London boroughs.
  I also wish to take this opportunity to pay tribute to my predecessor, Peter Rawlinson, who represented the constituency for nearly 23 years. He is now Lord Rawlinson of Ewell, having been deservedly elevated to another place. His distinguished record as a Law Officer took him through some very troubled times in our recent history when terrorism in British cities was at its worst. Both Peter Rawlinson and his family had to be given the strictest possible police security, with all the inconvenience and discomfort in which that resulted. I am sure that hon. Members will join me in wishing every success to him in his future career, wherever it may take him.
  I have spent most of my working life in industry, and I share the concern of hon. Members on both sides of the House that British manufacturing industry has been in a state of decline for far too long. As competition from the developing world gets fiercer, many of our traditional industries are under threat and are unsure of their survival, yet the Government propose to burden them with increased national insurance contributions and higher interest rates. Surely it would be better for Government to cut back on public expenditure than to impose an even heavier burden on the industrial sector. We shall never be able to reduce the queues of unemployed while the Government make it more expensive to take on labour. We shall never get the level of investment that we need in industry as long as Government borrowing pushes up interest rates, and high personal taxation holds down consumer demand. It surely must be apparent that the Government can either increase public spending or it can set about reviving British industry—but it cannot do both.
  I describe myself as a small business man, by which I do not mean that I am particularly small, but the engineering company that I run employs 35 people. From my experience, I have found that many small businesses are under-capitalised and depend most heavily on their skilled employees. As little of their machinery is automated, the only way they can respond to rising demand is by taking on more operators. In contrast

  1077
  in our large industries, demand can increase significantly before they need to employ more workers. But many of our small businesses could expand their work force in these days if they did not feel that the Government were against them and that the future was so uncertain.
  So much of the Government's recent legislation has only succeeded in discouraging employers from taking on labour and building up their businesses. The effect of employment protection legislation means that many small businesses are now employing workers on short-term contracts to avoid the liabilities that arise from longer periods of service. When small business men hear about the workings of the industrial courts, it is always the horror stories of anti-employer bias and exorbitant awards that get the widest coverage. Few of these people feel confident enough to conduct their own defence and therefore they hire lawyers—and legal fees can mount alarmingly.
  It is hardly surprising that so many small employers settle out of court to avoid spending valuable time away from work. It is no surprise either that unions invariably advise their members to have a go in the industrial court. It can so often produce a tax-free bonus for very little effort and no expense. Hon. Members must question the wisdom of legislation that protects people at work but at the same time puts more men and women in the dole queues.
  What a tragedy it was that the Chancellor of the Exchequer's thirteenth and fourteenth Budgets missed such a golden opportunity to give a new deal to British industry—a new deal to transfer the burden of tax from what we earn to what we spend, so that wage earners can once again be rewarded for their efforts, so that it will be worth while to work the extra hours, or to train for greater skills or promotions. We need a new deal that would make it pay for craftsmen to work for industry again rather than doing, as we know they all do, work outside for cash, a new deal that would bring much of our ablest professional and managerial talent back from abroad to work for the success of this country, and a new deal that would put heart back into our profitmakers—the men with the new ideas, the men who can react quickly to changing
  1078
  market conditions. I refer to men such as my former constituent, Sir Freddie Laker, who was justly recognised in the recent Birthday Honours, and who can take on the giant organisations and beat them. These are the men who can get British industry moving again, who can realise the potential of our inventors and engineers, and who can put Britain back on the industrial map.
  Finally, surely we must try to bridge the gulf that divides people at work. Now that so many industries are fighting for survival, should we not work together for prosperity which everyone can share? Should not the Chancellor encourage an attitude to profits so that all the workers in an enterprise can participate? I wish to see Britain adopt a system similar to the system in France where profit-sharing schemes are tax-deductible to the company and, after a period, are paid tax-free to the employee.
  People in industry must realise that the divide between "them" and "us", between management and unions, is largely illusory. The real division is between success and failure, between profit and loss. Industry stands on the right side of that division when everybody works together for the prosperity in which all can share.
  I wish to thank the House for listening to me so patiently.
  7.8 p.m.
  Mr. Ian Wrigglesworth: It is a great pleasure to congratulate the hon. Member for Epsom and Ewell (Mr. Hamilton) on his maiden speech. We have listened with great interest to the facts that he gave about his constituency. Some of us do not know that constituency at all and therefore probably listened with greater interest than those hon. Members who know the area. We also listened with interest to his comments arising from his connection with business as a business man. I am sure that he will have further opportunities to put forward his views on that subject in the House. We look forward to hearing those views and his experiences which I am sure will be of value to the House, even though all of us may not agree with him.
  We hope that the hon. Gentleman's predecessor, Lord Rawlinson of Ewell, a distinguished former Member of this House, will achieve success in another

  1079
  place and in his career. We hope that the hon. Gentleman will follow in Lord Rawlinson's footsteps and will have an equally distinguished career in this House.
  The House must support the Government and the Chancellor of the Exchequer because the strategy offered to us by the Opposition, such as we can work it out, is wrong and would do great damage to the country. The Government's strategy, as outlined in the past few months and in recent weeks, and indeed over the longer period of the Labour Government, is clearly right for the country and has been of enormous benefit to our people.
  Although the first three years of our period of office were years in which people had to tighten their belts and suffer from some of the difficulties that arose from the period of the previous Government, we are now reaching a situation where we shall be on top of inflation and where we can begin to see some of the benefits that have been worked for and for which sacrifices have been made over the previous two or three years.
  The Opposition have been trying to inflict on Britain the same economic irresponsibility in Opposition as they did when they were in Goverment. The criticism that we make of the specific action that they have taken in the past few weeks in making further cuts in taxes is one that is straightforward in economic terms. In the past few months domestic expenditure has been considerably boosted. Retail sales have risen by 2 per cent. in May and by 7 per cent. over the past six months, which is faster growth than we have seen since 1972–73. If there were to be a further boost to the economy, the boost should not come in the form of further tax handouts. Such a course would almost certainly lead to a further increase in domestic expenditure.
  In my view, and in the view of most Labour Members, if there were sufficient flexibility and the possibility of making a boost, that should be directed into forms of public expenditure that would give rise to increased employment and help industrial capacity in a way that increased domestic expenditure would not.
  The reason for the increase in domestic expenditure is there for all to see. We
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  have had a successful year of pay policy in which prices have not risen as much as pay. Indeed, price increases have been considerably less than the increase in pay, so there has been a considerable boost to the money in people's pockets over the past year. In addition, the Chancellor in his Budget made substantial reductions in taxation that have gone into people's pockets. It is only natural that the boost in domestic expenditure, in retail sales, has taken place. To adopt a policy of further boosting domestic expenditure would be wrong.
  If such a possibility existed, the boost should come in construction—for example, public works, housing, hospitals and other such sectors. That would have a beneficial effect throughout the construction industry, which would be welcomed by my hon. Friends.
  Any increase in capacity or in public expenditure was not possible. It was not possible to boost the economy more than my right hon. Friend did. Indeed, at the time of the Budget it will be remembered that there were those, especially in the City, who said that the cuts that the Chancellor made should have been less than £2 billion. There were some who were pressing for £1·7 billion while others urged £1·5 billion. It may be that the views that they expressed led them to be alarmed in a way that has not been helpful because of the subsequent Budget that the Chancellor introduced.
  When we talk about the public sector borrowing requirement being £8½ billion and we look back to last year and find that it turned out at only £5·7 billion, it is clear that we must make some judgment at the time of the Budget on what can be done. The Chancellor's judgment was one that I felt went as far as the Government could go. It was what the CBI was pressing for at the time. Therefore, it might have been expected that the market would accept that judgment and be prepared to fund the Government's borrowing requirement in a way that they clearly have not done in recent weeks.
  I should have been happy to see the Chancellor take the steps that he took rather earlier so as to forestall some of the increases in interest rates that have taken place. However, there is no doubt that the steps were necessary.

  1081
  The right hon. Member for Down, South (Mr. Powell) says that we have reached the end of the road. It is clear that the market does not agree with him, otherwise it would not have been buying gilts in the period since the Chancellor took action as it has done. There have been occasions before when the Governments have found difficulty in financing their borrowing requirement and action such as that taken recently has had to be taken to encourage the market to buy Government stock.
  I do not see that we have reached the Armageddon that the right hon. Gentleman seemed to suggest. He suggested that we have reached the end of the road. All the signs are that the Government will now be able to sell their stock on the market in the way that they need to do to fund their requirements during the coming year. As the right hon. Gentleman will know, all the factors on the market at present lead us, if interest rates are to come down and the value of stock is to increase, to think that the sales of Government gilt-edged stock will continue for some time.
  The Government's strategy has clearly been the right one. It has stopped inflation rising. When the right hon. Gentleman criticises the Government for borrowing more than they should have done and for increasing the money supply, all that I can do is draw his attention to money supply figures in recent years. The figures are remarkable. I know of the right hon. Gentleman's interest in these matters and surely they give him grounds for supporting the Chancellor.
  In 1972 there was a 27 per cent increase in the money supply. In 1973 there was a 27 per cent. increase. In 1974 it was 10 per cent., in 1975 it was 6 per cent. and in 1976 it was 9 per cent. It has been an equally low figure by comparison with the 1972–73 figures of the previous Administration in the past year although it has not been as low as in recent years. The Government's record since they came into office on the point on which the right hon. Gentleman sets so much store surely presents a case to cause him to support the Government tonight.
  What we have seen in recent weeks is another example of the Opposition cynically and opportunistically exaggerating
  1082
  the economic difficulties that the Government have faced to try to obtain party advantage at the expense of the country. They have demonstrated cynical opportunism. The action that the Government have taken is by no means unprecedented.
  The Chancellor has been attacked for having so many Budgets. I welcome the fact that he has used the regulator and taken various actions. There have not been 14 Budgets since my right hon. Friend became Chancellor, as those who have served on Finance Bills during that time will know. There have merely been the normal number of Budgets with Finance Bills following on from them, except for the additional Budget for the introduction of capital transfer tax.
  All previous Chancellors in all previous Administrations have, to a greater or lesser extent, used the regulator and the other economic controls that they have at their disposal from time to time. Although the Press might refer to mini-Budgets, they are not Budgets in the sense that we understand the major Finance Bill of the year with which we are now involved. Therefore, it is wrong to try to caricature the Chancellor as one who has had many mini-Budgets. I welcome the fact that he has done that.
  It has always seemed silly to many of us—and there has been public criticism of Governments about it—that we should have this one-and-only Budget every year in which the Government are supposed to do everything, taking no further action until the next Budget in the following spring. Many of us feel that it is wiser to use the regulator in July, the autumn or whenever necessary to try to keep the economy in balance, to try to reduce unemployment, growth in the money supply or any other matters which get out of balance during the year rather than leave it until the subsequent spring. There can be no exception to what the Chancellor did last week. Indeed, his action was well justified and should be supported by the House.
  The Opposition's opportunism on this matter—this is another reason why I think that all Labour Members should support the Government tonight—is matched equally by their opportunism on so many other issues. Looking at the Opposition's record during the last two years and the confusion and division which exists within their ranks, all of us,

  1083
  certainly on the Government side, will be only too pleased for the sake not only of the Government but of the country, to ensure that we win this vote tonight and maintain the Labour Government in office.
  We have seen opportunistic demands for increased pay for the police, the forces and the firemen at the same time as the Opposition have commended pay restraint in other sectors. We have seen opportunism on race and on crime. We have seen division and confusion in areas of industrial policy and in the Opposition's attitude towards the trade unions, devolution, pay policy, education, and prices. I could go on with a whole range of issues. If we read "The Right Approach to the Economy", the statements by Opposition spokesmen on various subjects and the statements by the Leader of the Opposition, we find confusion and division and no certainty as to what the Conservative Party would do were it to gain office.
  It is clear from comments made not only by Labour Members but by Opposition Members that a Conservative Government would have a divisive influence within the country. The way in which Opposition Members have been condemned by their own colleagues refutes the suggestion that the Opposition are seeking to follow moderate policies.
  The Leader of the Opposition has reacted because she has been called extremist. I refer her to comments made by the right hon. Member for Worcester (Mr. Walker). On 16th February the right hon. Gentleman said:
  "It is a depressing spectacle to watch a small, but vocal and apparently influential section of the Tory Party bow down to worship the free market gods which brought so much squalor, so many slums, so much social divisiveness and injustice."
  The right hon. Gentleman also said:
  "I have to tell my right hon. and hon. Friends that there is no way in which this problem can be solved by easy application of free market forces. Mr. Milton Friedman has only to take a short cab ride from his university in Chicago to see what free market forces have done to some districts in that city."—[Official Report, 9th February 1978; Vol. 943, c. 1717.]
  We hear a great deal about infiltration into the Labour Party. The hon. Member for Woking (Mr. Onslow) has warned the country about infiltration
  1084
  into the Conservative Party. We have heard of the National Association for Freedom. It has called the right hon. Member for Lowestoft (Mr. Prior) some unkind things in its time. In "Free Nation" on 28th October last year, he was called "that archetypal milksop".
  The hon. Member for Woking said that the National Association for Freedom represented extreme infiltration into the Conservative Party, and he has condemned it for its increasing interference in the internal affairs of that party.
  If the country is faced with the Conservative Party as a potential Government, what are we to think? What are its policies towards the trade unions? What are its policies on pay? What are its policies on public expenditure cuts? I could go through the list of public expenditure cuts proposed by the Opposition. What are their economic policies? What are their taxation policies? What are their education policies? Are they for grammar schools or for comprehensives? What are their policies on these matters? The Opposition are for anything which is popular. They adopt cynical, opportunistic policies simply to try to gain favour with the electorate.
  For those reasons, as well as for the economic arguments that I have sought to put before the House, I hope that there will be substantial support for the Government tonight. The worst thing that could happen to this country would be to have a change of Government. A change of Government would in any case be bad for the country. However, to have in government a cynical, opportunistic party, which has no clear policies and is divided, would be even worse for the country. I cannot imagine anything worse for the country than having such a party in office. Therefore, I hope that the motion will be roundly defeated tonight.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. A substantial number of right hon. and hon. Members still wish to take part in the debate. We are getting near the final stages. If hon. Members will restrict their speeches to 10 minutes each, I assure all right hon. and hon. Members who wish to participate that they will be accommodated.
  7.27 p.m.
  Mr. Maurice Macmillan: Despite your warning, Mr. Deputy Speaker, the temptation to take up the argument of the hon. Member for Thornaby (Mr. Wrigglesworth), in view of the irrelevance, inaccuracy and complacency of his remarks, is almost irresistable. Nevertheless, I shall resist that temptation.
  I congratulate the hon. Member for Hamilton (Mr. Robertson) on a maiden speech which makes me, at least, hope that we shall have plenty of opportunity of enjoyable disagreement with him in the future.
  I warmly congratulate my hon. Friend the Member for Epsom and Ewell (Mr. Hamilton) on a speech in which he paid a gracious tribute to his predecessor whom I felt honoured—and I mean that word—to call my friend as well as my colleague in Government. I know that my hon. Friend will be a worthy successor. I confess to having a slight interest in watching some of the results of the industry for which one part of his constituency is famous. I wish that I could afford to take a greater and closer part in it. My hon. Friend endeared himself to me by speaking as an industrialist in favour of employee shareholding—a cause which has been dear to my heart for many years.
  I want to make one particular point in the debate. It is an economic rather than a financial point. Indeed, it follows what was said by my hon. Friend in his admirable maiden speech. One of the failures of the Chancellor and the Government is to see accurately the links between productivity, unit labour costs, prices, real earnings and the level of employment. All the figures that I shall use come from the Treasury's publications. If they are wrong, I cannot help it. If they are right, the Government are wrong.
  Let me take the composition of the end price of our manufactured products. In 1966 50·5 per cent. was income from employment. In 1976 it was 49·5 per cent. In other words, the income element in the end price has gone up hardly at all. Gross profits and other income as a component of output costs have fallen from 22·4 per cent. to 18·5 per cent. That means that any increase in prices was not due to the end in real earnings of either capital or labour in industry over that
  1086
  period. It makes one wonder what happened. The Treasury has provided the answer in the economic progress report.
  In the articles in this report published last December and this May it is made plain what is wrong and that it has gone more seriously wrong during the years of the present Government. There has been a slower rate of growth in productivity in the United Kingdom, associated with a faster rate of growth in unit labour costs and in consumer prices, and a slower rate of growth in real earnings. Incidentally, there has been considerable damage to levels of employment.
  One of the points made in these Government publications is that industries with the highest level of labour productivity also show the highest level of growth in overall employment. Increasing productivity has not been shown to reduce the number of jobs available in an industry. Instead it has been shown to increase the number of jobs over a period.
  The rate of increase in United Kingdom wage costs is higher than it is in any other major industrial country with the exception of Italy. This is due largely to the policies of the right hon. Gentleman whom we are censuring today. I shall give the House two sets of figures which compare the periods 1965 to 1973 and 1973 to 1977.
  In France earnings in the first period showed an annual average rate of growth of 10·6 per cent. The figure for the United Kingdom was 9·4 per cent. In France the output per worker showed an average rate of growth of 4·9 per cent. In the United Kingdom the figure was 2·9 per cent. Unit wage costs showed an average rate of growth of 5·5 per cent. in France. In the United Kingdom it was 6·3 per cent. In France prices showed an average rate of growth of 5 per cent. In the United Kingdom it was 6·1 per cent. I chose to use France as a comparison because on the table it was shown to be only marginally better than the United Kingdom.
  Let us take the later period, the four years of the present Government. The annual average rate of growth of earnings in France was 14·4 per cent. In the United Kingdom it was 7·4 per cent. The growth in output per worker had dropped in France to 2·3 per cent. In the United Kingdom it had dropped to 0·1 per cent.

  1087
  per year. The unit wage costs in France had gone up considerably—by an average of 11·8 per cent. per year. But in the United Kingdom the average was 17·2 per cent. Prices in France over that period were rising at 11·2 per cent. per year and in the United Kingdom by 18·1 per cent.
  All this is clear evidence that under the Chancellor's policies our industrial performance has been allowed to decline, diminishing the real increase in living standards, causing unemployment and fueling the flames of inflation.
  I quote from the Treasury's last economic progress report. It states:
  "The most recent evidence suggests that the underlying pressure of domestic costs in manufacturing has become stronger and remains greater in the United Kingdom than in the most important competitor countries, holding the danger of a reversal of the recent downward trend in inflation with its likely adverse effects on employment and living standards."
  Shorn of its formal phraseology, that means that the present and immediate past policies of the Chancellor of the Exchequer are bound to cause higher inflation, more unemployment and lower living standards. That is one reason why I hope that the House will censure the Chancellor.
  7.37 p.m.
  Mr. Jim Craigen: Today's debate on the economy has taken a new twist. We all realise that the life of the present Government and the timing of the next General Election are at stake. We are living in what is supposed to be a responsible democracy. None of us would deny that a General Election will unleash a campaigning period during which the competing political parties will present prospectuses to the electorate and that they will say that they will do more rather than less.
  In his 45-minute speech the Shadow Chancellor, the right hon. and learned Member for Surrey, East (Sir G. Howe), did not unfold the Conservative policy for tomorrow. He did not say how the Opposition propose to reduce public expenditure. The present situation exists because in the Budget debate the Opposition said that they wanted to hand out the sugar and leave the Labour Government to dish out the medicine. Unfortunately, we had to do that last week.
  I turn to the question of the increase in the national insurance surcharge. In
  1088
  spite of what the Chancellor said yesterday at the NALGO conference, increasing the surcharge will have a detrimental effect on the long-term recruitment policies of some firms. An example is the retail distribution industry, which is labour intensive. It is not a matter simply of full-time jobs that might be lost because many firms in the retail distribution industry employ part-time workers. When the cost of labour increases, there is an easy way out for some employers by reducing the scope for part-time employment. The increase comes on the heels of the removal of the regional employment premium earlier this year. Companies in development areas will find it difficult to cope with the imposition of a further surcharge.
  More attention ought to be paid to a wider range of companies in the United Kingdom. My right hon. Friend the Chancellor said today that the cash flow position of the top 200 companies in the United Kingdom had improved recently. I do not know that that is altogether so for many smaller and medium-sized companies. All too often Treasury assessments are inclined to look at the very large companies or to try to take a blanket approach to industrial matters. That ignores the fact that industry is highly variable.
  I turn now to the subject of MLR. The reason that the Chancellor had to act last week was that there was something of an investment strike in the buying of Government securities. The days of the small saver seem to be over, because increasingly decisions are being taken by a number of managers of investment trusts, insurance companies and pension funds. But although they obviously have to safeguard the interests of their investors, it is in the interest of those investors that the health of the economy should be sound.
  The Treasury affords favourable tax relief in respect of pension funds and life assurance premiums. That results in a loss of income to the Treasury. I wonder whether in the not too distant future the Treasury might consider conditionality of tax relief in these areas with a view to a proportion of such investment funds being put into Government securities. If the Government are to provide an incentive for people to put money into pension funds and life assurance, the Government should have some support from

  1089
  those institutions in financing their borrowing requirement.
  Today we did not get from the Opposition an outline of where they would reduce public expenditure. Of course, we know that in Scotland, for example, they would abolish the Scottish Development Agency. In view of the chiding by the right hon. Member for Down, South (Mr. Powell) of my right hon. Friend the Chancellor for his temporary absence, it is worth pointing out how noticeable it is that the Leader of the Opposition has not taken much interest in today's debate, other than in the opening speeches. I wonder whether that indicates the extent to which the Opposition's interest behind this debate is in the economy, or whether this is simply yet another trial of strength in the Division Lobbies.
  7.43 p.m.
  Mr. William Clark: In view of the shortness of the debate I do not propose to take up the points made by the hon. Member for Glasgow, Mary-hill (Mr. Craigen), but I must remind him that the person who is being censured in this debate, and the person to whom the right hon. Member for Down, South (Mr. Powell) was referring, is the Chancellor of the Exchequer. He should have been here as much as possible.
  I add my congratulations to those already offered on the two maiden speeches. It was interesting to hear the hon. Member for Hamilton (Mr. Robertson), although I did not necessarily agree with all that he said. The House looks forward to hearing further speeches from him. Tthe other maiden speech was by my hon. Friend the Member for Epsom and Ewell (Mr. Hamilton). It was refreshing to hear a real live business man speak. The definition of a business man is someone who has to meet a payroll every week. That teaches one to run a business. The House looks forward to further contributions from my hon. Friend. It is unique in one debate to hear two maiden speeches, one maiden speaker rejoicing in the name of the constituency of the other.
  This is the Chancellor's fourteenth Budget and I offer him my congratulations on his consistency. Until now he has had 13 goes at getting it right, and each time he has been wrong. Andrew Alexander in the Daily Mail today is
  1090
  The Chancellor repeatedly comes to the House saying that everything will be all right. He says that he got it wrong the last time but that this time it will be right. That happens with monotonous regularity.
  Today the right hon. Gentleman is blaming the Conservatives and presumably the other Opposition parties because of the £500 million cut in taxation. But, as my right hon. Friend the Member for Chipping Barnet (Mr. Maudling) said—and the Treasury Ministers know this—with public expenditure running at about £6,000 million to £7,000 million a year, an error of just under 1 per cent. will give the Treasury another £600 million or £700 million. So it is within the purview of the Treasury and the margin of error to absorb the £500 million that these amendments will cost.
  The Chancellor dealt contemptuously with his partners in the Lib-Lab pact when they suggested a national insurance increase of 1½ per cent. Now he has come back to the House with a 2½per cent. surcharge on the national insurance contribution. All hon. Members are worried about unemployment. The Prime Minister referred to that yesterday. He glibly said that the national insurance contribution would raise £1,500 million in a full year, but that it will start only in November and will therefore raise only £500 million this year. His arithmetic is wrong, because if the surcharge starts on 1st November it will produce for the Revenue £625 million, which is £125 million more than the cost of the tax cuts that have been inserted. The Prime Minister said that the matter would be looked at next April, but if the Government intend to look at it then, why not create some certainty for employment? Why not impose the surcharge for four or five months only, or for whatever length of time is needed to produce £500 million?
  The current high rate of employment is a far cry from the slogan of the Labour Party that "Labour works". How can Labour work when, as Joe Haines said, 1·5 million of them are not working? That is an indictment of the Government. I believe, and all the commentators and anyone in business will agree, that this tax on employment is bound to retard the decrease in the level of unemployment.

  1091
  absolutely right to suggest that the Chancellor has an ego that is impenetrable,
  If we are to get unemployment down we must pay more and more attention to small businesses. They are the wealth creators, the innovators and inventors. They should be getting every encouragement, but as my hon. Friend the Member for Epsom and Ewell said, they have been clobbered. The Employment Protection Act is good in theory and in principle, but in practice it is preventing the employment of various people. How can a small business man take on an employee unless he has the right to get rid of that employee if the employee does not turn out to be satisfactory or, indeed, if that business man's operation or trade goes down?
  It is all very well for Ministers to shake their heads. They know this. All that they need to do is to go around industry and talk to small business men and ask them what their fears are as to increasing their labour forces.
  Another thing that I would recommend to the Minister—if he has not seen it already—is an excellent article in The Daily Telegraph written by a Mr. Circus, saying how the Employment Protection Act works. He givese chapter and verse as to how the Act is working against an increase in employment. The Act is too high a cost for the small business man.
  I come to the £1,500 million that this surcharge will produce. If, as the Chancellor said yesterday—he repeated it today—he did not think that this £1,500 million surcharge would have very much effect on employment, and if he agrees with his right hon. Friend the Chancellor of the Duchy of Lancaster that taxation in Britain is too high, why did not the Chancellor, in April, introduce a surcharge? With the £1,500 million he could then have reduced income tax to the benefit of all and not necessarily only to the benefit of those on higher incomes or those on lower incomes. If the £1,500 million will not have an effect on the employment prospects of the nation—why is it not used to reduce taxation so that it gives more incentive for people to work, with which, presumably, the Chancellor agrees?
  I want to make one or two comments about interest rates. The minimum lending rate has risen to 10 per cent. In itself, that will retard business and increase costs. It is all very well for the Chancel-
  1092
  lor to say "This little bit and that little bit will not have any effect". It will have an effect. For example, let us consider the mortgage interest rate of 9¾ per cent. The increase in the rate means that the consumer market will be deprived of that increase. That again will slow down business.
  The lack of confidence in our economy, which manifests itself in the fall of the sterling rate abroad, in itself will increase our import costs by probably between 6 per cent. and 8 per cent.—to say nothing of our borrowing requirement. A borrowing requirement of £8,500 million is far too high. It is all very well for Labour Members to say "Where would you cut? What would you cut? How would you do it?" They are the Government. They know that the country cannot afford a borrowing requirement of this magnitude. Therefore, they must cut their expenses.
  The Secretary of State for Prices and Consumer Protection maintains that inflation will remain in single figures. Indeed, the Prime Minister supported him. Yesterday, in response to a question from my hon. Friend the Member for Leominster (Mr. Temple-Morris), who said that someone had said that the inflation rate would never rise into double figures, the Prime Minister said:
  "Nobody has said that inflation will continue indefinitely into the future at single-figure rates."—[Official Report, 13th June 1978; Vol. 951, c. 827.]
  That raises a point of order. Hansard must be wrong, because if one looks at column 25 of Hansard for 6th June, one finds that when talking about the inflation rate, the Prime Minister said:
  "I would like to see it come down"
  —and so on—
  "It will range between 7 per cent. and 8 per cent. But if we follow the policy that we intend to follow I see no reason why it should ever get back to double figures."— [Official Report, 6th June 1978; Vol. 951, c. 25.]
  Both of those statements cannot be right. One of them must be wrong. I do not know whether the Prime Minister has made representations to the Table. However, if he said yesterday that no one had said that inflation would never go back into double figures yet on 8th June in fact he said precisely that, one of those statements is wrong.
  I should have thought that the other worry of people in Britain, apart from

  1093
  unemployment, is their rate of tax. Time does not permit me to give a lot of figures. However, a single man earning about £80 a week, which is just under the national average wage, pays £18·41 a week in tax, leaving aside national insurance or any other surcharge that he may have. A married man with the same income pays £14·82. That is far too high.
  I am absolutely convinced that today's taxation is out of step with modern society. We want more and more wealth creators. We do not want any politics in this matter. We must encourage the wealth creators. All that we have at present—and this is a serious indictment of the present Government; not only the Chancellor but the whole Government, who take collective responsibility for their economic strategy—is a rate of inflation that I am convinced will return to higher levels. What is in the so-called economic pipeline will take three, four or five months to come through to the shopping baskets. Presumably the General Election will be over by then.
  Unemployment is going higher and higher. Production is low, even if it equals that of the three-day working week. The frustration of the public and workers is increasing daily.
  Consequently, it is essential for the future of this country and for each and every person in it, irrespective of politics, to realise that the sooner we have a change of course in our economy, the better. The only way in which we shall get a change of course is to get a change of Government.
  7.57 p.m.
  Mr. George Rodgers: I, too, add my brief tribute to my hon. Friend the Member for Hamilton (Mr. Robertson) and to the hon. Member for Epsom and Ewell (Mr. Hamilton), who have made their maiden speeches today. If my congratulations are short, that is not because I do not appreciate their able and wide-ranging contributions but because I think that the House wishes to push on with the debate.
  Throughout the debate we have been subjected to the old familiar and rather tedious noises from Opposition Members. We have heard it all before, and the concoction has not improved with age. In startling contradiction to the outpourings
  1094
  from the Conservative Benches, the simple truth is that the country's economy is on a much sounder footing now than it was when the Labour Government took office in 1974. The evidence is there for all to see.
  The balance of payments position is obviously much healthier. The level of inflation has dropped quite dramatically and it is now running at a much lower rate than that which applied when the previous Tory Government were in office. The level of interest rates charged to people purchasing their own houses is lower now than it was when the present Government took office. Furthermore, building society spokesmen are convinced and confident that the rate will not increase in the immediate, foreseeable future. We must concede that this is a very different economic setting from that which existed during the chaotic period immediately before the 1974 election.
  Of course, this situation is not unique. We are all aware that it has become custom and practice for Labour Governments to rescue and restore the nation's ailing economy after every spasm of Conservative maladministration. The cure is usually quite agonising and has certainly proved electorally expensive on many occasions. But the next time around, I for one expect that the electorate will refuse to be hoodwinked and will totally reject the shrill appeals of the Conservative leadership, which is now clearly desperate to secure office, an arrangement which the Tories appear to consider is theirs almost by a divine right, and having little connection with ability or merit or even with political integrity.
  The grand economic and electoral appeal of the Opposition party is based entirely on the stimulants of greed and selfishness. As this becomes more and more apparent, there is a growing distaste among ordinary people for the formulae that they propose.
  Under a Tory Government, the structure of taxation would be changed in such a fashion that it would favour those who are already financially well-heeded, but who, despite their wealth, are reluctant to contribute towards the needs of others who are dependent in times of hardship upon collective and community provision. The Conservative aim is to give even greater privilege to the prosperous minority, knowing full well that

  1095
  this can be achieved only by the further deprivation of people who are already disadvantaged.
  The Conservatives advocate extremist Right-wing policies which will only provide a rallying point for extremist groups at the other end of the political spectrum. It is well known that the centrepiece of Tory economic thinking is that there should be a massive curtailment of public expenditure. That is a simplistic concept. The wise administration of a nation's economy does not consist of a reckless reduction in public spending. An efficient economy involves saving or spending to the best advantage. It concerns using time and ability to the greatest effect. It relates to a sound stewardship and accountability to the community.
  The comments we have heard today from Opposition Members have been crude and sloganistic to the point of absurdity. They have been influenced less by concern for the pound or the people than by a desperate desire to claw back the lead they have lost in the opinion polls.
  I belong to a sector of my party that has frequently been critical of the economic strategy of my right hon. Friend the Chancellor. It is perhaps as well that constructive opposition has occasionally been mounted from within the Labour Party, for the protestations of spokesmen or spokeswomen representing the Conservative Party have been confused and insignificant. How paltry, for instance, is the oft repeated charge that my right hon. Friend has introduced an excessive number of Budgets. Surely it is clear that in this day and age an annual Budget is not adequate. Treasury Ministers must respond to circumstances, often those brought about by activities outside this country.
  In any case, what is so sacrosanct about an annual Budget? The simulated fury of the Conservative Party and the Conservative Press at the increase in the employers' national insurance contributions has fallen flat, as there has been no attempt to substantiate the charges that the additional level will generate inflation and unemployment.
  When tackled about the methods they would use to recoup the revenue denied to the Exchequer, the Tories have been
  1096
  forced to reveal their intentions. As the euphemism has it, there would be taxation on spending rather than on earnings. In that case, how is the pensioner to fare, especially the pensioner who is entirely dependent on the State pension and whose income is such that there is no prospect of his benefiting from tax reductions? A pensioner dependent on a State pension does not receive enough to pay income tax but would have to pay the extra tax imposed on commodities purchased in the shops, and would inevitably be worse off as a consequence of the Tory tax adjustments. The simple truth is that the Tory policies would adversely affect millions of pensioners. That should be made clear.
  Mr. Peter Tapsell: Will the hon. Gentleman give way?
  Mr. Rodgers: I am reluctant to do so. We have been asked to make progress.
  Mr. Tapsell: The hon. Gentleman referred to retirement pensioners who were entirely dependent on their retirement pension. Such people, with no other source of income, would be entitled to supplementary benefit, so the hon. Gentleman's case is entirely invalid.
  Mr. Rodgers: My case is absolutely accurate, because a pensioner who depends on his State pension and supplementary benefit does not pay tax. Under the Tory formula, he would still have to pay the increased prices resulting from indirect taxation, particularly value added tax. There is no dispute there.
  The same argument applies to the millions of householders with young children. Those householders would be forced to carry the burden of additional VAT on many necessities. Is it the Tory Party's intention to move towards a common tax structure with other EEC nations, as is so gleefully advocated by the pro-Marketeers? Would that involve value added tax being imposed on food, coal, gas and electricity, which are at present exempt from VAT? Would the price of petrol be increased to match the rates charged in Continental countries?
  The Conservative Party has conceded under pressure that it would increase indirect taxation. May we be told tonight by how much it would be increased and in which directions? There is a widely held view that it is wrong to take the

  1097
  Tories seriously on any economic question. It seems to be true that they do not take the issue seriously themselves. How else can one explain the constant demand for huge increases in public spending by individual Tory Members, particularly for projects within their own constituencies? Such demands are worth a few lines in the local newspaper, but whenever the bold advocates of lavish public spending are given an opportunity to vote in favour of the principle they turn tail and bolt into the Lobby which advocates the proposition that all public spending is unwholesome and must be cut back to the maximum.
  I seek the direction of a greater proportion of our available resources towards education and the hospital services and a wider provision for the disadvantaged and the elderly. Unlike many of my close political colleagues and friends, I accept the necessity for an incomes policy, but only against a background of an equal degree of control over profits and prices. I believe also that there must be more control and direction of industrial investment.
  Labour Members have noted with approval the steady decline in the number of our people who are unemployed. No doubt, there has been equal satisfaction over this by Conservative Members, although they manage successfully to conceal their elation.
  It is proper that we should be concerned and anxious about the number of our people who are unemployed, yet, strangely, there are now probably more people in employment than there were 10 years ago. Our problem is that there has been a sensational increase in the labour force, and it will continue to grow for several years.
  The position is further bedevilled by the fact that manufacturing industry is less labour-intensive than it was even a few years ago. We must rid ourselves of the absurd notion that the greater the investment in manufacturing industry the greater will be the number of job opportunities created in manufacturing industry. The reverse is true.
  We must realise that the role of industry is to create wealth, not employment. The real debate should be about the distribution of the wealth so created. In
  1098
  my view, a wider public control of industry to prevent its wealth being syphoned off to serve merely a tiny sector of the community should be introduced.
  There must be a move towards the expansion of job opportunities in the public sector, which is comparatively more labour intensive. We must advance towards a shorter working week and a shorter working lifetime. We should seek extended educational facilities and examine the prospects for introducing sabbatical years for working people.
  I remain optimistic about our economic future but I am a realist about our current problems. It will be necessary for the Government to draw up a programme of long-term industrial development, industrial renewal, and certainly protection of the living standards of workers whose employment is at risk as a consequence of advanced technology.
  The result of the vote today will not be of great significance. The real decision will be made by the people outside the Chamber, who I believe have sufficient understanding and common sense to appreciate the value of a Labour Government not only to themselves but to their children and their children's children.
  8.8 p.m.
  Mr. Russell Fairgrieve: In response to the request of your predecessor in the Chair, Mr. Deputy Speaker, I shall resist the temptation to answer many of the points made by the hon. Member for Chorley (Mr. Rodgers), although I shall touch on some of his comparisons between the records of the two parties. Before I make my few remarks, I should like to add my compliments to the hon. Member for Hamilton (Mr. Robertson) and my hon. Friend the Member for Epsom and Ewell (Mr. Hamilton), who made their maiden speeches today. I hope that we shall hear more from them in the Chamber.
  Apart from just under four years in the early 1970s, it is now 14 years ago that the Labour Party became the Government of this country. It is not without its appropriateness that today we are talking about what is, more or less, the fourteenth Budget that this Chancellor of the Exchequer has introduced during the last four years.

  1099
  If we think back to the famous 13 years of Tory rule from 1951 to 1964, and then compare them with the basically Labour rule from 1964 until today, a devastating picture emerges. For those with memories of 1951 there were clothes coupons, food rationing, identity cards and a host of other controls and restrictions. But there then arrived, after two post-war Socialist Governments, a Tory Administration under Sir Winston Churchill, with a Chancellor by the name of R. A. Butler, who made the amazing remark that he intended to double the standard of living of the British people in 25 years, or, in other words, within a generation. He did it in about half that period. When the Tory Party left office in 1964, instead of what I described earlier, there were refrigerators and deep freezers. Those of us who served on local authorities then were having to construct garages on council estates to take a multitude of cars off the roads and had to consider the structure of houses to carry the host of TV aerials.
  When we demitted office in 1964, the British people had about the highest standard of living in Western Europe. Today, we have the lowest. That is the legacy of Labour and that is why it is more than right and overdue that this censure motion should be carried.
  The handling of the British economy by the Labour Party in general and the Chancellor in particular has been truly appalling. Socialist dogma has been put before the welfare of the British people. Laws, restrictions, acts and actions are brought in to distribute wealth, but virtually nothing is done to create it. If one wants to distribute wealth, what is the point of preventing its creation?
  For example, one can walk into a shop in Britain today and buy a ball-point pen. If one turns it around in one's fingers, one might well see on it "Made in Japan". Why is this? Are there no British initiatives or competent skills to make such articles when there is an obvious demand? Of course, the answer from Labour Members below the Gangway is restrictive quotas and import controls. What a barren philosophy, produced only to protect sterile Socialist political dogma.
  There could be many people in this country prepared and willing to set up a business to make ball-point pens, but
  1100
  I can tell the House why they do not and will not. The reasons are corporation tax, capital transfer tax, capital gains tax, the Employment Protection Act, income tax levels, multi-rate VAT, interest rates and now this national insurance surcharge, which is a payroll tax and which will, in today's circumstances, prevent increased employment.
  Far better for a keen and ambitious young bloke to take a job as a roustabout on an oil rig—two weeks on, two weeks off and some tax-free moonlighting in between. That is the price that our country is paying for Socialism. That same barren philosophy is reducing the standard of living of our people compared with our compatriots in Western Europe.
  Worse still, the new industrial countries of the Far East have realised that capitalism brings a higher standard of living to all the people of any country than Socialism, so they are carrying out the philosophy that once gave us such rich rewards and will continue to practise it privately while giving their Governments innocuous political titles.
  This motion may be couched in technical parliamentary terms, but the underlying facts remain. It calls upon all of us to make a judgment upon the economic handling of our country's affairs. In my opinion, this has been dogmatic, biased, negative and even Marxist in many parts. For the many reasons that I have mentioned, I hope that all parties represented in the House will support the motion.
  8.13 p.m.
  Mr. John Cronin: I hope that the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) will not expect me to follow his somewhat contentious speech. Nor shall I comment in detail on the speech of the right hon. and learned Member for Surrey, East (Sir G. Howe). He made a rather unconvincing speech, but he always does. We always have the same tableau—the right hon. and learned Gentleman speaking from the Front Bench while the right hon. Lady the Leader of the Opposition sits beside him wearing a look of severe displeasure. Nothing much emerges from his speech, for the simple reason that there is no coherent Tory economic policy.
  The unfortunate right hon. and learned Gentleman, for whom I have great sympathy, is in the difficult position of

  1101
  being put up to sell something which does not exist. We ought to treat him with some sympathy.
  The right hon. Member for Down, South (Mr. Powell) made an interesting speech. However, I could not understand his argument that the public sector borrowing requirement was onerous for the economy. In terms of population and GNP, it is less than those of Germany and Japan. Why is it that they can run high PSBRs yet the right hon. Gentleman feels that we cannot?
  Mr. Powell: Because the Government of this country do not have the same credit as the Governments in those countries, because the importance that we have attached in the past to maintaining the value of money has not been the same.
  Mr. Cronin: "Credit" is a vague word. There is no economic reason why this should not happen. I am also surprised that the right hon. Gentleman paid so little attention to the Government's unfortunate defeat in Committee on 8th May. One accepts that the £500 million is only a small part of total Government expenditure, but when the market is a little lacking in confidence, as it was, reckless and irresponsible actions by the Opposition act as a catalyst for the whole chemical reaction.
  From that moment, public opinion in the markets started to deteriorate. In introducing the "corset" and the employers' surcharge and in raising the minimum lending rate, the Chancellor did exactly the right things.
  It is surprising that the Chancellor should be criticised for doing something which obviously has the approbation of the City. Ever since he introduced those three measures last Thursday, there has been a complete reversal of all indicators. The City institutions have been voting with their cheque books and buying Government stock.
  In those circumstances, why do the Opposition adopt such lugubrious attitudes? They are certainly not shared by people who I suspect have the same political opinions—the gentlemen in the City.
  The cost of these economic measures will be very small. The employers' surcharge will not take effect until October
  1102
  and will certainly not increase inflation appreciably within the next six months. I hope that, certainly within the next six to nine months, we shall have another Budget in which it will be greatly reduced. I am looking forward to my right hon. Friend introducing a fifteenth Budget in which he does exactly that.
  The "corset" restrains the clearing banks from extending their credit facilities, but that affects only private expenditure. The banks are all giving the maximum priority to industrial expenditure when it is required, so there is no harm in that.
  The suggestion that the minimum lending rate should have such a bad effect on the economy is most odd. The MLR fluctuates in the most extraordinary way, and has done as long as I have been in the House. It is up now, but no doubt within the next few months it will be coming down again. The important thing is that it has achieved its useful purpose.
  One thing which is very attractive about the Chancellor's measures is that no one in any circumstances could describe them as electioneering, whereas almost every speech from the Opposition has been an electioneering speech. That is also a mark in favour of the Chancellor's measures.
  What is the alternative to those measures? Some hon. Members have suggested an increase in VAT. That would immediately increase inflation. What possible value would that be? Some have suggested reducing the PSBR, but except for social security payments, Government expenditure is labour-intensive. Any substantial reduction in the borrowing requirement is bound to increase unemployment. I should have thought that both those suggestions would have an undesirable effect. There is a tendency in these debates for there to be a controversy between the monetarism of the right hon. Member for Down, South at one extreme and the sort of modified Keynesian economics of the Treasury Bench at the other extreme.
  I should have thought that the time has come to consider protectionism, not to an extreme degree but to a partial degree. The hon. Member for Aberdeenshire, West made a very good point when he talked about Japanese imports. There is a very strong case, surely, for reducing the import of Japanese motor cars,

  1103
  of hosiery, and of many other commodities in regard to which there is no reciprocal gain for our companies. I believe, therefore, that the suggestion that some element of protection should come into the Chancellor's policy should be given very serious consideration. It is certainly a form of economics which has gained increasing favour among the Cambridge economists and is becoming more and more respectable.
  I suggest that there are two absolute short-term priorities. One is the control of inflation. The other is the continued co-operation between the Government and the unions in bringing about moderation of pay claims.
  I welcome the Government's obvious inflation. The steady increase of support for the Government shown in the public opinion polls is an indication that the country appreciates that the Government are getting the economic situation under control. We must hang on to this improvement, whatever happens. It was most refreshing to hear my right hon. Friend the Secretary of State for Prices and Consumer Protection tell us the other day that there is no question of the rate of inflation rising before the end of the year. Whether it does so will depend on the moderation shown by the trade unions.
  The control of inflation is a reality, but there are still some uncertainties about the co-operation of the trade unions on the question of pay claims. Obviously, it is a matter of continued patient negotiation on the part of the Government and also of making sure that the living standards of trade unionists increase. Over the last 12 months, they have had a 5 per cent. increase in their real living standards. The Government must try to maintain that momentum.
  The Government must also ensure that there is no provocation of the trade unions by any undue increase in the incomes of people who already have enough. In that context, my right hon. Friend might consider what is to happen when dividend limitation expires on 31st July.
  I also believe that a very important part of maintaining the co-operation of the trade unions will be the introduction of industrial democracy.
  1104
  I have said that there are two important short-term questions of policy for the Government. There is also a third, and that is the continuation of a Labour Government. Conservative Members are mostly well meaning, but they have hardly any declared credible policy. They are divided on what little policy they have. They stand for confrontation instead of moderation. They stand for a return to the cruelties and uncertainties of a market economy instead of an economy managed in the interests of the whole community. I suggest that if ever the right hon. Lady leads a Conservative Government, we shall be entering a dark period in British economic history.
  8.23 p.m.
  Mr. Terence Higgins: In at least two respects this is, I believe, an extraordinary parliamentary occasion. We were told at the beginning that the Government had decided to make the debate a vote of confidence and that the Prime Minister was to reply, but in many ways the debate has been "Hamlet" without the king. The Prime Minister, as far as I am aware—and I have been here throughout the debate—has not made a single appearance in the Chamber. That is quite a disgraceful thing to happen to the House of Commons. It is appalling that the Prime Minister, on a vote of confidence, does not see fit to attend a debate to which he is supposed to be replying.
  Mr. Ioan Evans Mr. Ioan Evans (Aberdare) rose—
  Mr. Higgins: I shall not give way: the hon. Gentleman has not been here either. It has also been a case of "Hamlet" without the prince, because the Liberal Party has been in a state of
  "To be, or not to be".
  There was no indication from the leader of the Liberal Party, when he spoke, as to which way his party was to vote. There was the implication that the Liberals will abstain. How any party can decide to abstain when the question is a vote of confidence, I find beyond comprehension.
  It is quite clear that the contempt with which the Prime Minister has treated the House today was very similar to that which was shown by the Chancellor of the Exchequer in not making a statement to the House of Commons on the very important economic measures which we are debating today. It was quite incorrect

  1105
  for the Leader of the House to say that we could debate those measures on the Finance Bill. I am glad, therefore, that in Opposition time we have an opportunity to pursue some of these matters.
  I think it is absolute rubbish to suggest that the measures which have now been taken by the Chancellor are necessary as a result of the amendments which were carried during the Committee stage of the Finance Bill. Quite clearly, the increase in the employers' contribution alone would have been sufficient in that respect, so that the two other major measures, the massive increase in interest rates and the "corset", are a correction of the Chancellor's own mismanagement at the time of his Budget. If we do the arithmetic, we find that that is very clear indeed.
  In addition, it is quite clear that the Chancellor's choice of the employers' surcharge is wrong. It is also one which is not understood on the Labour Benches, as has been clear from speeches made this afternoon. Instead of increasing the employers' surcharge, it would be far better to increase value added tax, which would not fall on exports, as the employers' surcharge will, and would not fall on food, and therefore would not have the same regressive effect, which I have always understood that the Labour Party was anxious to avoid. It would, instead, result in a more equitable distribution of the burden, because VAT does not fall, as was suggested, on essential items. An increased VAT would be vastly preferable to the Chancellor's proposals.
  It was suggested that nothing in the present package is electioneering. That is not true. I believe that the true reason that the Chancellor opted for an increased employers' contribution rather than an increase in VAT is that the effects of the increased employers' contribution will not be felt until later in the year, after an October election. I think that that is the real reason for it.
  As for the other measures, whether they are electioneering or not, the reason that they have been imposed is that the Government's hand has been forced by the Chancellor's own misjudgment in the Budget. As a result of this, he found that the market would not accept his view,
  1106
  and he has been compelled to increase minimum lending rate, and to impose a "corset". This is not, therefore, some splendid approach in which the Chancellor is saying that he is not electioneering. It is something for which he had no alternative as a result of his own mismanagement, and it is right that for this reason we should censure him today.
  I want to say a few words about a longer view of the economy and the Chancellor's stewardship of his high office. In doing so, it is necessary to look at the past record and to consider the future situation should we be so unfortunate as to have a Labour Government returned with an overall majority. The figures for the record are very important indeed and give us a basis of comparison between the Chancellor's performance and that of the previous Conservative Government. He is estopped from arguing that this was the problem he inherited, because he assured the country in October 1974 that everything was under control and that everything would be all right. He cannot argue that what has happened since then has anything to do with the situation which he has inherited.
  If one looks at the record of the Conservative Government and at the record of the present Labour Government, one will see that the main economic variables are very clear indeed. I am glad to see that at long last the Prime Minister has honoured the House of Commons with his presence when there is just half an hour to go before the winding-up speeches commence on a debate which is a vote of confidence on the Government.
  The Prime Minister (Mr. James Callaghan): I apologise to the hon. Gentleman and to the House and would have done so when I came to my own winding-up speech. As I think he and the House knows, I have had other preoccupations today, in connection with the President of Romania, which has made it impossible for me to be here.
  Mr. Higgins: That may be so, but the Prime Minister first and foremost has a duty to this House of Commons, particularly on an occasion when it is a vote of confidence in his Government. It is not good enough to say that one will reply to a debate when one has heard virtually none of the speeches.

  1107
  I should like to pursue the point that I was making, and I am glad that the Prime Minister is present to hear it. I was comparing the performance of his Government with that of the previous Conservative Government. Between the second quarter of 1970 and the fourth quarter of 1973, the rate of increase in gross domestic product was 3·1 per cent. a year, whereas if we look at the performance of the present Government we find that between the second quarter of 1974 and the first quarter of this year the increase was only 0·4 per cent.
  The record is even more remarkable with regard to the standard of living. During the period of the Conservative Government, real incomes per head each year went up by 4·6 per cent., but under this Government only 1·1 per cent. If we turn to the crucial question of inflation, we find that between June 1970 and January 1974 the annual rate was 9·5 per cent. under a Conservative Government while between February 1974 and April 1978 the rate was 16·9 per cent. Finally with regard to unemployment, under the Conservative Government the maximum level was 973,000 compared with 1,600,000 under this Government.
  If we are judging the Chancellor on his performance as Chancellor, this comparison of records makes very interesting reading indeed. It is right and proper that we should bring that to the attention of the country at the present time and right and proper that we should bring it the attention of the House of Commons. The fact is that until the Government were forced into the position of having to go to the IMF, and found themselves in a position in this House where they did not have an effective majority, their policies were disastrous.
  My own view is that should we find ourselves in such an unfortunate position that we have a Labour Government with an overall majority, the same procedure would emerge. Indeed, much of our present trouble stems from the irresponsibility of the Government when they came into power in 1974 in not resisting wage claims.
  When one hears the words which they now utter about incomes policy one would think that they never went through the period of 1974 and 1975, the social contract and all that that implied. We have
  1108
  all been suffering from the results of that ever since.
  What about the forecasts for the future? I believe that one ought to look at the outside forecasts, and I am glad that the Prime Ministher is present to hear this. He said these extraordinary words on 6th June:
  "But if we follow the policy that we intend to follow I see no reason why it"—
  that is to say, inflation—
  "should ever get back to double figures".—[Official Report, 6th June 1978; Vol. 951. c. 25.]
  It seems to me extraordinary that the Prime Minister should be so unaware of outside commentators and the reasons they gave why it is likely that inflation will again begin to accelerate that he should not be aware of any reason why inflation is not likely to get back into double figures. Of course, it is likely that he will go to the country before that happens. But the extraordinary thing is that he will go on a record of inflation which is appalling, and a record of unemployment which is frightful, yet now comes before the House—as the Chancellor proposes to do—with a measure on employers' contributions which undoubtedly will increase the level of unemployment in this country.
  If ever again a Labour spokesman presumes to say that the Conservative Party is the party of unemployment, I hope that point will be brought home to him very forcibly indeed.
  8.34 p.m.
  Mr. Ron Thomas: I am not surprised that most Opposition Members have tried to gloss over the main reason why we are having this debate. That is the action of the Tory Party during the Finance Bill proceedings. That is the main reason we are having this debate today.
  It is not just a question of £500 million. If the Tories and their allies had had their way and got all they wanted to give to a small but wealthy section of the community, the total would have been about £1,100 million.
  I have said previously—I do not retract a word of it—that the Tories entered the Budget controversy on the basis of sheer naked class interest. I suspect that they already know that they will lose the next General Election, so they wanted to use

  1109
  the occasion to give the biggest possible handouts they could to the people whom they represent.
  The amendments on the Monday cost £500 million-plus, but on 16th May—this is column 293 of Hansard—I checked the figures with my right hon. Friend the Minister of State and ascertained that if the Tories had had their way in further tax handouts the total cost would have been £780 million. Moreover, if they had had their way also on the so-called indexation of capital gains, the full total which they would have handed out to the wealthy would have been over £1,100 million.
  I remind the House that £1,100 million is almost equal to the Government's expenditure on law and order, it is not far short of total Government expenditure on education, it is almost half the revenue from corporation tax and it is 28 per cent. of the revenue from value added tax.
  Thus, we are talking here about a Tory economic strategy in relation to the Budget which would give away to the wealthy over £1,100 million. That was their intention as revealed by the full effect of their amendments.
  Even before those Tory amendments, it was made clear in reply to one of my hon. Friends that 57 per cent. of the total tax handouts in the Budget would in any case go to those earning over £4,500 a year, which is the average wage, but if the Tory amendments had been carried over 70 per cent. of the total handouts in the new Budget would have gone to those earning over £4,500 a year.
  On the Government's proposals, someone with £25,000 a year will already get a handout of £750 and another £1,200 if he manipulates his capital gains in the appropriate manner, as, no doubt he would. But the Tories would have given another £1,500 to the man on £25,000 a year, and another £5,000 to an individual with £50,000 a year.
  There has been a good deal of talk about elections and votes of confidence. I should be happy to fight an election on that clear evidence of basic class interest which the Tories have presented. I should be happy to go to the country and simply say "If you are earning £10,000 a year-plus, the Tory Party is the party for you,
  1110
  and if you are earning less than £10,000 a year you will get nothing out of the Tory Party and its allies." That is the truth of the matter. The Tories approached the Budget determined to give massive tax handouts to those earning £10,000 a year and more.
  I am not surprised that the whole business has been glossed over. The right hon. and learned Member for Surrey, East (Sir G. Howe) again gave us a long history of various Budgets. He told us about what he described as the iniquitous and depressing capital transfer tax. Last year, we collected £260 million in capital transfer tax. The Royal Commission on the Distribution of Income and Wealth tells us that the total personal wealth holding in this country is £190,000 million, yet all we are collecting in any form of wealth tax is £260 million—about 0·001 per cent., I should not wonder. We were not told by the Tories from where they would raise this money. The CBI, not unexpectedly, suggested cutting public expenditure and putting it on value added tax.
  The Tories weep crocodile tears when they speak about unemployment. At the same time, they want to cut public expenditure. If the Tories had had their way in terms of cuts in public expenditure and help via the NEB to British Leyland and other companies, our level of unemployment would have made the inter-war years look like an economic miracle.
  At the same time, I am very concerned that the Government Front Bench seems to be united with the Tory Front Bench in this grip of militant monetarism. We have never had a debate in the House about Milton Friedman and his views on monetarism. It has always been accepted that if we have a PSBR or an M3 or a domestic credit expansion of a certain amount, ipso facto we must have inflation. I table questions and I do not get very satisfactory answers on this matter. We will all accept that if the building societies and the banks expand credit, property and housing—those assets which are in fixed supply—will increase in price.
  The idea is put forward that because borrowing is being expanded and people are consuming more of the products of manufacturing industries, which are now running at well below their capacity, prices will go up when in fact they will

  1111
  come down. Even the Governor of the Bank of England is not clear about the matter. In his latest report he says that monetary expansion must have contributed to the rapid rise in asset prices that occurred notably in real property. He says that it is more difficult to decide how it affects the real economy. He says that it affects it in some general sense, but it does not make much analytical sense.
  Mention has been made by the right hon. Member for Down, South (Mr. Powell) of the difficulty of Government borrowing. He suggested that we had come to the end of the road. I suggest to him that it was not a matter of principle but simply a matter of money. The oligopolistic money market—there is not any free competitive money market—decides, as a group of institutions, what Government stock it is going to take, and so on. At that time it was not prepared to take it at the rate of return.
  The Financial Times of Tuesday says that the Government flogged £900 million just like that at a 10·5 per cent. rate of return. Since Gladstone, or since the time when we failed to balance Budgets, someone has always said that we have come to the end of the line. I should like to know what kind of PSBR is acceptable to Conservative Members, given that we have 1½ million unemployed which is probably costing us a total of £10,000 million in terms of economic resources.
  My right hon. Friend the Chancellor wanted again to tell us that he felt that the real economy was now, he hoped, on course. There are 1½ million unemployed, and we have an import bill for finished and semi-finished manufactured goods of about £22,000 million. It is not long—about 10 years—since imports of finished and semi-finished manufactured goods were 30 per cent. of our total import bill. They are now two-thirds of our total import bill and they are increasing every day, whether it is electronics, motor cars, or anything else.
  It is all very well to sit back and believe in this kind of Ricardian laissez-faire of the nineteenth century. We are not just saying that there should be import controls. The Chancellor often tells us that the wage bill in this country is so much that it cannot be ignored and
  1112
  must be planned in some way. I say to him that £22,000 million worth of finished and semi-finished manufactured imported goods must be planned in some way. We want a planned trade policy.
  I note also that, despite the problems that we have faced over the past three years, another £5,000 million net capital was invested abroad. We have failed to bring about planning agreements and the strengthening of the NEB. We shall get the real economy right only when we get a real economic strategy based on Socialist priorities and policies. Once again the Tories have shown the native blatant class interests they are here to represent, and I would welcome a General Election on that issue. I hope that we shall fight it on the 1976 programme that was hammered out by our party conference.
  8.45 p.m.
  Mr. F. A. Burden: I hope that the hon. Member for Bristol, North-West (Mr. Thomas) will forgive me if I do not attempt to follow the line of his speech. The debate was originally to be about a vote of censure on the Chancellor, but it has turned out to be a vote of censure on the Government and the Prime Minister. In the light of those changed circumstances, it is perhaps desirable that we should remember the view of the Prime Minister in 1955 when he said:
  "The Labour Party never would have reached the peaks and heights of power unless we had been prepared to subordinate our individualism to our Socialism."
  He made his view perfectly clear at that time, and I believe that that is still his attitude and philosophy.
  So far the Government's economic policies have been constrained by the fact that they have not had a full majority, but there is no doubt that pressures from below the Gangway and from the extremists in the Labour Party outside the House and some within the Cabinet would turn the Labour Party into what I would regard as a Marxist party. The Chancellor of the Exchequer is smiling. He knows quite a bit from his past days about the Marxist policy in this country.
  It is useful to remember that Labour's manifesto for the October 1974 General Election said:
  "The industrial sector of our economy is suffering from grave and chronic debilitation

  1113
  and that sort of illness cannot be cured with a couple of aspirins."
  Even this Government cannot claim that the Socialist economic medicine they have thrust down the patient's throat has brought a recovery. If anything, it has caused a further decline. Only the arrival in 1977 of Dr. North Sea Oil and the IMF nurses has given the patient a chance to recover.
  We must not forget what the Liberals have done. They have made grandiose claims, but it is extraordinary that not one Liberal has been in the Chamber for a considerable time. Dare I suggest that their influence has been only to keep the Government in power? The so-called pact has been seen by the Government only as an expedient which, by its nature, may have caused them to soft pedal for a few months and so give them a better chance of winning the next election and the pursuit of full-blooded Socialism.
  I wonder whether the Liberals are aware of the full extent to which they have been used. I wonder whether their leader read the Labour manifesto of October 1974 which said:
  "Why can't we accept the idea of a coalition to meet the nation's crisis? Because what our country needs in this crisis is a government with a clear-cut understanding of the nation's problems and the ability to decide quickly and effectively how to deal with them. A coalition government, by its very nature, tends to trim its policies and fudge its decisions; and in present circumstances that just won't do. If we believe, as we must, in our own independent political philosophies, there is no meeting point between us and those with quite different philosophies, and it would be a cruel farce to suggest that the future of the country would be helped by shuffling, compromising administration."
  That really shows up the pact between the Government and the Liberal Party. I wonder whether the Leader of the Liberal Party read it, and if so what he really feels about it. That statement makes clear how the Liberals have been used. It reflects little credit on the Government for the way they have used the Liberals, and even less upon the Liberals for allowing themselves to be so used.
  The issue of full employment is one which every decent Government—and indeed every decent person—must hold as the main objective. When Labour came to power in 1974, unemployment stood at 577,700–2·5 per cent. of the
  1114
  working population. Last month, under this Government, the figure stood at 1,366,400, or 5·7 per cent. Of course, the Government are hoping to alleviate the situation by giving school boys and girls £6 a week to stay at school another year so that they will not appear on any unemployment returns. Heaven knows what will happen in the schools.
  Commenting on the unemployment figure of 815,919–3·4 per cent.—which occurred during the term of office of the last Conservative Government, the present Secretary of State for Energy said:
  "there is nothing more wasteful than maintaining such a large body of men and women paid to do nothing in an economy"—[Official Report, 29th April, 1971; Vol. 816, c. 724.]
  He went on to quote the OECD report of December 1970, which said:
  "A major recession would no longer be an act of God, but only could result from miscalculation or a deliberate act of Government". —[Official Report, 29th April, 1971; Vol. 816, c. 726.]
  On Prices, it is very interesting to hear what the Government are saying now and comparing it with what the Secretary of State for Energy said in our day. He said:
  "In the last 12 months prices have increased by 8·8 per cent. That amounts to a hydrogen bomb explosion."
  On that basis, this Government have been lobbing hydrogen bombs around for the past four years and they are continuing to do so.
  The Government have put Britain in pawn by their borrowings. Between March 1974 and April this year they borrowed $8·55 billion, half of it in 1977 when North Sea oil was flowing in substantial quantities. By 28th February this year no repayments had been made or were due. However, on 26th January the Chancellor told the House of the Government's intention to repay early $1 billion to the IMF. Has that money been repaid? If not, why not, and when is it intended to be repaid?
  On 26th April, in a Written Answer, I was informed that the interest on the $8·55 billion was running at $620 million a year. In addition, the Government have floated enormous national loans, all of which have to be repaid and serviced. The Government are continuing to hang a legacy of debt around this country's

  1115
  neck, and it will take us many years to get rid of it.
  Neither the Chancellor nor the Government seem to realise that a country, like a company, cannot borrow its way out of bankruptcy. It is tragic that we are losing credit-worthiness abroad. Other countries are losing confidence in our ability to restore our economic situation. This has all happened under this Government.
  Perhaps the worst feature of this Government's performance, politically and morally, is the way in which they have used the Liberal Party in order to hang on to office. It is a tragedy that the Liberal Party has allowed itself to be used by the Goverment. The realisation by the public of what has happened will mean that the Liberal Party at the next election will become the party of irrelevance. That will be the public's view through the ballot box.
  8.55 p.m.
  Mr. Nigel Forman: I wish to spend the few moments that are available to me in this debate in considering some aspects of the Government's record over the past four years. This debate gives the House an opportunity to examine the Government's record over a longer period than simply that relating to the package that is before us.
  It has already been said that this is the fourteenth economic package of the Labour Government, and we all know the disastrous way in which real living standards have had to be slashed because of the Labour Government's economic mismanagement. Unemployment is intolerably high—twice the figure of that four years ago; industrial production is scarcely above the level attained during the three-day week; and productivity is virtually stagnant. The record of the present Government on all major economic indicators is sad, and the Prime Minister and his Chancellor of the Exchequer have to bear the major share of the responsibility.
  There is no doubt that the Government have reeled from crisis to crisis and from policy to policy, rather like a gang of drunken sailors. I do not credit them with a great deal of malevolence aforethought. I believe that they have staggered from one disaster to another with-
  1116
  out having any clearly thought-out plan of action.
  The impact of the latest batch of Government measures will mean further unemployment—perhaps another 100,000, according to the CBI, on top of the already tragic level—it will mean higher prices, perhaps an additional 1½ per cent. in a full year, again according to the CBI, and it will result in reduced international competitiveness—a factor that is so vital and to which the Government attach so much importance.
  Above all, this latest package has been a cruel blow to the tender plant of revived industrial confidence. There was a hope a little while ago that industrial confidence was beginning to pick up. It is against that background that the Government's major commitment to a so-called industrial strategy now seems so hollow. It must be galling to those who work so hard in industry to create the wealth which the Government are rapidly seeking to redistribute.
  Let me recall to the House a quotation from the Chancellor's Budget Statement. He said:
  "But we cannot expect to see the rate of unemployment moving down at an acceptable speed unless we can create new jobs particularly in profitable firms in manufacturing industry and so strengthen the industrial base on which our whole economy depends."—[Official Report, 11th April 1978; Vol. 947, c. 1187.]
  That is certainly true, and it is equally true that this particular package has done nothing to advance that cause.
  Let me now deal with the future. One is bound to conclude that this package is another example of what The Guardian describes as "cynical electioneering". In an apposite remark in a recent leader that newspaper suggested that the
  "measures which Mr. Healey and the Government have chosen amount to the sacrifice of jobs and investment to make sure that the Government wins an election in October".
  I have my own view about the Government's chances of becoming remotely near to winning an election in October, and I think that those chances are very poor. This says something about the cynical calculation in Ministers' minds and the way in which they have advanced these measures. They are working on the basis that the adverse effects of any of these measures could be pushed well into

  1117
  the future beyond the likely date of an autumn election.
  If by some miracle the Labour Party were to win such an election, it is obviously reckoning on the idea of cobbling together some further measures to deal with the consequences of its own mismanagement. However, on the assumption that the Labour Party will not be carrying out the task of government, it will not be particularly bothered by the consequences of inflation, unemployment and its cumulative mistakes.
  The National Institute Review recently forecast a return to a level of inflation of about 12 per cent. in 1979 and unemployment rising again to about 1½ million. If that is the inheritance that the next Conservative Government have to pick up, they will be justified in blaming the previous Labour Government for a legacy of cruel irresponsibility.
  When we are faced with the latest set of crisis measures and when the Chancellor had the cheek to talk about the present situation as a dramatic turn-around in the economy, I recall the refrain from one of Vera Lynn's wartime songs—I shall not sing it—which went along these lines, "We'll pay our way, don't know how, don't know when".
  The record of four years of Labour Government and the latest package show that the Chancellor has learnt nothing and forgotten nothing. We see before us a demoralised and desperate party clinging to power. I am mindful when looking at it of a Yeat's quotation
  "The best lack all conviction, while the worst are full of passionate intensity."
  On an evening when a number of hon. Members have made it abundantly clear that we are talking about the record of a bankrupt Administration with bankrupt policies, I am happy to join my hon. Friends in voting against the Government.
  9.2 p.m.
  Mr. Stan Thorne: I shall speak briefly as I recognise that little time is left. The debate has been about how industry is organised, about its goals and who decides those goals.
  We have had nothing new from the Opposition on those matters. Again we are being invited to accept that private enterprise should be the determining factor in regard to how industry is run
  1118
  and organised. We are again being told that there should be no Government intervention in industry, in spite of the fact that the Conservative Party has found it necessary in the past to intervene, especially in the case of Rolls-Royce, when there have been problems.
  I am concerned primarily about the problem of unemployment. I am not convinced that the measures that the Chancellor is putting forward at present will not exacerbate the problem that already exists. It is true that unemployment is a problem of the Western world generally. I would argue that there is not sufficient Government intervention in the economy to enable it to address itself primarily to that problem. Planning the economy has always been part of the Labour Party's approach to present-day society in Britain. However, we continue, as my hon. Friend the Member for Bristol, North-West (Mr. Thomas) has said, to accept that there is no need for any real action on import controls.
  In my constituency, and in several others in the North-West, jobs have undoubtedly been lost because of the tremendous inflow of manufactured goods. It is worth recalling the figures for passenger motor cars as imports from 1974 to date. The figures tell their own story. In 1974 it was £357 million, in 1975 it was £516 milion, in 1976 it was £889 million and in 1977 it was £1,328 million. In the first four months of this year it is £555 million. If that trend continues, at the end of the financial year the imports of passenger cars will reach a level of £1,665 million
  Surely we ignore figures of that description at our peril. We cannot possibly talk about regenerating British industry unless we are prepared to accept that some measure of import controls has to be introduced to protect that industry. That means that they must be selective and be in areas where the effects on the exporting country will be felt least.
  I am more concerned with the overall question of the world economic situation. Clearly, I cannot deal with that in the two or three minutes left at my disposal. I want to issue a warning which has already been issued by Labour Members. It will be not too far distant when the world crisis will be between the nations which have and the nations which have not. The tremendous input that we could

  1119
  make to the developing world to improve its economic position will be lost precisely because we have not put our minds to the regeneration of British industry which is not only in our economic interest but in the interest of meeting needs in other parts of the world. In view of the time, I shall leave it at that.
  9.6 p.m.
  Mr. James Prior: I start with the pleasant duty of congratulating two hon. Members on their maiden speeches.
  My hon. Friend the Member for Epsom and Ewell (Mr. Hamilton) follows a distinguished Member of this House—now Lord Rawlinson. My hon. Friend concentrated largely on youth unemployment and the problems of small businesses. He fought a good fight and had a very good victory. We are pleased to see him on the Opposition Benches.
  Much the same applies to the hon. Member for Hamilton (Mr. Robertson), who also made his maiden speech today. He follows a popular and quiet Member of this House who died recently. The hon. Gentleman also stressed the importance of unemployment, particularly among young people, in what I am told was a constructive and conciliatory speech.
  It is usual on these occasions to wish that we hear from such hon. Members many times in future. I think that their speeches today were of the kind that we should like to hear on future occasions. But I hope that they do not follow the example of the Chancellor of the Exchequer. If they do, we shall not want to hear them again very often.
  I say that because I thought that we heard the Chancellor of the Exchequer today at his worst, his most arrogant, his most cynical and his most inexcusable. I find Andrew Alexander difficult to take at times, but this morning he said that it was impossible to penetrate the right hon. Gentleman's ego. My goodness, if he listened to the debate this afternoon, he would have been proved right again.
  The Chancellor was his usual self, because in his speech he made the same old excuses. Looking back over the last four and a half years of the Chancellor's excuses when he has brought further economic measures before us, there has always been someone or something else to blame. It has even been the weather on
  1120
  occasions. It is what other countries are doing the fact that business has not invested, that wages have gone up too quickly or that the world economy is expanding too fast or too slowly. It is never the Chancellor's fault that anything goes wrong.
  The Chancellor of the Exchequer has proved himself to be entirely cynical in the measures that he has chosen on this occasion. The Guardian stated:
  "The measures which Mr. Healey has chosen to take represent cynical electioneering. Put crudely the Government has chosen to sacrifice jobs and investment to make sure that it wins an election in October."
  The article concluded:
  "The Government may have regained initiative in the money markets but it has done so at the cost of elbowing industry aside once again and this time in the interest of political expediency just as much as economic necessity."
  That was The Guardian's view:
  On the fourteenth Budget that the Chancellor has introduced, I must say to him that there are some people about whom one cannot truthfully say that practice makes perfect. It certainly does not in the case of the Chancellor.
  The Chancellor—and the Prime Minister is also fond of doing this—referred to the money supply figures for 1972–73. When we in the Opposition were sitting on the Government Benches I do not remember the right hon. Gentleman, when he was Shadow Chancellor, castigating us about the money supply. I remember that we were castigated about the level of unemployment when the number of unemployed was 900,000. We were castigated about the level of unemployment when it was 600,000—not the 1·4 million that it is today.
  Have the Government forgotten that they fought an election in October 1974 when they said that unemployment was coming down and that inflation was under control and when the Chancellor said that there was no reason why there should ever be over 1 million unemployed? They have forgotten all about that. They try and try again to pin the mistakes that they have made constantly and consistently over the past four years on the money supply problem of 1972–73. That just does not wash.
  The Chancellor says that there are divisions in policy thinking on these Benches. But they are nothing compared

  1121
  with the divisions in policy that he has announced in the past two months. It is extraordinary. Two months ago, in the Budget Statement, the Chancellor said that to increase the employers' national insurance surcharge would mean that it would ultimately be passed on in higher prices at a time when the fight against inflation was at a crucial stage and, even worse, that it would harm us when unemployment was our major problem.
  The day before yesterday the Chancellor said almost the same as he said today. He said:
  "The increase in the surcharge will have next to no effect on jobs, investment or trade. Indeed, the moaners are talking a lot of nonsense."
  It ill becomes the Chancellor or anyone else on the Government Benches to talk about splits in policy or about not knowing one's own mind. The Chancellor does not know his own mind from one moment to the next.
  Not for the first time the Government have misjudged the economic position. The Budget judgment was entirely wrong. It was wrong in terms of the borrowing requirements and in terms of public spending increases and in its combination of tax changes. It was also wrong in its judgment of the House of Commons. In the end it was the fear of a sterling crisis, a plunge in the reserves, and a plummet in the exchange rate that made the Chancellor act. It was not the £500 million tax cuts that the House imposed upon him. It is clear that it was a far deeper and far more serious crisis than that which began a long time before there was any question of tax cuts.
  My right hon. Friend the Member for Chipping Barnet (Mr. Maudling), who received no answer from the Government, was right to point out the interesting figure which the Chancellor has used and which appeared in the Financial Times today—that the borrowing requirement is about £700 million less than was forecast. If that is right, it completely destroys any argument that the Government might have been able to use—and use very unfairly—against the tax cuts of the second week in May. It is no good the Chancellor saying that our borrowing requirement is less than that of Germany or Japan as a percentage of GNP. Japan and Germany have strong economies
  1122
  whereas ours is weak. We are not in the luxurious position of being able to borrow at the rate at which other countries can borrow and still sustain their economies.
  The Goverment are in a vicious circle. They have boxed themselves in by their own policies. They realise that Britain is now operating under a new kind of restraint—that of monetary discipline. But once again they have proved that they are incapable of living within it. They respond to their own supporters by increasing public spending even though the country has not earned the money by increased production and sales.
  The Government have to borrow. They are a poor risk. Accordingly they have to pay over the odds for the money they borrow. The money they are borrowing now at enormously high rates of interest will have to be repaid by future generations. It is most unfair that those generations, not to mention the present generation, should have to suffer for the Government's mistakes now.
  Because of their policies, the Government are forced to retrench again, so they go for the private sector. Twice in two years they have put on an employers' surcharge for national insurance. They do that rather than hit the public spending sector, although of course their action still hurts the public. There is no way of avoiding that. The Government therefore hit at the already dangerously narrow industrial base whence comes our wealth. The country is not yet aware of the desperately serious state of much of our industry.
  Costs rise, unemployment increases and investment declines. Our competitive position deteriorates and our unit costs go up. We sell less and we import more. Let me ask the Government where they think the British economy would be today if it were not for the £5 billion we are now getting from North Sea oil and natural gas. I remember last year that the BBC's industrial correspondent—no doubt prompted by some Treasury spokesman—stated on the news that the balance of payments was in the black. There was no reason, he said, why the balance of payments should not stay in the black for 15 to 20 years. Yet within six months we are back in the red again. We are back in the red this month and we were in the red on average for the first three months of this year.

  1123
  As unemployment and prices rise, the Government seek to spend more to provide employment aids to put people into work, and they seek to spend it to prevent increases in prices that become inevitable as a result of their policies. They seek to protect the jobs that their policies have put at risk. They seek to prevent the price rises that their policies have made inevitable. As the situation grows worse they introduce tougher wage restrictions, and their very nature precludes the movement of differentials to the greater flexibility that is now essential. One had only to listen to the news this morning and to hear of the shortage of skilled men at ICI at Wilton, which is causing that plant to close, to know how damaging to the economy is the very tight and totally inflexible pay policy of the present Government.
  Mr. Robert Mellish: What would the right hon. Gentleman do? What is the alternative?
  Mr. Prior: Give me a chance.
  It is vital that we begin to break out of this vicious circle. The Government have shown themselves incapable of doing so.
  Mr. Mellish: What is the right hon. Gentleman's alternative?
  Mr. Prior: I shall tell the right hon. Gentleman this as well. I think that trade unionists have behaved with remarkable responsibility. [HON. MEMBERS: "Hear, hear."] I shall tell the right hon. Gentleman something else. They have been shabbily rewarded by the present Government, because present policies are not working for them now.
  The more the working man takes stock of his position and the more he understands his country's and his firm's position, the more he will seek the change in policy that is essential if we are to get production and productivity moving forward.
  The Government offer confrontation[Laughter]—yes, confrontation with the dole queues and confrontation with higher prices. Labour Members may laugh, but let them visit people on the factory floor and hear what they have to say. Let them not always be guided by London taxi drivers—Oh, I forgot; they do not travel in London taxis. Let them
  1124
  not be guided by the few people who do not tell them the truth about the level of taxes and of prices. I shall say a little more about that before I resume my seat.
  The Government have absolutely no right to presume to tell us the effect of our policy when their own is failing so abysmally.
  Let me turn for a moment to the effect of the Government's measures on employment. I never thought that I would live to hear in the House of Commons a Socialist Chancellor of the Exchequer cheered by his own side with unemployment at 1·4 million. I never thought that that day would come. Yet I heard that this afternoon, when I hear a Chancellor defending not only a record of 1·4 million unemployed but also further measures that will increase that total.
  What is more, it is no good the Chancellor thinking that these increases in unemployment will not start before the autumn, because that is when the unemployment surcharge comes in.
  Mr. Mellish: Tell us what you would do, Jim.
  Mr. Prior: The increases will start now. The increase in unemployment will begin now because more and more people in small businesses and big businesses will look at their payrolls and will decide, wherever they can, to cut down the number of people that they employ.
  I do not know whether Labour Members realise it, but the surcharge will cost about £100 per average industrial worker employed in British industry. It will cost the Government a lot of money, too. When my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) puts down an Question to the Secretary of State for Social Services about its effects on the National Health Service, the Government cannot even tell the House what the effect will be. They have not even got round to working it out. So panicky was the measure they had to introduce that they have not even worked out the effect in their own business, let alone in the other businesses of the country.
  Mr. Mellish: What is Tory policy?
  Mr. Prior: I have here a letter given me by my hon. Friend the Member for

  1125
  Shoreham (Mr. Luce). The letter, dated 9th June, is from the Federation of Sussex Industries, which asks:
  "Cannot the Government see that they are creating unemployment with these measures? Small firms in particular are cutting back on staff—every new employee is a potential tribunal case, so what with this new measure they will be even more reluctant to take on extra workers".
  That is the truth of the position. The Government know that as well.
  I quote next from what the Financial Times said of the Chancellor:
  "He must also be aware that there is something ludicrous in the spectacle of a Government which subsidises employment in uncompetitive industries by imposing a tax on employment in productive ones."
  That is what the Government are doing.
  I have been making winding-up speeches in the House for some while, but I cannot remember an occasion when the behaviour of right hon. Members on the Government Front Bench was as extraordinary as it has been today. First, the Prime Minister announced at the eleventh hour that he would treat the motion as a vote of confidence and that he intended to reply to the debate himself. Presumably his main motive was to flush out his colleagues in the Liberal Party so that they would jump through the hoops once more. I do not think that he needed to point such a large piece of artillery at them. Gone are the days when they cheered the prospect of marching towards the sound of the gunfire.
  As the Prime Minister decided to speak in the debate, it seems strange that, even given his programme outside the House, he chose to spend so little time here today. He did not even send a message, as he has on previous occasions, to explain why he could not be here. I gather from the noise they are making that Labour Members do not care much about the House of Commons. If they did, they would have seen that the Government made the original statement in the House.
  Then we had the hustings speech of the Chancellor. He plumbed new depths, even for him. He seems to have chosen to spend most of his life in the political gutter, and I shall not follow him there now.
  1126
  The main part of the right hon. Gentleman's speech was a characteristically vitriolic attack on Conservative policy. He said that Conservative policies were extreme and divisive. What nerve from the man whose policies have more than doubled the number of men and women out of work, the man whose policies will have pretty well have doubled prices by the time of the next election. I can think of no holder of his office whose policies have been more divisive than the right hon. Gentleman's.
  If the Chancellor wants, as he seemed to suggest in his speech, a serious comparison of policies, let him look at Conservative policy set out in "The Right Approach" and then look at the Labour programme—a collecton of Eastern-European-style policies passed by an Eastern-European-sized majority at Labour's conference 18 months ago. The right hon. Gentleman will remember that conference. It is the one he had to attend when the pound was plummeting and he was called back from Heathrow. He will also know, as hon. Members do, what Mr. Bert Ramelson said about Labour Party policy. He said:
  "The Communist Party can float an idea early in the year and it can become official Labour policy by the autumn."
  The right hon. Member for Orkney and Shetland (Mr. Grimond) said of the Labour Party:
  "The Labour Party remains without principle, clinging to office, paid by the trades unions and with an anti-democratic Marxist wing. The pact, I fear, is having no effect on the nature of that party."
  "The Right Approach"—our right approach—which the Prime Minister quotes with approval at every opportunity sets out our policies. I have not heard the Prime Minister pointing to the Labour programme. That is not surprising when it calls for more nationalisation. Does the right hon. Gentleman agree with it? Will he tell us tonight? Does he agree with nationalising the banks and insurance companies? His party does, but does he?
  That programme of his will lead to higher spending, bigger debt, higher taxes, higher inflation, higher unemployment. Is that moderate or is it extremist? Would that unite the nation or would it divide the nation?

  1127
  In Burnley the other day—it is bad luck for him that the local reporter was there to take down what he said—the Chancellor told the comrades:
  "I will offer you proper Socialism when we get a decent majority in the House of Commons to enable us to do it."
  That is not quite the message that the right hon. Gentleman whispers over the brandy and cigars down at the City lunches. It is a different message down there. But the message that he gave the Burnley comrades is the true message and the one to which the country must pay attention.
  But is it the right hon. Gentleman's "proper Socialism" which we are supposed to believe would unite the nation? Of course it would not. It would drive us back down the road to bankruptcy. It would be back to the policies of 1974 which got us into this mess and it would be full steam ahead for 1984 instead.
  Mr. Mellish: Now let us have Tory policy.
  Mr. Prior: I will give the right hon. Gentleman the theme on which I believe and I know my party will fight the election when it comes. As we approach the next election, let us take for our guide words from an American—[Laughter.] Labour Members would do a lot better to listen to these words rather than laugh because they have never listened to words like them before. I hope that they will listen now. Those words are:
  "If we promise, we must deliver. If we propose, we must produce. If we ask for sacrifice, we must be the first to give. If we make mistakes we must be willing to admit them. We must provide the people with a vision of the future that is attainable. We must strike a balance between the idea that the government can do everything and the belief that the government should do nothing."
  This Government have misled the country for four years. The result is 1·4 million unemployed. They have doubled prices and doubled unemployment. The Chancellor stays in office against the wishes of everyone on this side of the House. It is long overdue that his salary was reduced, and it is long overdue that he gave up his job.
  9.34 p.m.
  The Prime Minister (Mr. James Callaghan)The Prime Minister (Mr. James Callaghan) rose—
  Mr. William Whitelaw: Hear, hear.
  The Prime Minister: I hope that the right hon. Gentleman will also cheer at the end of my speech.
  I should like to begin as the right hon. Member for Lowestoft (Mr. Prior) began by congratulating the two hon. Members who have made their maiden speeches today. I regret that I heard neither the speech of the hon. Member for Epsom and Ewell (Mr. Hamilton) nor that of my hon. Friend the Member for Hamilton (Mr. Robertson). I understand that the hon. Member for Epsom and Ewell is an employer and works in an engineering firm. It is very valuable that people with practical experience should come here. It complements well the activities of my hon. Friend the Member for Hamilton, who is an experienced trade unionist. Both sides of industry need representation in this House, and from what I have been told it seems that we have gained two excellent new Members. I congratulate them.
  I apologise to the House for not having been here during the debate. It is true that I did not send a note, as I usually do; and I offer my apologies, but I thought it was known that. I have had over five hours of discussion today with the President of Romania. That is the reason that I was not here. It would not have been possible to put off the President of Romania today, and I do not believe that the House of Commons would have wanted me to do so.
  If I am asked by the Opposition, as I am, why I reply to the debate, my answer is that it is because I take responsibility for asking that the House should vote tonight on a vote of confidence. I think, therefore, that it is right that I should come here and say why.
  In a minority Government such as we have—and we have been in a minority of anything between 10 and 20 on ail occasions—it is inevitable that we shall constantly suffer defeats. We have accepted them during the last four and a half years, trying to put them right whenever we could, but, on the whole, we felt that it was right that we should carry on and accept such defeats.
  It could have been argued—and, indeed, was argued—that we should do the same

  1129
  tonight, if indeed the House were to vote against us, and put down a vole of confidence tomorrow on which the House could decide. That seemed to me not the right way to do it, and I shall explain why.
  The job of a Chancellor of the Exchequer is the most onerous and responsible and almost intolerable job in any Government. If anybody wishes to challenge that, I suggest that he should look at the record of the late Lord Selwyn-Lloyd or of Lord Barber, or even of two of us who are still in this House. Anybody who has done this job recognises its very onerous nature. The task of Chancellor of the Exchequer is central to that of the whole Government's economic and financial policy. Therefore, this is not like an attack on any other Minister. As I understand it—I hope I do—an attack on the Chancellor of the Exchequer, and an attempt to undermine him in this way, is an attack on the central policy of the Government. The whole of the Government, therefore, should put their weight behind the Chancellor and support him in a matter such as this.
  It seemed to me to be appropriate, therefore, that we should say that the House should make up its mind on the whole record of the Government and that, if the House cannot support us this evening, I would ask for a dissolution of Parliament and go to the country. That seems to me to be the right way to handle this situation, because, as the Chancellor of the Exchequer is so central to Government policy, a vote against him in the House tonight would have its repercussions in the markets and would have its reprecussions on the exchange rate. Indeed, it would have its repercussions in a great many of our financial and monetary affairs.
  It seems to me, therefore, that the House should vote—as I know it will, in all responsibility tonight—on that central issue whether it thinks that in all these circumstances, and taking the whole record, the House should censure the Government through the Chancellor of the Exchequer. That, therefore, is the reason why—
  Mr. Malcolm Rifkind: I am grateful to the Prime Minister for giving way. He has explained his reason for making this a vote of confi-
  1130
  dence. Can he explain why he came to that decision only just before lunch today?
  The Prime Minister: I thought that I had already done so—[HON. MEMBERS: "No."]. I said that there was a suggestion that we could accept today's decision in any case and then put down a vote of confidence tomorrow. Having reflected on this I came to the conclusion that that was not the right way of doing it. If hon. Hembers voted tonight without the knowledge of the damage they would be doing in certain circumstances, I believe that it would be leaving the House under a false impression. I did not want to do that. That is the reason why I ask the House tonight to vote in the full knowledge of what the results will be, and in the added certainty that if we cannot get support from the House we believe that we shall get full support from the country.
  I understand from all sides that the Chancellor today made an outstanding speech. Indeed, I am told that it was his best in this Parliament. I suppose, therefore, that there will be the usual number of bruised shins going home tonight.
  But the reason why I ask that there should be no support for this motion, in addition to what I have already said, is that there is a large amount of unfinished business still to complete. I take first the legislative side. There is the whole question of the devolution Bills for Scotland and Wales. On more than one occasion the House has declared itself in principle in favour of these Bills. We have spent two years on them. They have been amended, they will still come back to the House and there is no doubt that there will be further discussions. But they are reaching their final stages.
  Whatever views either side may take about this matter, I believe that there is now a growing acceptance that the people of Scotland and Wales should have the opportunity of declaring their view as they will do, through a referendum on this matter. I believe that it would be a disservice to the people of Scotland and Wales to deny them that opportunity. It is well known—I am sure that it is well known by those who apparently are seeking to interrupt me from the Scottish National Bench—that if the House should

  1131
  be dissolved—as I hope and believe it will not—both of those Bills will be lost. We should have to start again completely from scratch. The Members of the SNP should also remember when they vote tonight that if they have the misfortune to have a Tory Government those Bills will never start again.
  Mrs. Winifred Ewing: Would not the Prime Minister reflect on the fact that for 50 years it was the policy of the Labour Party to promise a much more full-blooded Assembly for Scotland? We are still waiting on that. Therefore, what confidence can we have in the promises of either side?
  The Prime Minister: I would have thought that the record of the Government in persisting with these Bills, despite the most vigorous opposition, is the best reason for confidence that the hon. Lady could have that we intend to bring them to a conclusion. I very much hoped that we would have more support from the hon. Lady and her colleagues with regard to this matter. If these Bills are lost, the referendum is lost. I hope that the people of Scotland and Wales will be able to declare themselves. As far as we in Wales are concerned, I hope that our people will declare themselves in favour of an Assembly. I should like to see that take place. But if we lose the vote tonight, both those Bills will disappear. The people of both Scotland and Wales know that.
  Another piece of business which is unfinished—indeed, it will never be finished; the battle is continuous—is the battle against inflation. We have had great successes here, but we must go on, and I think it important that the Government should know that they have the support of the House of Commons in carrying on that battle.
  We have had great successes. I must say that when I hear the right hon. Member for Lowestoft talk of the high cost of borrowing now, although his references were good I wish that he had looked at the cost of borrowing when he left office. It is now 10 per cent., and he is grumbling about it, but when he left office the cost of borrowing was 13 per cent.
  We have seen the right hon. Member for Lowestoft in his traditional role tonight, paying tribute to the trade unions,
  1132
  trying to seduce them, but I am afraid that they have seen too much and heard too much of other speeches. The voice may be the voice of Lowestoft, but the hands are the hands of Joseph.
  There was only one thing we were disappointed about in the right hon. Gentleman's speech. He quoted great words, with many of which, I must say, I found myself in agreement, from a great American, but he did not tell us who it was. I began to wonder whether we had exchanged Karl Marx on this side for Groucho Marx on that. But we heard no word of who the great American was who will now sustain the Conservative Party.
  I wish to refer also to some of the other financial provisions in the battle against inflation. The right hon. Gentleman spoke of the money supply. The money supply is one tool, though not the only tool. But if comparisons are to be made—if we are as bad as everyone says—how do the Opposition account for the fact that whereas the money supply has increased by 26 per cent. in the past two years, it went up by 65 per cent. in their last two years? What do they think was appropriate then which is not appropriate now? Why do they think that they did so much better when the increase in money supply was so much higher? We have asked that question many times, and I despair of getting an answer, but if we are comparing records, it is worth while putting these things on the record.
  With regard to the balance of payments, to be fair to the Opposition I have taken one quarter, the last quarter of 1973, before the increase in oil prices really took effect. The balance of payments deficit was then running at an annual rate of £1,300 million. If I took the following year, of course, the figure would be over £3 billion, but in that quarter it was running at the rate of £1,300 million a year. In 1977, we had a surplus of £165 million. What do the Opposition want to make of that? What is so special about their record in that respect?
  I have referred already to our record on inflation. The right hon. Member for Lowestoft referred to this and complained about how high it was at 7·9 per cent. I agree that it is high at 7·9 per cent. I I agree that we must naturally try to keep it there or reduce it, if it is humanly possible. But I must remind the right hon.

  1133
  Gentleman and the Opposition who are censuring the Chancellor tonight that when they left office inflation was at 15 per cent. and rising. It is now 7·9 per cent. and falling.
  Mr. Cyril Smith: Does the Prime Minister not agree that as well as inflation the issue of unemployment is extremely important? Will he undertake between now and the Report stage of the Finance Bill to have meaningful discussions with the Liberal Party and its leaders to try to reduce the 2½ per cent. surcharge that it is proposed to put on employers and particularly on small businesses because of the effect that that might have on them?
  The Prime Minister: We should be happy to have discussions with the Liberal Party on this matter or with the official Opposition if they wish. However, I cannot undertake to the hon. Member for Rochdale (Mr. Smith) that the 2½ per cent. surcharge will be reduced at this moment. I cannot go further than I have gone before, along with my right hon. Friend, in saying that the 2½ per cent. is necessary if we are to raise the revenue that has been lost in other ways for this year. But there is another Budget next April and the matter will be considered again before then. If the hon. Member for Rochdale or any of his hon. Friends wish to discuss that matter between now and the Report stage we shall be happy to enter into talks with them.
  I turn to the question of unemployment. The first point that we want to put on record is that the Government have saved hundreds of thousands of jobs during the last four years. The temporary employment subsidy and the short-time working proposals which have just come into force have applied to over 430,000 workers. The workers of this country know and understand this. They therefore know that the Labour Government are far better at handling unemployment when it occurs than is the Conservative Party.
  Mr. Anthony Grant Mr. Anthony Grant (Harrow, Central) rose—
  The Prime Minister: I have only just started on the question of unemployment. I may deal with the hon. Gentleman's
  1134
  point on the way through. In the matter of shipbuilding, we have saved hundreds of jobs, if not thousands, against the desire and votes of the Conservative Party. Jobs have been saved in aircraft against the votes of the Conservative Party. Jobs have been saved in the motor car industry against the votes of the Conservative Party. We have helped large and small firms against the votes of the Conservative Party. We have given coal a firm base from which that industry can proceed.
  We have in the matter of the Scottish and Welsh Development Agencies given assistance to small and medium-sized firms, and not one of us has had a reply from the Opposition as to what it would do about those two Agencies, which are extremely valued and welcome in Scotland and in Wales.
  What policy does the Conservative Party follow? The Conservative Party believes that grants and subsidies always do great harm. That is the theme of the Conservative Party, which is constantly expressed and constantly reiterated by the right hon. Member for Leeds, North-East (Sir K. Joseph). That is why the Conservative Party on every possible occasion votes in favour of cutting out jobs and of more unemployment.
  The unemployment figure has fallen slowly during the last eight months and I believe will continue to fall over a period of the next 12 months but not month by month, provided that we can overcome the battle against world recession and overcome the battle against inflation. I reiterate the Government's firm conviction that the battle against inflation is the first and overwhelming battle. Inflation, when it gets out of hand, destroys jobs. It is because we wish to see jobs preserved that we shall continue to fight this battle for as long as we can.
  Mr. Reginald Eyre: Has the Prime Minister thought about the situation in the inner areas of our cities where unemployment is increasing so much and where the only prospect of improving that position is through the creation of new small businesses? Has he considered the terribly damaging effect of these latest proposals on those businesses?
  The Prime Minister: The problems of our inner cities is a great one, but I wish that the hon. Gentlemen had thought about this before he unbalanced the Budget by his vote last month. We have introduced this package as a defensive measure because of the reductions in taxation that were voted. The hon. Gentleman and the country know that.
  We want to continue tackling the problem of overcoming the world recession. Britain has put forward a five-point programme which appeals for more growth, energy conservation, more stable currencies, success in the multilateral trade negotiations and long-term aid to the developing countries. In my view, this, and only this, will begin to reduce the 16 million unemployed in the Western world. I believe that it is vitally necessary that in addition to accepting our own responsibility for the levels of unemployment in this country, arising out of inflation and low productivity, we should not deceive our people by pretending that we shall get rid of our unemployment until the health of the Western economies is far better than it is today.
  I must conclude shortly by asking for the support of the House on these matters. I thought that my right hon. Friend the Member for Bermondsey (Mr. Mellish) was a little unfair to the Opposition when he said that he did not know what was their policy.
  Mr. Mellish: I never have known.
  The Prime Minister: Perhaps my right hon. Friend will allow me to enlighten him on what I think is their policy. I shall put it in about five short sentences.
  Their policy, as I understand it, is to have sabre rattling against the Soviet Union, tub-thumping on hanging, shuffling on immigration, confrontation with the industrial workers and running away on devolution. It is also to preach for public expenditure cuts while putting forward proposals for at least an extra £1,500 million a year on measures they have asked us to introduce immediately.
  Everyone who votes tonight, of whatever party, must consider whether that sort of negative approach to politics today deserves the support of this House. In my view, it does not. In my view, what we are doing, within the limitations of being a minority Government—that is why we must ask for a vote of confidence tonight—is to face the issues of inflation and unemployment that confront this country. We are combating them with a fair degree of success and with much more support in the country than we have in the House. [HoN. MEMBERS: "Try it".] I know that Conservative Members do not want the devolution Bills to go through, but I do and therefore I think that this is not the right time to appeal to the country on these matters.
  I say to my right hon. and hon. Friends that whenever the time comes, however the vote goes tonight, we can appeal to the country in confidence, with conviction, proud of our record, and we can appeal to the country knowing that facing us is a bankrupt Opposition.
  Question put, That the salary of Mr. Chancellor of the Exchequer should be reduced by half:—
  The House divided: Ayes 282, Noes 287.

  Division No. 231

  AYES

  [10.00 p.m.

  Adley, Robert

  Bowden, A. (Brighton, Kemptown)

  Clark, William (Croydon S)

  Altken, Jonathan

  Boyson, Dr Rhodes (Brent)

  Clarke, Kenneth (Rushcliffe)

  Alison, Michael

  Bradford, Rev Robert

  Clegg, Walter

  Amery, Rt Hon Julian

  Braine, Sir Bernard

  Cooke, Robert (Bristol W)

  Arnold, Tom

  Brittan, Leon

  Cope,John

  Atkins, Rt Hon H. (Spelthorne)

  Brocklebank-Fowler, C.

  Cormack, Patrick

  Atkinson, David (B'mouth, East)

  Brooke, Hon Peter

  Costain, A. P.

  Awdry, Daniel

  Brotherton, Michael

  Craig, Rt Hon W. (Belfast E)

  Bain, Mrs Margaret

  Brown, Sir Edward (Bath)

  Crawford, Douglas

  Baker, Kenneth

  Bryan, Sir Paul

  Crouch, David

  Bell, Ronald

  Buchanan-Smith, Alick

  Crowder, F. P.

  Bendall, Vivian

  Buck, Antony

  Davies, Rt Hon J. (Knutsford)

  Bennett, Sir Frederic (Torbay)

  Budgen, Nick

  Dean, Paul (N Somerset)

  Bennett, Dr Reginald (Fareham)

  Bulmer, Esmond

  Dodsworth, Geoffrey

  Benyon, W.

  Burden, F. A.

  Douglas-Hamilton, Lord James

  Berry, Hon Anthony

  Butler, Adam (Bosworth)

  Drayson, Burnaby

  Biffen, John

  Carlisle, Mark

  du Cann, Rt Hon Edward

  Biggs-Davison, John

  Carson, John

  Dunlop, John

  Blaker, Peter

  Chalker, Mrs Lynda

  Durant, Tony

  Body, Richard

  Channon, Paul

  Dykes, Hugh

  Boscawen, Hon Robert

  Churchill, W. S.

  Eden, Rt Hon Sir John

  Bottomley, Peter

  Clark, Alan (Plymouth, Sutton)

  Edwards, Nicholas (Pembroke)

  Elliott, Sir William

  King, Tom (Bridgwater)

  Rathbone, Tim

  Emery, Peter

  Kitson, Sir Timothy

  Rees, Peter (Dover & Deal)

  Ewing, Mrs Winifred (Moray)

  Knight, Mrs Jill

  Rees-Davies, W. R.

  Eyre, Reginald

  Knox, David

  Reid, George

  Fairbairn, Nicholas

  Lamont, Norman

  Renton, Rt Hon Sir D. (Hunts)

  Fairgrieve, Russell

  Langford-Holt, Sir John

  Renton, Tim (Mid-Sussex)

  Farr, John

  Latham, Michael (Melton)

  Rhodes James, R.

  Fell, Anthony

  Lawrence, Ivan

  Ridley, Hon Nicholas

  Finsberg, Geoffrey

  Lawson, Nigel

  Ridsdale, Julian

  Fisher, Sir Nigel

  Lester, Jim (Beeston)

  Rifkind, Malcolm

  Fletcher, Alex (Edinburgh N)

  Lewis, Kenneth (Rutland)

  Roberts, Wyn (Conway)

  Fletcher-Cooke, Charles

  Lloyd, Ian

  Ross, William (Londonderry)

  Fookes, Miss Janet

  Loveridge, John

  Rossi, Hugh (Hornsey)

  Forman, Nigel

  Luce, Richard

  Rost, Peter (SE Derbyshire)

  Fowler, Norman (Sutton C'fd)

  McAddon, Sir Stephen

  Royle, Sir Anthony

  Fox, Marcus

  MacCormick, Iain

  Sainsbury, Tim

  Faser, Rt Hon H. (Stafford & St)

  McCrindle, Robert

  St. John-Stevas, Norman

  Fry, Peter

  McCusker, H.

  Scott, Nicholas

  Galbraith, Hon T. G. D.

  Macfarlane, Neil

  Shelton, William (Streatham)

  Gardiner, George (Reigate)

  MacGregor, John

  Shepherd, Colin

  Gardiner, Edward (S Fylde)

  MacKay, Andrew (Stechford)

  Shersby, Michael

  Gilmour, Rt Hon Sir Ian (Chesham)

  Macmillan, Rt Hon M. (Farnham)

  Silvester, Fred

  Gilmour, Sir John (East Fife)

  McNair-Wilson, M. (Newbury)

  Sims, Roger

  Glyn, Dr Alan

  McNair-Wilson, P. (New Forest)

  Sinclair, Sir George

  Godber, Rt Hon Joseph

  Madel, David

  Skeet, T. H. H.

  Goodhart, Philip

  Marshall. Michael (Arundel)

  Smith, Dudley (Warwick)

  Goodhew, Victor

  Marten, Neil

  Smith, Timothy John (Ashfield)

  Goodlad, Alastair

  Mates, Michael

  Speed, Keith

  Gorst, John

  Mather, Carol

  Spicer, Michael (S Worcester)

  Gow, Ian (Eastbourne)

  Maude, Angus

  Sproat, Iain

  Gower, Sir Raymond (Barry)

  Maudling, Rt Hon Reginald

  Stainton, Keith

  Grant, Anthony (Harrow C)

  Mawby, Ray

  Stanbrook, Ivor

  Gray, Hamish

  Maxwell-Hyslop, Robin

  Stanley, John

  Grieve, Percy

  Mayhew, Patrick

  Steen, Anthony (Wavertree)

  Griffiths, Eldon

  Meyer, Sir Anthony

  Stewart, Rt Hon Donald

  Grist, Ian

  Miller, Hal (Bromsgrove)

  Stewart, Ian (Hitchin)

  Grylls, Michael

  Mills, Peter

  Stokes, John

  Hall-Davis, A. G. F.

  Miscampbell, Norman

  Stradling Thomas, J.

  Hamilton, Archibald (Epsom & Ewell)

  Mitchell, David (Basingstoke)

  Tapsell, Peter

  Hamilton, Michael (Salisbury)

  Moate, Roger

  Taylor, R. (Croydon NW)

  Hampson, Dr Keith

  Molyneaux, James

  Taylor, Teddy (Cathcart)

  Hannam, John

  Monro, Hector

  Tebbit, Norman

  Harrison, Col Sir Harwood (Eye)

  Montgomery, Fergus

  Temple-Morris, Peter

  Harvie Anderson, Rt Hon Miss

  Moore, John (Croydon C)

  Thatcher, Rt Hon Margaret

  Haselhurst, Alan

  More. Jasper (Ludlow)

  Thomas, Rt Hon P. (Hendon S)

  Hastings, Stephen

  Morgan, Geraint

  Thompson, George

  Havers, Rt Hon Sir Michael

  Morgan-Giles, Rear-Admiral

  Townsend, Cyril D.

  Hawkins, Paul

  Morris, Michael (Northampton S)

  Trotter, Neville

  Hayhoe, Barney

  Morrison, Charles (Devizes)

  van Straubenzee, W. R.

  Heath, Rt Hon Edward

  Morrison, Hon Peter (Chester)

  Vaughan, Dr Gerard

  Henderson, Douglas

  Mudd, David

  Viggers, Peter

  Heseltine, Michael

  Neave, Alrey

  Wakeham, John

  Hicks, Robert

  Nelson, Anthony

  Walder, David (Clitheroe)

  Higg ns, Terence L.

  Neubert, Michael

  Walker, Rt Hon P. (Worcester)

  Hodgson, Robin

  Newton, Tony

  Wall, Patrick

  Holland, Philip

  Nott, John

  Walters, Dennis

  Howe, Rt Hon Sir Geoffrey

  Onslow, Cranley

  Warren, Kenneth

  Howell, David (Guildford)

  Oppenheim, Mrs Sally

  Watt, Hamish

  Hunt, David (Wirral)

  Page, John (Harrow West)

  Weatherill, Bernard

  Hunt, John (Ravensbourne)

  Page, Rt Hon R. Graham (Crosby)

  Wells, John

  Hurd, Douglas

  Page, Richard (Workington)

  Welsh, Andrew

  Hutchison, Michael Clark

  Paisley, Rev Ian

  Whitelaw, Rt Hon William

  Irving, Charles (Cheltenham)

  Parkinson, Cecil

  Whitney, Raymond

  James, David

  Pattie, Geoffrey

  Wiggin, Jerry

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

  Percival, Ian

  Wilson, Gordon (Dundee E)

  Jessel, Toby

  Peyton, Rt Hon John

  Winterton, Nicholas

  Johnson Smith, G. (E Grinstead)

  Pink, R. Bonner

  Wood, Rt Hon Richard

  Jones, Arthur (Daventry)

  Powell, Rt Hon J. Enoch

  Young, Sir G. (Ealing, Acton)

  Jopling, Michael

  Prentice, Rt Hon Reg

  Younger, Hon George

  Joseph, Rt Hon sir Keith

  Price, David (Eastleigh)

  Kershaw, Anthony

  Prior, Rt Hon James

  TELLERS FOR THE AYES:

  Kilfedder, James

  Pym, Rt Hon Francis

  Mr. Spencer Le Marchant and

  Kimball, Marcus

  Raison, Timothy

  Mr. Michael Roberts

  King, Evelyn (South Dorset)

  NOES

  Abse, Leo

  Atkinson, Norman (H'gey, Tott'ham)

  Bidwell, Sydney

  Allaun, Frank

  Bagier, Gordon A. T.

  Bishop, Rt Hon Edward

  Anderson, Donald

  Barnett, Guy (Greenwich)

  Blenkinsop, Arthur

  Archer, Rt Hon Peter

  Barnett, Rt Hon Joel (Heywood)

  Boardman, H.

  Armstrong, Ernest

  Bates, Alf

  Booth, Rt Hon Albert

  Ashley, Jack

  Bean, R. E.

  Boothroyd, Miss Betty

  Ashton, Joe

  Benn, Rt Hon Anthony Wedgwood

  Bottomley, Rt Hon Arthur

  Atkins, Ronald (Preston N)

  Bennett, Andrew (Stockport N)

  Boyden, James (Bish Auck)

  1138

  1139

  Bradley, Tom

  Hattersley, Rt Hon Roy

  Orbach, Maurice

  Bray, Dr Jeremy

  Hayman, Mrs Helena

  Orme, Rt Hon Stanley

  Broughton, Sir Alfred

  Healey, Rt Hon Denis

  Ovenden, John

  Brown, Hugh D. (Provan)

  Heffer, Eric S.

  Owen, Rt Hon Dr David

  Brown, Robert C. (Newcastle W)

  Hooley, Frank

  Padley, Walter

  Buchan, Norman

  Horam, John

  Palmer, Arthur

  Buchanan, Richard

  Howell, Rt Hon Denis (B'ham, Sm H)

  Park, George

  Butler, Mrs Joyce (Wood Green)

  Hoyle, Doug (Nelson)

  Parker, John

  Callaghan, Rt Hon J. (Cardiff SE)

  Huckfield, Les

  Parry, Robert

  Callaghan, Jim (Middleton & P)

  Hughes, Rt Hon C. (Anglesey)

  Pavitt, Laurie

  Campbell, Ian

  Hughes, Robert (Aberdeen N)

  Pendry, Tom

  Canavan, Dennis

  Hughes, Roy (Newport)

  Perry, Ernest

  Cant, R. B.

  Hunter, Adam

  Phipps, Dr Colin

  Carter, Ray

  Irvine, Rt Hon Sir A. (Edge Hill)

  Price, C. (Lewisham W)

  Carter-Jones, Lewis

  Irving, Rt Hon S. (Dartford)

  Price, William (Rugby)

  Cartwright, John

  Jackson, Colin (Brighouse)

  Radice, Giles

  Castle, Rt Hon Barbara

  Jackson, Miss Margaret (Lincoln)

  Rees, Rt Hon Merlyn (Leeds S)

  Chemitson, Ivor

  Janner, Greville

  Richardson, Miss Jo

  Cocks, Rt Hon Michael (Bristol S)

  Jay, Rt Hon Douglas

  Roberts, Albert (Normanton)

  Cohen, Stanley

  Jeger, Mrs Lena

  Roberts, Gwilym (Cannock)

  Coleman, Donald

  Jenkins, Hugh (Putney)

  Robertson, George (Hamilton)

  Colquhoun, Ms Maureen

  John, Brynmor

  Robertson, John (Paisley)

  Concannon, Rt Hon John

  Johnson, James (Hull West)

  Robinson, Geoffrey

  Conlan, Bernard

  Johnson, Walter (Derby S)

  Roderick, Caerwyn

  Cook, Robin F. (Edin C)

  Jones, Alec (Rhondda)

  Rodgers, George (Chorley)

  Corbett, Robin

  Jones, Barry (East Flint)

  Rodgers, Rt Hon William (Stockton)

  Cowans, Harry

  Jones, Dan (Burnley)

  Rooker, J. W.

  Cox, Thomas (Tooting)

  Judd, Frank

  Rose, Paul B.

  Craigen, Jim (Maryhill)

  Kaufman, Rt Hon Gerald

  Ross, Rt Hon W. (Kilmarnock)

  Crawshaw, Richard

  Kelley, Richard

  Rowlands, Ted

  Cronin, John

  Kilroy-Silk, Robert

  Ryman, John

  Crowther, Stan (Rotherham)

  Kinnock, Neil

  Sandelson, Neville

  Cryer, Bob

  Lambie, David

  Sedgemore, Brian

  Cunningham, Dr J. (Whiteh)

  Lamborn, Harry

  Selby, Harry

  Davidson, Arthur

  Lamond, James

  Sever, John

  Davies, Bryan (Enfield N)

  Latham, Arthur (Paddington)

  Shaw, Arnold (Ilford South)

  Davies, Rt Hon Denzil

  Leadbitter, Ted

  Sheldon, Rt Hon Robert

  Davies, Ifor (Gower)

  Lee, John

  Shore, Rt Hon Peter

  Davis, Clinton (Hackney C)

  Lestor, Miss Joan (Eton & Slough)

  Short, Mrs Renée (Wolv NE)

  Deakins, Eric

  Lever, Rt Hon Harold

  Silkin, Rt Hon John (Deptford)

  Dean, Joseph (Leeds West)

  Lewis, Arthur (Newham N)

  Silkin, Rt Hon S. C. (Dulwich)

  Dell, Rt Hon Edmund

  Lewis, Ron (Carlisle)

  Sillars, James

  Dempsey, James

  Loyden, Eddie

  Silverman, Julius

  Dewar, Donald

  Luard, Evan

  Skinner, Dennis

  Doig, Peter

  Lyon, Alexander (York)

  Smith, Rt Hon John (N Lanarkshire)

  Dormand, J. D.

  Lyons, Edward (Bradford W)

  Snape, Peter

  Douglas-Mann, Bruce

  Mabon, Rt Hon Dr J. Dickson

  Spearing Nigel

  Duffy, A. E. P.

  McCartney, Hugh

  Spriggs, Leslie

  Dunn, James A.

  McDonald, Dr Oonagh

  Stallard, A. W.

  Dunnett, Jack

  McElhone, Frank

  Stewart, Rl Hon M. (Fulhem)

  Eadie, Alex

  MacFarquhar, Roderick

  Stoddart, David

  Edge, Geoff

  McGuire, Michael (Ince)

  Stott, Roger

  English, Michael

  MacKenzie, Rt Hon Gregor

  Strang, Gavin

  Ennals, Rt Hon David

  Mackintosh, John P.

  Strause, Rt Hon G. R.

  Evans, Fred (Caerphilly)

  Maclennan, Robert

  Summerskill, Hon Dr Shirley

  Evans, loan (Aberdare)

  McMillan, Tom (Glasgow C)

  Swain, Thomas

  Evans, John (Newton)

  Madden, Max

  Taylor, Mrs Ann (Bolton W)

  Ewing, Harry (Stirling)

  Magee, Bryan

  Thomas, Jeffrey (Abertillery)

  Fernyhough, Rt Hon E.

  Mahon, Simon

  Thomas, Mike (Newcastle E)

  Fitt, Gerard (Belfast W)

  Mallalieu, J. P. W.

  Thomas, Ron (Bristol NW)

  Flannery, Martin

  Marks, Kenneth

  Thorne, Stan (Preston South)

  Fletcher, L. R. (Ilkeston)

  Marshall, Dr Edmund (Goole)

  Tierney, Sydney

  Fletcher, Ted (Darlington)

  Marshall, Jim (Leicester S)

  Tilley, John

  Foot, Rt Hon Michael

  Mason, Rt Hon Roy

  Tinn, James

  Ford, Ben

  Maynard, Miss Joan

  Tomlinson, John

  Forrester, John

  Meacher, Michael

  Tomney, Frank

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

  Mellish, Rt Hon Robert

  Torney, Tom

  Freeson, Rt Hon Reginald

  Mikardo, Ian

  Tuck, Raphael

  Garrett, John (Norwich S)

  Millan, Rt Hon Bruce

  Urwin, T. W.

  Garrett, W. E. (Wallsend)

  Miller, Dr M. S. (E Kilbride)

  Varley, Rt Hon Eric G.

  George, Bruce

  Mitchell, Austin (Grimsby)

  Wainwright, Edwin (Dearne V)

  Gilbert, Rt Hon Dr John

  Molloy, William

  Walker, Harold (Doncaster)

  Ginsburg, David

  Moonman, Eric

  Walker, Terry (Kingswood)

  Golding, John

  Morris, Alfred (Wythenshawe)

  Ward, Michael

  Gould, Bryan

  Morris, Rt Hon Charles R.

  Watkins, David

  Gourlay, Harry

  Morris, Rt Hon J. (Aberavon)

  Watkinson, John

  Graham, Ted

  Moyle, Rt Hon Roland

  Weetch, Ken

  Grant, George (Morpeth)

  Mulley, Rt Hon Frederick

  Weitzman, David

  Grant, John (Islington C)

  Murray, Rt Hon Ronald King

  Wellbeloved, James

  Grocott, Bruce

  Newens, Stanley

  White, Frank R. (Bury)

  Hamilton, W. W. (Central Fife)

  Noble, Mike

  White, James (Pollok)

  Hardy, Peter

  Oakes, Gordon

  Whitehead, Phillip

  Harrison, Rt Hon Walter

  Ogden, Eric

  Whitlock, William

  Hart, Rt Hon Judith

  O'Halloran, Michael

  Willey, Rt Hon Frederick

  1140

  1141

  Williams, Rt Hon Alan (Swansea W)

  Wilson, William (Coventry SE)

  Young, David (Bolton E)

  Williams, Alan Lee (Hornch'ch)

  Wise, Mrs Audrey

  Williams, Rt Hon Shirley (Hertford)

  Woodall, Alec

  TELLERS FOR THE NOES:

  Williams, Sir Thomas (Warrington)

  Woof, Robert

  Mr. James Hamilton and

  Wilson, Rt Hon Sir Harold (Huyton)

  Wrigglesworth, Ian

  Mr. Joseph Harper.

  Question accordingly negatived.

  KIDDERMINSTER EASTERN BYPASS
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Jim Marshall.]
  10.19 p.m.
  Mr. Esmond Bulmer Mr. Esmond Bulmer (Kidderminster) rose—
  Mr. Speaker: Order. Perhaps the hon. Member will wait a moment while hon. Members who wish to leave are doing so.
  Mr. Bulmer Mr. Bulmer rose—
  Mr. Speaker: I propose to time the Adjournment from now.
  10.21 p.m.
  Mr. Bulmer: I welcome the opportunity to put before the Minister some of the wider implications of the Government's decision not to proceed with the Kidderminster eastern bypass and to ask him, in the light of these considerations, to re-examine that decision. If the decision is not reversed, it will have the most serious consequences for many of my constituents. It will vitally affect their chance of a job and, indeed, whether they can live at home in peace or move about their neighbourhood with ease.
  I understand that the Minister is not familiar with Wyre Forest. He would be welcome if he cared to visit us. Such a visit would aid his understanding of the problems that I wish to explain to him.
  The part of the A449 about which we are concerned runs through my constituency on its way between Worcester and Wolverhampton. It is a trunk road planned as a lorry route. It runs through sensitive residential areas of Kidderminster. The need for an alternative eastern bypass to take the traffic out of the town has been accepted by successive Governments since 1960. The present road is wholly inadequate.
  In a letter to me, the chief executive of the Wyre Forest District Council describes
  "the sheer inadequacy of that portion of the A449 between Hoobrook and Broadwaters at Kidderminster, particularly the stretch between its junction with the Comberton Road and its junction with the Birmingham Road. The volume of traffic is far too heavy for the
  1144
  existing carriageway which is barely wide enough for two articulated lorries to pass one another. Any attempt to improve the existing A449 between Hoobrook and Broadwaters would have a catastrophic effect upon the residential properties fronting that stretch of the road. In many cases it would probably result in a complete demolition of the houses fronting the road. The cost of any such improvement would be extremely high.
  "In my opinion, the portion of the A449 between Hoobrook and Broadwaters at Kidderminster was the most congested and inadequate stretch between Worcester and Wolverhampton and I just cannot understand why this section of the improvement scheme has been or is proposed to be, abandoned".
  If the Minister were to join me and travel from Worcester to Kidderminster, he would enjoy a fast journey over that part which has been much improved between Warndon and Hartlebury. But then he would come to Kidderminster. He would be appalled by the conditions that were so eloquently described by the chief executive for Wyre Forest.
  The situation as it stands is bad enough, but my constituents have a real fear that the situation might deteriorate rapidly because of what is happening on the M5. I understand that the M5 is 10 per cent. short of saturation. But for the big increases in oil prices, it would already have reached that point. I understand that major reconstructions are inevitable and that perhaps between 16,000 and 20,000 vehicles per day will not be able to use the M5. If they do not use the M5, what road will they use? Will they use the A38, in which I know my hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) has a keen interest?
  Mr. Hal Miller: Will my hon. Friend ask the Minister to consider the effect of the extensive repairs, extending over several years, to the M5 upon traffic on the A38 going from my constituency? Will he also consider the need for the Bromsgrove eastern bypass to be completed and the possibility of widening the M5 to a three-lane highway at the completion of these extensive repairs?
  Mr. Bulmer: My hon. Friend can draw some comfort from the fact that the police at the moment regard the A38 as a priority road to be kept clear for emergency traffic. That does not apply to the A449. At present the Department is advocating its use for holiday traffic.

  1145
  If half of that traffic was unable to use the M5 and used the A449, the effect on my constituency would be catastrophic.
  Will the Minister confirm that virtually the whole of the road between junctions 3 and 6 will have to be rebuilt? What guarantee can he give that Kidderminster will not be shattered by heavy traffic diverted from the motorway? What steps will he take to improve the inevitable congestion in Kidderminster if he is not to reinstate the eastern bypass? What steps will he take to see that traffic is not diverted from the M5 through Kidderminster? The Minister may not be able to answer these questions tonight, but I hope that he will write to me in due course giving me the answers I seek.
  The Kidderminster eastern bypass has been accepted by succeeding Governments over the last 18 years. Planners have many variables with which to contend—including population, traffic flow and jobs. One that they should not have to contend with is variation of this sort. The structure plan was approved by the Secretary of State for the Environment. It projects the Wyre Forest as a growth area. We desperately need new industry. The carpet industry is going through cyclical and structural difficulties. The Government's decision to close RAF Hartlebury meant that there were 2,000 fewer jobs in the Wyre Forest area. Unemployment has gone up by a factor of three in the last four years, and we have many school leavers who will not be able to find work this year or next.
  We have no regional aid and no development status, and we have lost rate support grant. Good communications remain one of our essential selling points. I hope that the Minister will not seek to deprive us of them.
  Our planners and the Minister's Department have always until now accepted that the eastern bypass was an integral part of the scheme which included the Kidderminster ring road and the Bewdley bypass. The eastern bypass was the rim of the wheel, and the inner ring road the hub. A wheel may run with a few spokes missing, but it cannot function without a rim or a hub. Not to build the eastern bypass will destroy the balance of movement and have serious implications for the Hereford and Worcester structure plan and the Wyre Forest urban structure plan.
  1146
  I cannot accept the Department's view that the bypass must be costed in isolation. Nor am I satisfied with the consultation that has been extended. The Department has to work to formulae which do not allow it to consider such factors as the benefits of jobs for school leavers or retaining inviolate such a marvellous eighteenth century townscape as Bewdley. Its calculations are over-dependent on traffic volume. We cannot accept that situation, nor could the Minister himself if he were to come to my constituency and see the problems at first hand.
  In spite of the Minister's decision not to proceed with the eastern bypass, the county council—and all praise to it—is bringing forward consideration of an earlier start to the construction of the Bewdley bypass and phase four of the Kidderminster inner ring road. The inner ring road was started on the assumption that the Government would at some time proceed with the eastern bypass. Three stages have been completed. The remaining two stages, which have not yet been undertaken, have created extended planning blight and have made the town of Kidderminster shamefully derelict in its appearance in the parts that are affected. The need for action, as the county council appreciates, is urgent.
  The Bewdley bypass has been regarded as crucial by the county council since 1944. Bewdley is the first conservation area in Worcestershire, and yet more than 100 listed buildings continue to be exposed to increasingly serious damage from heavy traffic. The county council is determined to end this vandalism.
  The Government's decision not to proceed with the Kidderminster eastern bypass is serious enough. But if it was seen to threaten the resolve of the county council to make an early start on the next phase of the Kidderminster inner ring road or the Bewdley bypass, that would indeed be a body blow.
  In conclusion, I say to the Minister that I am not asking tonight for money to be spent. I am asking him to come and see for himself the effect of this decision on the whole future balance of Wyre Forest. I ask him to declare the preferred line for the Kidderminster eastern bypass so that the county council can obtain the maximum benefit from the inner ring road and the Bewdley bypass.

  1147
  If the Minister is not prepared to do this now, I would ask him to meet a deputation from the county council to consider the present situation in the light of changed circumstances, in the light of what he now knows about the M5 that I do not think was known at the time, and in the light of the county council's desire to go ahead at an earlier date with the Bewdley bypass and the inner ring road—and this certainly was not known. I am sure, too, that within the Minister's Department there is increasing support for the Leitch Report and a desire to look at the whole basis on which weighting is given.
  I believe that the Kidderminster eastern bypass is essential to the future well-being of my constituents. I am not asking that it be built tomorrow, desirable though that would be, but I am concerned that it should remain within the planning framework to be brought forward as soon as circumstances permit.
  10.32 p.m.
  The Under-Secretary of State for Transport (Mr. John Horam): I am grateful to the hon. Member for Kidderminster (Mr. Bulmer) for giving me the opportunity to explain to the House the present position on the scheme about which he is obviously and rightly so concerned. The background to it is the general policy set out in last year's White Paper on transport policy and the review of schemes we then referred to and on which we reported more fully in this year's White Paper "Policy for Roads: England 1978".
  Following publication of the White Paper on transport policy, we set in hand the review of the trunk road programme in which we considered the need for each scheme and whether the standard for each scheme was appropriate. The method of the review was to consider each scheme in the road programme in terms of its impact on the environment, its value for money and its sensitivity to different assumptions about the growth of traffic.
  In some cases it was clear that even on the most modest assumptions about traffic growth the scheme was still needed and the standard was right. In other cases the scheme was confirmed but the standard was modified. If it were clear that a scheme could not be justified in the light of the new approach, it was
  1148
  dropped altogether or replaced by a more limited alternative. Altogether, over 30 schemes were dropped from the programme in this way.
  For most schemes we reached a clear conclusion one way or another, although all these schemes will be kept under review and re-appraised at each stage when decision have to be taken. But there were cases, particularly those at an early stage of planning, where some doubt remained or where it was too early to determine what the standard ought to be. As I shall explain, in this case we came to the conclusion that the scheme could not be justified against our present criteria and ought to be dropped from the preparation pool. I am talking about the Kidderminster eastern bypass.
  We had not, however, had a full opportunity to discuss with the Hereford and Worcester County Council, first, the implications for that council of such a decision and, secondly and most importantly, what alternative more modest works might be needed as an alternative to building the full-blooded bypass.
  The detailed investigations into the possibility of an eastern bypass for Kidderminster to supersede the existing A449 trunk road began in June 1971, when the then Secretary of State for the Environment announced the inclusion in the trunk road preparation pool of a scheme to improve comprehensively the A449 from the Waresley bypass to Wolverhampton. Subsequently, the scheme to be investigated was more specifically defined. Its first stage was a new route between the northern end of the Hartlebury bypass, to which the hon. Gentleman referred, and the boundary of the then Worcestershire County Council, the proposed route which has now come to be referred to as the Kidderminster eastern bypass
  The bypass was expected both to remove a considerable amount of through traffic from the A449 in Kidderminster, and thereby improve the environment and access within the town for pedestrians and drivers, and to complete a high standard route from just north of Kidderminster to Worcester, which would be safer and more convenient for through traffic.
  The first stage of the work included the identification of possible solutions.

  1149
  This is normal practice, and I should explain that for almost every major road scheme it involves predicting the volume of future traffic which is likely to use the new road in the design year—that is, the fifteenth year after the road is open to traffic. In making those predictions we have to make a good many assumptions, including assumptions about other new roads which are also being planned or are likely to be planned in the intervening period. The most significant of these to the Kidderminster eastern bypass investigations has always been, as the hon. Gentleman rightly implied, the Bewdley bypass proposed by the Hereford and Worcester County Council to replace the existing principal road, the A456, through Bewdley by a route to the south of the town.
  Soon after the study began, it became clear that the justification for the eastern bypass would be substantially enhanced if the Bewdley bypass were to go ahead in the same period, and the county council's programme at that time fitted well in this respect. Our study also took into account the possibility of a Birmingham west orbital route and the relief that a Kidderminster eastern bypass and the adjacent improved length of the A449 south of Hartlebury would give to the two-lane section of the M5 motorway in Worcestershire. Towards the end of 1974, we had identified possible solutions. Public consultation on these was undertaken in January 1975. By the time the results of the consultation were being examined and evaluated, changes in the Department's criteria for making decisions on road schemes had taken place. First, in 1974 the Department had reviewed the carrying capacity of new roads and reached the conclusion that higher standards of vehicle construction and the improved quality of driving, amongst other factors, indicated that a road built to a given standard could carry a greater volume of traffic than had earlier been assumed. We therefore revised our design standards and issued detailed technical advice in our technical memorandum on design flows for motorways. The following year we also reviewed our national traffic prediction advice. This led to a reduction in the forecast rate of increase in traffic flows and the issue of a further technical memorandum. Improved techniques for asses-
  1150
  sing the economic value of road schemes were brought into use at the same time.
  Along with all other trunk road schemes, the Kidderminster eastern bypass was reviewed in the light of these changes. The review began to cast doubt on the economic viability of the scheme. More recently, we have had to take account of the views expressed in the report of the advisory committee on trunk road assessment—the Leitch Committee—about the need to reconsider the methodology to be applied to traffic forecasts. On 10th January, the same day as the report was published, we produced an interim memorandum on traffic forecasting. This includes advice on how the uncertainty inherent in making such predictions should be reflected by assumptions of high and low levels of traffic growth. The economics of schemes are now assessed on the basis of the low levels. Overall decisions take account of the consequences of flows being under-or over-estimated.
  During our review this year of all schemes in the light of the policy set out in the transport White Paper and of the Leitch Committee's report, we reached the firm conclusion that, irrespective of what the county council might decide about the Bewdley bypass and the timing of its construction, there was no case for building the Kidderminster eastern bypass for many years to come. The economic assessment produces a negative result and the environmental effects could not possibly justify any priority over competing schemes elsewhere.
  However, before taking a final decision on the future of this scheme we felt it essential to consult the Hereford and Worcester County Council, the local authority with the strategic planning responsibility for the area and the local highway authority. But consultations on these lines had not been carried out—due mainly to shortage of time—when the White Paper was published on 4th April, so we included the scheme in the section of the White Paper which listed schemes for which start dates had not been determined and, by a footnote, indicated that the future of this scheme, which was in a category with several others, was under review.
  We appreciate that a decision to abandon the Kidderminster eastern bypass could affect future consideration of

  1151
  the proposed Bewdley bypass by the county council. I realise that the county council's scheme is important to it in environmental and local planning terms and that any decision of ours which reduces its potential is bound to give it cause for concern.
  The hon. Member for Kidderminster understandably stated his own views on the matter. He shares the concern that both these schemes have been considered as integral, with a decision on one affecting the other. However, a decision to drop the Kidderminster eastern bypass would affect only the economic and not the environmental arguments for the Bewdley bypass, which are very strong.
  The hon. Member has mentioned to me before the consequences of the Leitch Report. That also mentioned the need for an environmental framework for any scheme. The Bewdley scheme has strong environmental advantages. I understand from what the hon. Member has said tonight that Hereford and Worcester are prepared to go ahead with it and are not necessarily proposing to defer it as a consequence of our decision on the Kidderminster scheme.
  Mr. Bulmer: That emphasises the need for further consultation, because the scheme is finely balanced. The decision has not been taken but it will shortly be taken, so additional consultation is essential. In his earlier remarks about the Kidderminster eastern bypass, was the Minister taking into account all that might happen as a result of the break-up of the M5?
  Mr. Horam: I am glad that the hon. Gentleman mentions that point, which was also made by the hon. Member for Bromsgrove and Redditch (Mr. Miller). I have visited his area, if not Kidderminster, because I have taken a close interest in developments on the M5. The surface of that road has reached the end of its design life and it must be replaced over the next few years so that the road can be used fully. That will have repercussions for the adjacent roads. On the other hand, the complete replacement of the surface of the M5 over the relevant two-lane stretch will take place over the next four years. It is not possible for the eastern bypass to be built in that time, even if we started today, given the statutory procedures and building time.
  1152
  Therefore, no diversion of traffic as a result of those works could be helped by any favourable decision on the Kidderminster bypass.
  Mr. Hal Miller: Can the hon. Gentleman understand the fear not only that during the diversionary period while the M5 is being reconstructed there will be trouble on the roads but that when the M5 is completed, if it is still a two-lane road, it will have passed its capacity, which it has already reached? Therefore, there will be continued diversion, either on the A449 or on the A38. We have tried to press the Minister to have alternative provision made to carry that excess traffic.
  Mr. Horam: That is something that we should like to discuss with Hereford and Worcester. I accept the need for consultation on that. We are increasing the capacity of the M5 to the North from two lanes to three. We shall have to take a view on whether the two-lane stretch of the M5 is reasonable for the needs of the immediate future. There may be a difference between the Department, the hon. Member and the county council, but that should be discussed. It has obvious implications for the council and for roads such as this in the hon. Gentleman's constituency. Clearly, we shall take into account the ramifications of the M5.
  Another point that was raised concerned the inner ring road and any link between that and a decision on the Kidderminster eastern bypass. The inner ring road is complete on the eastern side of the town, where it is, in effect, an alternative to what would have been the eastern bypass. It is on the western side of the town, as I understand, that the remaining links are to be completed. The construction has been brought to its finality, and it is utilised fully on the eastern side of the town. In that sense, there is no immediate connection between our decision on the eastern bypass and what happens in the future on the completion of the inner city link. That is something rather separate from our decision.
  I want to make clear that the door is in no way closed. I am very anxious that we should take our decision on the scheme's future in the light of all the facts and the detailed views of the

  1153
  county council. When the White Paper was published, the Department's regional director in the West Midlands wrote to the county council explaining our view that the scheme should be dropped from the preparation pool on the ground that it was not economically viable and would not lead to overall environmental benefit to the community in the immediate future. Comments were invited, and the county council has made clear that it is concerned at our decision and would like to discuss it further with us. The best way to achieve this is for the regional director, with other representatives of the Department, to meet representatives of the county council so that they may have the fullest opportunity to deploy their case for the scheme's retention in the preparation pool.
  In replying directly about the suggestion that I should meet a deputation, I should prefer it if we could allow these meetings to take place between the regional director and the county council officials. I have seen the regional director of our West Midlands Region today about this very subject and have made plain my desire for the meetings to be held at an early stage so that the matter can be thrashed out without delay. I realise the implications not only for the road decisions for the area but also for the structure plan, and so on.
  As I understand it, a number of technical factors have to be taken into account, and reference has been made to one or two of them. In reaching our
  1154
  decision on the eastern bypass, should we declare the results of the public consultation, declare a firm line and leave it at that, indicating that we do not believe that it is right to go ahead in the immediate future, or do we say that the scheme is abandoned? What happens in the Torton area, which is the real problem area, where the A499 jinks around and there are some difficult parts? What is the proper relationship, in the eyes of the county council, between the Bewdley bypass and the eastern bypass? I think that the Bewdley bypass can be justified quite independently of the eastern bypass. Certainly the decision not to go ahead with the eastern bypass will reduce the economic advantages of the Bewdley bypass but will not affect the environmental case for it.
  A number of important technical decisions will have to be thrashed out in all these areas. I should prefer it if we could proceed by means of having these meetings at official level between the county council and officials of my Department. But certainly, if the hon. Gentleman feels at the end of the day that he would like to see me with a deputation, I shall gladly see him. I feel, however, that it would be right, as a matter of practicality, to proceed in the way that I have suggested. I hope that that full and speedy consultation will sort out the genuine problems in this area in an amicable fashion.
  Question put and agreed to.
  Adjourned accordingly at eleven minutes to Eleven o'clock.

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  Canada (Reciprocity)
  Rossendale General Hospital
  Rossendale General Hospital
  Greenwich and Bexley Area Health Authority
  Greenwich and Bexley Area Health Authority
  Radiological Services (Grimsby)
  Radiological Services (Grimsby)
  Hospitals (Greenwich)
  Hospitals (Greenwich)
  National Health Service (Expenditure)
  National Health Service (Expenditure)
  Grimsby Hospital (Completion Date)
  Grimsby Hospital (Completion Date)
  Retinitis Pigmentosa
  Retinitis Pigmentosa
  Fluoridation
  Fluoridation
  Northumberland (Adoption Service)
  Northumberland (Adoption Service)
  National Insurance Surcharge
  National Insurance Surcharge
  Death Grant
  Death Grant
  Vaccine-damaged Children
  Vaccine-damaged Children
  Members' Correspondence
  Members' Correspondence
  Mentally Disordered Offenders (Secure Units)
  Mentally Disordered Offenders (Secure Units)
  Retirement Pensioners
  Retirement Pensioners
  Housewife's Invalidity Pension
  Housewife's Invalidity Pension
TRADE
  Oil Tankers (Spillage at Sea)
  Oil Tankers (Spillage at Sea)
  Japanese Motor Vehicles
  Japanese Motor Vehicles
  Iran
  Iran
  Textiles
  Textiles
EMPLOYMENT
  "Equal Opportunities Commission News"
  "Equal Opportunities Commission News"
  Disabled Persons
  Disabled Persons
  Lost Working Days
  Lost Working Days
  Advisory, Conciliation and Arbitration Service
  Advisory, Conciliation and Arbitration Service
  Teachers (Representation)
  Teachers (Representation)
  Unemployed Skilled Workers
  Unemployed Skilled Workers
  Youth Opportunities Programme
  Youth Opportunities Programme
  Kepone
  Kepone
  Work Experience
  Work Experience
  Pay Settlements
  Pay Settlements
PRICES AND CONSUMER PROTECTION
  Aerosols
  Aerosols
  Ironing Boards (Asbestos Rests)
  Ironing Boards (Asbestos Rests)
  Travel Agents
  Travel Agents
INDUSTRY
  Postmarks
  Postmarks
FOREIGN AND COMMONWEALTH AFFAIRS
  Rhodesia
  Rhodesia
  Mr. Robert Mugabe
  Mr. Robert Mugabe
TRANSPORT
  Petrol (Lead Content)
  Petrol (Lead Content)
  Port of London Authority
  Port of London Authority
  Disabled Persons
  Disabled Persons
  Newburgh (Bypass)
  Newburgh (Bypass)
OVERSEAS DEVELOPMENT
  Aid
  Aid
  World Bank (Loan Applications)
  World Bank (Loan Applications)
ENVIRONMENT
  Partnership Arrangements (East London)
  Partnership Arrangements (East London)
  Council House Sales
  Council House Sales
  Land Reclamation (Birmingham Partnership Area)
  Land Reclamation (Birmingham Partnership Area)
  Coastline Protection (Planning Control)
  Coastline Protection (Planning Control)
  South End Dock, Liverpool
  South End Dock, Liverpool
  Inner Urban Areas
  Inner Urban Areas
  Small Businesses
  Small Businesses
  Tenants' Charter
  Tenants' Charter
  Rent Allowances
  Rent Allowances
  Partnership Areas and Programme Districts
  Partnership Areas and Programme Districts
  House Building
  House Building
  Local Authority Mortgages
  Local Authority Mortgages
  Rent Acts (Review)
  Rent Acts (Review)
  Council House Building
  Council House Building
  Mortgages
  Mortgages
  River Water (Quality)
  River Water (Quality)
  Compulsory Purchase Orders
  Compulsory Purchase Orders
  Partnership Areas
  Partnership Areas
  Rented Accommodation
  Rented Accommodation
  Dogs (Control)
  Dogs (Control)
  Severn-Trent Water Authority
  Severn-Trent Water Authority
  Home Insulation
  Home Insulation
  Local Government
  Local Government
  Water Supplies (Cost)
  Water Supplies (Cost)
  Electricity Substations
  Electricity Substations
  Nuclear Installations (Inquiry Procedures)
  Nuclear Installations (Inquiry Procedures)
  New Towns (Social Mix Objective)
  New Towns (Social Mix Objective)
  Community Land
  Community Land
  Cromwell's Green
  Cromwell's Green
  Waterways
  Waterways
  Water Pollution Control
  Water Pollution Control
  Sport (Sponsorship)
  Sport (Sponsorship)
  Village Ponds
  Village Ponds
  Tortoises (Import)
  Tortoises (Import)
  Argentina (Ministerial Visit)
  Argentina (Ministerial Visit)
  Housing Subsidies
  Housing Subsidies
  Youth Organisations (Birmingham)
  Youth Organisations (Birmingham)
NATIONAL FINANCE
  Medical Checks (Tax Allowance)
  Medical Checks (Tax Allowance)
CIVIL SERVICE
  Members of Parliament (Salaries)
  Members of Parliament (Salaries)
  Income Tax
  Income Tax
  Personal Taxation
  Personal Taxation
  Income Tax (Wife's Earnings)
  Income Tax (Wife's Earnings)
  Luncheon Vouchers
  Luncheon Vouchers
  Business Transfer Relief
  Business Transfer Relief
  Pay Settlements (Government Action)
  Pay Settlements (Government Action)
  Personal Incomes
  Personal Incomes
  Uncollected Taxes
  Uncollected Taxes
SCOTLAND
  Licensed Premises
  Licensed Premises
  Gas Separation Plant (Fife)
  Gas Separation Plant (Fife)
  Textile industry
  Textile industry
  Bearsden (Licensed Premises)
  Bearsden (Licensed Premises)
  Land Title (Registration)
  Land Title (Registration)
  Police (Manpower)
  Police (Manpower)
  Welsh Language
  Welsh Language
  Inverness (Traffic Scheme)
  Inverness (Traffic Scheme)
WALES
  Capital Building Programmes
  Capital Building Programmes
  Nursery Nurses
  Nursery Nurses
  Council for the Welsh Language
  Council for the Welsh Language
  Bilingual Teaching
  Bilingual Teaching
  Farms
  Farms
  Structure Plans
  Structure Plans
  Unfit Houses
  Unfit Houses
AGRICULTURE, FISHERIES AND FOOD
  Common Agricultural Guarantee Fund (Expenditure)
  Common Agricultural Guarantee Fund (Expenditure)
  Tobacco
  Tobacco
  Animals (Export)
  Animals (Export)
  Skimmed Milk
  Skimmed Milk
NORTHERN IRELAND
  Government Servants (Uniform)
  Government Servants (Uniform)

Preamble
The House met at half-past two of the clock: The PRINCIPAL DEPUTY CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Salisbury.

LORD LEONARD
John Denis Leonard, Esquire, OBE, having been created Baron Leonard, of the City of Cardiff in the County of South Glamorgan, for life—Was, in his robes, introduced between the Baroness White and the Lord Parry.

THE "ELENI V"
2.47 p.m.
The Earl of KINNOULL: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will publish details of how the sinking of "Eleni V" cost £2 million of taxpayers' money.
Lord WINTERBOTTOM: My Lords, the Government incurred expenditure on measures to deal with the oil spilled from the "Eleni V" and on measures to secure and eventually to sink the bow section of the tanker. The accounts for that operation have yet to be finalised, but the current estimate of the sum involved is approximately £2 million. The Government will be looking to the shipowners and their insurers, and to the voluntary oil industry scheme known as CRISTAL, to recover this expenditure.
The Earl of KINNOULL: My Lords, while thanking the noble Lord for that helpful reply, may I ask him if he can say whether the Government are setting up any compensation arrangements to help those local businesses which have suffered loss of business from pollution of the beaches? Secondly, what advice did the marine biologists give to the Government
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on the sinking of the ship at the particular point at which it was sunk, and whether there is any likely damage to the marine life there and, indeed, around our coasts?
Lord WINTERBOTTOM: My Lords, I must apologise to the noble Earl and to the House that I cannot answer either of these questions, because I was not aware that the original Question was going to range so wide. If the noble Earl would put down another Question, I shall certainly answer those two points.
Lord SHINWELL: My Lords, can my noble friend explain why the taxpayers should be called upon to accept a burden of this kind? Surely the ship was wholly insured and the underwriters will be entirely responsible?
Lord WINTERBOTTOM: My Lords, my noble friend is in fact correct. I may not have made myself clear, but so far as one knows there will be no burden on the taxpayer.
Lord AVEBURY: My Lords, is the noble Lord satisfied that persons whose interests are affected, such as those engaged in fishing and in tourism, who suffer financial loss as a result of oil spills, can claim compensation from the shipowners? If not, what plans do the Government have for introducing legislation to maintain the rights of these people against the tanker owners who cause such widespread destruction and damage?
Lord WINTERBOTTOM: My Lords, speaking without precise knowledge, the responsibility for the acceptance and payment of damages lies always with the vessel which has spilled the oil. The spillage is the area in respect of which compensation must be claimed; and, although it is not within my brief, I assume that local authorities which have incurred expenditure will be able to claim under this general arrangement.
Lord CAMPBELL of CROY: My Lords, since Press reports have given the impression that the tanker was struck and split in two in bad visibility by a vessel of another nationality, not British, is an inquiry in train as to the responsibility for the accident? Because it may not have been the responsibility of the

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tanker owners. Further, if an inquiry is in train, under whose auspices is it being held?
Lord WINTERBOTTOM: My Lords, because the accident took place on the high seas, inquiries are taking place in Greece and in France, which are the countries in which these ships are registered; but the claim is against the "Eleni V", the vessel that spilt the oil. Responsibility may be established later by the two national boards concerned, and then, of course, it will be a matter for dispute between the French and the Greeks.
Lord DAVIES of LEEK: My Lords, is my noble friend aware that it is estimated that somewhere every week a catastrophe of this dimension in the seas and oceans of the world is taking place? Is any initiative being taken internationally on the basis of reducing the size of these mighty tankers so that when a tanker does crash there is not the spillage that we get from the large ones as compared with the smaller ones?
Lord WINTERBOTTOM: My Lords, I have no knowledge of such a convention; but after the "Torrey Canyon" disaster an international convention on the civil liability for oil pollution damage was agreed under international law.
The Earl of KINNOULL: My Lords, while I accept that the question of compensation for individual businesses is outside the scope of the Question, could the noble Lord look into that question? Secondly, is he able to say whether the Government are instituting increased safeguards of the patrolling of these big tankers around our key points like the Channel and the Solent?
Lord WINTERBOTTOM: My Lords, I believe this country is well in advance in giving leadership in this field, not only round our shores but worldwide.

THIRD LONDON AIRPORT: STANSTED
2.57 p.m.
The Earl of KINNOULL: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are contemplating Stansted as the third London airport in the 1980s.
Lord WINTERBOTTOM: My Lords, the White Paper on Airports Policy suggests that traffic at Stansted might increase to about 4 million passengers a year by 1990. The airport would therefore fulfil only a modest role in meeting air traffic demand in the London area in the 1980s.
The Earl of KINNOULL: My Lords, though I thank the noble Lord for that reply, is he aware of the very deep concern at the Government's apparent lack of decision, even of vision, as to the importance of determining a third London airport policy? Is he also aware that the Answer he gave on Monday to his noble friend Lord Boston appeared both to be complacent and to reveal what could be described as a policy of irresponsible drift in reaching this no doubt unpalatable decision? Can he say what new body is being set up by the Government to examine the possibility of a third London airport, what are its terms of reference and when it is likely to report?
Lord WINTERBOTTOM: My Lords, first I cannot accept the view that the Government are complacent. We are not going to be hurried into a decision because, as became abundantly clear on last Monday's Question, nobody wants an airport anywhere near them; and there is no place—except, perhaps, somewhere beyond Ultima Thule—where people might accept it. There is a public inquiry proposed but the structure and programme are not yet firm.
The terms of reference of this committee were explained in the White Paper on Airports Policy and the task of the proposed committee would be to assist in the formulation of advice on future airports policy; but this will not replace the process of consultation initiated with the Airports Strategy Consultation Document 1975–6, which the Government regard as an essential part of the development policy.
Lord TREFGARNE: My Lords, did the noble Lord say at the beginning of

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that supplementary answer that there was to be a new public inquiry into the possibility of a requirement for a third London airport?
Lord WINTERBOTTOM: No, my Lords, I did not say that. I must get this plain. I have been handed this further information. Government policy is designed to lead to the development of air services in the regions, which will increasingly enable those living outside the South-East to fly direct to their destinations and will thus ease the pressure on London Airport. Since the local authorities have to be consulted, this demands the creation of some machinery for consultation at this stage.
Lord TREFGARNE: My Lords, that is all very well, but can the noble Lord tell us what this machinery is going to be? He said—and my noble friends behind me confirm that they heard this—that there was to be a public inquiry. If that is so, perhaps the noble Lord can indicate what is the nature of this inquiry, whether it will have any public aspect and whether members of the public will be able to contribute to it.
Lord WINTERBOTTOM: My Lords, I suggest that since this is a matter of interest, the noble Earl might care to question me again in rather more precise terms. It is early days yet and no decision about membership has been made; but an inquiry must take place.
Lord THOMAS: My Lords, disregarding what the noble Lord may or may not have said previously, is he aware that there is very active consideration being given to the construction of an airport well away from London to the West where it can be linked by high-speed trains to the centre of London?
Lord WINTERBOTTOM: My Lords, I am aware of that and I believe that this House will discuss it this week.
Lord BOSTON of FAVERSHAM: My Lords, will my noble friend accept that his replies on Monday to the questions concerning Maplin or Foulness were, far from being complacent, in fact a robust confirmation of the Government's admirable policy on this matter, and that their decision on Maplin, which was, if I may
316
say so with respect, perfectly correct, followed the most thorough, the most prolonged and the most painstaking scrutiny that any planning decision has ever had?
Baroness EMMET of AMBERLEY: My Lords, is the noble Lord aware that there is some urgency about this matter because the impression given to guests and friends who come from overseas, especially to the third terminal at Heathrow, is so shocking that it gives us a bad name from the point of view of tourism and travelling?
Lord WINTERBOTTOM: My Lords, that is another question. Traffic at Heathrow is very great and problems arise therefrom.
Lord LEATHERLAND: My Lords, may I ask my noble friend, as I seem to have been doing from time immemorial, whether before coming to any decision about Stansted the Government will investigate the possibilities of all the other sites that have ever been mentioned, particularly those which were reported on by the Roskill Commission?
Lord WINTERBOTTOM: My Lords, I remember that on Monday I said that three possibilities were being considered: one, an extension of Stansted; two, the use of a military airport; and, three, some other site. I will bear in mind what my noble friend has said.
Lord NUGENT of GUILDFORD: My Lords, is the noble Lord aware that his statement that he proposes to consult the local authorities will be welcomed; but is he also aware that the local authorities have already expressed very strong opinions to him about the development of Stansted, about the development of Heathrow and about the extension of Gatwick—and that all have been adverse? Will he, therefore, kindly take into account those opinions already expressed before asking them for any more?
Lord WINTERBOTTOM: Yes, my Lords. That is another reason why marking time is taking place at Stansted while these things are being considered.
The Earl of KINNOULL: My Lords, can the noble Lord say whether among the

317
sheaf of notes that he has, there appears the Government's best estimate of the date when the third London airport facilities will be needed, bearing in mind the existing facilities mentioned in the White Paper?
Lord WINTERBOTTOM: My Lords, 1990 seems to be the date when there will be a time for concern.
Lord DAVIES of LEEK: My Lords, has my noble friend noticed that everybody wants to travel by air and to get away quickly, but that nobody in this House or any other place wants an airport near to where they live?

ZAMBIA: CAPITAL AID
3 p.m.
Lord BARNBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government, in regard to the recent announcements of massive aid to Zambia and in view of the large sums understood to be due to expatriate Britons working in Zambia, what steps they are taking to ensure that such overdue payments are honoured before further aid is remitted.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, current British capital aid to Zambia is designed specifically to relieve her shortage of foreign exchange. To withhold it until overdue payments were made would mean, in practice, that they would be delayed even longer and achieve, I am afraid, precisely the opposite effect to that intended by the noble Lord.
Lord BARNBY: My Lords, if I correctly understood the noble Baroness, the Chief Whip, it would sound bad accounting, and the British Government ought to be particularly keen to give good accounting. Will the noble Baroness clarify the statements in the Press that there have been recent grants to Rhodesia, one of £15 million and one of £13 million, and at the time they were granted there was left over from the earlier grant of £10 million a certain amount unremitted?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I take it that the noble Lord was referring to Zambia. This is extremely complicated, because there have been different grants from us, the £15 million and £9 million previously, which was largely for agricultural development, and of course there is also the IMF loan of a very large sum in dollars. There is now going to be a World Bank consultation regarding more loans. It would weary the House if I were to go into the total details about these grants. Of course, I should be very glad to answer a Written or an oral Question about the individual grants in particular.
Lord HATCH of LUSBY: My Lords, would my noble friend agree that at the time of independence, Zambia was left by the British Government tied to the Rhodesian economy, and that 12 months after independence Zambia was asked by the British Government to participate in economic sanctions against the illegal regime in Rhodesia? As a consequence, it is the Zambian people and Government who have been in the front line and who have suffered more than any other people as a consequence of the policy towards Rhodesia. We have an inescapable obligation to the people and Government of Zambia, and the amount of aid that has so far been provided hardly justifies the word "massive".
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I entirely agree with my noble friend that Zambia were asked not merely by the British Government but by the United Nations, which carries international authority, to carry out the sanctions agreement. Zambia have suffered from the sanctions possibly even more than Rhodesia. That is absolutely true and I think the rest of an answer to my noble friend follows from that.
Baroness ELLES: My Lords, the noble Baroness has been good enough to deal with this Question very fully and to tell us what help has been given. Nobody would disagree with her and that aid should be given in view of the fall in copper prices. This is understood by everybody. In view of what the noble Lord opposite said about our duties and obligations to the people of Zambia, do not the Government think that they have an overriding duty and obligation

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to British subjects who are working in Zambia? Will the Government say what help they are giving to expatriates who are working in order to assist in the economic and social development of Zambia?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I entirely agree. Her Majesty's Government consider that Zambia is fulfilling her obligations, not merely to the British but to the world in general. The House knows well that the British Government are supplementing salaries to staff employed by the Zambian Government; we are doing everything we can to make present conditions known to the people who want to take up jobs in Zambia. We do everything we can to help them. The difficulty—as everybody knows—is that, as with most developing countries, the currency problem before Zambia is extremely difficult. I should like to remind the House that all countries have exchange controls, not mealy Zambia.
Baroness ELLES: My Lords, I am grateful to the noble Baroness for that answer. Would she undertake that if individual cases of hardship are submitted to her she will see that something is done for these people?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, we are very much aware of the individual difficulties. The problem is not of the money on which they have to live; the problem is of getting money out of Zambia, paid leave, gratuities, and that kind of thing. I am sure that the House understands that we consider the difficulties sympathetically. I must be quite frank and say that we are not proposing to go into the situation we did when people were thrown out of Uganda and left penniless.
Lord HEWLETT: My Lords, arising out of the reply, and not wishing to exert too much pressure upon the Zambian Government, would the noble Baroness bear in mind the fact that exports have been made to Zambia in good faith; that payments are due and that companies are able to make those payments but they are blocked by the Zambian Central Bank? It seems to me in common fairness that the British taxpayer with
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one hand—say, perhaps, a British company—should not be paying additional aid when money properly due under contract has not been paid. I hope that the noble Baroness will exert every proper influence to see that fair trading returns to Zambia.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, the British Government are aware of the money due to firms as well as to individuals. We are very much aware of this. My right honourable friend the Prime Minister had a long discussion with President Kaunda on this very subject when he was here. It is precisely because the Zambians do not have the currency which they can export that the IMF (which, everybody knows, is not in any way a soft loan kind of organisation) is helping, and that the World Bank have convened a conference consisting of over 20 countries and international organisations to deal with this precise situation. If Zambia were to succumb to her economic problems, it would do major harm to Africa and to the world. That is why we continue our aid.
Lord LOVAT: My Lords, is the noble Baroness aware that President Mobutu is now reckoned to be the third richest man in the world? He has probably £70 million "stashed away" in Swiss banks. If people in his country need blankets, I think he might well put his hand in his own pocket.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I am extremely interested in the remarks by the noble Lord about President Mobutu, but he has not much to do with Zambia.
Lord LEE of NEWTON: My Lords, is my noble friend aware that unless the Western manufacturing nations begin to take a more sympathetic interest in the problems which have been brought about by the fall of the copper prices to the Zambian people, it may well result in starvation of copper to our manufacturing industries?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, yes; and Zambia supplies one-third of the copper requirements of the United Kingdom.
Lord HANKEY: My Lords, would not one of the best ways to help Zambia be to withdraw sanctions against Rhodesia and thereby help an internal settlement there?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I regard that as a rather simplistic approach to the situation. May I, wearing another "hat", point out to your Lordships that so far we have spent 20 minutes on three Questions? There is another Question which will interest the House and if I have the will of the House, may we pass on to that Question?

THE ELIZABETH GARRETT ANDERSON HOSPITAL
3.8 p.m.
Lord SANDYS: 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 are the terms of reference of the working party set up to re-examine the position of the Elizabeth Garrett Anderson Hospital.
Lord WELLS-PESTELL: My Lords, there are no formal terms of reference. What my right honourable friend is seeking to achieve is to get interested parties round the table in full, frank and friendly discussions. Noble Lords may know that my right honourable friend said yesterday in another place (and I quote from col. 820 of Hansard):
"I have therefore invited the health authorities, representatives of the staff of the Elizabeth Garrett Anderson Hospital and other interested parties to come together under the chairmanship of a senior official of my department to consider detailed proposals for alternative accommodation.".
Lord SANDYS: My Lords, while warmly welcoming the change of attitude adopted by the Department in the past seven days, and further welcoming the remarks of the noble Lord's right honourable friend in another place yesterday, may I ask whether the noble Lord is able to tell the House if the proceedings will take place in public or private?
Lord WELLS-PESTELL: My Lords, I do not want to enter into a controversy with the noble Lord, but let me make one point clear; there has been no change of attitude. We have quite recently received confirmation from the Elizabeth Garrett Anderson Hospital that they are prepared to consider any offer of alternative accommodation, but without commitment. It was when we received this that my right honourable friend took the course that he did. Certainly the discussions will not be in public; they will be in private for reasons which I would have thought were obvious to everybody.
Lord BROCKWAY: My Lords, may I ask the Minister whether the discussions will include a proposal that a separate hospital should be maintained and that it should not be a question merely of inclusion in a present hospital?
Lord WELLS-PESTELL: My Lords, I cannot say that. So far as I know, the only practical proposal which exists at present is the transfer to the Whittington Hospital. However, as I indicated, other proposals are not ruled out.
Baroness EMMET of AMBERLEY: My Lords, could I ask the noble Lord to express to the Minister the difficulties that the Elizabeth Garrett Anderson Hospital must be working under now, with the people there not knowing what their future will be from one month to another? Discussions will of course be necessary and extremely useful. At the same time, how do you run a hospital if you do not know how long you are going to exist?
Lord WELLS-PESTELL: My Lords, there have been difficulties at the Elizabeth Garrett Anderson Hospital for some considerable time, by virtue of what needs to be done. The Government have taken the view for a long time that it is not a viable proposition because of the cost of putting it into real working order and the annual cost of maintaining it. We appreciate the difficulties and we ourselves would like to get the situation clarified and finalised at the earliest possible moment. I must, however, repeat what I have said on previous occasions; that is, that my right honourable friend has decided that the hospital on the Euston Road site must be closed.
Lord ANNAN: My Lords, would the Minister not agree that the Elizabeth Garrett Anderson Hospital can receive facilities at the Whittington Hospital which are particularly suitable, in that the Whittington Hospital is part of the teaching complex of hospitals in the North-East London region? Is it not also important that, at a time when the Government are having to reduce the provision for hospitals in London in order that there should be sufficient funds to extend facilities for teaching hospitals in the Provinces, the London teaching hospitals, when their resources from the DHSS are being reduced under the RAWP programme, should have priority when the Government come to consider how total resources for London are to be used?
Lord WELLS-PESTELL: My Lords, that is precisely the position the Government have taken consistently.
Lord HARMAR-NICHOLLS: My Lords, does the noble Lord's new statement mean that there will be no lack of continuity so far as the hospital is concerned and that this hospital will continue until new buildings are found, if new buildings are contemplated?
Lord WELLS-PESTELL: Yes, my Lords, the Euston Road hospital will continue to provide its existing services while these discussions are taking place.
Lord SEGAL: My Lords, is my noble friend aware that there is an excellent hospital now in a state of disuse at Millbank? Would the possibility of transferring the EGA Hospital to that hospital be entirely ruled out?
Lord WELLS-PESTELL: My Lords, I cannot go beyond the point I made some time ago, when I said that the only practical proposal, as I understand it, existing at present is the transfer to the Whittington. That has to be discussed. That is the first matter, and from that will stein consideration of whether or not it will be necessary to look at some other site.

COMMUNITY SERVICE BY OFFENDERS (SCOTLAND) BILL
Brought from the Commons; read 1ª, and to be printed.
House adjourned during pleasure and resumed by the LORD CHANCELLOR.

WALES BILL
3.14 p.m.
The Lord CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, That the House do now again resolve itself into Committee.—(The Lord Chancellor).
On Question, Motion agreed to.
House in Committee accordingly.
[The Lord Greenwood of Rossendale in the Chair.]
Clause 9 [Existing statutory functions]:
Baroness ELLES Baroness ELLES moved Amendment No. 42A:
Page 6, line 16, leave out from ("of") to end of line 17 and insert ("—

(a) the functions specified in the second column; and

(b) any function which consists of or is ancillary to the taking of a decision by a Minister of the Crown after the holding by him or on his behalf of a statutory inquiry or in a case in which a person concerned could (whether by objecting or otherwise) have required the holding as aforesaid of a statutory inquiry.").

The noble Baroness said: In moving this Amendment, with the permission of your Lordships I should like to speak to Amendment No. 43D, concerning the definition of a statutory inquiry. Thisclause gives the key to the Bill and to how the Welsh Assembly is to work. It seeks to answer the questions: What is the Welsh Assembly going to do? What will its functions and powers be? What will its relationship be to the Secretary of State, to the local authorities and, perhaps, most importantly of all, to the individual people of Wales? We hope that the queries and doubts that will arise during our discussion on this Amendment will be dispelled by crystal clear replies from the Benches opposite, not only to clear our own minds of some of the fog which surrounds us when looking at the clauses of this Bill but also, and perhaps again more importantly, to help the people of

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Wales themselves, who have to decide at the end of the day whether they really want this expensive, extra bureaucratic burden to be put upon them.
I think it should be remembered that by means of this clause the powers of the Secretary of State are reduced considerably and the local authorities acquire further supervisory powers. The taking away from the Secretary of State, of his powers and of the functions set out in Schedule 2 means a loss of sovereignty for the United Kingdom Parliament far greater, I may say, by devolution of powers to another elected body than were ever contemplated in the European Community legislation. It is somewhat surprising that the Leader of another place, Mr. Foot, said during the Second Reading of this Bill on 15th November last year, at column 506:
"There is no impairment of the House of Commons or of its authority".
In view of the of Clause 9, that, of course, is questioned.
It is clear from the way the Bill is set out that functions given to Ministers of the Crown by statute have been carved up. Functions contained in Acts on the left-hand column of Schedule 1 are functions and powers devolving to the Wales Assembly, and those in the right-hand column are retained by the Minister of the Crown. Consequently—and this is an important thing to remember—the functions and powers retained by the Minister of the Crown will remain subject to control by a United Kingdom Parliament. That is basically the meaning of Clause 9(1)(a), as set out in the Amendment, and it is identical with the wording of the Bill as now drafted. There are, however, a whole bundle of functions of different kinds contained in Schedule 2 which, in general and in particular, we shall be debating later, during the Committee stage of the Bill.
It is perfectly natural and very understandable that, if you are to create a new body, for whatever reasons, whether cosmetic or not, you have to give it something to do. If, on the other hand, you wish to tighten your grip on individuals and to control them even more than they are already being controlled, it is not so much the functions which come under scrutiny but the manner in which
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those functions are to be exercised—whether they are to be in public, whether the proceedings are to be published and who is to exercise these powers and with what limitations. So that this Amendment seeks to find out the Government's views on these matters.
Concerning the functions and powers which are retained for the Minister, unless alternative proposals are forthcoming, certain of them are identifiable by the following characteristics: first, that they wholly relate to the taking of decisions following an inquiry; secondly, that an inquiry will be one which has been ordered by a Minister, and in the future by the Welsh Assembly, to be held under some Act as set out in Schedule 2; thirdly, that the Minister, now the Welsh Assembly will appoint a person to hold such an inquiry; fourthly the inquiry may of course, be one which an individual will have requested shall be held in circumstances permitted under some statute and, finally, there will, of course, be those cases where the Welsh Assembly has to exert some form of quasi-judicial powers when deciding on a devolved matter which is in dispute between different authorities.
So what I am, first, asking the Government is whether they can tell your Lordships how many instances there are in Schedule 2 to the Bill where the Welsh Assembly will have powers to hold an inquiry, to give directions or even to take decisions from which there may be an appeal by an individual—again, to the Welsh Assembly. Of course, there will be instances under planning provisions and I should like to reserve discussion of these until later, when we discuss the Town and Country Planning Act. But there are examples that I can give to the Committee now which spring to mind, and which bring out the kind of situation with which the Welsh Assembly, vis-à-vis the individual, will be faced.
For instance, there is the power to designate a new town, or even to extend an existing one, under the New Towns Act; or under the Highways Act 1959, in Part XVII of Schedule 2, in relation to special or trunk roads. In both of those cases, the Welsh Assembly will be the authority directly concerned in the first instance, and later on in the proceedings it will have to deal with objectors. The other category where the Welsh Assembly

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will, as I understand it, be exerting quasi-judicial powers is where it gives general directions or lays down overall policy. But here, again, at the end of the day, it will be hearing disputes and appeals as a result of giving those general directions. So, particularly in the first example that I have outlined, will the Government agree that the Executive is, in fact, giving directions and also acting as judge?
Furthermore, I should like to say something about the procedure under which this type of power will be exerted. We do not know at this stage, and perhaps the Government will be able to tell us, whom the Welsh Assembly will appoint to hear an appeal. Will it be the Welsh Assembly as a whole, or the relevant committee concerned with implementing subordinate legislation under the Act? Might it, indeed, in accordance with Clause 17 of the Bill, merely be one member of the committee, generally the leader; or might it be an outside individual with experience of such matters? If it is to be the leader with no other individual present, the judgment is bound to be purely political, without necessarily having any regard to fairness or equity. In the very nature of things, even if justice were done—and I do not doubt that many people who serve in assemblies or local government seek to fulfill their rôles as fair and honest members of society—it will not be seen to have been done.
It is worth recalling what happened in 1946 when the new town of Stevenage was designated by the Minister of the day. It was said at the time that,
"… his role makes it inevitable that he will incline in favour of his own scheme".
This is an inevitable consequence when a body has to give general directions, and even more so when it actually has to decide on some scheme and then hear appeals on the matter. So that I should like comments from the Government on this aspect.
Following on from such an appeal to the Welsh Assembly, to one of its component parts or to an individual in that Assembly, what right of appeal would an aggrieved person have against such a judgment? At present, very often, the decision is final, but it is not final to the extent that an individual can always raise a matter with his Member of Parliament
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and have it discussed in another place or, indeed, in this House. I believe that the United Kingdom Parliament still remains the last resort of any aggrieved individual in this country. A person can go to his Member of Parliament and be told that it can be debated in Parliament, so that justice is seen to be done to that individual. I do not say that it always happens, but that opportunity exists. But under the Bill, as I understand it, that will be impossible, particularly when the Welsh Assembly is exerting these quasi-judicial functions.
There is another aspect of this very serious problem to which I should like to draw the attention of the Government, and I hope they will be able to make some comment. Will the Government indicate to the Welsh Assembly, or to the authorities who will be responsible for the conduct of the Welsh Assembly, what rules of procedure will apply in these cases? Will there be rules of confidentiality? Will the committee—if it is a committee—the Welsh Assembly or the leader have a duty to act "judicially"? Will the committee, or a member of that committee, be able to communicate with the parties involved and what rules of disclosure will apply? Will the statutory codes for the conduct of inquiries apply in the case of the Welsh Assembly? Is it correct to say, as the Bill is at present drafted, that different rules of procedure may be adopted for Wales from those now applying throughout England and Wales? It would be highly undesirable if a standard of conduct for a quasi-judicial body, wherever it is in the United Kingdom, did not have at least some general code as to how it should act.
So that this Amendment draws attention to a very sorry state of affairs which is not only to be laid at the door of the Government, but which shows the elementary stage to which our administrative law in this country has developed over the last few years. It is, of course, due to an excess of legislation which impinges on the rights of the individual. It is time that we looked at our administrative law and, if certain Parties or the Government are to legislate and introduce laws and regulations which affect the rights of individuals, then those individuals should have some alternative right of appeal, other than to a member of the Government, whether it is the Government of the United Kingdom

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or the Welsh Assembly, which we are now discussing.
In fact, this Bill emphasises even more that the principle of the separation of the Executive from the Judiciary is being breached, if an aggrieved individual wishes to appear before a body which will hear his or her justifiable complaints. So I ask the Minister whether she can inform the Committee of the instances in the Bill where it is foreseen that the Assembly will have to deal with these matters, and how it is expected to deal with them. This is a very urgent matter on which we need to have some kind of information.
But my main contention is that if there is a to be a Welsh Assembly—which, in accordance with the terms of the Bill, there may well be—then, instead of perpetuating this jungle in our administrative law, we should take the opportunity of devising alternative procedures to ensure that natural justice is done. I believe that the Government have failed to take this opportunity, and that the people who will suffer are the people of Wales. I beg to move.
3.30 p.m.
Baroness STEDMAN: Although it may take a little time, the House may find it useful if I refer in general terms to begin with to what we see Clause 9 as trying to arrive at and then go more specifically to the Amendments moved by the noble Baroness. As she said, this is one of the key clauses of the Bill because this is what confers on the Welsh Assembly the list of the ministerial functions by or under statute that we identify in Schedule 2.
It is this provision which brings out most clearly the critical difference between this Bill and the Scotland Bill which we have also been discussing. In the case of Scotland it was legislative competence that was devolved, and areas of legislative competence cannot be described with any accuracy by relation to existing enactments because these merely exemplify the legislative action in a particular field at a particular moment. When it comes to devolution of executive functions contained in the statute, then it does become possible to obtain much more precise listing of the functions and there is no
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need to fall back on any general description with the sort of uncertainty that we came face to face with from time to time in the Scotland Bill.
So, while the Scotland Bill makes great use of the concept of devolved matters, this Bill has no counterpart in it. It lists either individually or in blocks the existing ministerial functions which are to be devolved, and it offers no generic description of the functions or the groups of functions unattached to their parent statute. It is all very clearly laid out in the Schedules. The word "functions" in this case has to be analysed and understood. It is used in ordinary departmental practice to denote the areas of responsibility, so that there is a housing function, a planning function and so on. In a statutory context, it bears a rather more technical meaning—it means the powers and the duties, and indeed many of the enactments define the functions expressly to include powers and duties. There is sufficient judicial authority to make this unnecessary, particularly in the present context where the clear intention is to achieve a very wide, and we hope effective, devolution of ministerial responsibilities.
Perhaps we can accept at the beginning that the Bill proceeds on a very wide interpretation of the concept of function and runs rather beyond the plain powers and duties and takes in things which Ministers can do or things that can be done in relation to Ministers. The latter draft, of course, includes cases where perhaps some person has to serve a notice on a Minister. Ordinarily, it is these concealed functions which are dealt with specifically in Schedule 2, but a few have been dealt with by specific Amendments in Schedule 11 in order to achieve a precise result.
These marginal cases apart, the powers and duties tend to fall into two classes—the substantive and the ancillary. The substantive powers are the primary ones under which Parliament authorises action; the ancillary powers are the secondary or supplementary powers which are used only in connection with or for the purpose of one of the substantive powers. Perhaps a clear example of this is the one used by the noble Baroness herself—the power to hold a local inquiry. It exists only for the purpose of some substantial power.

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In the context of Clause 9 the powers of whatever degree fall within the concept of functions. This leads to the practical difficulty to which Schedule 2 must constantly revert. Within the context and confines of any particular Act there may be some functions which are devolved and some which are reserved, and any related supplementary powers must therefore be made available equally to the Welsh Assembly in a devolved function and to the relevant Minister in the reserved function. This affects a great deal of the entry in Schedule 2.
The first column in Schedule 2 specifies the devolved functions, and it does so wherever possible by a block devolution of all the functions of a particular Act or in a group of Acts which are identified by their collective citation. Where this is not feasible it lists the individual provisions. The second column specifies the exceptions from the functions as identified in the first column. The exclusions fall into a variety of classes. There may be complete exclusion of particular functions otherwise comprised in the block devolution; for example, the Local Government Act 1972 (the functions under Sections 171, 198 and 200) and the qualified exclusion of other particular functions such as those exercisable in relation to reserved matters, those listed in Schedule 5 for which local authorities will continue to respond to the United Kingdom Minister and not to the Assembly, those exercisable in relation to other functions which remain the prerogative of United Kingdom Ministers; and those so far as are exercisable in relation to the accepted statutory undertakers—that is, undertakers which we have included in the definition in Clause 79(1) who still have to respond to United Kingdom Ministers—and those exercisable in relation to land otherwise than land which is held for the purposes of the Assembly. These are the kind of things which we shall be discussing throughout the Bill, but particularly in regard to Schedule 2 and Clause 9.
In general, Clause 75(1) has not been relied upon for the purposes of Schedule 2, and the Bill has been constructed on the basis that Schedule 2 should deal explicitly with all the relevant functions. As Clause 9 bites only on minsterial functions concerned by or under enactments, it does
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not affect either the functions exercisable by persons other than Ministers where we have the definition in Clause 79(1) to include the Treasury, or the functions exercisable by Her Majesty under Order in Council or otherwise, or the functions exercisable other than by statute. Certain enactments contain powers exercisable by Order in Council transferred in a modified form to the Welsh Assembly by the Amendments in Schedule 11.
The position with regard to powers currently exercisable by United Kingdom Ministers, other than by statute, is that the powers that are to become exercisable by the Welsh Assembly are converted by the Bill into formal statutory powers under Clauses 10 and 11 which we will be discussing later. In the light of those, Clause 12 is in effect a new substantive function for the Assembly. The Assembly does not get prerogative powers in and around the area covered by the functions listed in Clause 9. Nothing of substance is withheld by this. Today nearly all the prerogative powers of any value have already been subsumed into formal statutory provision, and it is very rare for a Minister to be compelled to fall back on to powers which, on proper constitutional analysis, are truly prerogative in character.
Clause 9 is the source of the devolved powers and Clauses 10 and 12 are also an important source of devolved powers. We also have Clause 27. I am sorry that it is so complicated, but it links up. Clause 27, which concerns certain ancillary powers and various enactments which are amended in Schedule 11, will henceforth concern functions and orders under Clause 59 as to certain public bodies. Subsection (2) deals with the special classes, those few powers which are listed in Schedule 3 which are to be exercised concurrently by the Welsh Assembly and by a United Kingdom Minister about which we have some later Amendments to consider.
So far as the points which the noble Baroness raised are concerned, they were rather wider, I suspect, than we had initially expected. Amendment No. 42A, which the noble Baroness moved, would reserve the power of decision in all cases where a statutory inquiry is held or claimed. As the noble Baroness has said, such cases occur in a very wide number of fields, but not exclusively in planning. Perhaps her

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fear is the dislike—apparent in a number of other Amendments—of the devolution of quasi-judicial powers. We have problems here. The noble Baroness asked me some fairly specific questions, to which I am not able at this time to give an absolutely correct answer. However, I shall look at what the noble Baroness has said and make sure that she has the information in good time before we reach the next stage of the Bill.
The noble Baroness asked me how many enactments in Schedule 2 relate to the power of direction and the power to hold an inquiry. There is no simple, arithmetical total. My pigeon post tells me that there are many such powers, but that at this time it is impossible to work them out and give their total. I was also asked who the Assembly will appoint to hold the inquiry. I believe that Amendment No. 43D, which initially we understood we were taking together with this Amendment, impinges upon this point. It is based on the supposition that an elected Assembly is incapable of taking the kind of decisions for which Parliament has decided that a public inquiry ought to be available. We do not think that this is right. We think that the Assembly would be able to discuss matters in general —as they do in another place, because they consented to discuss the Windscale Report in the full knowledge that the Minister would be influenced by their view.
In general, inquiries are held on matters of rather more local than national concern: the siting of new public works, motorway loops, compulsory purchases and so on. These are areas where everyone in the locality might be affected and ought to be able to have their say, the matter to be resolved at Assembly level in the full knowledge of all the facts. I hesitate to say that it is better for such matters to go to an Assembly, for the House might seek to put my job in commission! However, I strongly maintain that it is in no way wrong or improper for the Assembly to decide such matters. The whole purpose of the inquiry would be that a full and balanced public discussion could be held. And what better place is there for that to take place than an Assembly representing all the people of Wales?
If that is not enough, then there are the courts in Wales to see that fair play is
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done. The Assembly would be bound by exactly the same rules of natural justice as are the Ministers of the Crown. Where an enactment of itself provides who shall chair an inquiry, clearly the Assembly will be bound by that enactment. In the case of all enactments that at the moment provide powers to Ministers of the United Kingdom, if those powers are devolved, they will be devolved to the Assembly and will be binding on the Assembly in just the same way. The noble Baroness ranged very much wider than that in her opening speech. I shall look at what she said and try to answer in much more detail the points which she has made.
3.43 p.m.
Lord WIGG: May I ask the Minister a question. I thought that I had mastered the problem that she is posing by paying the closest attention to what the Lord Chancellor said on 23rd May. Perhaps it might help your Lordships if I read his words. He said at col. 833 of the Official Report:
"In Wales, where executive competence only is involved, it has been necessary to single out in each particular case the ministerial functions which are to be devolved, and this is done by listing the appropriate enactments which confer powers and duties, and that is set out in the lengthy—and, I must say, on the face of it, alarming—Schedule 2 to the Bill.".
I was not put off by the word "alarming", but then I turned to the parts which interested me. I took the Acts mentioned and cut out the parts which are to be excluded. If those parts are to be excluded, they will have nothing to do with the Welsh Assembly. Then I proceeded to study what was left, in the belief that what was left was devolved within the field of executive competence only and would not involve any legislative powers. That is the difference between the Scotland Bill and the Wales Bill.
Then I began to get into difficulties about what this really meant. Not being a lawyer and not even having studied English—certainly not the classics—I began to get into difficulties about what "executive" meant. It seemed to me that "executive" meant an act of Government; therefore, it was the act of Government which was to be devolved; Whitehall was saying "Here is the Act. You can have the lot, except those matters which are mentioned in column 2. They are

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excluded". Therefore I proceeded to concentrate, for better or for worse, on what was left. All that I am asking is this: not that I should now be understood but whether I have made a mess of it and whether I am wrong, because if I am wrong I had better go away and do some more homework.
Lord HYLTON: I wonder whether I could take a concrete example? Could the noble Baroness tell us whether the hearing of appeals under the Town and Country Planning Acts against the refusal of planning permission will be devolved or reserved?
Lord PARRY: It seemed to me that in moving the Amendment the noble Baroness begged the whole question of devolution. It was not simply a question of moving an Amendment to a clause in the Bill; the question was whether the Bill itself would win authority for the Secretary of State to devolve certain of his powers and whether, in that devolution of his powers, he would weaken the constitutional authority of the Mother Parliament. I hesitate to remind the Committee that this point has been made clear on a number of occasions. Probably the latest occasion was during our own Second Reading debate when I quoted the words, very car fully given in another place, of my right honourable friend the Secretary of State for Wales. Those words bear repetition in the context of what the noble Baroness said in moving the Amendment. When discussing the position of Parliament after devolution in Wales and the relationship between Parliament and the Assembly, my right honourable friend the Secretary of State said this:
"Let there be no question that a large number of powers and functions now exercised by myself and by my colleagues the Ministers will be devolved to the Assembly.".
My right honourable friend went on to say:
"In other words, the Bill transfers certain executive responsibilities of central government to the Assembly, but Parliament will continue to legislate in these fields for Wales and the Members of Parliament will continue to be responsible for all primary legislation applying to the Principality."
If we do not accept that, we beg the question of devolution itself. If we are not going to give responsibility to a responsible Assembly of the Welsh people and trust them adequately to safeguard
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it, then we are saying that we do not trust the Welsh people with the devolved authority to which we paid lip service during other stages of the debate on this Bill.
If we also take the analogy which the noble Baroness offered, when she said that this small devolution—which is very much smaller than that for which many Welsh people would have asked and which is very much smaller than that amount of devolution which other federal Parliaments and other devolved Assemblies enjoy in other parts of the world—and that this measure of devolution is less than the amount that we were prepared to give to the EEC Parliament, of course, that is right. When we were moving authority from our native Mother Parliament towards another extra-Parliamentary and extra-national body we were most careful to see that there did not pass from the Parliament of Britain to the Parliament of the European Economic Community the real authority which should be vested in the people of Britain.
When we set out, as a result of a calculated appeal to the people of Wales, as a result of a request from the people—however much we might argue about what the nature and the strength of that request might be in various parts of Wales—to devolve authority to them, we are simply redistributing power within the United Kingdom. We are not weakening the mother Parliament; we are simply giving an aspect of power to the Assembly which we are setting up. I think that it is wasting the time of the Committee at this stage constantly to be going back to the suggestion that we are setting out, somehow, to cheat the British Parliament of authority which is, in any case, vested not directly in the Secretary of State, who holds that authority, but is administered for him by the bodies which I mentioned in the Second Reading speech that I made in this House. It seems to me that many of the powers of the Minister are not at the moment directly responsive to the authority of this Parliament or of the Welsh people because they are vested in nominated bodies.
If I understood correctly an appeal that was made by the Shadow Secretary of State at the weekend in Wales, it was that such bodies and the appointment of individuals to such bodies should be directly

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subject to the people and should not be vested in the Secretary of State. I may be wrong in assuming that, because I was personally involved and my view of what he said might be clouded, but I believe we must approach these Amendments in honesty and knowing that they seek to give precise and careful devolved authority in the respects scheduled to a Parliament and an Assembly of the Welsh people which will be directly responsive to them, while the legislative functions will be safely held in the Mother Parliament.
Lord ELTON: Perhaps I may come to the aid of my noble friend in reply to that. I am not quite sure that the noble Lord, Lord Parry, has got it right. He is addressing himself to general principles and we are, in the Committee stage of the Bill, addressing ourselves to particular questions. Therefore the general principle is implicitly asked even when it is, in detail, begged. My noble friend said that this was an astonishingly complicated Bill and everything that everybody else has said except the noble Lord, Lord Parry, and particularly the noble Lord, Lord Wigg, has borne this out I think few would be disposed to contend it. It is our duty to find out what the effects of this will be in particular cases, and the most pertinent question of all has come from my noble friend Lord Hylton as to what will happen in a particular case.
Secondly, I think that the noble Lord, Lord Parry, and his friends perhaps look at this problem from the opposite direction to us: they think that we are seeking to reserve to Parliament the powers which give it its grandeur, its importance or its effect. I see our duty as being the reverse of this: It is to see that the Welsh citizens are protected from a machine which may in fact not operate in the way they wish it to operate in order to bring devolution into effect. The function of this Chamber has always been to defend the individual against the State and the machine. In doing this, it may well appear that what we are trying to do is to say that we can do the job better than the Welsh. What we may be saying is that we believe that the United Kingdom Parliament can do it better than the Welsh Parliament.
What we all wish to establish is that this will be done (if it is to be done) to the satisfaction of the Welsh people, and
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as I said at Second Reading, the protection of natural justice. We cannot know the answer to that question until we can read in Hansard what the noble Baroness has said in this context in reply to the speech of my noble friend, which I do not think begged the question; I think it asked a lot of vital and pertinent questions.
3.54 p.m.
Baroness STEDMAN: With the leave of the Committee, perhaps I may take one or two of the points that have been raised. First, I am grateful to my noble friend Lord Parry for his general support of the Bill. Noble Lords opposite are right—he was dealing with it in perhaps a rather more general tone than we are dealing with it on these specific Amendments, but, so far as the general principles and the outlook as expressed by my noble friend are concerned, those are perfectly right. What the Welsh Assembly is able to do for the Welsh people and do properly, it should have the power to do, and for things in respect of which we need to keep some reserve powers for the Mother of Parliaments we must ensure that we have done so. I think that as this Bill goes on we shall get worried because we had so much discussion on the Scottish Bill about the executive competence and the legislative competence, whereas Clause 9 itself does not refer to executive powers. In fact, I do not think we refer specifically to executive powers as such in this Bill. Clause 9 devolves the functions of the Ministers as we have identified them in Schedule 2, which also includes the power to make subordinate instruments.
So far as the planning appeals are concerned, if the noble Lord will look at Schedule 2 on page 50 of the Bill, he will see a lot of information about the Town and Country Planning Act and the various things which are excluded. The general responsibility for planning appeals will be devolved to the Assembly. So far as the procedure for public inquiries is concerned, the Assembly itself will have no power to change the rules of the procedure for the holding of the public inquiry. The power to regulate the procedure is in Section 11 of the Tribunals and Inquiries Act and that is not devolved and will still be in effect, even with the Welsh Assembly.
Lord WIGG: I do not want to be tiresome but I am not going to leave this subject because the noble Baroness, Lady Stedman, has not answered my question. The question I put to her was this: Is she saying the same as the noble and learned Lord the Lord Chancellor said at column 832 on 23rd May this year, or is she saying something different? Clearly, the noble Lord, Lord Parry, is saying something different and we shall run into great trouble later on, which is something that I am not going to wear. He says, "Trust the Welsh people. The Assembly must have the powers and if you doubt the way in which they are going to behave then you are doubting the Welsh people". That may be logic for the noble Lord but it will not do for me because the Assembly is not a person, it is a thing; and a thing can only operate through humans. While I am quite willing, on paper, to devolve this to the thing, when it comes to operate and becomes flesh and blood, it will become a person. Because I doubt the thing, it does not necessarily follow that I am doubting the person.
What we are discussing here on the authority of the Lord Chancellor—and surely there is no higher—is that so far as the Welsh Bill is concerned we are dealing with executive competence only. In my terms "executive competence" means an act of government which is devolved. So we have whole measures which are devolved, with certain sections excluded. What I want to know is this: Are we discussing executive competence exclusively in the terms that were used by the noble and learned Lord the Lord Chancellor, and, if we are not, will the noble Baroness please explain the difference between herself and her noble and learned friend?
Baroness STEDMAN: Far be it from me to differ from my noble and learned friend in what he said on the Scotland Bill, and I cannot help wondering, even at this early stage of the Wales Bill but having spent some 20 days or something like that on Scotland, what would be the position if we were to have English devolution and they started telling us that we were not competent to run our own Assembly. We had that throughout the Scotland Bill and we are beginning to get it now in regard to this Bill.
Lord ELTON: This is absolutely the point, that we would say the same because we speak for two bodies: at one end is the United Kingdom and at the other is the individual in Wales or Scotland or England. If it affected them, we should have no right to object to the Scots saying that a decision ought to be taken by them with us rather than by us alone. I cannot see that there is any unpleasant imputation in this.
Lord PARRY: As my noble friend has been interrupted perhaps I may take the opportunity to say that, logic or otherwise, I find it difficult to distinguish between a "thing" called the Parliament of the United Kingdom and an Assembly which is a "thing" in wales. Is it in fact assumed that this House or the other place is superhuman while the Assembly in Wales is simply a collection of humans?
Baroness STEDMAN: I think we have to accept that in this Bill and in Clause 9 we do not draw the distinction between legislative and executive competence. There is no legislative competence so far as the Assembly for Wales is concerned. All that we are doing, by means of the Schedules, with the powers that we are giving it and the powers which are being reserved, is to empower that Assembly to administer the legislation which is being devolved to it. I think perhaps that is as simply as I can put it and I hope it meets the point raised by my noble friend Lord Wigg, although I have a feeling that it does not.
Lord WIGG: Perhaps I can make it even more simple. I am not speaking about juxtaposing the Assembly at Westminster and the Assembly in Wales. I am drawing a distinction between the Assembly and the individual: and the individual, whether in fact he is the victim or the beneficiary of Westminster or Cardiff, is so as a result—so the Lord Chancellor has said—of an act of "executive competence", to use his words. All I want to know is whether, as the Lord Chancellor said, we are, so far as Wales is concerned, discussing only executive competence and nothing else. All I want to know is whether the noble Baroness stands by what the Lord Chancellor said, or, if not, what is the difference. Perhaps the noble Baroness will be kind enough to say, yes, she

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endorses what the Lord Chancellor said. I am only asking for this reason. I have tried on this occasion, and on others, to do my homework, and, perhaps the noble Baroness will agree, not altogether without some success. I propose to go on doing it. If in fact she is altering what the Lord Chancellor said and we are discussing something more, or if there are grades of executive competence, then I ought to go out and do some more homework.
Baroness STEDMAN: With the leave of the Committee, may I be very brief and say, yes, the Lord Chancellor was right.
Baroness ELLES: I should like to thank the noble Baroness for her very full reply. Indeed, she answered more questions than I put and for that I am grateful. There were one or two questions which she was not able to answer, even though I put them. I shall await her reply, which I shall hope to get before the next stage of the Bill, and I quite understand that she is not able to give the answers now.
There was one point which I took, and I hope I have got it right; I shall read it very carefully in Hansard tomorrow. I think the noble Baroness said that the Welsh Assembly would of course uphold natural justice just as strongly as would any other body or person. I question this argument, because it is not a question of natural justice in a political elected Assembly any more than in any other political assembly; it will be a matter of politics, and a matter of politics is not always a matter of justice, whether we like it or not, and I say this regardless of Party.
This is what concerns me, and it was the point of this Amendment. I am concerned that, if an aggrieved individual goes to the Welsh Assembly, he should, as a result of an adverse decision by that Assembly or by a local authority, have no certainty of getting justice. It is not a question of whether he will get it or not, but of whether he will be sure to get it and whether it will be seen to be just. Therefore, at some stage, perhaps either in writing or at the next stage of the Bill, I should like some answer to this particular point. In thanking the noble Baroness for her assistance in understanding this particular
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clause and this Amendment, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.4 p.m.
Lord SKELMERSDALE Lord SKELMERSDALE moved Amendment No. 43:
Page 6, line 18, leave out subsection (2).
The noble Lord said: I beg to move Amendment No. 43. The last time I had the pleasure of seeing the noble Baroness across this Chamber we fell into some degree of amiability on linked ideas as to how a particular Bill should proceed. On this occasion I am afraid the omens are not quite so good, but we shall see how we go with this one.
As your Lordships can readily see, this is a rather blunt probe because it begs the question about Schedule 3 to the Bill, which talks about the dual responsibility of the Secretary of State and the Welsh Assembly in certain areas of legislation. It is a rather blunt probe, one could say, in order to push—I hope the noble Baroness will not take offence at this—at the soft underbelly of the Government. However, it has now, since I put down the Amendment, got some rather sharpened edges. I would say that it is still not intended to draw blood; it is very much interrogative. The sharpened edges I refer to are Amendment No. 61C by the noble and learned Lord the Lord Chancellor on the Local Employment Act 1972—and I shall have something to say about this in a minute—and also Amendment No. 61B which not only duplicates the noble and learned Lord's Amendment but also adds the Town and Country Planning Act. Again, I am sure that the noble Baroness will have a good deal to say about this a little later on in the proceedings.
The point of my Amendment is to clear up why exactly there needs to be this dual responsibility, how it comes about that in certain areas of the law there need to be two people looking at exactly the same aspects of legislation, where there was only one before. I should have thought that there was a golden opportunity for conflict between the Secretary of State and the Assembly, and not only if the two are of different political persuasions. This has been constructively argued, both last week in the first stages of the Committee stage of

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this Bill and at Second Reading. In any event, the Assembly will be looking at particular subjects exclusively from a Welsh point of view, and the Secretary of State, through the Cabinet, has a responsibility to the whole country, although I should be the first to agree that the Welsh people are his priority. It follows that they could well take conflicting decisions in relation to these powers in Schedule 3.
There is another important point, which is that most of the concurrent powers relate to finance. For example, the first one on the Schedule, Section 2 of the Commissioners of Works Act 1852, gives the power to buy and sell public buildings, public works and land, including woods and forests—an area in which I certainly do not want to get involved at the moment. My question here is this: is it not anomalous for such funds to come out of both the national and the Welsh exchequers? Perhaps they will not, and I hope the noble Baroness will be good enough to tell us. For my own part, I would assume that the relevant body which initiates the motion will pay for it. Is this correct?
A third and last point on this subject is that it seems to be a very complicated way of going about things. Who should the public go to for clarification, the Welsh Office or the Assembly? Is it really necessary to have concurrent powers at all? Cannot each and every one of the Acts be the responsibility of either the Secretary of State or the Assembly? In other words, is it beyond the wit of man, or perhaps the draftsman, to provide in this Bill that powers are either devolved or not devolved?
I said that I would say something about the Lord Chancellor's Amendment. He, it seems, has decided to clean up this rather grey area in at least one respect in his Amendments Nos. 61C and 57B. These Amendments refer to the Local Employment Act 1972. It seems that the noble and learned Lord has had such a major change of heart that he is not only proposing to remove the sections from dual responsibility under Schedule 3 but not to devolve power at all under Schedule 2. I beg to move.
Baroness ELLES: I should like to support this Amendment moved by my noble friend, and to add one or two further points relevant to Clause 9(2)
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of the Bill in relation to Schedule 3. There are matter which have been debated in the Scotland Bill and which of course affect the Welsh Bill. I shall be very brief, because I know we have a great deal to get through today. I think the attention of your Lordships should be drawn to the fact that some of the powers to be exercised concurrently by the Minister and the Welsh Assembly are similar and identical to powers to be exercised not only by the Minister and the Welsh Assembly but also by a Scottish Secretary. Therefore, a situation will arise where Ministers will have to take decisions, or may be in a position to take decisions, and they will have to take the view of the Scottish Secretary as well as of the Welsh Assembly.
What I should like to put to the noble Baroness is, how is that to work out in practice? A very obvious case in point is, for instance, the Minister who is responsible under the Transport Act for making grants for research and development. He has to decide about making grants for research and development in transport. Supposing the Scottish Secretary agrees that a certain scheme should be undertaken and research carried out and the Welsh Assembly also decides that certain research and development studies should be made, but the two schemes are in conflicting terms, on conflicting conditions and in completely different circumstances. Who, out of all these various bodies, actually takes the final decision? Do they take their own decisions? Is it a vast new way of spending masses of money throughout the country at United Kingdom level and in Scotland and Wales? That is the matter of concern and as set out at present it really becomes a matter of gross inefficient administration. I should be grateful, when I add my voice to that of my noble friend, if the noble Baroness would explain how she envisages all these problems will be worked out in fact and in practice.
Baroness STEDMAN: I explained at some length as regards the preceding Amendment the general principles upon which we have based Clause 9(2) and Schedule 3. The normal statutory powers will either be wholly devolved or reserved. However, the enactments in Schedule 3 contain special features which make it

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necessary that they should be available for use both by a Minister of the Crown and by the Welsh Assembly. As the noble Lord, Lord Skelmersdale, and the noble Baroness, Lady Elles, have said, we had long discussions on these particular points when discussing Scotland. For example, Section 57 of the Transport Act 1968 contains the power to make grants for research into transport services. As both the Assembly and the Government will have responsibilities for transport services in Wales, both need to have access to the provision question.
In the case of a number of other provisions listed in Schedule 3, the Welsh Assembly will not have access to the powers concerned as a whole, because restrictions are placed upon them by virtue of the relevant wording in column 2 of Schedule 2. For example, Section 113 of the Town and Country Planning Act 1971, which is concerned with the power to acquire land compulsorily for the public service, is devolved by means of the entry for that provision in Schedule 2 on page 51. However, the devolution of the power is circumscribed by the wording in column 2 to the effect that the Welsh Assembly's powers extend only so far as they are exercisable in connection with that part of the public service for which it is responsible. However, the Minister of the Crown has access over the whole range of the powers—those parts devolved and those parts which have not been devolved.
In other cases, such as Section 57 of the Transport Act to which I referred earlier, both the Welsh Assembly and the Minister of the Crown will have full access to the power. So, technically, there is nothing in the terms of the Bill to prevent the Welsh Assembly using powers under such enactments as are listed in Schedule 3, within non-devolved areas or, for that matter, the Minister using his powers within the devolved areas. That is because of the difficulty of devising and drafting a scheme which would in all circumstances prohibit the one from acting in the other's area of responsibility in these cases. We think—as we did as regards the Scottish Assembly—that it is unlikely that the Welsh Assembly could take conflicting decisions in relation to the powers in Schedule 3.
In practice we believe that there will be reasonable co-operation between the
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Government and the Assembly and that each will confine its use of the powers in Schedule 3 to those areas of its own responsibilities. I should remind the Committee—and the same point was made during the debate on concurrent powers in the Scotland Bill—that the majority of these powers are concerned with the provision of funds for certain activities such as research. The Government do not believe that the Welsh Assembly or the Ministers will be prepared to expend both effort and money unnecessarily just to cause difficulties for each other.
Some criticism has been levelled at the entries in Schedule 3 in another place and the noble Lord, Lord Skelmersdale, referred to the Lord Chancellor's change of heart and the Amendments to which we shall come later. However, we have taken note of the criticism made in another place and an exercise has been undertaken to reconsider all these entries and to ensure that they fully reflect the Government's policy. As a result, as the noble Lord has said, we have tabled Amendments to remove the entries in Schedules 2 and 3 for the Local Employment Act, 1972, and we have tabled others to include entries in Schedule 11 for Section 7 of the Historic Buildings and Ancient Monuments Act 1953, and Section 7 of the Local Employment Act 1972. Perhaps we can leave our detailed discussion on those matters until we reach the relevant part of the Bill.
However, the noble Lord, Lord Skelmersdale, was concerned with the Commissioners of Works. If the Assembly acquires land, then the Assembly will pay for it out of its funds. If it is agreed that the Government will need land for some purpose in Wales, then, after consultation, they will use their executive powers and will buy it. However, the land and buildings that are, at present, Government property, will pass to the Assembly on devolution. There should not be a great deal of cause for them to spend a great deal of money on land in Wales. However, we are quite sure, as we were as regards Scotland, that the two bodies will each have their own funds. Money is not so plentiful that either the Government or the Welsh Assembly are likely to have a terrific spending spree, because they both have funds which they can use for perhaps more or less identical purposes. We are reasonably satisfied that there will be collaboration and co-operation

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between the Assembly and the Government in the use of these powers, as we are sure there will be so far as the Scottish Assembly and the Government are concerned as regards the Scottish powers.
Lord SKELMERSDALE: From what the noble Baroness has said, am I to understand that the person who initiates the action—whether the Assembly or the Secretary of State—will use their own funds to carry out the work that they have initiated?
Baroness STEDMAN: If the Welsh Assembly wants to carry out a specific project then, if it is within its devolved functions, it will take the decision, will provide the money and be responsible for carrying the project to a conclusion. If it is a joint project of something like research, an inquiry or something like that, then the project and the work will be decided jointly between the United Kingdom Ministers responsible and the Welsh Assembly. There will be some apportionment and it may be that in some cases it will be the Welsh Assembly that will be the agent for the two and perhaps in some cases, if the facilities are better, it may be the United Kingdom that will be responsible for it. However, whoever starts or initiates something will have the responsibility of carrying it through and paying for it.
Lord ELTON: The noble Baroness, Lady Stedman, has been helpful and forth-coming if not altogether reassuring. It might help to expedite matters if I were to bring in Amendment No. 43B at this stage and speak to it rather than make it a separate issue. As the noble Baroness will have detected, it is a means of persuading her to reveal a good deal of what she has already revealed about the actual purposes behind the provisions of this subsection.
The Amendment, in fact, operates as a grid to put over the existing grid in Schedule 3, thus making particular functions visible, and the device would be to ask the noble Baroness what is not visible that ought to be visible. What are the areas not listed in Schedule 5 where concurrent powers might be needed? I suspect that a good deal of what that was designed to reveal will be visible when
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we read Hansard. However, I should like to take the opportunity of asking one or two further questions.
First, is it or is it not the case that the Welsh Assembly will be able to exercise concurrent powers with the Secretary of State in subordinate legislation? In other words, is there an area within this Schedule in which they can both make orders? If they can both make orders, what procedure is envisaged—and can we be sure that it will be implemented—to prevent orders in contrary senses being published on the same subject? Should it happen that contradictory orders are made and a person acts in good faith under the provisions of one order, only later to be challenged because it is contradictory to that laid down in the other, what indemnity is there for the person so caught in a case, which I think would interest A. P. Herbert if no one else?
I imagine that this must have been foreseen, but it is the most obvious anxiety, is it not?—that the two bodies (because, after all, the Assembly and the Minister are both bodies corporate) shall be empowered in the same area and will not sufficiently co-ordinate their actions. They may not be in headlong contradistinction with each other; they may be pursuing the same ends. But it is possible, is it not? that if you give two people equal power in any other sphere of life there is almost always the most appalling row until it is decided which of them has the final word. The device in the Bill seems to be designed to prevent anybody having the final word. Can we not overcome that awful eventuality before it arises? Maybe it will be possible to do so by legislation.
Baroness STEDMAN: The noble Lord has referred to, and based his last general inquiries on, Amendment No. 43B, which is to limit, as it were, the concurrency of the powers that are listed in Schedule 3 in so far as they relate to Schedule 5 matters. In other words, for a Minister of the Crown to retain power to do a particular thing, not only must it be under one of the nine powers listed in Schedule 3, but the proposed exercise must have to do with one of the variety of matters that are listed in Schedule 5. We have found difficulty in seeing, for example, how a power to acquire a historic building

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can have anything to do with the matters which are listed in Schedule 5. Indeed, the only case where we have been able to think of an Amendment that could do anything other than destroy concurrency, is in relation to Section 177 of the Local Government Act 1972. That is the power to specify bodies in respect of which allowances are paid. It is true that this could cover certain bodies to do with such matters as the police. But the reason for making it concurrent is that it covers such a very wide range of bodies that it cannot easily be split.
So far as the orders are concerned, the Welsh Assembly will be able to make the necessary orders for these matters and powers which are devolved to the Welsh Assembly. Our Ministers will be making orders for those things which are reserved and which are still the responsibility of the United Kingdom Government. We do not think that there is any real conflict.
Lord ELTON: It might help if I explained my difficulty. The noble Baroness is adducing the principles of which I am fully conversant; that devolved powers are in the competence of the Assembly and reserved powers are not. We, of course, are looking at the Schedule which sets out the area where this is not the principle; but where devolved and reserved powers, as it were, are both exercisable. First, I am asking whether, in that area, there is a coincidence of order-making powers by both the Assembly and the Secretary of State. There may be or there may not be, but there is a limit to the amount of research that we carry out, and I think that it is a fair question to ask. Perhaps I have not asked it in a fair way; the noble Baroness may not have been sufficiently aware of what I am after from the drafting of my Amendment, and for that I may be at fault. But it is a real question and a real difficulty. I want to know whether the difficulty exists and, if it does, how those involved in it will be got out of it.
Baroness STEDMAN: The nine enactments listed in Schedule 3, are the enactments which confer the powers exercisable concurrently. If orders were needed to be made under any of these enactments, they would have to be made by co-operation and consultation between the two
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bodies. I am quite sure that it would not be the wish of the Welsh Assembly or the United Kingdom Government to be pulling one against the other; they would try to settle this amicably. There is always a danger that these things may happen. I had not understood that that was the point of the noble Lord's Amendment. I shall be very happy to take another look at it. If I can come up with a more reasoned argument, I shall write to him before the next stage.
4.25 p.m.
Baroness ELLES: Before my noble friend speaks to his Amendment, perhaps I could add to the confusion with which the noble Baroness is so ably dealing. She is being attacked on all sides on this very difficult clause, which gives us ground for concern, of course, where one has concurrent powers. The noble Baroness has not quite satisfied some of us—certainly not me—that there will not be an administrative mess between the Secretary of State's Department, which decides whether grants should be paid, for example, for research and development into some form of transport or public service, and the Welsh Assembly, perfectly justifiably, under its devolved powers expending money in such and such a way; and similarly with the Scottish Secretary.
Therefore, I should be grateful if, before the next stage of the Bill or possibly at the next stage of the Bill, we could have some explanation as to how this is envisaged in administrative terms, and the number of civil servants who will be involved in this exchange of letters and—if I may put it in ordinary parlance—"bumf", as to how these various concurrent powers are actually to be administered. As I think the noble Baroness will agree, many of the troubles will arise from administrative confusion; not from ill-will among those involved in making the decisions, but among the miserable and sad people who will have to put into effect the conflicting decisions by these various bodies exerting their perfectly lawful powers. Therefore, I should be grateful for some explanation on that.
As the noble Baroness touched on this point, perhaps I could raise it now. She referred to Section 113 of the Town and Country Planning Act 1972 where, as I understand it, the reserved functions are

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the functions of the Secretary of State for the Environment who will be able to make compulsory purchase orders for certain public services. I understand that the kind of thing included would be the erection of telephone boxes, the Post Office not having its own powers to make compulsory purchase orders. It is clear that if appeals are made to the Secretary of State for the Environment, he has a certain neutrality in the situation because he is not directly involved with the original decision and, indeed, with the appeal.
But in so far as the public service which is to be administered by the Welsh Assembly is concerned, as I understand it, the Welsh Assembly will have powers to confirm its own compulsory purchase orders, particularly in relation to the public service: although, again, I understand that there is no definition of "public service". I assume that certain things are understood to be public and others are understood to be private, but I do not think that there is any legal or statutory definition of "public service". I should be grateful if the noble Baroness, in thumbing through her documents, could find one for us.
As I understand it—and perhaps the noble Baroness can either confirm or deny this—as the Bill is at present drafted, the whole of this exercise, which is the exercise of confirming a compulsory purchase order by the Welsh Assembly, could be done just by the leader of the committee which made the order under Clause 17. With all her experience of local government, does the noble Baroness think that this is a wise way of carrying on administration? We on these Benches are trying to make the Bill work; we are not—as the noble Lord, Lord Parry, tried to infer—attacking the Bill as a whole, though many of us, of course, have our reservations. But we are discussing matters which affect individuals and we should be very grateful, knowing the spirit in which the noble Baroness is dealing with this, for a reply either now or at a later date.
Baroness STEDMAN: I do not think that I can satisfy the noble Baroness in full this afternoon, but in so far as both the Welsh Assembly and the Secretary of State make orders, the Welsh Assembly cannot interfere with any order made by
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the Secretary of State. So in that sense, where there are concurrent powers, the Secretary of State is the "Supremo", if one likes to describe him in that way. The local authority's goods and services is another case of a concurrent power, but here we think that there is not likely to be much conflict about it. We have sought to give specific protection where it is needed. I shall look at this again. I shall happily send the noble Baroness a copy of the kind of things we have in mind, so that she can see how we think this will work. Then perhaps we can have a little more agreement or further discussion at the next stage.
Lord SKELMERSDALE: My rather blunt probe sank in rather deeper than I expected. We shall certainly be most interested and will get far more from reading the Official Report tomorrow morning than I, for one, managed to take in this afternoon. Therefore, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 43B not moved.]
4.30 p.m.
Lord STANLEY of ALDERLEY Lord STANLEY of ALDERLEY moved Amendment No. 43A:
Page 6, line 21, at end insert—
("(3) The Assembly shall not exercise its powers of appointment of members of a body except after consultation with bodies representing interests affected by the functions of that body.").
The noble Lord said: This is the first of a series of Amendments which concern agriculture. As your Lordships know, agriculture as such, is not to be devolved, but I have learned to my cost, in your Lordships' House in particular, that agriculture does not just mean tilling the soil and breeding animals. It is affected by a great many outside factors, such as transport, land use, water, and indeed amenity for our basically urban and less fortunate brethren. Many of these outside factors that I have mentioned will be devolved to the Welsh Assembly.
I hope that your Lordships will appreciate that if I appear, for use of a better word, to "knock" the Welsh Assembly, it is only because I happen to believe passionately in the importance of agriculture and its right to be placed second

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to none. I would take, and do take, a similar attitude to the Ministry of Agriculture, the Department of the Environment, local authorities, or any other person who, to put it crudely, wants to put his hands on my land.
In this Amendment the enemies, or the friends, to agriculture, if I may loosely call them that, are the nominated bodies: bodies such as the Welsh Commission, the Regional Land Drainage Committee the Welsh Water Authority, and a host of others specifically referred to in the Schedules. Perhaps the Committee will excuse me if I refer specifically to those bodies particularly concerned with agriculture. I hope that my noble friends will rectify this rather narrow approach. The purpose of this Amendment is to ensure that those people appointed to such bodies will have the interests, in my particular case, of agriculture, and in other bodies the interests of the respective interested parties, at heart: indeed, to make sure that these bodies will prove to be agriculture's friends, and not enemies.
I should be grateful of an explanation from the Government as to who will appoint members to these nominated bodies, and how they will be appointed. Am I correct that the Welsh Assembly will take over the appointment of all members who previously were appointed by the Minister of the Crown? Could the Government tell me—and I think it is rather a difficult question to ask of the noble Baroness—what proportion of the nominated bodies were appointed in this way, and what proportion will in future be appointed by the Welsh Assembly? Presumably the local authorities will still, as previously, make their share of appointments to these bodies; in particular to the Welsh Water Authority.
This is a most important point because in the White Paper, Our Changing Democracy, in 1975, in paragraph 255 it states:
"The Welsh Assembly will provide, or nominate, the majority of the members of the Water Authority".
I think I am right in saying that the Secretary of State at the moment does not appoint the majority of the members to the Water Authority. I think the local authority does that. So here is a confusion that we should like cleared up. I have had a fairly rough time over the weekend being rung up by various bodies
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asking this question, and I think for my sake and the Government's sake an answer as to how they would be appointed, and how many, would help us very much.
To keep on with why these people should be appointed from those who should know about this matter, you might think that I am being slightly blinkered and just putting on my farming spectacles. To a certain extent I am, and indeed I am trying to do so, but that is because certain of these bodies affect agriculture perhaps more than any other section of the community. These bodies require land and, as I told your Lordships at Second Reading, land is under the power of the Welsh Assembly and agriculture is not. Therefore, it is vitally important that if they are to work satisfactorily—and we want them to work satisfactorily —they must command the support of the agricultural community. I believe that the best way to achieve this is by consultation and representation from that community, and that is what this Amendment seeks to achieve.
I suppose I must declare, in common with most farmers, a naturally suspicious nature, and I cannot get over the fact that the Welsh Assembly will have a majority of urban Members. I am not objecting to it—not that it would do any good if I did—and it is right and proper that the majority should control, but I believe that when it comes to appointing members to the bodies which affect agriculture so vitally it must be right that, despite the fact that we are in the majority, it is our land, and it is our work, and it is of prime importance not just because it is ours but because without it our work, and the whole country in the long run, would suffer. I should have liked to table a far more demanding Amendment but I have decided otherwise, mainly in the hope that the Government can reassure me, or maybe age has dampened by farming zeal. I therefore hope that your Lordships on both sides of the Committee will accept the spirit of the Amendment, and perhaps even the Amendment itself. I beg to move.
Lord SKELMERSDALE: In rising to support my noble friend's Amendment I would pick up those passages of his speech where he said that his Amendment was not entirely devoted to agriculture,

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because by looking at it one can see immediately that it has much broader aspects to it, and perhaps even more worrying aspects, than he has adduced. For example, can one take the Commission for historic buildings and works in Wales. I am sure that that is not its right title but I have not got my appropriate note to hand, and no doubt the noble Baroness will doubtless tell us what it is. As I understand it this is currently peopled, for want of a better expression, by architects, planners, landscape people; by people who are relevant to that particular body. The libraries set-up is another example of this which is peopled almost exclusively by specialists. There is nothing in the Bill, as I read it, that would stop the Assembly from putting non-specialists into those bodies. I should like the assurance of the noble Baroness that the situation as it has been pertaining heretofore will continue, and that these bodies will remain specialist bodies.
4.38 p.m.
Baroness ELLES: I should like to support my noble friends in this Amendment. They have brought out some real difficulties that will face the Welsh Assembly in appointing people to the boards which have been referred to by my noble friends. For the benefit of your Lordships, may I just single out one or two further examples which fall to the patronage of the Secretary of State for Wales which come from a directory of paid public appointments made by Ministers, and to which I referred when we discussed disqualification for membership of the Welsh Assembly.
As my noble friends pointed out, it is not only a question that the people should be suitable for the jobs concerned, but there is a considerable amount of patronage in these appointments.
When you look at the Land Authority for Wales, you see that, at £6,500, the part-time chairman gets more than a Member of the House of Commons. I am sure that many Members of the House would feel, from the time they spend in their work, that they have earned considerably more than that. The Welsh National Water Development Authority part-time chairman receives £6,175. We
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come to the Welsh Development Agency where the chairman, lucky chap, part-time, gets £8,500. The deputy-chairman, part-time, gets £4,800; and seven members, part-time, get £1,000. The chief executive and member, if he is to be appointed by the Welsh Assembly, is even luckier because full-time he gets £15,750. These are very well paid appointments. So the question is not only one of whether people are suited to them, but a question of people appointing their friends. Unless the Assembly has some measure of control, it will be "jobs for the boys", something which nobody in Wales or anybody else would accept; that seems to be the position on the face of it.
It would therefore be of interest to the Committee in general to be told how these appointments are to be made, who ultimately will be responsible for them, and whether it will be the Welsh Assembly as a whole, or the committee responsible for the relevant devolved subject, or could the leader of a committee—I say "could", and I am not saying he would; I am not making any imputations about anybody—appoint a friend of his? I am voicing the concern of my noble friends in asking the Minister for a reply on this important issue.
Baroness ELLIOT of HARWOOD: As my name appears above the Amendment, I wish to make a few remarks in support of what my noble friends have said. We must remember that the bodies about which we are speaking are very powerful. Like my noble friend Lord Stanley of Alderley, I am interested in farming and I know what a difference can be made by people with outside authority who, for example, want to drive a main road over one's land. I appreciate that such developments, certainly in England and Scotland, are subject to many inquiries and one must get the local authority to support such a move; but it is something that can happen and can be most inconvenient. I mention this to show that these outside bodies which are concerned with decisions of this kind are very powerful.
It is important that the people appointed should be expert to some degree in the subjects of the committees or commissions to which they are appointed. Perhaps "overruling" is too strong a word, but I should like to see some kind of authority

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above the Assembly which could veto an appointment if it was considered not particularly suitable. Committees of this kind grow and multiply. Many years ago there was none, but now they exist and are apt to multiply, and it is therefore important that they should be carefully scrutinised. I feel there should be somebody with authority to veto an appointment if it is considered unsatisfactory. Frankly, I am not enthusiastic about increasing the number of such commissions and committees, because I am a strong believer in the democratic authority of the elected bodies, whether they be county councils or, as I said last night, Parliament.
Viscount MONTGOMERY of ALAMEIN: I too support the remarks of my noble friend Lord Stanley of Alderley and I wish to ask a specific question about the water authority. It is not clear as drafted whether the structure of the water authority will change, how many members there will be and what will be the relationship between the Secretary of State, who has previously appointed members to this authority, and the local authorities. Nor is it clear whether the Assemblymen in future will have a right to nominate people, whether those people will replace the people previously appointed by the local authorities or whether they will be in addition to them, because one could see the authority enlarging itself enormously and, as my noble friend Lady Elles pointed out, the powers of patronage are quite extensive. I also wish to defend the noble Baroness, Lady Elles, against any attack by the noble Lord, Lord Parry, who unfortunately is not in his place, because what we are trying to do here is not to beg the question but, rather, to put questions to seek clarification about what the noble Baroness, Lady Stedman, said is an extremely complicated issue. It is certainly complicated to simple folk like myself: I find myself considerably confused by it.
Viscount TRENCHARD: In supporting the Amendment, I particularly wish to support the point made by my noble friend Lady Elles in asking who will actually make these appointments. Is not the Bill as drafted equivalent to saying, for instance in the context of the United Kingdom, that Parliament will be responsible for the appointment of the chairman and members of the National
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Enterprise Board? Appointments must be of an individual nature and surely a Member of the Executive, of Government —the Secretary of State for Industry, or whoever it is in the parallel I give—must be the person who has the duty to consult all interested parties, to look at the list of possible candidates, to look at their qualifications impartially and then to decide who should be appointed. At present I do not fully understand the situation which charges an Assembly with such appointments.
Baroness STEDMAN: Under the Government's proposals in the Bill, the Assembly will make the appointments to the various nominated bodies coming under its responsibility in exactly the same statutory conditions that Government Ministers have to comply with now; that is, that where the primary legislation requires that the persons to be appointed to any particular body must have special experience, such as in land drainage or agriculture before they are appointed to the regional land drainage committees, or in industry or commerce and so on before they are appointed under Section 2 of the Welsh Development Agency Act 1975, the Assembly will have precisely the same powers and obligations as the Secretary of State has now.
The specific legislation for a particular body may also sometimes provide for a certain number of members to be appointed after consultation with organisations representative of certain special interests. For example, four members of the Land Authority for Wales are appointed after statutory consultation with
"… such organisations as appear to … the Secretary of State … to be representative of local authorities in Wales".
That obligation will now pass to the Assembly rather than the Secretary of State. There are other cases in which no such statutory obligation is imposed by the primary legislation, and the Government consider that in those cases it is entirely right, once again, that the Assembly should have the same discretion as Ministers now. The absence of any statutory requirement does not mean that there is no consultation with interested organisation. Just as Ministers today recognise the benefit of such consultation, we have no doubt, that the democratically elected Assembly with the electors watch-

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ing very carefully what they are doing and how they are doing it and representing all the people in Wales, will certainly recognise the benefits of consultation of the sort that Secretaries of State have now.
The noble Viscount, Lord Montgomery of Alamein, referred to water authorities. What shall be the composition of the water authority is laid down, and if I were still wearing the hat which I wore for 30 years before I came to this House, the member for the local authorities, I might be arguing that local authorities did not have a big enough representation on the water authorities. But, as the noble Viscount said, the local authorities nominate and have a majority of members on the regional water authorities.
The Government oppose the Amendment, first, because where it is strictly necessary for appointments to nominated bodies to have regard to certain conditions, the primary legislation itself already imposes those conditions. The second count is that whereas the primary legislation now gives discretion to Ministers in making appointments, then devolution means that we must give equal discretion and place equal trust in the democratically elected Assembly. The question was asked as to what happens when there is an appointment: does the whole Assembly argue whether it should be Mr. A or Mr. B who should be appointed? That, too, is a matter for the Assembly to decide. Whether the Assembly delegates these powers to a sub-committee, to a group of people, to people who have specific interests in the matter, and how this is done, are matters for the Assembly to decide. Our Secretary of State does not do it entirely on his own. He consults; he takes soundings; he tries out names on all kinds of people for all kinds of jobs. I am sure that this is the kind of way the Welsh Assembly will work, but the Assembly will have to decide exactly how it puts this into practice.
Baroness ELLES: Before we leave this Amendment, I wish to ask whether the noble Baroness is saying that the Welsh assembly as a whole will therefore be responsible to the Welsh people for those who are appointed. Whereas the Secretary of State is identifiable as a
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person who takes individual, ultimate responsibility both before Parliament and in Cabinet for his actions, the Welsh Assembly as a whole is a much more difficult body for anyone to attack when a question of discretion arises. Perhaps sufficient thought has not been given to the problem of the selection of people for what are, after all, very important appointments, bearing in mind the work they are expected to do, and, as I have pointed out, the salaries that they are to receive. There is not visible to the people of Wales a person who will be responsible ultimately for making this kind of decision.
It is all very well for the noble Baroness to say that it is the Welsh Assembly as a whole which will be involved, but can this really be satisfactory where it is necessary to make a choice? I am sure that in Wales there will be many people who are suitable for these appointments, and it may mean having to make a choice between individuals of equal capacity, equal understanding, and equal dedication to their country. I think that that will be a very difficult matter for an elected body to decide as a whole and be collectively responsible for to the people. I believe that we have not yet quite got the right answer. I hope that my noble friends will be considering this matter, and that perhaps at the next stage of the Bill we shall be given further elucidation. This is an administrative problem, as well as, in many cases, a problem of exerting discretion, and I believe that we have not yet received a satisfactory answer from the Minister.
Lord HYLTON: Would the noble Baroness agree that it might be better to pin responsibility for these appointments and for this patronage fairly and squarely on the chief executive of the Welsh Assembly? If that were done, then at least the public would know whom to attack if a bad appointment was made.
Baroness STEDMAN: I have no doubt that if the public were dissatisfied, the chief executive would be the first person to know about it, but I do not think that it is for us to lay down in the Bill that the chief executive shall be the responsible person. That must be a matter for the Welsh Assembly to decide.
Lord ELTON: Is this not delicate ground we tread? We must be careful

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here. The noble Baroness has made the assumption—which I think many noble Lords in favour of the Bill are bound to make—that an elected body will behave in the same way, and will respond to the same restraints, as a Secretary of State. Is it not the principle of the Bill that if one trusts the Secretary of State to do something, one therefore trusts the Assembly? We have reservations about this, which become more important as the issues in question become more important. My noble friend Lady Elles has referred to the not inconsiderable salaries which the people appointed to the boards will draw. That is a perfectly valid observation, and there would be nothing gained by covering it up.
No one has mentioned the very large sums of which these boards will dispose. The Welsh Development Agency—which, I understand from reading the Bill, may in any case be subsumed into the Assembly, though I cannot see to what purpose—disburses an amount which many small countries would regard as a satisfactory budget, or revenue. Before we debated the Amendment, it seemed to me to be innocuous. It merely sets out the advice that should be taken by the Assembly before it reaches a decision. The noble Baroness has said that the Assembly is already under constraints under the principal Acts. It is a difficulty of dealing with this kind of legislation that we are but mortals and, with the exception of the noble Lords on the Front Bench opposite, we are all engaged outside the Chamber on other pursuits.
I have a question in mind which I think would not be unfair. I do not intend to ask it now, but the noble Baroness must be made aware that we may later be under a constraint to ask it. It would be fair to ask what are the restraints in each case in relation to the seven or nine bodies to whom this provision principally applies. We are concerned to see that there is nothing which may appear to be undesirable, unsatisfactory, or hole-in-the-corner in each case. I do not propose to ask that question, but I think that the noble Baroness should know the way in which our minds are working. We have here patronage. I am not making any suggestion as to the future, but I would regard an offer of the kind of job which been referred to as something at least worth considering, because it would
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involve a considerable income. This amounts to patronage, and it is a matter on which we must be careful.
Those are the reflections that I have in mind, but I think we should all wait in order to read what the noble Baroness states in her supplementary written reply on this point, and I hope that she will be kind enough to provide my noble friend Lady Elles and myself with copies of the correspondence.
Lord SKELMERSDALE: My noble friend Lord Hylton made an admirable suggestion that there should be one person responsible for the appointments. In answer to this suggestion, the noble Baroness said that if an unpopular appointment was made, the chief executive would be the first person to know about the general dissatisfaction. In the present situation, in which the Secretary of State is primarily responsible, he is answerable to Parliament. This means that if pressure is brought to bear upon him, or his life is made unlivable, for one reason or another, he can either resign or he can be sacked by Parliament—to put it very bluntly. However, in the case of the Assembly, the situation is completely and utterly different because, as has previously been pointed out, there is nothing that the Assembly can do about an unpopular decision. The Assembly is not even allowed to dissolve itself. Therefore, the unpopular decision may have to be maintained for as long as four years, until a new Assembly can come into being. Has the noble Baroness any advice to offer on that situation?
Lord GLENAMARA: Is this not a great deal of fuss about nothing? Would this not work in exactly the same way as what happens when a large local authority appoints a chief officer, or when it nominates someone to serve on one of the very bodies we are talking about here? Local authorities are doing this all the time. The usual mechanism is for a sub-committee to make a selection, and for the full council to confirm it, and I imagine that the Welsh Assembly would work out that kind of mechanism for itself. This kind of thing is perfectly well understood, and works perfectly well.
Viscount MONTGOMERY of ALAMEIN: I want to take up with the noble Baroness a point relating to the water

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authority, as this is still not quite clear. She said that at present the local authority has the majority, but it is not quite clear what the position will be in the future. I am not quite clear whether those appointees nominated by the Secretary of State will be replaced by those of the Assembly, and where that would leave the authorities. Will the local authorities then have an increased number of places, which would still give them a majority, or will the Assembly become a kind of superior local authority, rather in the way that the noble Lord who has just spoken mentioned, with the result that the Secretary of State's appointees would disappear within the Assembly? It is not really clear how this will work in the future, though it is quite clear how it operates now.
Baroness STEDMAN: We shall be dealing later with a series of Amendments concerning water, and no doubt we shall then get into much deeper detail than we are in at present. However, my understanding would be that those appointments which are now made by the Secretary of State would be made by the Welsh Assembly, and the local authorities would still continue to make their share of the appointments from their nominations.
Viscount TRENCHARD: I should like to ask whether the parallel given by the noble Lord, Lord Glenamara, is a correct one in relation to the appointments by local authorities. Does not what the noble Lord mentioned really involve the appointment of servants of the local authority, such as the chief engineer or a works engineer? Is that really a parallel with the appointment to boards—such as the Welsh Development Agency—which are the subject of Acts of Parliament, which have very considerable functions, and which involve the appointment of members who are not professional executive civil servants, but are members of boards, with their functions very wide-ranging and very powerful?
Baroness STEDMAN: The posts to which local authorities appoint the officers referred to by the noble Lord are, of course, permanent appointments to the authorities, and, for the most part, carry very much higher salaries than those quoted by the noble Baroness for the people doing the supposedly part-time
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jobs on the boards. As I would see it, my noble friend behind me is quite right: the appointments would be made and the Assembly would confirm the appointment before it was made, and then, as is the Secretary of State now if he makes a duff appointment, they are stuck with it for a period of time.
Lord STANLEY of ALDERLEY: We seem to have discussed this fairly deeply, and rather more deeply than I thought it would go. I must say that I am still most unhappy about one point. It is this. Let me give your Lordships a perfect example. At the moment, I believe the large majority of appointments to the water authority are made by the local authorities, and the point that concerns me is whether the Welsh Assembly will be empowered to say, "From now on, we are going to take some of those appointments away and make them ourselves". I am not happy, and I am not sure that the noble Baroness is happy, about this. However, we have another Amendment, as the noble Baroness will see, at No. 43E, which in fact proposes exactly this; and if the Government can agree to that it will put my mind very much at rest. Meanwhile, although I think I should say that we have obviously not thrashed this thing to an end and there are further questions to ask, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.4 p.m.
Lord STANLEY of ALDERLEY Lord STANLEY of ALDERLEY moved Amendment No. 43C:
Page 6, line 21, at end insert—
("(4) The Assembly shall not exercise functions of appellate or quasi-judicial review of any decision made by the Assembly or any committee of the Assembly.").
The noble Lord said: This Amendment follows the same line of thought as that in the name of my noble friend Lady Elles. However, I think I will bring it forward once again as there was a lot of discussion on that Amendment, and also for another, specific reason. The thought behind this Amendment is that it could stop the careless requisition of land; and its intention, also, as my noble friend said, is to make sure that the Welsh Assembly are not put in the invidious position of acting as judge and jury.
The Welsh Assembly will have powers of compulsory purchase, as we have already said, under the powers which the Secretary of State now has and which will have been devolved. I should like, for simplicity's sake, for my own sake and also for the sake of the ordinary person, to give an example of how I think it would work. I am going to quote as one example the New Towns Act, but the Forestry Act, too, could be quoted, and also the Highways Acts 1957 and 1971. But let me take the New Towns Act as a case in point.
As I understand it—and I should like to be corrected if I am wrong, which is why I am giving the example—the Welsh Assembly would be empowered to draw up a plan for a new town. This would naturally involve the taking of agricultural land. Under the Act the Welsh Assembly would have to order a public inquiry, and this would presumably be conducted by an officer of the Assembly. I should like the Government's view as to whether that is correct, and whether the person conducting the inquiry will be a paid official and not a Member of the Assembly. That is not made quite clear.
The inquiry having been completed, the report will, as I understand it, be sent to the Welsh Assembly; but, as I read the Bill, it need not be accepted by the Assembly. Indeed, the report could be accepted or refused by a committee that was formed from the Assembly to look after the particular matter, or, as I understand it, it could be accepted or refused by just one person, the chairman of that committee. If it is then decided to go ahead with the new town, a final blow to me—the farmer whose land has been compulsorily purchased—is the fact that it is possible for the chairman of the committee which voted for it originally and then judged on it and said it should take effect to make himself chairman of the board of the new town—a somewhat unhappy relationship, I feel, between the farmer and the person in question. I know I am stretching the imagination a bit, but I understand that that is what could happen.
I shall not go on any longer because we have already had a good discussion on this, but I hope I have explained my fears —and, so far, the noble Baroness has not entirely quelled them. They are, first of
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all, that land could be compulsorily purchased by the Welsh Assembly, and that land is precious; and, secondly, that though the compulsory purchase order would be instigated by the Welsh Assembly yet at the end of the day it would be the Welsh Assembly or, indeed, one single chairman of the committee which had instigated the compulsory purchase proceedings who would sit in final judgment. For simplicity's sake, and for the sake of justice by way of providing effective safeguards against compulsory purchase, I think that this is a dangerous thing.
The noble Lord, Lord Parry, has made some very telling points, and I understand what he is saying, but I do not really take his point about this. The Assembly, so far as I as an individual am concerned, is the same as a Government Minister or a local authority; and as a farmer whose land is being purchased, or as an individual, I want to see that justice is being done. I fear that, as it looks to me at the moment, the chairman to whom I have referred is not the same person as the Secretary of State. He is very much closer to me. He may, alas!, be from South Wales, which does not always get on well with North Wales, or vice versa. Hence, there will be a much more individual feeling involved. I want this person, as I am sure the noble Baroness does, to convince me—the awkward farmer whose land is being taken—that this is being justly done. At the moment I am not at all happy. I beg to move.
Baroness STEDMAN: In many of the subject areas which are covered by the enactments which we have listed in Schedule 2 the Ministers are currently responsible for deciding appeals or considering objections from persons affected by the decisions or the proposals of local authorities or nominated bodies. The Assembly will take over this responsibility from the Minister by virtue of Clause 9. In relatively fewer cases, where the legislation so provides, the Minister is responsible both for initiating a proposal and for determining any objection or appeal to which that proposal may give rise. This is the case with things like draft orders establishing the line of new motorways and compulsory purchase orders for the land which will be required, and appeals against the refusal of planning

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permission where local planning authorities have acted on the direction of the Secretary of State, acting in his capacity as highway authority, to acquire land for a trunk road. We admit freely that there has been a certain amount of public disquiet (although this has been in England rather than in either Wales or Scotland) at this situation, principally in relation to motorway proposals. As noble Lords will know, we have had demonstrations at recent public inquiries, and we are hoping to reform some of those as a result of the Leach Report.
The basic approach to the Wales Bill which the Government have adopted is to set up an elected all-Wales Assembly with full executive powers in the devolved fields. To achieve this, the Bill gives the Assembly exactly the same powers and duties in these fields as Ministers now exercise. In other words, with very few exceptions the Bill does not change the existing powers on highways or on town and country planning law; it only transfers those existing powers by substituting references to the Welsh Assembly for the present references to Ministers. The Amendment which the noble Lord has moved departs from that approach, because it has implications of principle for the law in England as well as Wales, which I shall come to shortly.
First, it may be helpful if I give some examples of the sort of case which I think the noble Lord has in mind. For example, the Assembly may have proposed a line for a new motorway, taking up some farm land in order to do it, and they may have to consider objections to the proposals; and certain kinds of planning appeals. In the Government's view, it is essential, if the Assembly is to act as a responsible body and be responsible to the political wishes of all those people living in Wales and if it is to take its proper place in the constitutional structure of the United Kingdom, that it should be accorded the full executive power and status of Government and the wholehearted trust of Parliament in the things which have been devolved to it. As I have said, the Bill proposes to give to the Assembly in the devolved fields precisely those appellate duties which are now exercised by Ministers, in most cases the Secretary of State.
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The noble Lord has implied that this means that the Assembly is judge and jury in its own case; but the Assembly will do precisely no more and no less than what the present law imposes on our Ministers. The noble Lord may say that it is wrong and the noble Lord, Lord Skelmersdale, is shaking his head; but what Parliament has required and approved is what happens now and what we propose to transfer to the Welsh Assembly; and if the law were to be changed—and I am sure that the House would not expect me to be able to speculate on that—then at this stage it would be right surely to make the same sort of change for England and Wales together. In the meantime, it cannot be right to give the Assembly the policy responsibility for highways and other matters involving public inquiries and planning, on the one hand and take it away with the other by removing the right to make the ultimate decisions on its own policy. I think that we might perhaps be tempted to try to use the Wales Bill as a vehicle for making changes in the law which we do not like as it stands at the moment. I believe that it would be wrong to try to do that in this Bill.
Lord SKELMERSDALE: The noble Baroness has said that the situation as it pertains at the moment will be the same under the Welsh Assembly; but, as I said on the last Amendment, I contest that to the hilt. The Secretary of State is answerable on any one day of any year to Parliament. The Welsh Assembly is answerable to no one but itself for a period that may be as long as four years, although I agree that it probably will be an average of only two years. That is the fundamental difference. I think that this is a danger around which it should be possible to devise a way.
Lord HYLTON: When I heard the noble Baroness replying on Amendment No. 42A, it seemed to me that my noble friend's Amendment No. 43C was extremely necessary—and necessary because of this question of natural justice. Now, in replying to Amendment 43C, the noble Baroness has acknowledged that throughout the United Kingdom there is very considerable disquiet on this matter of motorways since the Minister appears to be not only the proposer but also, ultimately, the judge. Surely, when we

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are attempting a great measure of reform for Wales, as is the case with this Bill, it should be possible to hand over something better than the present unsatisfactory state of affairs!
In this context, I should like to ask whether any advice has been sought from the Council on Tribunals, a body particularly concerned with natural justice in administrative law. If it has not been sought, could it be sought even at this late stage? Unless the noble Baroness is able to be rather more forthcoming than so far she has been, I hope that my noble friend will press this Amendment.
The Marquess of TWEEDDALE: May I say to the noble Baroness that when she accuses us of using this Bill to try to alter things that should not be altered, I hope that she will hear that in mind when we come to page 29, Part V, Clause 71 of the Bill.
Baroness STEDMAN: I was not accusing anybody of trying to do that. I said that there was a possibility that we might get into the danger of trying to change the law in the whole land and of using this Bill to do so.
Lord STANLEY of ALDERLEY: We have had a greater discussion than I expected. I thought it had ended probably with the Amendment of my noble friend Lady Ellis. I must say that I am still unhappy. The noble Baroness gave me the encouragement that, like me, she is not entirely thrilled with the present procedure in England over motorways. I speak with another hat, having a motorway proposed over my Oxfordshire farm at the moment. I should like to ask her whether, if in future some different procedure is decided upon in England over, say, motorways or whatever, that will naturally become a part of the Welsh Assembly's procedure or not?
Baroness STEDMAN: If it is primarily legislation which is amended, the necessary arrangements will be made to devolve the amended primary legislation to the Welsh Assembly.
Lord STANLEY of ALDERLEY: I thank the noble Baroness. At the moment I think that the question is a deeper one than I thought it would be. I should not
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like to press this Amendment. I can see the problems which would be involved if Wales had one system and England another. I think that we shall come back to the point. I see that it arises all the time, like the nominated bodies. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.15 p.m.
Baroness ELLES had given Notice of her intention to move Amendment No. 43D:
Page 6, line 21, at end insert—
("( ) In this section "statutory inquiry" means an inquiry or hearing held or to be held in pursuance of a duty imposed by any enactment or any statutory provision having effect under any enactment.").
The noble Baroness said: I had touched on this Amendment when were dealing with Amendment No. 42A. It was in order to define the statutory inquiry that I had put down Amendment 42A. I am happy to say that the noble Baroness answered one of the queries that I had with regard to statutory inquiries, in relation to the procedure. She said that Section 11 of the Tribunals and Inquiries Act 1971 would apply to the statutory inquiries whoever set them up, the Minister or the Welsh Assembly. That was already some assurance. There is another point on which she is going to write to me. I shall wait until I get further correspondence from her on this and, therefore, I do not propose to move this Amendment.
Lord STANLEY of ALDERLEY Lord STANLEY of ALDERLEY moved Amendment No. 43E:
Page 6, line 21, at end insert—
("( ) The Assembly shall not exercise any power of appointment of members of a body unless that power had been conferred on a Minister of the Crown before the enactment of this Act.").
The noble Lord said: I understand that the noble Baroness is going to accept this Amendment because she said previously that the number of nominations by the Welsh Assembly were the same as those by the Secretary of State. I should merely like confirmation of that. I beg to move.
Baroness STEDMAN: The noble Lord is under a misapprehension. I was not proposing to accept the Amendment.

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We can see no reason to limit the Assembly powers in the way that this Amendment proposes. One of the basic purposes of the Bill is to increase democratic control over public bodies. One aspect of that control is appointments. In this sense, the appointments now made by the Secretary of State will be made by the Welsh Assembly or by whoever they decide to devolve to—a Committee or someone—to make those appointments on their behalf. It would be wrong to enshrine in this Bill the present position in every respect, whether or not the governing enactment relating to the body in question permits it to be changed or not. Where the statute gives room for change, that should not be taken away. But where it is defined in primary legislation, the same powers will rest with the Assembly as now rest with the Secretary of State. There is no reason to suppose that appointments made by the Assembly will be any less attuned to the needs of the body concerned than those made by a Secretary of State at present. Given the Committee structure of decision-making in the Assembly, there will be ample opportunity for expertise of all kinds both inside and outside the Assembly to show itself.
If the Assembly can be trusted to make the appointments which are made by Ministers now, it seems perverse that they should not be trusted with any others which the statute concerned enables them to create or to take over. The Assembly will be a directly-elected body and, in the Government's view, we shall not be helping the people of Wales (indeed, we might be insulting them) if we suggest they are not capable of making their own nominations where they have that power.
Viscount MONTGOMERY of ALAMEIN: If it may, I should like to press the noble Baroness a little further on the matter of nominations. Going back to the previous point, if, as I understood from a previous Amendment, all the powers of the Secretary of State are to be devolved to the Assembly, this means that the Assembly will have enormous powers of nomination and could ultimately take control of certain statutory bodies within the Principality. If they do that, the way that those statutory authorities developed could take a direction completely tangential to that in other parts
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of the United Kingdom. This would be detrimental where the type of authority—it may be water, land drainage or highways —is of national significance. Surely, one must get a state of confusion arising thereby because the Assembly must rapidly get into conflict with what were the powers delegated to, or in the hands of, the Secretary of State. I can see confusion developing at a much earlier stage than one might have expected.
Lord ELTON: While I can see great merit in this Amendment, I understand some, though not all, of the fears of the noble Baroness. They might be allayed if there was a slightly more precise description in the body referred to in the Amendment. We have not decided whether it is a statutory or nominated body; it is simply a body. If that were taken literally, it would be a considerable curb on the rights of the Assembly. The principle that is intended to be enshrined in the Amendment may not be as offensive as the noble Baroness supposed it to be if the Amendment is redrawn more particularly. I should not like to commit myself on this issue, but I think it wise to take the opportunity to work this through before taking it too far.
Baroness ELLIOT of HARWOOD: If the Assembly is taking over all the appointments made previously by the Secretary of State and has no limit on the number of appointments it may make or committees it may form, surely we are opening ourselves up to a proliferation of bodies about whose functions we will not know. We know about some of them, and I should like to see some limitation placed on the Assembly's powers to create these types of organisation, as I am not greatly enthusiastic about this aspect.
If the whole authority is moving from the Secretary of State for Wales to the Assembly, what happens if the Assembly makes appointments which do not fit in at all with the United Kingdom and with English/Welsh unity on the Border? There is a lot of overlap between functions which are Welsh on one side and English on the other. One does not want a policy which divides the carrying out of functions between England and Wales when the same subject is under discussion, whether it is water, forestry or whatever it is.
One wants these bodies well cognisant of what is happening in England, as well

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as of what is happening over a frontier which is not very well defined. We know it is not a frontier in the sense of frontiers in Europe or elsewhere. We are leaving the Assembly without any check, and without any power of removing an unsatisfactory person, for instance, who becomes the head of one of these bodies. I should have thought that the Secretary of State as well as the Assembly should have some authority in these matters.
Baroness STEDMAN: In the statutory bodies to which we referred earlier, the interest to which the Secretary of State at this time must have regard when making appointments is laid down. Those same restrictions will pass over when the power to make policies moves to the Welsh Assembly. So far as water is concerned, they will need to have regard to people with special interests, such as agriculture, land drainage and so on, and the Welsh Development Agency will need to have regard to people who have particular business interests and special qualities to offer. Those same restrictions will be on the Welsh Assembly. The noble Lord, Lord Elton, has a point that the Amendment is too widely drawn at the moment, and perhaps the noble Lord, Lord Stanley, might care to reconsider the Amendment. I cannot guarantee that in future I shall be able to give him a different answer. I may be able to expand my remarks and to allay his fears. At the moment "a body" is a little vague and we ought to say whether or not we are talking about statutory bodies.
Lord STANLEY of ALDERLEY: I should like to thank the noble Baroness, first for her usual charm in answering; and, secondly, much to my surprise, she has not confused me. She has worried me considerably more than when I came into the Committee today. Obviously, I must look again at the original statutes to see exactly what they say. I usually get these secondhand; I am sure no other Members of the Committee do so. I am not happy, and when I look at the statutes and talk to people on these boards about how they work I do not think that they will be entirely happy. I will leave the matter because it is too big a subject for me. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.26 p.m.
On Question, Whether Clause 9 shall stand part of the Bill?
Lord CULLEN of ASHBOURNE: Before we leave Clause 9, I should like to ask the Government how their thinking has developed on the subject of tax raising powers. In the White Paper, Our Changing Democracy, the Government seemed not to be averse to the Scottish Assembly having power to levy limited additional taxation. During the Report stage in your Lordships' House on the Scotland Bill, on Monday of this week, an interesting debate occurred on this subject from which it was evident that the Government have not changed their mind. But so far they have not been able to come up with any practical ideas.
I appreciate that the position in Wales is different from that in Scotland, since the Welsh Assembly will not have legislative powers. I take it therefore that there will be no question of the Welsh Assembly being given such powers. I shall be grateful if the noble Baroness will confirm this. If this is the case, I am concerned as to what will happen when, in due course, the Scottish Assembly comes forward with suggestions, as I have no doubt it will. Is not this going to cause friction between the Welsh and Scottish Assemblies?
Baroness STEDMAN: My understanding is that the position is as set out in the White Paper. We are hoping for consultations and suggestions from noble Lords opposite and from any other bodies which are interested. I will check back on exactly what is said in the White Paper and how it reflects on this issue. I will communicate with the noble Lord before the next stage.
Lord LLOYD of KILGERRAN: I have listened carefully and in silence to this long debate on the Amendments to this key clause, Clause 9. I have admired the able, conciliatory and helpful approach which the noble Baroness, Lady Stedman, has made on behalf of the Government. I am moved to say a few words at this stage because of my delight, in the light of my understanding of the history of the Welsh people, to hear from the Conservative Benches such eloquent statements as follows: we heard from the noble Baroness,

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Lady Elles (or was it indeed the noble Lord, Lord Elton?) of the desirability of safeguarding the rights of individual people of Wales. Again, they emphasised the desirability of doing natural justice to Welsh men and women. Then there was the fine phrase that the Welsh citizens must be protected from Executive and Government machinery.
Lord ELTON: If I may interrupt, what else is the function of Parliament except to do that?
Lord LLOYD of KILGERRAN: I am delighted that the noble Lord, Lord Elton, has emphasised that at last the Conservative Party is intending at last to emphasise those basic matters in the history of Wales. I have been very surprised that, in view of these general statements, there have been no Amendments by the Conservative Party to put the Welsh people, as members of the United Kingdom, in a similar position in which members of the United Kingdom in Scotland now find themselves under the Scotland Bill; that is, by putting forward Amendments to increase the legislative powers to Welsh people under this Wales Bill such as are to be found in the Scotland Bill. We on these Benches have from time to time expressed the view that more legislative powers should have been devolved in the Wales Bill. We believe there should be greater parity as between devolution to Wales and Scotland, but we have decided to go along with this Bill and we believe that the principal functions of the Welsh Assembly should be exercised as set out in Clause 9.
In my view, the speakers from the Conservative Benches have emphasised the difficulties which are likely to arise out of the powers given in Clause 9 to the Welsh Assembly. Of course there will be difficulties. Where a United Kingdom Constitution devolves powers to Wales, there are bound to be difficulties. The kind of difficulties that will arise in regard to the powers of the Welsh Assembly and the rest of the United Kingdom will be the those that sometimes exist now between city councils and the Central Government. When there is, for example, a Conservative Greater London Council and a Labour Government there are problems; and vice versa. In my view,
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the difficulties arising under Clause 9 have been vastly exaggerated this afternoon.
Clause 9 agreed to.
Schedule 2 [Existing statutory functions]:
5.32 p.m.
Lord SWANSEA Lord SWANSEA moved Amendment No. 43F:
Page 36, line 32, column 2, insert—
("The functions under section 2(3).").
The noble Lord said: This Amendment deals with the reference in Schedule 2 to the Public Bodies (Admission to Meetings) Act 1960. Under Section 2(3) of that Act, any body may be added to the Schedule to the Act and any body so added may be removed from the Schedule by order of the appropriate Minister, made by Statutory Instrument, which is subject to the Affirmative Resolution Procedure in Parliament.
This Act, with other Acts to which reference is made in the Bill now before us, was framed before any national Assembly, either Scottish or Welsh, was ever thought of; and the Act makes no provision for national Assemblies. It refers to local authorities, and the highest tier of local authorities then was that of county council. Therefore, one question I should like to put to the noble Baroness opposite is whether these Acts which refer to local authorities can be taken as referring to an authority superior to a county council or whether some amendments will have to be made to other legislation to make them apply to a national Assembly. In any case, the powers to add to, or subtract from, the bodies to which this Act applies should remain in the hands of Ministers in Central Government and not be devolved to the Assembly, because Clause 9 refers in general terms to the exercise by the Assembly of certain functions of the Minister of the Crown.
However, not only the Secretary of State for Wales might be involved. It seems to me that too much power is being given here to the Assembly to take over functions normally exercised by Ministers of the Central Government. I think a safeguard must be kept against the Assembly or its committees going into closed session and excluding the

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Press and the public. That safeguard should continue to be exercised from the central Government. I beg to move.
Baroness STEDMAN: The Public Bodies (Admission to Meetings) Act 1960 provides that the meetings of certain bodies and their committees in normal circumstances should be open to the public. The bodies concerned are listed in Schedule 1, and include local authorities, water authorities and health authorities. There are no ministerial powers in the Act to vary the procedures for open meetings or to vary the criteria under which bodies may resolve to exclude the public. In fact the only ministerial power in the Act is the one which the Amendment seeks to reserve. This is the power in Section 2(3) to add new bodies to the list in Schedule 1. There is no power to remove bodies, escept where they have themselves been added by order. There is therefore no power to disapply the Act to, for example, local authorities.
The Government believe that it is right for the power in Section 2(3) of the Act to be transferred to the Assembly. It is concerned with the general supervision of local authorities and similar bodies acting in devolved areas, and it fits in with all other general supervisory functions which are to be transferred. In practice it is a minor power because, where new public bodies are established by Statute, the Act concerned often itself applies the 1960 Act to those bodies, where appropriate, without leaving the matter to ministerial discretion. This was, for example, the case with the Local Government Act 1972.
We do not think that this Amendment is necessary. We think it is right that the Welsh Assembly themselves should be free to make their own arrangements for their proceedings, but I might remind the noble Lord that we have some Amendments coming later, including Amendment No. 69A, when we shall be discussing the proceedings of the Assembly. If he likes to think about what I have just said, we might perhaps have further discussions when we reach that Amendment.
Lord ELTON: I am sure we are all most grateful to my noble friend for putting down this probing Amendment and to the noble Baroness for saying what are in fact very important words.
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It may be a simple case, but she will be aware that many people are anxious about the shape that the Assembly is going to take and about the danger that in some way it might operate in a—I do not think "clandestine" is the proper word—way which is outside the public gaze. This, I think, is the function of a Committee stage: expeditiously to remove fears; and for my part I am very grateful to the noble Baroness for doing so.
Lord SWANSEA: I am also grateful to the noble Baroness for what she has said. I do not think, though, she has quite answered one point I made about the actual standing of the Assembly under this Act, because it cannot really be classed as a local authority; it is superior to local authorities. I think this point arises in other parts of the Bill, and wonder whether she could clear up that particular point. Can the Assembly be classed as a local authority within the meaning of this Act and the other Acts, or is some further amendment necessary to bring it within the sphere of this Act and the other Acts?
Baroness STEDMAN: My Lords, we think it is appropriate that the Wales Bill should apply the Act of 1960 to the Welsh Assembly. It is a nationally-elected body and it should be free to make its own arrangements for its proceedings. As I said, we are coming to the question of proceedings later on and can no doubt hammer this out then in greater detail. Knowing something of the Welsh county councils, from my years of service on county councils—not in Wales, I hasten to say—I know that they believe in open government; they do things in the open, and there is no reason at all to suppose that they will want to carry out all their business behind closed doors.
Lord SWANSEA: I am grateful once more to the noble Baroness; but of course I was referring to the proceedings of the Welsh Assembly and not to local authorities. However, I will take note of what she has said.
Lord ELTON: If my noble friend is tempted to withdraw this, may I just say that I should be most interested if we could have an answer to that question, which the noble Baroness may have

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thought she answered by implication, but which I do not think she did. Under various Acts of Parliament which we are now considering, is the Welsh Assembly a local authority or is it not?
Baroness STEDMAN: The Welsh Assembly is the Welsh Assembly; not a local authority.
Lord SWANSEA: The noble Baroness has at last provided the answer to my first question. In that case, I think that that gives weight to what I have been saying. The Welsh Assembly will not be a local authority, so how will it come within the ambit of the Public Bodies (Admission to Meetings) Act and other Acts relating to local authorities?
Baroness STEDMAN: We do not think that it is right to write into the Wales Bill that it should be bound by the 1960 Act. It will be a matter for the Assembly to decide. We are reasonably certain that that is the decision which it is likely to make.
Lord ELTON: So the noble Baroness is saying that it is up to the Welsh Assembly whether its debates are in public or in private. I think that that is something which we should like to think about.
Lord SWANSEA: I think that we have chased this hare for long enough. I shall study what the noble Baroness has said, and perhaps have another look at the later part of the Bill which she mentioned. Meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.41 p.m.
Lord SWANSEA Lord SWANSEA moved Amendment No. 43G:
Page 36, leave out lines 34 and 35.
The noble Lord said: This part of Schedule 2 places the whole of the Local Government (Records) Act 1962 within the competence of the Assembly, as it applies to Wales. Nevertheless, Section 5 gives the Minister of Housing and Local Government power to make alterations to local Acts, in cases where provisions in those Acts are inconsistent with a provision of this Bill; and, presumably, in
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the application of the Bill to Wales those powers will be exercised by the Secretary of State for Wales. I was not at first sure whether to put down an Amendment to exclude the functions of the Minister under Section 5 from the provisions of Schedule 2, so as to continue to reserve those powers to him. But I think, on the whole, that it is better to move to exclude the whole Act from the Schedule, in order to ensure uniformity of the application of the Act in England and Wales by Central Government. I beg to move.
Baroness STEDMAN: This is the second of a number of Amendments which we will be discussing related to the Assembly's responsibilities in the field of local government. It is concerned with the Local Government (Records) Act 1962, which is an Act dealing with the law relating to the functions of local authorities with respect to records, including provisions about their use, acquisition and deposit.
The ministerial powers in the act are very few. There is a power to specify by order of the authorities to which the acquisition and deposit provisions apply, and also a power of consent to the deposit of records with a person other than an authority specified in the order. The only other power which the Minister has is one to amend or repeal a local Act which does not conform with the provisions of the 1962 Act. This power is now more or less spent. These are powers of very limited extent, and, I suggest, are entirely appropriate for transfer to the Assembly. After devolution, the Assembly will exercise functions in respect of the very great majority of major local government responsibilities; for example, education and housing. And the Assembly will also exercise most functions which are of a more general supervisory nature; for example, in respect of local government finance and audit. Functions in respect of local government records clearly come within this second general category. Devolution of these functions is therefore consistent with this approach, and I am sure that the Assembly will be assiduous in carrying out its responsibilities. I hope that the noble Lord is satisfied with that explanation and will not press this Amendment.
Lord SWANSEA: I am grateful to the noble Baroness for those remarks, which have served to clarify the position so far as I am concerned. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord SWANSEA Lord SWANSEA moved Amendment No. 43H:
Page 37, leave out lines 6 and 7.
The noble Lord said: The Local Authorities (Goods and Services) Act 1970 gives power to a local authority and a public body to enter into an agreement for the supply by the authority to the body of goods, professional and technical services, plant and apparatus and their operators, and maintenance work by the authority on land or buildings for which the public body is responsible. Here, again, we come up against a definition of what is and what is not a "local authority". "Local authority" in the context of this Act normally means a county or borough council, or the equivalent, which regularly carries out works of various natures. The Welsh Assembly is a new animal, above local authority and county council level. Is it envisaged that the Assembly should take unto itself any powers of a works or services nature at present exercised by county councils and, if so, to what extent? I feel that powers reserved to the Secretary of State under Section 1(5) should continue to be reserved. Otherwise, I do not quite see what will be the procedure for dealing with Statutory Instruments, as provided by Section 1(5), if the administration of the whole Act is handed over to the Assembly. I beg to move.
Baroness STEDMAN: The Local Authority (Goods and Services) Act 1970 enables agreements to be made between local authorities and public bodies for the supply by the former to the latter of all forms of goods or services. The intention is that local authorities should be able to put their facilities to wider use. For example, a local authority might agree to undertake maintenance work for a housing association which does not have the resources for it to be economical to carry out the work itself.
The only relevant ministerial powers in the Act are those of designating public bodies and of imposing restrictions on the
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agreements reached. The power of designation is one which has already been widely used and a whole miscellany of bodies have been designated—ranging from new town development corporations to the Women's Royal Voluntary Service. The Government consider it right that the power should be transferred to the Assembly, which will have a number of similar supervisory responsibilities in local authority matters. Moreover, the great majority of the bodies so far designated operate in the "devolved" sphere. However, the Bill must take account of the fact that there are some bodies operating in reserved areas which the Government may wish to designate. The Government are accordingly given in Schedule 3 (lines 37–38 on page 62) a concurrent power to add bodies to the list. I suggest that this is a sensible and practical approach to the Local Authority (Goods and Services) Act, and that it provides fully for the interests both of the Government and of the Assembly.
Lord ELTON: That was very interesting. In what circumstances would the Government wish to designate a body to which a local authority might supply goods and services, when the Welsh Assembly itself did not wish to do so?
Baroness STEDMAN: That is a good question. It is difficult and is not practical to split the power to designate bodies between the Government and the Assembly, according to the nature of the bodies concerned. Many of them are not operating, or are not self-evidently operating, within either the devolved or the reserved spheres. Therefore, we want some kind of concurrent action on this. I should like to look at the point which the noble Lord has raised and write to him. I cannot give him an absolutely clear answer on this point.
Lord LLOYD of KILGERRAN: May I ask the noble Baroness whether she would send me a copy of some of the letters that she is proposing to send to the Front Bench of the Conservative Party. From time to time she has been most helpful in saying that she is going to commit herself in writing in some way or other. If she could send me copies, I should be most grateful.
Baroness STEDMAN: I shall be very happy to see that noble Lords on the Liberal Benches are kept apprised of what we are doing.
Lord SWANSEA: I am grateful to the noble Baroness for her explanation. I should like to return for a moment to Section 1(5) of the Act which provides for the Minister of Housing and Local Government and the Secretary of State acting jointly to designate public bodies for purposes of the Act made by Statutory Instrument. In the Bill before the Committee it is proposed to devolve the whole of this Act to the Welsh Assembly. Should not the powers under Section 1(5) be reserved to the Minister and the Secretary of State?
Baroness STEDMAN: Section 1(5) of the Act enables Ministers by order to prescribe bodies exercising functions of a public nature as being bodies for the purposes of the Act. There is a wide miscellany of bodies ranging from new town corporations to the Women's Royal Voluntary Service and the Red Cross, all of which can be sensibly described as being devolved or non-devolved. To avoid any unnecessary rigidity the power of description is made concurrent in Schedule 3. Normally, in practice, it will be exercised by the Assembly as most local government matters will fall within its competence, but the Secretary of State will also be able to prescribe bodies where he considers it appropriate.
Lord SWANSEA: I am grateful to the noble Baroness. I shall look carefully at what she has said and, in the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.54 p.m.
Lord SWANSEA Lord SWANSEA moved Amendment No. 43J:
Page 37, column 1, line 9, leave out ("55").
The noble Lord said: We come to the references to the Local Government Act 1972, and this Amendment refers to Section 55 of that Act which deals with the operation of the Welsh Local Government Boundary Commission. Let me say at once that it is not my intention at this stage to pre-empt any discussion on
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Clause 12 of the Bill and I shall endeavour to confine myself to one or two points. It seems curious to me that in this part of Schedule 1, the only reference is to Section 55 of the Act and not to the whole Part of the Bill dealing with the Local Government Boundary Commission for Wales—Sections 53 to 59 and Section 62. It is hard to see why Section 55 has been singled out to be devolved to the Assembly. Clause 9 of the Bill refers generally to the transfer of functions of Ministers to the Assembly, and it is not clear exactly what function of what Minister under Section 55 alone it is proposed to devolve. Perhaps the noble Baroness can clear away some of the fog which covers it. I beg to move.
Lord DAVIES of LEEK: I have followed with interest the remarks of the noble Lord. I have looked at this and marked it up. Am I right in thinking that without the consideration of the British Parliament the Assembly could once again re-draw Parliamentary boundaries for the Westminster Parliament in Wales? Is that power conferred upon them or is it not?
Baroness STEDMAN: The noble Lord opposite was not the only one mystified when he saw that it was just Section 55 which was taken out; so was I. Section 55 is the section which imposes on the Local Government Boundary Commission for Wales certain duties to keep under review the counties and districts in Wales to see whether changes in local government areas are desirable. The Assembly will have no responsibility for these matters and the listing of Section 55 in column 1 of Schedule 2 is not what it might at first seem. Schedule 2 is concerned with the transfer of Ministerial functions, and the only Ministerial function in Section 55 is in subsection (4) of the section; this imposes a duty on the Secretary of State, where he has made a designation order under the New Towns Act 1965 in respect of a new town, and the land involved is not wholly comprised in one district, to give notice of that fact to the Local Government Boundary Commission for Wales.
Part VIII of Schedule 2 to the Bill, to which we shall be coming later, proposes that the Welsh Assembly should be responsible for the exercise of functions

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under the New Towns Act and it is therefore purely consequential that it should also inherit the obligation under Section 55. Once the notification has been given, any action becomes a matter for the Boundary Commission and ultimately the Secretary of State. Again, I would stress that all other matters in respect of the Boundary Commission are reserved.
Lord SWANSEA: I am grateful to the noble Baroness for that explanation. So far as I am concerned the situation has clarified somewhat and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.57 p.m.
Lord GRIDLEY Lord GRIDLEY moved Amendment No. 43K:
Page 37, line 22, at end insert—
("The power under section 129.").
The noble Lord said: I wonder whether the noble Baroness agrees that it would be for the convenience of the Committee that we should take Amendments Nos. 43K and 43L together because they both more or less hope to achieve the same object. In referring to the Amendment which I am proposing, may I say once again that I am concerned about the powers which are to be devolved to the Welsh Assembly which were hitherto held by the Secretary of State. In my Amendment I am referring to Section 129(1) of the Local Government Act 1972 wherein it is specifically stated that payment of purchase or compensation money by one local authority to another should, as I understand that section, in any dispute or in any disagreement of that nature be settled by one person, the Secretary of State. As is proposed in the Bill, it is those powers which are to be handed over to the Welsh Assembly. As we do not quite know at present how the Welsh Assembly will be constituted, it is my view that in disputes of that nature where it was considered desirable that a decision should be left in the hands of one person as an arbiter, it is undesirable that the whole of that function should be pushed over to the Welsh Assembly. Apart from that, I hope it will not be construed that I am saying that any act performed by the Welsh Assembly might be of a dishonourable nature, but I do not think the Welsh Assembly should be
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placed in that difficult position. With that object in view, I am moving the Amendment that the present circumstances should pertain and that this power should be left with the Secretary of State and not devolved to the Welsh Assembly. I beg to move.
Lord SWANSEA: I should like briefly to support my noble friend in this Amendment, because Section 1(29) is quite specific about the powers of the Secretary of State in this connection and says in definite terms:
"A decision of the Secretary of State under this section shall be final".
It seems to me to be quite certain that those powers should be reserved to him. Therefore, I support the Amendment.
Baroness STEDMAN: Section 129 of the Local Government Act 1972 concerns certain instances of land transactions between two local authorities—for instance, where there has been a dispute. It enables the Secretary of State to determine the arrangements in respect of compensation to replace the arrangements set down in the Compulsory Purchase Act 1965 whereby the compensation is paid into court. This is because different considerations apply where both parties to a land transaction are local authorities. Public money is involved so far as both the purchaser and the seller are concerned, and no question arises of compensation to private interests.
The financial arrangements of the Welsh local authorities are primarily a devolved matter, since not only will specific grants and authority for borrowing for the expenditure relating to the devolved services be a matter for the Assembly but it will also have the sole responsibility for the rate support grant in Wales and will take over those ministerial powers which relate to the general supervision of financial matters, including accounts and audit.
In the Government's view, the powers under Section 129 of the Local Government Act should, for consistency, also pass to the Assembly in relation to transactions between Welsh local authorities.
Lord GRIDLEY: I thank the noble Baroness for the way in which she has answered the points which I have made,

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although I do not think that she has really answered them. I find it very difficult to be satisfied that this is the best arrangement for all circumstances. I have some experience of what is involved in land transactions, since I worked in an estate agent's office before I came to your Lordships' House. However, I am prepared to look carefully at what the noble Baroness has said. Therefore, at this stage I am prepared to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 43L not moved.]
6.3 p.m.
Lord GRIDLEY Lord GRIDLEY moved Amendment No. 43M:
Page 37, column 2, line 24, leave out ("and 201") and insert ("201 and 208.").
The noble Lord said: I beg to move the Amendment which stands in my name. I have given notice to the noble Baroness that there is a mistake in the Amendment, as printed on the Marshalled List. It should read ("201 and 207") instead of ("201 and 208"). I apologise for giving such late notice to the noble Baroness. However, the mistake was drawn to my attention by telephone only 30 minutes before I was due to speak on the Amendment. Therefore I was unable to let the noble Baroness know about the mistake any earlier.
Turning to the proposals contained in Schedule 2 to the Bill, I wonder whether the Government have studied in detail the provisions of the Public Libraries and Museums Act 1964. It appears to me that the powers exercised by the Secretary of State are very limited and that in the past responsibility for the working of the Public Libraries and Museums Act has been left to a very great extent in the efficient hands of the local authorities. May I suggest to the Government that this responsibility should be left in their hands. What is the point of the Assembly taking over that responsibility?
The Bill proposes that the local authorities should lose to the Welsh Assembly the powers which hitherto they have exercised to look after public libraries and museums—powers which, to a very great extent, are of an administrative, not of a legal nature. Nothing is more
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likely to cause friction between the Welsh Assembly and the local authorities than if they are to lose responsibilities in which they have taken pride—and with good reason.
Secondly, I can see no sense in handing over duties—which, as I have explained, are of an administrative nature—under the Public Libraries and Museums Act 1964 to an Assembly which, presumably, should concern itself with debates on policy matters and should in no circumstances become involved in administrative detail. In addition, so far as it is within our competence, we have a responsibility during the Committee stage of the Bill to ensure that what is proposed can be interpreted correctly by those who will have to carry out the provisions contained in it. Therefore, may I suggest to the Committee that the powers contained in Section 207 of the Local Government Act 1972 should be excluded from the Welsh Assembly and should remain, as at present, with the Secretary of State. I beg to move.
Lord LLOYD of KILGERRAN: In view of the correction which the noble Lord, Lord Gridley, has made, I wonder whether I may ask him a question about Section 207. I have been approaching the matter on the basis of the Marshalled List, which refers to Section 208. The noble Lord, Lord Gridley, has great experience of these matters and is most anxious that the scope for friction between the Welsh Assembly and the United Kingdom Government should, so far as possible, be diminished. However, I do not have before me a copy of Section 207 of the Local Government Act 1972. From what the noble Lord, Lord Gridley, has said, I am afraid that I do not appreciate what is the scope of Section 207.
Lord GRIDLEY: I believe that it is appropriate for me to reply to the noble Lord. I was telephoned by the County Councils Association, in whose name I am putting forward this Amendment. They pointed out that Section 208, which they had originally quoted, was wrong. I may say that when I considered speaking to Section 208 I found myself in some difficulty over making any sensible speech upon it. I expect that the noble Lord has studied the Public Museums and Libraries Act 1964, and I am sure that he appreciates

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that this is very largely an administrative Act in which the Secretary of State reserves to himself the power to superintend the library services of this country. In those circumstances, those powers are all given to the local authorities. It seems to me to be an insult to the local authorities in Wales to take away from them and transfer to the Assembly those powers which they have managed so efficiently for so long. I am afraid that I am repeating myself, but that is the reason why I moved the Amendment.
Lord ELTON: I wonder whether I may put another thought into the head of the noble Baroness. I think I am right in saying that there may be some anxiety about the power to designate a library authority. If my recollection is correct, in this section of the Act the Minister has power to designate a library authority. Obviously that is a power which local authorities regard as somewhat important, though not so important as being designated as education authorities. However, I believe that it is a matter which causes concern.
Baroness STEDMAN: As we keep saying, the Government's policy is to devolve those ministerial powers and functions in relation to all kinds of things which are purely Welsh to the Welsh people. This includes their museums and art galleries, which we are devolving to the Assembly.
Libraries and museums provide a very important local service, and we feel that an elected Assembly will be best placed to meet the needs of the people in Wales in these matters. Moreover, they are integral to the devolved functions of education, the arts, crafts and all other cultural and recreative activities. The Public Museums and Libraries Act 1964 is listed as being wholly devolved in Part III of Schedule 2, and Clause 10 also confers a general power on the Assembly to support museums and libraries. By the means of this clause, the Assembly will be able to provide support, largely financial, to the National Museum of Wales, which is a Royal Charter body, to the Council of Museums in Wales, which is a non-statutory body, and to any other museums or libraries which it may, in the Assembly's view, be right to support.
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I think that the noble Lord is unduly worried about this. The local authorities will still continue to run the libraries, museums and galleries as they have done up to now, and I am advised that there are no ministerial functions at all in Section 207 of the Local Government Act 1972. With regard to the comment made by the noble Lord, Lord Elton, I have hastily scanned the photostat copy that I have and I cannot find any reference to the power stating what shall be the library authority areas. I will certainly look into that before the next stage of the Bill.
Lord ELTON: I am grateful to the noble Baroness for that. She has raised another matter entirely which I think is of concern; that is, the funding of the grants in aid to be given to the National Museum of Wales. I am very interested to know whether the purchase grants which hitherto have come from central Government will now come from the Welsh Assembly and, if so, whether the national museum has been consulted about the effect this is likely to have upon its grants in aid for purchase. As I understand the position hitherto, the bids for grant have been passed to a national body and the recommendations of that body have been put, with the bids of the three parts of the United Kingdom, before the Secretary of State in question, and he has decided the allocation between those, in rivalry only with each other. The allocation has then been made in the light of that advice.
I hope I have got that right, but the noble Baroness will know if I have got it wrong. If indeed that was the procedure and they were hitherto in rivalry between each other as to the purchase of a Rembrandt or some other artefact, how are they reacting to the proposition that they should now be in rivalry with statutory bodies and municipalities for the building of roads, as it were, and for other purposes quite different from those of museums?
I suspect that the same question will raise itself in connection with funding the purchase grant of the National Library of Wales. I suspect that it is really a matter of considerable importance and interest to the people involved in these culturally vital activities in Wales that their

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bids for funds should be thrown into a completely new and unfamiliar perspective. I should very much like to know whether they have been consulted and, if so, whether the comments they have made have been taken into account in drafting this Schedule.
Baroness STEDMAN: I regret to tell the noble Lord that owing to the speed with which all the Amendments came in I have not got as far as considering what happens with special purchase grants and how they would affect this matter. With the leave of the Committee, and if the noble Lord will agree, I will look into it and will write to him. It is an important point, and I should like to be quite correct on it and not hazard guesses at this stage.
The Marquess of LINLITHGOW: I should like to ask the noble Baroness a question on that because I am getting somewhat fogged. Is this an exactly parallel case to the point that arose on the galleries, museums and special purchasing grants on the Scotland Bill?
Baroness STEDMAN: I am not quite sure because I myself, have not got as far as that in this Bill.
Lord ELTON: I think I should say that obviously we are apologetic for the lateness of tabling Amendments. On the other hand, I think the noble Baroness will realise that the labour of going through enactments with a toothcomb is considerable; and do not have a lot of time to do it, and we have forwarded photostat copies whenever possible. I realise that the noble Baroness is not being unduly critical of us, but I thought I should explain that we have done our best.
Baroness STEDMAN: I was not being critical. I appreciate the difficulties that the Opposition are in.
Lord PARRY: This question is obviously perfectly proper and has been exercising the minds of people on various bodies in Wales. It seems reasonable to suppose—and I have no status for saying this, other than the fact that we have been discussing it at various levels—that the Secretary of State, having requested the right to devolve functions and having been given that right (assuming that the
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Act is passed), would then expect the Assembly itself to determine the disposition of the funds available to it from the Consolidated Fund and otherwise.
There is already a very great precedent of experience existing at local authority level and at nominated body level, where there is in any case competition. I take the point raised by the noble Lord, Lord Elton, that the whole thing is being thrown into a new situation. That is inevitable. It is understood that it is so, and bodies like the Welsh Arts Council will find themselves working with a new localised situation as opposed to accepting a portion of the grant and a portion of the services made available to them at present under the British Arts Council. So while the question is proper, with the greatest respect I do not think there will ever be a stage at which the Minister on the Front Bench can answer in detail, other than to say that it would seem that the Secretary of State would expect the Assembly to make its own decisions about brains or drains or whatever.
Lord ELTON: I like the alliteration, but I am not sure that it is appropriate. I do not think we can leave it entirely there, because we none of us actually know what we are talking about, I understand. I bear as much responsibility for that as anybody else, although it is a position with which I may be more familiar than the noble Baroness. However, the issue is an important one and the noble Lord, Lord Parry, has suggested a resolution of it which may be simplistic. I have asked three questions: first, what is the present system? Secondly, how does the proposed system differ from it and, thirdly, to what extent have the bodies involved been consulted and their views taken into account.
The noble Lord, Lord Parry, has raised another point which is the Welsh Arts Council, with which I believe he has a connection. Presumably, that also would have a view. If the noble Baroness could circulate her reply fairly generally, I think it would be a good thing, because I know that there is disquiet in areas which are not perhaps capable of being all that vocal, and we should not be doing our job properly if we were not able to look into this for them and reserve the right to something. It may not be

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necessary, but on the other hand it may be necessary to bring something forward at the next stage of the Bill.
Lord LLOYD of KILGERRAN: I agree with the noble Lord, Lord Elton, that these are important and new matters, and I should like to ask to be put on the list of those to whom the noble Baroness will write.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Alport): Does the noble Lord wish to withdraw the Amendment?
Lord GRIDLEY: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.18 p.m.
Lord SWANSEA Lord SWANSEA moved Amendment No. 43N:
Page 37, leave out line 29.
The noble Lord said: When I was going through these various references to the Local Government Act, I came up against this one which is a reference to section 244 of the Act. Whatever confusion I may have been in up to that point was as nothing to the fog which enveloped me after I had studied this clause. I cannot really see what it means at all, so if the noble Baroness can do some little thing to clear the fog which has surrounded it and me, I shall be very grateful to her. I beg to move.
Lord GRIDLEY: I should like to support my noble friend in what he has said: I was equally fogged and could not understand a word of it.
Baroness STEDMAN: I shall do my best to spread a little light. Section 244 of the Local Government Act 1972 has the effect of amending certain local or private Acts which were passed prior to 4th August, 1906. It provides that where, as regards local authorities, powers are conferred by such Acts upon the Treasury with respect to dealings with property, loans and connected matters, those powers should now be exercised by the Secretary of State. This simply reflects modern practice. The section also provides that, if any question arises as to whether any particular power is transferred to the
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Secretary of State by this provision, the determination of the Treasury shall be final.
The Wales Bill does not itself transfer to the Assembly any ministerial power to be found in local Acts. If the Bill attempted this task I suggest that Schedule 2 would get quite out of hand as there are such a miscellany of local enactments, most of which do not contain ministerial powers of great significance. Instead, the task will be undertaken by the Secretary of State by order under Clause 13 of the Bill. The Government's intention is that the order should transfer to the Assembly those powers under local Acts which are analagous to the powers under public Acts transferred by Schedule 2 to the Bill.
As the Government will have to determine what ministerial powers should be transferred to the Assembly, it follows that the powers in Section 244 of the Local Government Act 1972 should be reserved. If they were, as the Amendment proposes, not excluded in column 2, I am advised that the legal effect would not be wholly clear. But it is possible that many powers in pre-1906 local Acts would be transferred to the Assembly regardless of their subject matter and without the Secretary of State being able to consider under Clause 13 whether they were suitable for devolution. This would not only be undesirable in itself but would place pre-1906 local Acts in a different position to later Acts. It seems right that if any question arises as to whether a Treasury power has been transferred as a result of Section 244, the Treasury should continue to determine the issue, and not the Assembly. I hope that makes it a little clearer.
Lord SWANSEA: The noble Baroness's skill at shedding light is unexcelled. I am very grateful to her for that explanation. I should perhaps in kindness to her have said at the outset that this was only a probing Amendment anyway, and I would have saved her some of that lengthy explanation. I am very grateful to her, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.22 p.m.
Lord WIGG Lord WIGG moved Amendment No. 44:
Page 39, leave out lines 16 to 18.
The noble Lord said: I beg to move Amendment No. 44 standing in my name, and, with the permission of the Committee and for your Lordships' convenience, I would wish in one speech to address my remarks to Amendments Nos. 44, 45 and 46, because they all operate, as it were, under the same umbrella.
As with the Scotland Bill, the story starts with the publication by the Government of Cmnd. 6348, Our Changing Democracy. Immediately following publication of that paper, the Home Office, in a circular dated 27th November 1975, wrote to a number of bodies and issued an invitation for their views. They wrote to the Gaming Board for Great Britain, the Horserace Betting Levy Board, the Horserace Totalisator Board, the Bookmakers' Committee and the Jockey Club. The first four are all statutory bodies; their membership is appointed by the Secretary of State for the Home Department. They all discharge responsibilities which, in the case of the Gaming Board, the Horserace Betting Levy Board and the Horserace Totalisator Board, find expression in reports which are submitted to the Secretary of State and tabled in either House. The work of these bodies has been built up now over a period of not less than 17 or 18 years. They were brought into being by a Conservative Administration. Their work has been supervised by successive Labour Governments. Indeed it is true to say that they enjoy general confidence.
What they have to say and the views they express, I should have thought, are worthy of your Lordships' attention. Indeed, on the Scotland Bill your Lordships agreed with me, and the Amendment that I put down to retain the work of these bodies right across the board throughout the country as a whole was carried. Each one of them has been built up very slowly; the foundations have been dug and no one has attempted to put the roof on before the foundations were dug. Step by step, brick by brick, they have been built up until they are working. I would say that any fair-minded, dispassionate observer would say that they function as well as any similar organisations in any part of the world. Indeed I would say that one of the merits—it is a virtue for which both Parties can claim
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credit—is that they operate in the British way.
A fundamental decision was taken way back in the early 1960s that there would be no suppression. We would abandon suppression; we would get away from the operation of betting and gaming outside legality, which carries with it the dangers of the Mafia, the dangers of protection rackets, and all the corruption and nastiness of street corner betting and illegal gaming. It has paid a handsome dividend. Today, the Mafia does not exist in this country; protection rackets do not exist, at least on any great scale. I think betting and gaming, from the highest level, in terms of stake, down to the humble bingo —which I used to play as a soldier, but it was known as "housey-housey"—now operates cleanly and in a way which is supervised by public bodies answerable to this House.
I am anxious to establish under the Wales Bill that the concept in relation to what is being devolved here is the concept of executive competence. If your Lordships would turn to page 39 of the Bill, we see mentioned The Betting, Gaming and Lotteries Act, and the functions which are excluded are those under Sections 12, 24, 25(1), 26, 29(2)(a), 29(3) and 31. I can tell your Lordships without any great difficulty—one does not have to be a very careful researcher—what are the parts that are excluded. Section 12 deals with the establishment of the Tote Board; Section 24 deals with the establishment of the Levy Board; Section 25(1) deals with the Levy Board's powers; Section 26 deals with the establishment of the Bookmakers' Committee; Section 29(2)(a) deals with the levy appeal tribunals, appointment of chairmen; Section 29(3) deals with the procedure of the tribunals; Section 31 deals with the Levy Board and Tote Board annual reports and accounts. Those are the parts that are excluded. So all the rest remains.
May I remind your Lordships that Section 24 is excluded, and Section 24 is a very important section. It is of particular interest to the Jockey Club, one of the voluntary bodies to be written to. Section 24(1)(a) to (c) deals with the three functions upon which the levy may lawfully be spent;—that is, improvement of breeds, advancement of veterinary science or education, improvement of horse racing. So here we have the powers

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retained to the Secretary of State under Section 24. But, of course, if the rest of this Act, the consolidated measure of 1963, is devolved, then it opens into question the operation of the Jockey Club writ right across the board, because it will affect the Totalisator Board and the Levy Board. If the Amendment had not been passed on the Scotland Bill, and if this Amendment were rejected, then you could have three Levy Boards and three Totalisator Boards; the poor Jockey Club would have to operate in association with three, and it may be that they find it difficult enough having to operate with one of each of them. So I think one can start off by expressing the Jockey Club point of view.
I do not speak for the Jockey Club and they do not speak for me, but I have been approached by all the organisations who have either relied upon their published evidence or have been approached directly. All the statutory boards are aghast at the provisions of this Bill and the Scotland Bill, and they support me in the Amendments I have put down. I am going to weary your Lordships again by reading, as evidence of good faith, just one paragraph from a circular sent out by the Jockey Club. After all, I am not coming here to plead with your Lordships; it is a matter for noble Lords to make up their own minds about. May I remind your Lordships, as I did on the Scotland Bill, that you are dealing with no light measure.
It may be just the hour before dinner, but may I remind your Lordships that the turnover on betting and gaming in these islands—and I am not relying on my figures; your Lordships can go to the Printed Paper Office and get the annual report of the Board of Customs and Excise and verify it for yourselves—is not less than £3,250 million per year. One might say that it affects almost every home in the country in some form or other. These are the facts, and if it is mishandled it will be a corrupting force. It is of major public interest and it should be dealt with honestly and competently. Therefore, in this respect the views of the Jockey Club are not unimportant, and I propose to read to your Lordships a paragraph from the circular. I should like to point out to your Lordships that I did not ask for this circular, it was sent to me. It says:
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"In view of the fact that the betting market knows no frontiers, the Jockey Club are concerned at the considerable dangers which might arise if betting legislation is not uniform throughout Great Britain. Unless the levy, upon which racing depends so heavily, is applied uniformly throughout Great Britain an inequitable and difficult situation will occur which will be to the detriment of British racing as a whole".
So far as Wales is concerned, racing is a very inconsiderable activity. On the face of it, it looks as though the Welsh people are not interested in going to racing. There are only two racecourses in Wales. One is at Bangor where I think that there are seven days of jumping in the course of a year. At Chepstow there are 12 days jumping with eight days fiat, including one mixed meeting. The class of racing there is not high but it gives great enjoyment to those who attend. Apart from the Welsh Grand National the races that are held are not important to the racing scene as a whole. Moreover, there are few training establishments in Wales, and therefore very few horses that are trained in Wales. Indeed, were it not for England, English horses, English trainers and English jockeys, racing at Chepstow and Bangor would be very poorly supported.
So far as the Jockey Club is concerned, it must be interested in the breaking up of the concept of its authority into three parts, one of which, as a result of the Scotland Bill, has happily been avoided, but the others are at issue tonight. When one tries to turn, as I have done, from what the Act excludes and tries to reach some conclusion as to what is left—that is to say, what is in fact devolved as an executive function—one does not know whether one is on one's head or one's heels. I would not in any sense call myself an expert, but I have had some experience of the operation of these Acts as a member of the old Racecourse Betting Control Board, as a member of the Horserace Totalisator Board and as chairman for five years of the Levy Board.
One point in dispute at one stage and which caused an amending Act to be passed concerned the powers of the three members. The three individual members appointed by the Government were an attempt by Lord Butler to keep the controversial problems about the size of the levy and how it should be made up right away from the Home Office; that

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is to say, the Bookmakers' Committee—and that, of course, caused a difficulty to the noble Baroness, Lady Stedman—is asked by the Levy Board to prepare its proposals for the levy for the ensuing year. It puts its proposals forward to the Levy Board and if the Board accepts them forthwith the agreement has the force of law. Under the Act as originally drafted the power passed, when I was chairman, to myself, and to two independent members, and it had the force of law.
Mr. Callaghan, the then Home Secretary, reversed, I think unwisely, the principle of Lord Butler, saying that no individual should have this power and that it should be vested in Ministers. Of course, there is an argument for saying that it should be left to individuals but it has the consequence of annually bringing a great difficulty right into the Home Office. One doubts whether there was in the Home Office the experience and knowledge which Lord Butler took into account when handling the levy. So, the 1969 Act was passed, became a statute and became operative. I assume that the 1969 Act is not mentioned in Schedule 2 because by its being passed, the parts that it mentions in the 1963 Act become part of the 1963 Act so that the contents of the 1969 Act are relevant. However, one of the matters which is left over and which is devolved is the power of determination.
Let us assume that there is a dispute—and disputes occur with some regularity—between the Levy Board and the Tote. If there is a difference it used to fall to the three independent members to decide it. Now it is left to the Secretary of State. However, this is a devolved power. Therefore, the Assembly in Wales has no organisation to guide it and no build-up of experience because Section 27(5) was repealed by the Horse Racing Betting Levy Act 1969 and the situation is now left up in the air. What is true of what could be a matter of dispute as between the Totalisator and the Levy Board is that the same provision has also been devolved in relation to a dispute—there was one last year and it seems very likely that there will be one this year—between the Bookmakers' Committee and the Levy Board. Under the provisions of this Bill—
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because that section of the Act is not excluded—that too could be a subject for decision by the new Assembly. It looks to me as though it will have a very busy time indeed.
There are parts of the devolution process which frankly I do not understand. Under section 24, which laid down the three powers of the Levy Board, the exercise of those powers in terms of schemes and activities is vested in the Secretary of State in Section 25(1); that is to say, it can only do those things lawfully with the approval of the Secretary of State. The Home Office has a very bad form record in this area. From 1961 until I became chairman in 1967, no attempt whatever was made to seek the approval of the Secretary of State. I had three years hard work ending up with an instrument which was not executed and signed by the present Prime Minister when he was Home Secretary until May 1970. Until his approval was granted, the actions that were taken by the Levy Board in terms of Section 24 were ultra vires and the Home Office did not raise a finger. In other words—I do not make a black mark about it—they just did not know; they did not understand. They do not have the experience. Perhaps they are better men for not having the experience. However, I make the point that they did not have the experience to detect when something was very seriously wrong, except in one respect.
The three actors involved are all known Members of your Lordships' House. The noble Lord, Lord Soames, was Minister for Agriculture. He found that the National Stud was becoming a charge upon his votes and he came to me because I was, at that time, a member of the Racecourse Betting Control Board. I had conversations with the noble Lord, Lord Peart, who was at that time the Shadow Minister for Agriculture. As a result, the National Stud's policy was changed for holding mares and the stud in Dorset was sold and established in Newmarket with a completely new policy. That was submitted to the Secretary of State. He approved it and the results were present in this year's Derby. It was won by a horse the sire of which stands at the National Stud. Indeed, one of the things of which I am most proud during my five years in that office is that I also bought Blakeney on behalf of the country

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for £400,000 and today he would be worth several millions.
So the record is not bad. Indeed, the Act is not bad when those who administer it understand what they are doing. I am not suggesting for one moment that this is my exclusive property, but I am saying that the work of the Levy Board and of the Totalisator Board has been of substantial interest to the country and they should not be torn up in pursuit of a political chimera the results of which are quite obscure. Do not give me the answer that I have consistently had from the Liberal Benches. They say: "Why worry? Why not trust the people? ". That is why I intervened when the noble Lord, Lord Parry, spoke tonight. Of course, I am prepared to trust the Welsh people. But they are much better men; they are not interested in racing. If they are not interested, leave it to those who are, and do not interfere. That is the very simple point.
I want to curtail what I have to say. Therefore, I move on to deal with the Gaming Board. I want to emphasise that the Gaming Board has a very special claim upon your Lordships' attention and acceptance of the evidence that I shall put before you. The Gaming Board had as its chairman a distinguished member of the Labour Party, Sir Stanley Raymond. He was appointed by a Conservative Administration and was subsequently reappointed on a number of occasions by a Labour Administration. He succeeded me as Chairman of the Horserace Betting Levy Board. In turn, he was succeeded by a very distinguished civil servant, the Permanent Secretary at the Home Office—and there has never been a better one—whose judgment on all subjects, particularly in connection with this subject, could not be sounder.
Those three men have come forward, two in annual reports presented to your Lordships in 1975 and 1976 and also in the published evidence which has been given to the Royal Commission. The present Administration set up a Royal Commission to inquire into all these activities and its report is due next month. One of the pleas that was made by the Gaming Board was: "Please do not do anything, do not upset these statutory Boards which work, until you receive the report of the Royal Commission".
If any Member of your Lordships' Committee is in a fanciful mood for a bet and has any doubts about what I have been saying—I am certainly not making this offer with my card marked—if that Member cares to have a little wager with me (at evens, it you like), I am prepared to lay a shade of odds that the views which I express are in line with the evidence given by the Gaming Board that when the report of the Royal Commission is published next month what we say will have its backing and not the Government's policy. That is my confirmed view.
Briefly, I want to turn to some of the consequences in relation to the Gaming Board. The powers of the Gaming Board that are excluded are contained in Section 10 of the Act, which deals with the establishment of the Gaming Board and its functions. The Bill also excludes Section 43 dealing with the appointment of inspectors and their powers. Section 50 concerns the annual report of the Board and its submission to the Secretary of State. Apart from those three powers, the rest of the Act is devolved.
I should like to mention one or two examples. Let us take bingo, which is a not unpopular occupation with many of our fellow countrymen. Section 20 governs the way in which bingo shall operate, its supervision and the deductions which should be made. This will be devolved on to the new Assembly. Likewise with gaming—the games that can be played, the deductions that shall be made and the inspectorate are all devolved subjects. The very grave risk will be taken of transferring these from the Gaming Board to the new Assembly in Wales.
Quite apart from the parts of the Act that have now been devolved, the Act itself comprises section after section which enable the Secretary of State to make regulations and orders, all of which are to be passed over to the Assembly. I have mentioned some of the important ones. Section 15 provides for a levy to be charged on stakes and winnings; Section 22 makes provision for a whole range of regulations to be made, covering areas in which gaming clubs can be licensed, the grounds on which licensing authorities may renew licences and in some instances may refuse licences.
In its evidence, the Gaming Board pleads with the Government; it points

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out that those who engage in gaming have vast resources; that it would be dangerous indeed to break up the administration of the Gaming Board. If that happened, the forces which are at work on an international scale might come in and find their way clear to breaking up not only the concept on which the Gaming Board is based, but also the very way in which it has been controlled from the time it came into existence.
I have endeavoured to be as brief as I can, but this is a very extensive and complex business covering the work of three statutory boards and the Bookmakers' Committee. Without exception, they are all in opposition to the Government's proposals and all indicate the dangers involved in action of that kind. Therefore, I have no hesitation in asking your Lordships to support me, if necessary, in the Division Lobby in support of the same principles as I advocated when this matter arose on the Scotland Bill. It is difficult to cut short a complex business of this kind and present it in a form in which I do not want to appear as a protagonist or a propagandist pleading for a cause, but rather making available to your Lordships a fairly long experience and researches which any Member of your Lordships Committee could follow if he or she is so minded. If such a Member is objective in his or her researches, I have no doubt whatever that he will reach the same conclusion as I have.
6.48 p.m.
The Earl of ONSLOW: Unlike the noble Lord, Lord Wigg, I have no experience of betting; in fact, I tried to put a bet on my cousin's horse in the Derby, but did not know how to do so and it won, which was slightly galling. However, the noble Lord, Lord Wigg, has spoken with enormous knowledge and experience. I have joined with him on this Amendment because in the discussions during the Committee and Report stages of the Scotland Bill his argument seemed to be so overwhelming that it might need support from a member of another Party who is not involved—and I do not say this, obviously, in any pejorative sense—in the betting or horseracing industry. I know one end of a horse from another; I happen to like sitting in
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the middle. I do not like going to racecourses; I very rarely go and I do not bet.
I should think that having seen similar powers deleted from the Scotland Bill, the Government will accept this Amendment without forcing us to go to a Division. If they do accept it, it will be intensely to their credit, because they will then have said: "We have seen the arguments from Members on all sides of the Committee; we concede that they are quite intelligent men, they are honourable men, and that they have a point, because your Lordships' House has taken this view". If the Government say, No, one can only be persuaded of the fact that they have not been listening to the argument. I know that Governments sometimes have to have arguments shouted in their ear, but on this occasion I should have thought that the argument is overwhelming.
There are, as the devolution Bills stand at the moment, 60 racecourses in this country. Five of them are in Scotland, two in Wales and the rest in England. We shall have a Totalisator Board and a Levy Board for "59-ish" of those racecourses, and if this Amendment is not carried there will then be the possibility of setting up a separate Tote, a separate Levy Board, for two racecourses. This seems to be beyond the bounds of sense.
In the previous debate on the Scotland Bill, the noble Viscount, Lord Thurso, waxed lyrical about Scottish racing. I should have thought that that was a fairly hard task. It brought to my mind kilted Highlanders on shaggy ponies after Culloden. But is anybody going to wax lyrical on Welsh racing? It is a United Kingdom industry; it is a United Kingdom sport; people bet across Borders. They bet across the Tweed, and across the Border between Wales and England. In my humble opinion it would be too ridiculous to allow betting and gaming to be devolved to Wales only: in other words, to two racecourse plus obviously some point-to-point courses, and not keep that within the United Kingdom as a whole. Therefore, I strongly support the Amendment in the name of the noble Lord, Lord Wigg.
The Marquess of LINLITHGOW: I should like to add just a few words. We have been through this on the Scotland Bill, and I was enormously impressed by the arguments I heard, and particularly

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because the arguments came from people who knew what they were talking about. I support this Amendment. I would not have risen to my feet had it not been to congratulate the noble Lord, Lord Wigg, on having galloped round a Scottish course and then round a Welsh course and showed tremendous stamina, which I am afraid rather put my own stamina into doubt. However, I concentrated on what he said, and I believe in what he said, but I wanted to cheer him up a bit more by telling him that he was perfectly right that Mill Reef won the Derby. And I am sure he also realises that this horse that he managed to help to acquire for the National Stud performed the astonishing feat of siring the winner of the French Derby. I support the Amendment.
6.53 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): I hope to speak with a moderate degree of brevity with regard to this Amendment because we have gone over this particular course before in the recent past. I would say to the noble Earl, Lord Onslow, that the fact that I suggest that the Committee should not accept this Amendment does not in any way suggest that Members of the Committee are not intelligent and honourable men, which I think was the rather strange suggestion he made in his speech. With great respect, he has got his Amendment, which he has signed, totally wrong. There is no question of a separate Levy Board, or Tote, for Wales as he suggested.
If he looks at his Amendment, he will realise that that is not the effect of it. I shall now explain to the Committee what is in fact the point of the Amendment moved by the noble Lord, Lord Wigg, and supported by the noble Earl, Lord Onslow. As the Committee knows, the Bill, by way of Clause 9 and Schedule 2, transfers existing ministerial functions to the Welsh Assembly. Clause 9 and Schedule 2 do not, and cannot, transfer to the Assembly powers which are vested in bodies. I make this point so that there is no doubt in anyone's mind that there is any possibility of the Assembly assuming, for example, the duty of the Horserace Betting Levy Board under Section 24(1) of the Betting, Gaming and Lotteries Act 1963, to assess and collect monetarycontributions from bookmakers and the Totalisator
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Board. The entry for the 1963 Act in Schedule 2 only transfers to the Assembly ministerial powers: a clear distinction.
Perhaps I should start by reminding the Committee once again that the Assembly will have no legislative competence and therefore it will be operating within the framework of the existing law. For example, it will not be able to abolish the need for a licence for gaming under Part II of the Gaming Act 1968; but it will be able to make separate regulations as regards Wales about a levy which may be charged in respect of gaming taking place on licensed premises, which is dealt with under Section 15(2) of the 1968 Act. In the Government's view betting and gaming is primarily a matter of social or recreational activity for which it is wholly appropriate for an elected Assembly in Wales to have responsibilities. The bodies operating in the field which have a centralised, regulatory rôle, will continue to operate on an England and Wales basis.
There is no question of us moving away from that at all, notwithstanding what the noble Earl said a few moments ago. With respect, I think he has misunderstood the position. There will not, for example, he a separate Gaming Board for Wales, but within this framework the Government think it right that the Assembly should be able to take account of the views of the Welsh people and specific problems of concern in Wales, and should therefore be able to exercise ministerial powers in respect of these functions.
I now come to the position of the public hodies operating in this field. The Horseracing Betting Levy Board, the Horserace Totalisator Board and the Gaming Board will continue to operate as they do at the moment on an England and Wales basis. But these bodies are listed in Schedule 7 to the Bill and can therefore be subject to a Clause 59 order, so that changes may be made to take account of the Assembly's responsibilties. For example, additional Welsh members can be appointed to the Board by the Assembly. Clause 59(3)(a) allows for the Assembly to exercise existing ministerial functions in relation to the body. The extent to which existing ministerial functions would be transferred will depend upon the outcome of the Minister's consultations with the body concerned (Clause 59(4)) and the form of the order

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placed before Parliament by the Minister. Until such action is taken, it is clearly important that ministerial powers in relation to the body are excluded from the competence of the Assembly, otherwise it would not be possible to achieve an orderly division of responsibility. This is achieved by listing the powers in column 2 of Schedule 2—hence the exclusions in column 2 in relation to the Betting, Gaming and Lotteries Act 1963 and the Gaming Act 1968.
I do not wish to take up still more time explaining the workings of Clause 59, which is obviously an important matter in relation to this particular question. We shall clearly have an opportunity of discussing that in due course. But I hope that this explanation makes it clear why these exclusions in column 2 for the 1963 and 1968 Acts are there; and, more importantly, what the position of the public bodies could be post-devolution. I repeat—and I think I have made the position clear on several occasions—there is no question of a separate Tote, separate Levy Board, so far as Wales is concerned. There are some powers for the Assembly after a Section 59 order has been passed, and they are limited powers so far as the Assembly is concerned. It is no more than that.
Lord WIGG: There is no doubt that what the Minister said is correct—that is, until a Clause 59 order is made—but I have given an account of what is in the Bill; the powers that are excluded and the powers that are not excluded, and I have commented exclusively on ministerial powers which exist now. If the Committee does not accept my Amendment, they will remain and then, when the Bill becomes law and the Assembly is set up and an order under Clause 59 is made, the things I described could happen. I assume that is why they are in the Bill.
The Minister says there is nothing in the Bill that will lead to a separate Tote or Levy Board, but let us briefly examine that. When they have the Assembly, the Welsh people, like the Scottish people in the same position, will look at the Levy Board in the same way as it has been looked at in England—as a mulch cow. They will not keep it as a pet but because it will produce some milk—some money—and that could be a matter of
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dispute as between the Tote and as between the Levy Board. When that happens, the power which exists and which Parliament has vested in the Secretary of State as the arbiter, the honest judge in the public interest, will not be there any more; it will be in the Assembly in Wales who, as I say, will keep this cow not as a pet but in order to get some milk.
Let me make this simple point again, and I must not charge the Minister with being innocent because he would think that rude of me and I do not want to be rude to him, not for the moment anyway, not even accidentally. What does the Minister think will happen if there is a higher rate of levy in one country than in another? Of course, noble Lords on the Liberal Benches are innocent. I was interrupted on an earlier occasion by one of the Liberal spokesmen who said, in effect, "It is perfectly easy. You can have a lien on the levy; that can be done quite easily in Scotland". The poor dear never quite understood that people can bet in cash in a street in Glasgow and a lien can be put on that, but if somebody puts on a bet by telephone to a bookmaker in England, it is impossible to collect anything. The fact that one could have two different rates must mean in the long term—and the poor old Totalisator's overheads are costly enough already—that this is a piece of administrative nonsense from the point of view both of the Levy Board and the Tote.
I have saved my blockbuster to the last. The Minister said, in effect, "Just go away. This is going to be quite all right and it does not mean very much. Go home and have your supper and forget all about it". Perhaps I may trouble the Committee by reading Clause 10 of the Bill. I hope those who have had experience, particularly ministerial experience, in the other place will note this carefully and will tell me whether they know of any other Statute passed by any Administration since the dawn of time containing wider powers than Clause 10. If this is not a blank cheque, what is it?—
"Cultural and recreative activities.The Assembly may do anything it considers appropriate to support museums, art galleries, libraries, the Welsh language, the arts, crafts, sport and other cultural and recreative activities".
To some people, bingo may be a vice, but it is a recreative activity, and this Assembly will be able to do "anything it

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considers appropriate". So far as racing is concerned, it can do anything it thinks appropriate, yet the Minister says, "Please go away, forget all about it, it is all very innocent; just support the Government". It may be innocence because I can only think that it has been produced by innocents, but blank cheques given to innocents may be filled in by those who are not so innocent. I beg noble Lords to consider the possibility of not giving blank cheques drawn on somebody else's account and to support me in the Lobby tonight.
Lord HARRIS of GREENWICH: The noble Lord, Lord Wigg, having discharged his blockbuster, will forgive me if I deal briefly with that point, which could arise on the Question, That Clause 10 stand part or on an Amendment to it. It does not in any way change the description that I gave of the effect of this particular provision in the Bill. There are two other points I would make to the noble Lord. I would never accuse him of being innocent, nor would I regard it as offensive if he described me in those terms either.
I wish to comment on two other points he raised, the first of which raised some doubts in my mind as to the logical basis of his case. As I understood from the interesting review he gave of the affairs of the racing industry in the last few years, he gave a fairly low mark to the Home Office; he said they had mucked things up over a long period of time, during the lives of different Governments, and that there had been serious mishandling. Curiously, however, Lord Wigg is desperately anxious that the powers in the Bill should be left wholly and exclusively in the hands of the Home Office. I regard that as a tribute to my Department, though, with respect to the noble Lord, it seemed a strange argument given the general thrust of his remarks.
Secondly—he will appreciate that I
say this in an extremely amiable way—Lord Wigg referred to the effect of the Mafia and said that as a result of the activities of all the boards he listed we had been very successful in this matter. There was indeed a risk some years ago. We had some slight problem in this area, as he will well know, but it has been, I think, dealt with resolutely both by the organisations he mentioned and the police. I am bound to say that I think we have been successful at keeping the Mafia at bay, but I do not believe that if we let the Bill stand as it is, the Mafia will necessarily reappear in either Bangor or Chepstow.
The Earl of ONSLOW: I must take up what the Minister said about Clause 10 because if anything can be done in regard to sport, then surely he cannot glibly discard what the noble Lord, Lord Wigg, said and claim that we can discuss it simply when we reach the debate on the Question, That Clause 10 stand part. The noble Lord, Lord Harris of Greenwich, did not deal at all with the question of the possibility of the differential levy which he admitted could be levied on the various bets at the various places. He did not answer the point about the Scotsman credit betting at Ladbroke's on a Welsh horse. What are the different circumstances of racing in Newmarket or Chepstow which are likely to make the Welsh Assembly take a decision different from that of the Minister?
Baroness WHITE: I wonder whether my noble friend, Lord Harris of Greenwich, is aware that if it were in Wales it would be the "Taffia" rather than the Mafia!
7.10 p.m.
On Question, Whether the said Amendment (No. 44) shall be agreed to?
Their Lordships divided: Contents, 76; Not-Contents, 61.

CONTENTS

Alexander of Tunis, E.

Clifford of Chudleigh, L.

Denham, L.

Amherst of Hackney, L.

Clitheroe, L.

Deramore, L.

Baker, L.

Colville of Culross, V.

Drumalbyn, L.

Belstead, L.

Colwyn, L.

Elles, B.

Brooke of Cumnor, L.

Cork and Orrery, E.

Elliot of Harwood, B.

Brooke of Ystradfellte, B.

Craigavon, V.

Elton, L.

Brougham and Vaux, L.

Crathorne, L.

Faithfull, B.

Campbell of Croy, L.

Crawshaw, L.

Falkland, V.

Carrington, L.

Cromartie, E.

Ferrier, L.

Chelwood, L.

Cullen of Ashbourne, L.

Fortescue, E.

Fraser of Kilmorack, L.

Masham of Ilton, B.

Skelmersdale, L.

Greenway, L.

Massereene and Ferrard, V.

Soames, L.

Gridley, L.

Monson, L.

Stanley of Alderley, B.

Hanworth, V.

Montgomery of Alamein, V.

Strathclyde, L.

Henley, L.

Moyne, L.

Swansea, L.

Hill of Luton, L.

Napier and Ettrick, L.

Swinton, E.

Hylton-Foster, B.

Newall, L.

Tenby, V.

Killearn, L.

Northchurch, B.

Terrington, L.

Kilmany, L.

O'Hagan, L.

Trenchard, V.

Kinloss, Ly.

Onslow, E. [Teller.]

Trevethin and Oaksey, L.

Linlithgow, M.

Rankeillour, L.

Tweedsmuir, L.

Long, V.

Rochdale, V.

Vickers, B.

Lyell, L.

Romney, E.

Vivian, L.

Mansfield, E.

Sandys, L.

Ward of North Tyneside, B.

Margadale, L.

Selkirk, E.

Wigg, L. [Teller.]

NOT-CONTENTS

Alport, L,

Hale, L.

Parry, L.

Aylestone, L.

Hampton, L.

Ritchie-Calder, L.

Balogh, L.

Harris of Greenwich, L.

Rochester, L.

Banks, L.

Hatch of Lusby, L.

Sainsbury, L.

Birk, B.

Henderson, L.

Seear, B.

Blyton, L.

Hughes, L.

Stamp, L.

Brockway, L.

Jacques, L.

Stedman, B.

Champion, L.

Janner, L.

Stewart of Alvechurch, B.

Collison, L.

Kaldor, L.

Stone, L.

Crook, L.

Kirkhill, L.

Strabolgi, L. [Teller.]

David, B.

Lee of Newton, L.

Taylor of Blackburn, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Gryfe, L.

Davies of Penrhys, L.

Lloyd of Hampstead, L.

Thomson of Monifieth, L.

Diamond, L.

Lloyd of Kilgerran, L.

Wade, L.

Donaldson of Kingsbridge, L.

McCarthy, L.

Wallace of Coslany, L.

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

McCluskey, L.

Wells-Pestell, L.

Evans of Claughton, L.

Maybray-King, L.

Whaddon, L.

Gaitskell, B.

Melchett, L.

Wigoder, L.

Gardiner, L.

Northfield, L.

Winterbottom, L. [Teller.]

Glenamara, L.

Nugent of Guildford, L.

Gordon-Walker, L.

Oram, L.

Moved accordingly, and, on Question, Motion agreed to.

Resolved in the affirmative, and Amendment agreed to accordingly.
7.16 p.m.
Lord WIGG Lord WIGG moved Amendment No. 45:
Page 39, leave out lines 23 and 24.
Lord WIGG Lord WIGG moved Amendment No. 46:
Page 39, leave out lines 27 to 30.
Lord WALLACE of COSLANY: My Lords, I beg to move that the House do now resume.
House resumed.

RATING (DISABLED PERSONS) BILL
7.17 p.m.
Lord HUGHES: My Lords, I beg to move that this Bill be now read a second time. Some of your Lordships will no doubt recall the background to the proposals in the Bill. Rating relief is currently given to disabled persons under Section 45 of the General Rate Act 1967. That section is obscurely drafted, the extent to which it gives relief being far from clear. It has led to a succession of court cases about its interpretation, not least of which was the decisive decision of this House on the Vandyk v. Oliver appeal. Largely as a result of that case, and the continued criticism directed at the current provision, this measure was sponsored in another place by my namesake, the honourable Member for Aberdeen, North—someone with whom, not unnaturally, I am glad to be associated. The Bill was supported in another place by Members of the three main Parties,

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and I hope that it will meet with the approval of your Lordships.
The purpose of the Bill is simply to clarify the circumstances in which relief is available—and I believe that it achieves that object by spelling them out in some detail—and the way in which the actual amount of relief will be calculated. If it becomes law, then the existing provision in Section 45 will be repealed. The Bill covers England and Wales, and Scotland, but because of the different rating system north of the Border, the Scottish provisions have been separated for ease of reference. So far as it has been possible to achieve this, the provision of relief is the same, although it has been recognised that differences will inevitably occur here and there. I do not think that too much should be made of them, in view of the overall benefits that will ensue from a single measure.
The Bill will give relief both on private dwellings which have special additions or adaptations for a disabled person living there, and to institutions for the disabled. In England and Wales there will be a standard tariff for the more common adaptations; but rating authorities will also have the discretion to grant extra relief up to 20 per cent. above that tariff. Relief will also be granted to disabled persons moving into dwellings already specially adapted to their needs, as well as to those having adaptations made for them. In the case of institutions, the intention is largely to continue the relief presently given, but a small extension of the coverage is being proposed partly to remove anomalies, and partly to achieve parity on both sides of the Border.
The cost of this relief will initially fall on local authorities, as in effect it does at present under Section 45. But it is proposed to make an adjustment to the distribution of the resources element of rate support grant so as to take account of the cost to individual local authorities. The Bill will require an application to be made to the rating authority by the person entitled to a rebate, and provides for an appeal to the county court (or, in Scotland, to the sheriff) in the event of a refusal. It also provides, where the valuation officer is required to certify rateable values in certain special cases involving installations or adapatations, for an appeal
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against his certificates to be made to the local valuation court.
My Lords, at the next stage I shall be proposing two Amendments to the Bill. In another place, doubt was expressed as to whether "garages" included carports. It is thought that it does, but, in order to make certain, in each of the places where garages are referred to in the Bill the word "carports" will be added to make absolutely certain. It may be that we are carrying out a belt and braces operation, but that is better than finding out that you have neither. In another part of the Bill, it is mandatory at present for a local authority to reduce the amount of the rebate if it applies only for a part of the year; for instance, if the recipient of the rebate died before the end of the year, the local authority would be required, as the Bill stands, to recover that part of the rebate. The Amendment which I shall be submitting is to substitute the word "may" for the word "shall", so that it will be within the discretion of the local authority whether or not to take any action.
My Lords, I am sure that as a result of this measure disabled persons, and those running institutions connected with them, will have a much clearer idea of the circumstances in which they are entitled to claim relief. Not only have great pains been taken to ensure that everyone receiving relief under Section 45 will continue to do so, but where it has been possible the opportunity has been taken to make some small extensions of relief. Of these, perhaps the most significant is the inclusion of wheelchair housing within the provisions. My Lords, I beg to move that the Bill be now read a second time.
Moved, That the Bill be now read 2ª—(Lord Hughes).
7.23 p.m.
Lord SANDYS: My Lords, from this side of the House I should like to give a warm welcome to the Bill, which has been produced by the efforts of the honourable friend and namesake of the noble Lord, Lord Hughes, in another place, and I do so for a very particular reason. I stood at this Dispatch Box on the 16th February 1977 when your Lordships were discussing the Snowdon Report, and I made a particular reference at that time to the case to which the noble Lord, Lord Hughes, has referred; that is, the

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Vandyk v. Oliver case. This, again, was referred to in the Snowdon Report in these words, which I should like to stress—and I quote the words exactly:
"We therefore urge Parliament to clarify the position and establish in law those concessions which, prior to the House of Lords ruling, had been deemed to exist".
Section 45 of the General Rate Act 1967 has caused great difficulty in interpretation in another case, and that, of course, was the case of Almond v. Birmingham Corporation in 1968, only a year after the enactment. Here, I should like to quote—and I shall not be long—what was said by Lord Reid in that case. These are particularly significant words, and I quote them exactly:
"If the scope of section 45 was to be extended far beyond local authorities and charities to many thousands of citizens, many of them ill or handicapped, or if the contrary was the case, Parliament really ought to make its dispositions intelligible".
My Lords, the noble Lord, Lord Hughes, referred to this, and, of course, the situation was pointed out very clearly by the noble and learned Lord, Lord Wilberforce, when he said that Section 45 of the 1967 Act was, "a labyrinth and a minefield of obscurity". All this will be found in The Times law report of 28th January 1976, and I am sure the Government have fully noted it.
It is important that very eminent authorities have so strongly criticised the 1967 General Rate Act, and it is therefore hoped on this side of the House that the Government will be very receptive of the detailed matters of dubiety which have been raised up to date when it comes to the Committee stage, particularly in the case of the matter of interpretation. I would pause here to stress the interpretation clause in one particular respect. The word "rebate" occurs in the Bill no less than 73 times, and when I looked through the Bill I was under the impression initially that I understood what the word "rebate" meant until I heard what those specialists in this particular field, the district valuers and others, had to say about it. I hope the Government will be generous in according suitable thought to this particular problem.
The field as a whole goes very much wider, because the aim of the Bill is to enable the handicapped to enjoy as much independence as those more fortunate.
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Much has been achieved in terms of technical design by such well-known experts as Mr. Selwyn Goldsmith, who wrote that famous book Designing for the Disabled. My Lords, the adaptation of houses and flats to suit the lives of the disabled is a skilled and often extremely complex and costly undertaking, especially when it is a matter of ensuring that the burden of rates does not fall on a householder after the alterations have been completed.
It has been said that this will involve, in turn, a loss of rates to the local authority, but perhaps at this point it bears mentioning that this, perhaps, has been exaggerated. The noble Baroness's honourable friend Mr. Guy Barnett said in another place during Standing Committee on 3rd May, in column 18—and I quote his words:
"Compensation to local authorities will be provided by means of the Rate Support Grant, as now, and an adjustment will be made if that is necessary.".
My Lords, on the domestic side, the additional cost to rating authorities will mainly be the discretionary one-fifth available in some cases on the mandatory relief. The noble Baroness's honourable friend went on to say that currently some 14,000 dwellings receive relief under Section 45 of the Act, giving a rating loss of the sum of £235,000 in England and Wales only. Just compare this for a moment to the cost of making institutional provision for those 14,000 handicapped people at a cost of, say, £200 a week. I quote this figure purely for the purposes of example. I may be told that it is a greater or a lesser figure, but let us take it at £200 a week. This figure would produce a cost per person of more than £10,400, and give a grand total of the sum of £142 million. So, financially alone, the arguments are immensely strong for encouraging the disabled and the handicapped to remain where they wish to be—in their own homes.
7.29 p.m.
Lady KINLOSS: My Lords, the Bill before us this evening is surely welcome to all sides of your Lordships' House. The Times law report of 28th January 1976 states that the existing law on rate relief was described by the noble and learned Lord, Lord Wilberforce, as:
"a labyrinth and a minefield of obscurity".

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This is a commendable small piece of legislation designed to rectify the Vandyk anomaly. Therefore, I hope it will pass through all its stages rapidly, and will quickly become law. But it is true to say that most of the legislation for the disabled is of a piecemeal nature, and is very confusing. I hope that at some stage we shall be able to get it put together as one good disablement package. I suppose that an intelligent disabled person who took a look at the present Bill would immediately react with the question, "How much will I get out of this?" Then, later, meeting with another disabled and intelligent person from another part of the country, he or she would ask, "What do you get out of it?"
My Lords, how is it to be ensured that this Bill will be interpreted in a uniform manner throughout the country and that the relief afforded in Tiverton will be proportionately the same as in Tooting Bec. I cannot find any answer to this question in the Bill. I see, too, that it is quite a difficult question and perhaps the noble Lord, Lord Hughes, will prefer not to reply to it this evening. I apologise for not giving the noble Lord prior notice of my question.
7.32 p.m.
The Earl of SWINTON: My Lords, I feel that I ought to start by declaring a financial interest in this Bill, for not only have I an enormous rate bill every year but I have a very expensive disabled wife to maintain; so perhaps I may be gaining if this Bill becomes law. I thought that I should speak tonight of 20 years of practical experience of being married to a severely disabled person. When we were married we were fortunate enough to have been able to afford to build our own house, specially designed with a wheelchair in mind. This included the most important part which is referred to in the Bill; that is the question of separate bathrooms. To my mind, this is not a luxury but an absolute essential for two reasons: first, because of the time factors involved and, second, because of the practicalities. The time factors are probably obvious. It takes my noble kinswoman a lot of time to do the necessary in the bathroom every morning; and, staying around the country with other disabled friends, I found that this is the
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rule and not the exception and that the time factor is very important.
There are also the practicalities of the matter, if I can put it delicately. I was brought up in the old-fashioned way that after breakfast every day I must go and do what is good for me. In order to do this, I have to have the right atmosphere, if I might say so, to achieve job satisfaction. To go into a disabled person's bathroom, which is covered with things like plastic gloves, suppositories and all sorts of other "nasties" which I do not think I shall mention to your Lordships tonight, is a very off-putting experience. So I feel that this is a very essential factor.
I can joke about it, but it is a serious problem and I might say that it is a very serious problem to many hardworking disabled people. I think we ought to encourage them to have their own separate lavatories and they should not be penalised, as they are at the moment, for having the nous to go out and to achieve independence through doing a job of work and getting a house of their own. At the moment, if they live in a council house or in a home, they do not have to pay this large rates bill and I am delighted that this Bill is going to remove this anomaly. At the same time, I think that there are some questions that need ironing out in this Bill and I hope that certain Amendments will be accepted on Committee stage. I should like to join with all other noble Lords and noble Baronesses who have spoken in welcoming this Bill and in wishing it a successful passage through your Lordships' House.
7.34 p.m.
Baroness VICKERS: My Lords, I am glad that we are having a Second Reading debate on this Bill because there was not one in the other House. This gives us the opportunity of paying tribute to the originator of this Bill, Mr. Robert Hughes, and to the noble Lord, Lord Hughes, who is introducing it in this House. I should like to thank the noble Baroness, Lady Stedman, for taking part. She must be very fatigued after the long debate that we have had previously. This is a small, but I think very important Bill. I have served in the Council of Europe and on the EEC Sub-Committee and I think it is quite fair to say that the United Kingdom

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leads in the work for the disabled and that we should recognise that. We really have given a lead to the whole of Europe.
The noble Baroness, Lady Masham, for whom I have great admiration, will remember, when she and I went to Brussels, that there were no conveniences for disabled people in the newest building they were using there. I have more than admiration for the way that she coped. We should not forget the wonderful example of the formation of the Disabled Income Group by a disabled woman Mrs. du Boisson, and also Mary Greaves, who is herself disabled, and who has been undertaking visits to various organisations in Europe and has been consulted on what they should do. I think that we should remember, too, that the motto of the disabled people is, "Help us to help ourselve" and also the Association called the "Association of Disabled Professionals" and not "Disabled People".
Paragraph 13(3) of Schedule 1 is very useful because it says that the Minister will have the power to review the rateable values under paragraph 13(3) and that any,
"statutory instrument containing an order made under this paragraph shall be subject to annulment in pursuance of a resolution of either House of Parliament".
This should act as a safeguard for local authorities who are slow in implementing this Bill. We can also call in aid Cmnd 6851 on Housing Policy, page 112, paragraph 12.28. It says:
"Most physically disabled people would like to go on living in their own homes, among friends and in a familiar neighbourhood."
They express also the need for ramps, hand-rails, a downstairs lavatory and improvements. We all know that directly you get improvements the rate is increased. I gather that there are already 2,000 wheelchair units built since the Sick and Disabled Persons Act 1970, which is a fairly good record. There are over 11,000 mobility units, which is also helpful.
This Bill, I think, should help to improve the situation. I understand—and perhaps the noble Lord, Lord Hughes, will confirm this—that no existing relief will be withdrawn when this is put into operation. I also note in Clause 2 the rebates for institutions for the disabled. I think this should be helpful also—and perhaps he can
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confirm this—to the voluntary organisations who have homes for disabled people.
I should like to mention (and perhaps confirm what the noble Lord, Lord Sandys, said in relation to it) the Rating and Valuation Association. I think they have a good point. I should like to read what they suggest in regard to the term "rebate" in Clause 1(1). They say:
"The term 'rebate' is known both to the public and rating staffs as allowances to persons on limited incomes. It is defined in Section 115(3)(a)(i) of the General Rate Act 1967 and that meaning is very different from the terms contained in the Bill. This duplication could lead to very considerable confusion. Perhaps 'allowance' or ' abatement ' would be more appropriate".
I hope that the noble Lord might think of this.
I believe that there is a misprint in Paragraph 7 of Schedule I which deals with Garage or Land used for accommodating vehicle. It reads:
Where the heriditament is within Section 1(2)(e) …".
I think that should be Section 1(2)(f); and also on page 11 it should read, I understand, "1 (2)(g)" instead of what is there at the moment. Probably these are only printing errors but I thought that I should mention them.
I hope that this little Bill will help disabled people substantially and that those who are now to benefit by it will have the satisfaction of earning, perhaps, a better living and be as able to serve their country as can fully able people.
7.40 p.m.
Baroness MASHAM of ILTON: My Lords, this type of rating Bill is far too complicated and involved for me and I had not intended to speak on it; but many disabled people have made it known to me that they are concerned that the Bill will, unless amended, mean extra hardship for many disabled people. My first question is this: The Bill covers provisions for England and Wales and provisions for Scotland. What about provisions for disabled persons in Northern Ireland? Northern Ireland was left out of the 1970 Chronically Sick and Disabled Persons Act. Are they to be left out of all legislation for disabled people? Perhaps the Government will consider including Northern Ireland. I know that there are many disabled people in Northern Ireland. Northern Ireland is supposed to be part of

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Britain; then, should they not have the same provisions?
This Bill may seem very unimportant to you, my Lords, but I can assure you as chairman of the Spinal Injuries Association that I know several of our members who have been very distressed over the payment of rates on the essentials that tney need due to their disabilities. It is sometimes the small things in life which grow to be enormous problems. Some disabled people will perhaps take their rating problems to court if they fear they are being unfairly treated. But even if they won the increased rebate, it can only be an additional amount equal to one-fifth of the amount so determined, so it would not be worth going to court over it unless one did so on a matter of principle. This means that the valuation officer will have unfair power over the disabled person.
I am sure that your Lordships will agree that, wherever possible, it is right to encourage disabled people to live in their own homes rather than be institutionalised in Part III accommodation. A survey was taken some years ago of some severely disabled people and it was found that those living in housing and poor circumstances in their own homes lived longer and were happier than those in institutions. We who are disabled know that, if we cannot use public transport, it is essential to have a car and so have a garage. If one is a paraplegic, it is highly desirable for the other members of the family that there should be two lavatories. This has already been stated by my noble kinsman. If one is paralysed, it is essential to have a good heating system otherwise there are numerous complications. I can assure your Lordships that these are not luxuries; they are necessities to enable a disabled person to live in the community.
May I ask a few more questions. Will the Bill cover lifts and permanent hoists? Should the rating not be calculated on a cubic capacity rather than on a floor area? Will heating needs be taken into consideration? Does the Bill cover day care centres? If not, I think it should do so because day care centres do a splendid job and need encouragement. Part III accommodation is not rateable. I feel that these essentials in a disabled person's home should also be exempt from rates. Some people who will have to pay more
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rates if this Bill becomes an Act are those who presently get complete exemption for garages occupied by their vehicles, but who will only get exemption up to the limits of rateable value imposed in Schedule 1 to the new Bill. For example, a garage in inner London can be up to approximately £145 rateable value. It is now wholly exempt. But under the new Bill only £25 of the value will be rebated. Under the new Bill, the specially adapted baths for disabled people in their houses will no longer be exempt. This is surely against the wish of society to encourage disabled people to live in the community. With the risk of fire and the difficulty of lifts breaking down, bungalow accommodation is by far the most suitable for disabled people: but these have extra rates.
I hope that your Lordships will try to imagine what it is like to be severely disabled, and I hope that your Lordships will study this Bill and find it feasible and humanitarian to support the Amendments which will be put forward. It seems to me that there will be a great deal of extra administrative work. The disabled person will have to deal with the rating authority, the valuation officer, the Inland Revenue and, if the claim is disputed, the local valuation court and the county court, whereas now they have to deal only with the valuation officer. I hope very sincerely that your Lordships will make this an even better and simpler Bill than it is now without delaying its passage.
7.45 p.m.
Baroness STEDMAN: My Lords, I should like to intervene briefly just to indicate the Government's warm welcome and support for this Bill. My noble friend has introduced it in a clear and succinct manner, and I am sure the House will wish me to thank him for that. There is no doubt that for some time a considerable amount of confusion has reigned on the subject of rate relief for the disabled and this effective measure will go a long way towards clarifying what does or does not qualify for relief, both on the domestic front and for institutions. It will also be an advantage to have a greater parity of treatment than hitherto both North and South of the Border. I know that the noble Lord, Lord Campbell of Croy, who has been expecting this Bill

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for so long, will endorse that, even though, as the noble Lord, Lord Hughes, has explained, total uniformity is unlikely to be achieved because the two countries have different rating systems.
If the Bill is passed—and my hopes are high because of the non-controversial nature of its provisions—it will not come into effect until 1st April 1979. The reason for that is that it will allow plenty of time for local authorities to make all the preparations that will be necessary for the administration of their new responsibilities for giving the new form of rate relief, which will be by way of a reduction in the rate bill rather than a reduction in the rateable value as at present. It will also allow time for disabled people to submit their applications for relief as the Bill requires. It is of course intended that guidance will be issued to local authorities and to disabled people explaining the new system and the way it will work in order to get it off to a smooth start.
I hope that my noble friend Lord Hughes will not mind me dealing with one point which has been raised by the noble Baroness, Lady Masham of Ilton, in that my ministerial colleagues advise me that the Department which deals with rating subjects in Northern Ireland has already said that they intend to promote their own legislation in the same way as this Bill. I do not think that there is anything else that I need add to the details of the Bill already explained by my noble friends, and I hope that the House will give it a Second Reading this evening.
7.48 p.m.
Lord HUGHES: My Lords, if, in the interests of the time that is available to us, I reply very briefly to the points which have been made, it is not because of any lack of interest. To a certain extent when the noble Baroness, Lady Masham of Ilton, was speaking I was very much aware that I should not be able to reply to some of her questions, not because of lack of interest but because of lack of knowledge.
In the Division on the previous matter which we have been discussing, much was made of the advantages of having issues discussed by people who knew what they were talking about. This was a reference to the expertise of the noble Lord, Lord Wigg. I have found, through
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the intervention of the noble Earl, Lord Swinton, and the noble Baroness, Lady Masham of Ilton—to whom he was pleased to refer as his "noble kinswoman" —that it can be a positive disadvantage to someone like myself, picking up the Bill for Second Reading, to be confronted by two people who know so well what they are talking about.
However, I was heartened at the end of what the noble Baroness, Lady Masham, said, because in the early part of her remarks I thought that she was praising the Bill with a considerable number of faint damns, but it was at least consoling to have her say finally that she hoped that the Amendments which would be passed would make it an even better Bill. So she does see some merit in the Bill at some point. I will read in particular what she has said about these points. I hope that it will be at least possible to give fair consideration to anything that she may be submitting for the next stage.
Very briefly, the noble Lord, Lord Sandys, and the noble Baroness, Lady Vickers, referred to the word "rebate". The noble Lord, Lord Sandys, referred to what exactly people understood "rebate" to mean, and the noble Baroness, Lady Vickers, referred to finding a better term. I will certainly consider those matters. The noble Baroness, Lady Vickers, asked further whether I would assure her that nobody would have a reduction in what they are getting at present. Until the noble Baroness, Lady Masham, spoke about garages in Inner London, I thought that was the position. I have to qualify the answer and, subject to what the noble Baroness, Lady Masham, said, I think the answer is "yes".
The noble Lady, Lady Kinloss, asked how equality could be achieved up and down the country. The simple answer is that there will not be equality: there will be uniformity of method. But as rates vary very much from one area to another—and I am talking now, as I did in my other speech, entirely on the English side of the matter—if the measure of rebate is £30, obviously the higher the rates are in particular area the bigger the measure of relief that is being given. Similarly, in Scotland it will vary from one place to another. But at least the method to be applied will be uniform,

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which is an advantage on the present position.
I think it true to say that the Bill has received the sort of welcome I thought it would get from your Lordships, given the interest that has always been shown in the House in the welfare of disabled people. I thank all those who have taken part.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

LOCAL GOVERNMENT ACT 1974 (AMENDMENT) BILL
7.52 p.m.
Lord HUGHES: My Lords, it is 17 years since I entered your Lordships' House, and until tonight it has never fallen to my lot to try to take through the House a Private Member's Bill. I can assure your Lordships that it is not my intention to make tonight's proceedings a habit; that is, to take Bills through two at a time.
I beg to move that this Bill he now read a second time. This is a Private Member's Bill introduced in another place by the honourable Member for Luton East, Mr. Ivor Clemitson, with all-Party support. Before I explain the purpose of the Bill, I should like to take this opportunity to pay tribute to the noble Baroness, Lady Serota. It is in no small measure due to her admirable work as Chairman of the Commission for Local Administration in England that the local ombudsman system has established itself so well in such a short period of time. Unfortunately, the noble Baroness is unable to be in her place today. Your Lordships will be glad to learn that she is recovering well from her recent accident. I should also like to mention a former colleague of mine in the Health Service in Scotland, Mr. Robert Moore, who performs these functions in Scotland and who, from a background both in local authority and health service work, is proving a very acceptable local ombudsman in Scotland.
The Bill amends Part III of the Local Government Act 1974 which provides for the investigation of complaints of injustice sustained because of maladministration by local and other authorities in England and Wales. Its purpose is to empower the authorities, subject to investigation by the local commissioner, to incur expenditure
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in making a payment to or in providing some other benefit for a person who has suffered injustice previously of their maladministration.
The statutory responsibility for deciding what action to take in the light of a local commissioner's report finding injustice arising from maladministration rests with the authority concerned. The form of action needed to remedy the injustice clearly depends upon the nature of the injustice suffered, and so remedial action varies accordingly. In some cases the authority and the local commissoner may agree that the proper remedy is a payment to the claimant. However, the Local Government Act 1974 makes no specific provision enabling such a payment to be made. In these circumstances, authorities may seek the approval of the Secretary of State under Section 161(1) of the Local Government Act 1972 to make an ex gratia payment. But the Secretary of State's approval does not make such payments lawful: it merely removes the expenditure from the purview of the district auditor. The fact that it should be unlawful for authorities to incur expenditure to remedy injustice which they themselves have caused, and admit, is clearly an anomaly. This Bill seeks to rectify that anomaly.
This is a short Bill, and I will give a brief general description of its purpose. It may be helpful if I mention two specific points. Clause 1(2) states that expenditure incurred by local authorities under the Bill will not count as relevant expenditure for rate support grant purposes. I understand that this limitation was included in the Bill in the light of advice from the authorities in another place, that in accordance with their Standing Order No. 91 it was not possible for a Private Member to introduce a Bill, the main purpose of which was to create a charge on public funds. However, a Money Resolution was subsequently tabled by the Government and approved in another place on 11th May. I therefore propose to introduce an Amendent at a later stage to delete Clause 1(2) and thus make expenditure incurred by local authorities under the Bill count for rate support grant purposes. The Government's approved Money Resolution will enable this Amendment, if agreed by your Lordships' House, to be endorsed when the Bill

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returns for further consideration in another place. I understand that this change has the support of the local authority associations.
It is generally agreed that the Bill should extend to Scotland, and I propose to table the necessary Amendments during the Bill's later stages to secure that end. It is rather interesting that the previous Bill which I moved started off as a Scottish Bill and then became a Great Britain Bill. This one starts as an England and Wales Bill and has Scotland tagged on to it.
My Lords, may I sum up. This is a short, non-controversial but commendable piece of legislation. It gives effect to a recommendation of the Commission for Local Administration in England to the Secretary of State for the Environment. I understand that the Bill has the support of the statutory body which represents the authorities which are subject to investigation. It is also very welcome that the Government have given their valuable support to implement this measure. I therefore commend the Bill to the House and hope that your Lordships will give it a Second Reading.
Moved, That the Bill be now read 2a.—(Lord Hughes).
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, I think it would be for the convenience of the House if at this stage I expressed the Government's view on this Bill. First, I should like to thank my noble friend Lord Hughes for introducing the Bill and for explaining so clearly the nature and purpose of the measure. I well remember that the first Bill I ever assisted in from the Front Bench was with him. That was over two years ago and concerned health and safety at work; and a very good seminar he gave me as to how to present Bills and how to deal with them. I am very grateful to him.
I should also like to endorse what my noble friend said about the work of the noble Baroness, Lady Serota, as Chairman of the Commission for Local Administration in England. I am also very pleased to know that she is recovering from her recent accident. I have had the opportunity from time to time of discussing the
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work of the Commission with my noble friend Lady Serota, and I know how important the qualities of a deep understanding of local government, hard work and tremendous tact are in this particular job. All these she has in admirably great supply.
I am very glad to confirm the Government's support for this Bill. In the Government's view, it is absolutely right that the authorities concerned should have this discretionary power to make payments to remedy the injustice they have caused.
My noble friend has explained that under the present arrangement an authority may seek the approval of my right honourable friend the Secretary of State, under Section 161(1) of the Local Government Act 1972 to make an ex gratia payment. This arrangement has proved unsatisfactory for a number of reasons. For example, it requires my right honourable friend to decide on a case of which he has far less direct knowledge than either the authority or the local commissioner. Then his involvement in a local ombudsman system, which is otherwise wholly independent of Central Government, is also an anomaly. The present position could, on occasions, cause difficulty between central and local government. There is often quite enough without adding to it.
My noble friend has indicated his intention to introduce Amendments to provide, first, that expenditure incurred by local authorities under the Bill shall count as relevant expenditure for rate support grant purposes—which he explained so clearly and admirably that I shall not add to what he said—and, secondly, that the Bill's provisions should extend to Scotland as well as to England, and Wales. It is quite impossible, at the moment, with the progress of business through the House, for us to forget Scotland. We have not done that, and Scotland will now be included in the Bill. I should like to confirm that the Government wholeheartedly support these proposed Amendments.
The Bill will, in effect, take the place of the existing unsatisfactory arrangements to which I have just referred, and its financial implications are therefore unlikely to be significant. Expenditure on ex gratia payments to complainants in

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England and Wales, in the first two years' operation of the local ombudsman system, amounted to only about £5,000 and £4,000 respectively. It is the Government's view that local authorities' expenditure under the Bill should count as relevant expenditure for rate support grant purposes. It will be expenditure out of the rate fund incurred by local authorities in the course of their normal activities; and rate support grant is a general grant in respect of rate-borne expenditure. This is, therefore, a point of principle, but, from the figures which I have just given, your Lordships will appreciate that it is unlikely to be a matter of financial significance.
In the Government's view it is also right that the Bill's provisions should extend to Scotland. Indeed, on 17th February, an Instruction was approved in another place that their Committee on the Bill should have power to extend the measure to Scotland. However, the necessary Amendments were not then tabled and I am therefore pleased that my noble friend now proposes to introduce them during the Bill's later stages in your Lordships' House. I will certainly make the notes on clauses available to any noble Lords who would like to read them. I should like to thank the Promoters of the Bill in another place, and my noble friend Lord Hughes for moving the Second Reading, and I commend the Bill to the House.
8.2 p.m.
Lord SANDYS: My Lords, from these Benches, I should like to give another warm welcome to a Private Member's Bill so ably proposed by the noble Lord, Lord Hughes. There are very few comments for me to make from these Benches, because so many of the points which were obscure have been clarified. But I should like to draw the noble Baroness's attention to one problem about which the House may be in some doubt, because I hold in my hands the only copy which is apparently available in the Palace of Westminster of the Commissioner's report for the year ended 31st March 1977. I hope that I have the correct report in my hands. It comes from the House of Commons Library.
There is one paragraph in the report of the noble Baroness, Lady Serota, which,
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with the permission of the House, I should like to quote, purely for record purposes, should your Lordships have been unable to obtain a copy. It is paragraph 10, in which the noble Baroness refers to problems of seeking redress, and she says this:
"Where such total redress is not possible, a cash payment in recognition of the inconvenience suffered may be appropriate. In seven cases in my area during the year, money was paid to the complainant by the authority. This was either a specific sum such as a grant, or an ex gratia payment to cover expenses that the complainant had incurred, and in recognition of the inconvenience and distress caused by the authority's mistake. I must record my concern that, in one case where a local authority positively wished to make a payment to a complainant, who, because of the authority's maladministration, had not applied for a home loss payment in time, the Department of the Environment refused to grant the necessary sanction under Section 161 of the Local Government Act 1972 to allow such a payment.".
That stresses the difficulties which have occurred up till now, and this short Bill will enable matters to be put right.
8.5 p.m.
Lord EVANS of CLAUGHTON: My Lords, I have the feeling that brevity would be most acceptable this evening, not because this is not an important measure, but because of the time. May I also add my thanks and congratulations to the noble Lord, Lord Hughes, for introducing this Bill which, from these Benches, I wish to welcome very warmly. It goes a long way towards curing a lacuna which is wrapped up in an anomaly, in that I am sure it was never the intention of the Legislature that this kind of payment should not be within the terms of local government.
Fortunately, in the authority of which I was a member for some years, there was only one case of maladministration, as it were, proved against the authority, and we had to go through the extremely vexatious, troublesome and tiresome business of applying to the Department for permission to pay a sum in interest, because a payment to a person had been deferred through one cycle of council meetings. There was all that trouble for a comparatively small sum. It is important, too, that noble Lords should remember that some authorities—I am sure none with which I have been associated, and, I hope, none that anyone else can think of —through exasperation at a finding of mal-

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administration against them which they do not support, might use this lacuna as an opportunity of not paying money to someone who is properly entitled to it. So I am sure that, in every way, this Bill, though a small one, is very important and I think that it will go a long way to curing hardship, anomalies, difficulties and vexatiousness.
Having said that, I do not believe that all in the garden of the ombudsman is beyond complaint. I think that before long a definition should be found—I have not succeded and neither has anyone I know—of the word "maladministration". This causes difficulties at local government level and I suspect that it causes uncertainty to the ombudsman. In particular, I know that lack of a definition causes great difficulties for local government officers, in determining what is maladministration. Furthermore, of course, it might—I do not suspect that it would—encourage members of the staff of the ombudsman occasionally to go on fishing expeditions to extend the area of possible maladministration.
So I hope that the Government will at some point consider whether it is possible to give a reasonably accurate definition of the word "maladministration", as local government is in difficulty at times m that the area of maladministration does not come within the area of statute law or common law, but comes in the rather vague area of administrative law. Lack of certainty in this field does not help those people seeking the assistance of the ombudsman, local government or the ombudsman. Having made those small reservations, may I, on behalf of these Benches, welcome the Bill, and also welcome very greatly the Amendment which I understand is to be made to Clause 1(2).
8.9 p.m.
Lord HUGHES: My Lords, if I may first reply to the points just made by the noble Lord, Lord Evans, I doubt very much whether it would be possible or helpful to attempt to define the word "maladministration" in a piece of legislation. Personally, I should very much prefer to leave the identification of maladministration in the hands of such a person as my noble friend Lady Serota. I am certain that she might have as great a
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difficulty as any of us here in defining "maladministration" as a word. But I am also certain that she has no difficulty in recognising maladministration when she comes up against it. I am equally sure that she does not send her people out on fishing expeditions. There are enough people coming to her, without her having to go out looking.
The noble Lord, Lord Sandys, quoted an example in a report by the Commissioner, and that illustrates why the Minister himself is anxious that this should be left with the authority, which is in a better position to make a determination. It will consider the matter on the merits of the individual case, whereas civil servants, who have to work within rules, perhaps find it a little more difficult to show that degree of compassion which in some cases will be necessary. There was another case of a similar kind where refusal was given by the local authority in the first case, but the local authority felt that they had been wrong in their attitude, that they had indulged in maladministration and were anxious to remedy it. They kept at it and eventually they got the first decision from the Department reversed. For these reasons, this is very much a case where the people in what used to be called the Town Hall will know better than the people in Whitehall.
On Question, Bill read 2a and committed to a Committee of the Whole House.
Lord WELLS-PESTELL: My Lords, I beg to move that the House do now adjourn until twenty minutes past eight o'clock.
[The Sitting was suspended from 8.12p.m. until 8.20 p.m.].

WALES BILL
House again in Committee on Schedule 2.
Lord ELTON Lord ELTON moved Amendment No. 46B:
Page 39, column 2, line 42, at beginning insert—
("The functions under section 10 of the Education Act 1944 (c. 31).").
The noble Lord said: The functions devolved under Section 10 of the Education

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Act 1944 appear to me to be functions relating to the fixing of standards for the provision of education, in the material sense, by the Secretary of State. These provisions are implemented under a Statutory Instrument of 1972, No. 2051. This instrument sets out in considerable detail what are the minimal standards for the provision of education. If I may quote at random, Section 5(1) in Part II, Primary Schools, states:
"The minimum internal area of the teaching accommodation shall be …".
Throughout the instrument we find either that standards shall be sufficient or that they shall be other than minimum.
It strikes me as a peculiar provision that one of the functions devolved to the Welsh Assembly shall be a determination of the minimum standards under this section. One wonders what is the purpose. If they were maxima, one would understand, but they are minima. They relate to the number of square yards in the playground, the number of square metres in the staff room, the number of toilets, the area of the playing fields. All of these are minima. Already there is provision under subsection (2) to make a variation order where circumstances do not permit the minima to be met and where this is thought to be desirable. Therefore, if there are occasions in Wales when there should be a variation, this standard could be departed from.
I do not wish to make a mountain out of a molehill, but it seems to me odd that the first privilege that we should give to Wales under this part of the Schedule is to be the privilege of varying the minimal standards when there is nothing in that section of the Schedule to prevent those minima from being exceeded. Perhaps the noble Lord will explain to us why this should be the provision and what its effects will be. I beg to move.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Lord Donaldson of Kingsbridge): The noble Lord speaks of a privilege being given to Wales. This is a privilege which Wales already has, in the form of the Secretary of State for Wales. As these Amendments are designed to prevent the objective which we are trying to achieve in this devolution Bill, which is to transfer certain things which affect the Welsh
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people from the Secretary of State for Wales to the Assembly, I think that it might be helpful if I made a few general remarks on this series of Amendments which are coming before the Committee.
Before we go into any great detail—many of these Amendments are very detailed indeed and not everybody will have had time to look at them carefully—I think it might be helpful if I tried to explain once again, which has been done before, the objectives of my Government in putting forward the Bill.
First, the background. As the original White Paper of November 1975, Cmnd. 6348, stated, the central task on which the Government have concentrated in developing the schemes for devolution is to define those areas of activity where decisions primarily affect people living in Wales. These areas include such matters as health, housing, roads and, in our particular case, education. At the same time, it would plainly be wrong to devolve activities which substantially affect people living elsewhere or which affected the wellbeing of the United Kingdom generally. Thus matters of national taxation and industrial, energy and regional policy should continue to be dealt with by the Government in the interests of the people of the United Kingdom as a whole. As a subsidiary objective, but one which is nevertheless of considerable importance, the Government have kept in mind the need for a coherent and consistent pattern of government which will be clear and understandable to the people who work in it and the public whom they serve.
These objectives provided clear guidelines when the provisions of the Bill were being drawn up. Nevertheless, the boundaries between devolved and reserved functions have often needed to be defined in great detail and precision. The governing enactments were not drawn up with devolution in mind: the components of devolution—economic, social, educational—are not, at least in the second half of the twentieth century, easily carved up and produced in neat packages. Consequently there will always be some interaction between devolved and reserved functions and between authorities exercising functions in the same field in England and Wales. Nevertheless, the Government have tried and, I believe in great measure, succeeded, in delineating reasonably discrete fields of activity.

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One of the criticisms levelled at the Government's earlier measure, the Scotland and Wales Bill, was that it contained numerous "apron strings", so to speak, which allowed interference by Whitehall in the day-to-day administration of devolved functions. We frequently hear talk of the complexities of modern life, of confusion, of "faceless administrators" passing those with complaints or grievances or in search of help and guidance from one authority to another. One of the intentions of devolution is that decisions in matters of domestic everyday concern to the people of Wales should be taken in Wales by identifiable people working in identifiable institutions—either the Assembly or organisations responsible to it.
The Wales Bill as now presented for your Lordships' consideration has been simplified by comparison with the earlier Bill, which never left the other place. Simplicity, or perhaps I should say in the light of my earlier remarks, comparative simplicity, can only be achieved if we leave the Assembly to get on with the job. I fear that many of the Amendments we are coming to seek to prevent that by placing the Secretary of State as an arbiter, or director, of last resort in many detailed matters in the education field. This must sap the initiative of the Assembly. We shall be dealing with these Amendments one by one, but I hope that this general thought can be kept in mind.
Turning to education itself, noble Lords will know that it is at present administered by the Welsh Office—although the Secretary of State for Wales has only recently, in 1978, been given the responsibility for higher and further education to add to his long standing responsibility in the primary and secondary field. Only the University of Wales now remains the responsibility of the Secretary of State for Education and Science who, with the help and guidance of the UGC administers the universities on a United Kingdom wide basis.
The Assembly will thus be responsible for nursery, primary and secondary education, further and higher education outside universities and adult education. The Assembly will have a general duty to promote the education of the people in Wales, the development of institutions devolved for that purpose and the supervision of the execution by local authorities
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of educational policy. Among its functions will be control of the school building programme, including proposals for closing schools; approving regulations to various fields, for example in respect of school buildings, private schools and schools for those with special needs; approval of further education schemes prepared by local authorities and payment of grants (but not grants to university students which remain reserved).
Thus people living in Wales will look to the Assembly for the ultimate provision of their educational needs. It is my belief that the Amendments proposed by noble Lords opposite would undermine this and insert arbitrary boundaries between devolved and reserved functions. In particular I hope that the debates we heard earlier about the Assembly's appellate role will have removed many fears which some of these Amendments obviously express. Let us have a little more faith in the inherent reasonableness of those elected to the Assembly. Nothing will do more to sour relations with the Secretary of State than if he is forever looking over the shoulders of Assembly Members. The approach evident in the many detailed Amendments we are to come to could only provide for confusion, inefficiency and ultimately, I fear, for conflict. Responsibility would be diffused, the provision for education in Wales would be effected piecemeal. The educational system itself could be damaged.
The Amendments concerning education which have been tabled by noble Lords opposite, except for three Amendments—Nos. 46W, 46AAA and 46AAD—about which I shall have more to say later, are of two kinds: either they reserve to the Secretary of State powers that the Bill now devolves to the Assembly or they give the Secretary of State superior powers to override the Assembly's exercise of powers that are being devolved. The issues of principle involved in the Amendments are therefore similar in each case, and your Lordships may think that it would have been better for these issues to be argued out for the Amendments as a group; but the noble Lord was not content to treat them in this way, so we will deal with them individually. However having already said a certain amount about the principles concerned, I shall deal very briefly with the individual Amendments.

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Both kinds of Amendment are a derogation from the powers of the Assembly. Either they remove powers that the Government consider that the Assembly clearly ought to have, or they place constraints upon the Assembly's exercise of its powers that can only lead to friction and eventual conflict between the central and the devolved Administrations. The Government's intention is that the Assembly should have virtually all the powers of the Secretary of State in devolved fields. Therefore, we strongly disagree with, and oppose, the Amendments, except the three I have mentioned, and when the time comes I shall urge the Committee to reject them.
I ask the forbearance of the Committee for having made rather a long speech at the outset but there are a large number of Amendments, all concerned with the same area, and it seemed to me that it would save time if, instead of speaking at length on each, I spoke at length at the beginning and hoped to deal much more shortly with the Amendments as they arise.
This Amendment would certainly bring the objective of emasculating the Assembly's powers nearer by excluding the power in Section 10 of the 1944 Education Act from the competence of the Assembly. If the Assembly is to have any responsibilities in the education field it must surely be given the power to determine standards of school premises within the framework laid down by primary legislation. Inevitably it will be argued that standards must be exactly the same in England and Wales. But the whole point of devolution is to give the initiative in such local matters, which primarily affect people living in Wales, to the Assembly. This is one of a large number of ministerial powers for which the Assembly will be responsible and accountable to the people living in Wales. It is an extreme view which suggests that the Assembly will ignore the electorate or be insensitive to its feelings—the field of education generally or this power in particular. The Assembly Members will, after all, hope to be re-elected. I urge your Lordships to reject this Amendment.
8.40 p.m.
Lord ELTON: That was an extremely interesting introduction to the evening's proceedings by the noble Lord. I hope
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he does not think I am unco-operative or ungracious in not wishing to take these Amendments holus-bolus. He was not present, as it happened, when we had a rather heated exchange on the same subject on an earlier day. It was quite definitely the opinion of the Committee, and it was voiced on both sides, that this would not be a good thing. I am following in this guidance of the Committee. I am, of course, clear that there are certain principles which are common to a number of the Amendments, and I do not propose wearily to trot out the same arguments on every occasion. If I do so, I am sure the noble Lord will be the first to check me in that process.
Since the noble Lord has introduced a number of general principles, it is only fair that I should remind him also of the same. As I said earlier, a principal concern of this Committee must be to see that this Bill works as effectively as possible to the benefit of the Welsh people; secondly, to protect individual Welsh people from what may be the miscarriages of the machinery which this Bill produces. These are both primary functions of Parliament and have nothing to do with the Welshness of the institution we are considering; it could as well be Liverpool or Blackpool. Another purpose is to see that the best deal which can be obtained is obtained. What I find difficult in this is that the provisions of Section 10 are provision which set out standards which are minima. Anybody can have twice as many square metres in the classroom or the staffroom as are set out in Section 10. Anybody can, on appeal to the Minister, have less. The Minister to whom such an appeal would be, as I understand from the noble Lord, would be himself a Welshman.
We are not taking anything away from Wales. If I used the word "privilege" it was sarcastically. We are taking away from them nothing except the right to have something less good than the English. The noble Lord looked puzzled, but that is what the case is. Under Section 10 of the 1944 Act as it stands, they are required to have at least as good as the English are required to have. There is no need to alter that. If they want to have more they do not have to alter this Act. The only right they are being given is the right to lower standards, and it seems a strange one to me. I do not want to leave the subject of uniformity of standards when those

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standards are minimal. This is the least important area of it. When it comes to standards of teacher training, standards of pupil accomplishment, or standards of examination, we shall obviously have more concern. There is a principle of equality of provision. The noble Lord says that he wishes to address himself to general principles during this sequence, and this is the first principle we have come to. I have not heard him defend it as yet.
Lord DONALDSON of KINGS-BRIDGE: Section 10 contains a regulation-making power, and whatever the existing regulations may say there is nothing to preclude the Assembly, in their regulations, prescribing maxima, minima or anything else they want. It is a proper function for the body which is in control of education to be in control of the conditions in which education is given; that is all that exists, and this is what the noble Lord is suggesting should be removed.
Baroness ELLES: I should like to join in this exchange of views. I am very grateful to the noble Lord thinking that a contribution might be welcome from this side. As I see it, this section gives the Secretary of State powers to prescribe standards, to make regulations which impose standards across the country. I think the point my noble friend was making, and I thought extremely clearly, was that there is nothing derogatory in the Secretary of State holding powers which impose a universal standard; that is, a minimum standard below which no part of the country should sink. This is what we are all concerned with, that the schools throughout the country, whether it is England or Wales or Scotland, should be of at least a certain standard. If we take away this power from the Secretary of State and devolve it to another body, that new body will not be obliged or bound to have any particular standard. I am not saying that they will not in fact reach the same standard as other parts of the country, but there will be nothing in the Bill that will impose on the Welsh Assembly any duty to the people of Wales to provide that minimum standard. That is what we are concerned about.
However good they may be, however honest they may be, however willing they may be, they will nevertheless be in charge
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of a certain sum of money which they cannot increase. They have got to use that sum of money, which comes from the consolidated fund to be allotted to the Assembly, for certain specific purposes for the Welsh people, and beyond that amount of money they will not be able to go. If they decide, quite rightly possibly, for some reason, to spend a large sum of money on developing opportunities for employment in parts of Wales, it may mean that there will be less for education. It may mean, therefore, that they will have less money to spend on maintaining a certain minimum standard for the premises of the schools the noble Lord has mentioned. It is, therefore, for this reason that we feel that for all children in all parts of the United Kingdom—and this is a principle which I believe has always been shared by Members of the Party opposite—there should be at least a minimum equality of standard. We should like to see that minimum standard maintained, and we are concerned that by devolving this particular power in this section these children may be deprived of that right.
Lord DONALDSON of KINGS-BRIDGE: I cannot quarrel in any way with the noble Baroness's wishes, because they are mine and they are the Government's. The position is really very simple. There is at the moment in the hands of the Secretary of State for Wales the duty to exercise the powers under Section 10; this duty is to maintain the standard as it is, and, as he may think fit, to improve it or otherwise. We are asking simply that this duty should be transferred to the body which is responsible for education, bearing in mind that under this Bill the Secretary of State for Wales will no longer be responsible. I do not feel that we are at all far apart in this. I do not feel that what the noble Baroness and the noble Lord are putting forward can be regarded by a Welsh Assembly as anything but a derogation, even though I do not believe it is meant as such. I would hope that the noble Lord would not find it necessary to press this Amendment because I believe it cannot be regarded otherwise than as a derogation.
Baroness ELLES: Perhaps I should clarify that in no way am I speaking in terms of it being any derogation from the Welsh Assembly. I am only saying that it would be limited by the financial

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circumstances of the money allotted to it. I have known a personal colleague of mine who, when she was Minister of Education, managed to press money out of the Treasury for what she believed was essential to this country, which was nursery education. She managed to get a larger budget to improve nursery schools—and very well done. But the Welsh Assembly will not be in that position; they will be limited by the financial circumstances which circumscribe their activities. That is the only thing I am concerned about.
Lord DONALDSON of KINGS-BRIDGE: If I may have a last word, in a sense this is what the whole of devolution is about. If in every difficult situation you say, "Of course, if they cannot get the money out of their block grant they can go to the Government", you have not got devolution. We had a discussion about purchase grants for art and so on. This Bill is about devolution; it is about giving a block grant to the devolved country—in this case Wales—which will in the view of the Government be adequate for it to do what it ought to do. I do not think I can go further than that.
Lord ELTON: We have scratched the surface of what is perhaps a larger subject than we thought. At some stage, obviously, we are going to have to exercise a principal function of this House, which is to give the House of Commons an opportunity to discuss subjects which they have not yet discussed. I am very tempted to take this particular Amendment to a Division as a means of doing that. I am, on the other hand, aware of the dangers of moving the first Division after dinner in a euphoria of certainty that it is correctly drafted. It may be that we shall find a better topic on which to provide the same opportunity to the Commons. Therefore, with what I must confess is a certain reluctance, I will take this away with me, but on the understanding that something quite like it may come back at a later stage, unless we encounter something even more like it later this evening. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.50 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46C:
Page 39, column 2, line 42, at beginning insert—
("The functions under section 13(4B) of the Education Act 1944 (c. 31).").
The noble Lord said: I beg to move Amendment No. 46C. This Amendment is a paving Amendment for Amendment No. 108D, provided that there has been no change in the revised Marshalled List which betrayed me before. I should explain that this is an Amendment to Section 13 of the Education Act 1944, the principal Act with which this part of the Schedule deals. The noble Lord, Lord Donaldson of Kingsbridge, will be very familiar with the provisions of that section.
However, your Lordships should be aware that it is that section of the 1944 Act which provides for the establishment and discontinuance of county and voluntary schools and which enables the establishment of a new county school, and the maintenance
"…as a county school any school which at the time being is not such a school";
or the cessation—and this of course is the ground with which the noble Lord is as sadly familiar as I am and which became highly contentious during the great programme of comprehensivisation from which we are all emerging—under Section 13(1)(c)
"…to maintain any county school or, save as provided by the next following section of this Act, any voluntary school".
This is a sensitive issue and it is always possible that there may be a similar conflict, although on a different matter, in the future which might or might not be the direct result of the educational policy of the Welsh Assembly.
At the outset when I was looking at this part of the Schedule, I was tempted to suggest that during the Committee stage we had a debate on reserving the whole issue of Section 13. However, I take the point that the Welsh people should be masters in their own house. I do not take the point that the householder should be above appeal. Therefore, I sought to devise a method whereby, if the judgment of the Welsh Assembly aggrieved one of the parties affected, the aggrieved party would not through devolution lose his right of appeal to the Secretary of State as regards whom presumably one would be dealing with a different set of advisers. Of course, we have not yet reached the

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part of the Bill—in fact, some of us have not identified the part of the Bill—which will enable us to find out which group of advisers will be giving what advice to whom.
However, assuming that the educational function devolved to the Secretary of State for Wales is part of the Home Civil Service relating to the Ministry of Eduation, that is a separate body and an appeal to the Secretary of State would not be an appeal therefore to the body which had initiated the policy. Nor, as I said in the last debate, would it be an appeal outside Wales, because the noble Lord himself has pointed out that this function now rests with the Secretary of State for Wales.
Therefore, I cannot see that this can be classified as is in any way derogatory to the Welsh. Nothing is being taken from Wales or the Welsh. What is being provided is a means by which people who feel themselves aggrieved by the Welsh Assembly may appeal for a final judgment to the Welsh Secretary of State. I do not think that that is contrary to devolution. Therefore, I do not feel that it is a part of the great principles that the noble Lord adduced so eloquently at the beginning of this series of Amendments. He adduced them on the assumption that a derogation from the Assembly was a derogation from Wales. But, in this case, that is patently not true, because it will be a derogation from the Welsh Assembly in Cardiff to the Secretary of State, quite possibly also in Cardiff.
As to how this is to be done, your Lordships will see set out on the Order Paper the functions—Amendment 46C—under Section 13(4B) of the Education Act. If I may explain, a trap which I have had to avoid, I hope successfully, is that of providing an appeal system and then failing to reserve it in Schedule 2 because all the functions of the person hearing the appeal would be once more devolved to the Welsh Assembly. So, in Amendment 108D your Lordships will find new Clause 4B comes into Section 13 of the 1944 Act. It provides that, where the functions of the Secretary of State under subsections 4 and (4A) of Section 13—that is, the function of hearing objections to proposals for new schemes of education
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—have been devolved or have been discharged by the Welsh Assembly (and only in that case), then the people who in the original Act under subsection (3) are entitled to make objections to the Secretary of State, who has become, of course, transmogrified by the effect of devolution into the Welsh Assembly. If they are entitled to appeal to the Welsh Assembly, they are, by this subsection, entitled to appeal to the Secretary of State. In order to enable them to do so, we have to have a period during which they are entitled to make an objection and also we have to make them aware of what it is they have to object to and how long they have to object to it.
Therefore, the new Clause 4A—to go into the 1944 Act which is devolved—refers to the Secretary of State. But, as it is not reserved that reference to the Secretary of State, as elsewhere in the section, is a reference of course to the Welsh Assembly. This sounds tortuous, but it is the way that the Government have designed the Bill and we can only follow our way through the labyrinth seeking the Minotaur.
The Secretary of State under Clause 4A therefore gives notice in the person of the Welsh Assembly of his decision to approve proposals to which people have objected. Then, if it is the Welsh Assembly that is doing this, that approval remains provisional until either the expiry of the time allowed for an objection, which is two months, which is a common period throughout the Bill, or until the determination of an objection or an appeal on objection whichever is the later. That is how it will work.
The noble Lord said almost critically that some of the Amendments were somewhat detailed. Of course, legislation that is designed to work must be detailed. I am sure that the noble Lord with his spanner which we know so well will soon show that it will not, but in my view as I now stand advised, it would work. As I have said, I do not think that the principles which he adduced with so much eloquence at the beginning are affected because this is not an appeal outside Wales. I shall be interested to hear what he has to say. I beg to move.
Lord LLOYD of KILGERRAN: May I crave the indulgence of noble Lords in

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the Committee as I have had the Amendments for only a fairly short time. I am making no criticism at all. However, I have not had the opportunity to consider fully the effect of the proposed Amendment. The noble Lord, Lord Elton, in his admirable introduction to Amendment No. 46C, used the words "conflict arising"; he talked about "aggrieved persons"; and he also referred to dealing with a Minotaur. I fully appreciate that there will be difficulties as a result of these concurrent powers. There are bound to be difficulties, but they are not difficulties which are insoluble under the arrangements in the Wales Bill. The noble Lord, Lord Elton, spoke about conflicts, aggrieved persons and the Minotaur; and I noticed that the noble Lord, Lord Donaldson of Kingsbridge, was trying to indicate that he was the Minotaur and I reject that suggestion at once. But would he give us specific instances in relation to the education circumstances where the kind of conflict which he has in mind arises?
Lord ELTON: With the greatest of pleasure. I am surprised that the noble Lord, Lord Lloyd of Kilgerran, should need reminding of recent events within which these conflicts have arisen in the United Kingdom. They arose in England between an English local authority and parents who felt that their schools should not be changed and that the way in which a plan was put forward was not in accordance with the Act. Later we shall have cause to refer to the Enfield case which I am sure the noble Lord remembers reading about and which resulted in legislation. These things happen. I am glad that the noble Lord has raised this point because it has nothing to do with it being in Wales.
All that we are seeking to do here is to establish that there shall be an appeal from what is either a very small legislature or a very large local authority—nobody has actually said what it will be—but from a body consisting of elected people and committees to a Secretary of State, a Minister of the Crown, advised by the Civil Service of Her Majesty's Government. It will take the grievances which arise; and the grievances themselves have nothing to do with the Bill. In recent years we have experienced them very sharply. They do not arise from this Bill. I think that the noble Lord, Lord
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Lloyd of Kilgerran, imagines that I am saying that this Bill will produce this sort of grievance. On the contrary, I am saying that this kind of grievance will occur whether or not we have the Bill, but it should not be resolved by the Welsh Assembly. There should be an appeal from the Welsh Assembly to another authority, which incidentally will take the sense of grievance further away from the aggrieved person. That seems to be eminently reasonable to me. I do not wish to make a meal of this, but it seems that everybody else does.
Lord DONALDSON of KINGS-BRIDGE: We are really back on the same topic. I do not want to continue to say the same thing the whole evening, although I think that I shall probably have to. The Bill transfers education from the Secretary of State to the Assembly. A dispute which takes place between a parent and a local authority in Wales will be referred to the Assembly in exactly the same way as it is referred in England to the Secretary of State, because the Secretary of State for Wales is changing his powers—giving over his powers to the Assembly.
In this country there is no problem whatever about an appeal. If there is a row between an individual and a local authority, they have recourse, not to an appeal to anybody but to the courts. The same is available in Wales. It is exactly the same situation as we spoke about before in a slightly different context. If the Welsh Assembly is to have power to ensure that the citizens of Wales get a proper education, it must be able to deal with the thing as a whole. There cannot be an appeal against it to a third tier. That is something quite new and quite unnecessary. Certainly differences in the systems between England and Wales might be ironed out by having them exactly the same in this way, but that is really against the whole philosophy of devolution.
We believe that the elected Assembly should have the right to change the system within the framework of primary legislation, without the fetters that this scheme would impose. The noble Lord says that we could not make up our minds whether it was a "local authority large" or a "legislature small". We have said fairly clearly that it is not a "legislature small";

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it does not legislate; it does not have legislative powers.
Lord ELTON: The noble Lord's noble friend earlier said that it was not a local authority.
Lord DONALDSON of KINGS-BRIDGE: I think that my noble colleague was clearly right. Why should it be either? It is not. It is an Assembly which is a new body serving a new function which is of great interest to all of us. In the course of our discussion, I am absolutely determined that I shall not let the noble Lord gradually remove its powers to do its job properly. I cannot agree to this Amendment.
Lord ELTON: This has been very profitable. It certainly has not brought
Resolved in the affirmative, and Amendment agreed to accordingly.
9.13 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46D:
Page 39, column 2, line 42, at beginning insert—
("The functions under section 14(5A) of the Education Act 1944 (c. 31).")
agreement. However, it is an important principle. The noble Lord accepts that it is an important principle, and it is a principle in a part of the Bill which the House of Commons has not had a chance to discuss. Therefore, I think that we should be doing no service to anybody not to insert one of these Amendments, and many people would like to do it sooner rather than later. If none of my noble friends wishes to restrain me or to add to what I have said, I shall press this Amendment.
9.5 p.m.
On Question, Whether the said Amendment (No. 46C) shall be agreed to?
Their Lordships divided: Contents, 47; Not-Contents, 40.

CONTENTS

Alport, L.

Faithfull, B.

Northchurch, B.

Amherst of Hackney, L.

Falkland, V.

O'Hagan, L.

Belstead, L.

Falmouth, V.

Onslow, E.

Bradford, E.

Fortescue, E.

Pender, L.

Campbell of Croy, L.

Gainford, L.

Rankeillour, L.

Colville of Culross, V.

Gridley, L.

Rochdale, V.

Cork and Orrery, E.

Harmar-Nicholls, L.

Sandys, L.

Craigmyle, L.

Harvey of Tasburgh, L.

Selkirk, E.

Crathorne, L.

Kilmany, L.

Strathclyde, L.

Cullen of Ashbourne, L.

Long, V.

Swansea, L.

De La Warr, E.

Lyell, L.

Swinton, E.

Denham, L. [Teller]

Margadale, L.

Trenchard, V.

Drumalbyn, L.

Mowbray and Stourton, L.

Tweeddale, M.

Elles, B.

[Teller]

Tweedsmuir, L.

Elliot of Harwood, B.

Moyne, L.

Vickers, B.

Elton, L.

Newall, L.

Ward of North Tyneside

NOT-CONTENTS

Champion, L.

Janner, L.

Stedman, B.

Collison, L.

Kaldor, L.

Stewart of Alvechurch, I

Davies of Leek, L.

Kirkhill, L.

Stone, L.

Davies of Penrhys, L.

Lee of Newton, L.

Strabolgi, L.

Donaldson of Kingsbridge, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Blackburn, L.

Elwyn-Jones, L. [L. Chancellor.]

Lloyd of Kilgerran, L.

Taylor of Gryfe, L.

Gardiner, L.

McCarthy, L.

Taylor of Mansfield, L.

Gordon-Walker, L.

McCluskey, L.

Thomson of Monifieth, L.

Greenwood of Rossendale, L.

Melchett, L.

Wallace of Coslany, L. [Teller]

Gregson, L.

Morris of Borth-y-Gest, L.

Wells-Pestell, L. [Teller]

Han worth, V.

Oram, L.

White, B.

Harris of Greenwich, L.

Ritchie-Calder, L.

Winterbottom, L.

Hatch of Lusby, L.

Sainsbury, L.

Houghton of Sowerby, L.

Seear, B.

The noble Lord said: Having discussed this principle at some length, I accept what the noble Lord, Lord Donaldson, said earlier; that is, that we do not wish to go over the same ground the whole time. However, it is worth noting that the provisions of Section 14 of the Education Act 1944 are different from those of Section 13. This deals not with objections to

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proposals to change the nature of a school, to open or close it, but disputes between managers and governors of voluntary schools who are not happy with the directions given to them by the local education authority.
Again, this is a matter which generates a great deal of heat in local affairs, and again I think some of my colleagues would feel that to take that heat further away from the locality than merely to the Welsh Assembly would be a good thing. I do not doubt that the noble Lord, being a prudent man, has adduced other reasons for resisting this Amendment than the general reason of principle which he adduced at the beginning, which I hold to be invalid. I should be obliged if he would let us know what they are.
Lord DONALDSON of KINGS-BRIDGE: This Amendment gives a right of appeal by governors or managers of schools against a requirement made by the Assembly; under its terms they can go to a Government Minister over the heads of the Assembly. I cannot think that the noble Lord, Lord Elton, believes this is not in some sense or other a derogation from the powers of the Assembly. At present under the Bill there is no appeal except to the courts, which is the same as the position in England. If one puts in an extra appeal one is clearly showing a lack of confidence in the Assembly.
Such a provision would make the Assembly's administration of the education system in Wales a hollow shell, because those involved would know that if they did not get their own way with the Assembly they would always have the ultimate ability to appeal to a higher authority. We have heard much in these debates, and in those on the Scotland Bill, about extra tiers of Government. I can only think that noble Lords opposite are now attracted to such an idea. For my part, I remain of the view that the devolved Assembly should be allowed to get on with the day-to-day administration of the education system; the efficiency and responsiveness of that system would be reduced by the cumbersome mechanism proposed by Lord Elton. I hope he will not feel it necessary to press it. I believe it would be absolutely wrong.
Lord ELTON: I had not thought of it as cumbersome, expressed as it is in soft
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few lines of print. The noble Lord, Lord Donaldson of Kingsbridge, I think attributes more importance to it than I do in this case, and I do not think we should go on arguing about what is a derogation; presumably the noble Lord would say it is a derogation for anybody to have an appeal to a higher authority, and I could not accept that.
We have opened up the principle of the matter and it was open to us to have used any one of several of these Amendments. The noble Lord merely adduced the same objection to it as he did before and there would be a certain logic in marching through the Lobby again to establish the point; but we have opened the door to exchanges in another place, from which we will learn what the other place thinks of this part of the Bill, which nobody has been able to discover hitherto because the opportunity has not been given to them. As the Committee may wish to proceed at a smarter pace, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.18 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46E:
Page 39, column 2, line 42, at beginning insert—
("The functions under section 29 and Schedule 5 to the Education Act 1944 (c.31).").
The noble Lord said: We come now to something rather different. The Minister and others will be pleased to hear that. This is a probing Amendment which deals with the functions under Section 29 and Schedule 5 to the Education Act 1944 and proposes a reservation of them in order to enable the noble Lord to give us the current thinking of Her Majesty's Government on the oversight of religious education in Wales, and indeed elsewhere if he wishes.
The function of the Secretary of State as affected by the Amendment is, if I have it right, merely restricted to paragraphs 10, 11 and 12 of Schedule 5, and those paragraphs have the force of enabling him to set out an agreed syllabus of religious instruction when the conference appointed by a local education authority cannot agree. I should be interested to know, if the noble Lord has the facts at his fingertips, how often in the past this power has been invoked.
I should also like him to give an indication of the way in which the adminis-

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tration of religious education may differ in the Principality. It is a different set-up —the Church is not established for a start—and obviously (I do not think "colour" is the word; "breadth" may be the word) religious education in Wales is different from that in the rest of the United Kingdom. It is a different problem and it is proper that it should be devolved. I hasten to say that, and I do not wish to derogate anything from anybody, but we should like to know what the Minister sees the field in which this power will be operating. I beg to move.
Lord DONALDSON of KINGS-BRIDGE: The noble Lord asked me whether I could say how many times the power had been invoked where the conference disagrees. My position here is rather disappointing, because when we had debates on this matter in your Lordships' House I had the facts at my fingertips, but now I simply cannot remember; so I shall write to the noble Lord about it. But I think that the occasions were not very often. Obviously, the disestablishment of the Church in Wales at the time of Lloyd-George and thereabouts—which we read about with such interest—has already led to different approaches to the syllabus on each side of the Border. Schedule 5 of the 1944 Act itself allows, as the noble Lord has suggested, for different representation at a conference convened by an education authority in Wales from that convened by an education authority in England. I think that the main difference is that in England the Church of England must be represented, while in Wales the Church of Wales need not.
Given the different character of religous life in Wales—and I do not think that I can go into a discussion on exactly what the differences are, but I think that anybody who has been to a Welsh chapel will know that they are considerable—it seems only right to us in the Government that the Assembly representing the people of Wales should have the power to deal with a situation in which such a conference, set up to determine the syllabus of religous instruction, has failed to reach a unanimous decision. I can see no valid case for denying the Assembly these powers. I do not think that the noble Lord feels at all strongly that we should
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deny these powers to the Assembly. I can see no case for it, and I hope very much that the noble Lord will not find it necessary to press the Amendment which, as he said, is of quite a different kind to most of the others.
Lord ELTON: I almost never press Amendments which I have announced in my first breath as probing Amendments, and I do not intend to do so this evening. I am much obliged to the noble Lord for the information he has given us, which I shall read with attention tomorrow, as it has not been possible to take it all in this evening. Therefore, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.22 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46F:
Page 39, column 2, line 42, at beginning insert—
("The functions under section 33 of the Education Act 1944 (c. 31).").
The noble Lord said: Before the noble Lord opposite can say "derogation", I shall say "equality". Section 33 of the 1944 Act deals with the education of pupils requiring special educational treatment. Principally, the section contains provisions for handicapped children, though that is not the only matter it contains. It seems to me that this is probably a matter of wider importance outside the educational service itself than other Amendments with which we have already dealt, because I think that the provision for handicapped children extends beyond the Department of Education into the Department of Health and Social Security; but I am prepared to be corrected on that. I suppose that the noble Lord has a point about a continuing character in these Amendments; we were concerned earlier with the provisions of so many yards of playground.
I am very chary of any scheme to adopt variations of provision on each side of the Border, unless it can be justified more than by an appeal to Welsh amour propre, which is a subject of frequent appeal during these debates. We saw in the debate on the Amendment of the noble Lord, Lord Wigg, a very clear indication—not accepted by the Government, but accepted by many of their colleagues, as well as mine—that there can be unfortunate administrative difficulties arising

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from a difference of provision on each side of the Border.
Quite apart from that, there is the question of common justice and humanity. One does not see why, for instance, the Welsh should be able to classify as a simpleton somebody whom the English would regard as perfectly normal. I think that the noble Lord, Lord Lloyd of Kilgerran, might feel that that would be a common occurrence—but that is nationalist chauvinism, I think. The point I am making is that there must be a reason for it beyond the mere fact of wishing to give the Welsh everything that they can possibly run themselves. If I am wrong, I shall be disappointed, but I am at least interested. I beg to move.
Baroness ELLIOT of HARWOOD: I want to ask the noble Lord a question about this. I find it rather difficult to follow these Amendments because I do not have a copy of the Education Act 1944. I therefore did not realise that this Amendment was about handicapped children; but, through voluntary organisations, I have a good deal to do with handicapped children, as I also had when I was chairman of the Education Committee in my own county at home. One thing about handicapped children is that different types of handicap are very often dealt with in different types of schools. You cannot say that there is a boundary and that children who are handicapped in Wales cannot go to a school for handicapped children which is in, say, Cheshire or Lancashire, even though that happens to be the school which is best able to deal with their particular handicap. Equally, I do not think you could say that children living in England—in, let us say, Cheshire, or some area near to Wales—cannot go to a school for handicapped children which is in Wales even though it might be the one which could best deal with their handicap. I think that to try to divide education for handicapped children by the use of boundaries between the two countries would be a mistake.
I do not know whether this Bill does that, but if it does then I think it is a great mistake, because I think you must deal with the handicap of any child in the best way possible. Sometimes, of course, they can go to their own local school, where they may have a class for handicapped children which they can pass through and then get into the ordinaryschool; but some
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times there is a handicap which requires special treatment in a special school, and I would ask the noble Lord to say, when he replies, whether, under the Bill as it is at present drafted, there would be this inability to exchange schools because they happen to be in different parts of the country.
Lord DONALDSON of KINGS-BRIDGE: Before the noble Baroness, Lady Faithfull, speaks, may I answer this particular point while it is in my mind? The position today is that the education of handicapped children in Wales is the responsibility of the Secretary of State for Wales, and the suggestion in the Bill is to transfer this to the Assembly. There is no other change, so everything else is as it was. I think that answers the point which is worrying the noble Baroness.
Baroness ELLIOT of HARWOOD: Then can the Welsh child who wants to go a school in Lancashire go there?
Lord DONALDSON of KINGS-BRIDGE: By arrangement between the two.
Baroness ELLES: Perhaps I may intervene on this because I think the point being made by my noble friend is that, here again, we are coming back to this dual standards business; that is to say, where you have a school providing special treatment for handicapped children in Wales which will be controlled, under the present Bill, by the Welsh Assembly—and, indeed, why not?—they will have different regulations, different standards and different criteria by which to judge whether a child is handicapped in a way which is met by the special treatment provided in this certain school. I think the point that my noble friend is making is this. Would a child who is in a school in, say, Lancashire receiving special treatment provided for under the authority of the Secretary of State be able to get the same treatment, the same provision and the same standard, in a school in Wales? It is not that the Welsh Assembly might not give it, but just the fact that there is a possibility of having different standards for different parts of the country. I think this is what concerns us all, and I am sure we shall be coining back to this question again. Once more, it is no derogation of the Welsh Assembly; it is merely the possibility that they may create different

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standards, different criteria, for a section of the population which needs particular care, help and attention.
I think this is the point that my noble friend is making, and we should like to be assured that there will be some way in which the Welsh Assembly is statutorily obliged to provide this standard. We quite accept that they must make the decision, but they must ensure and undertake to the people of Wales that this minimum standard will be attained. I t may be that Clause 34, the overriding powers of the Secretary of State, is the answer. It may be that if the Welsh Assembly, for some reason—not of course, that we have any doubt in that regard, but for some reason— do not reach that standard, possibly under Clause 34 the Secretary of State, the overriding power, will be able to stop them from doing something or make them do something which they would not otherwise want to do. If the noble Lord can tell us that this is so then a lot of our doubts and worries will be removed.
Baroness FAITHFULL: May I ask an allied question of the Minister? There are a number of voluntary organisations dealing with handicapped children. The headquarters of those voluntary organisations are not in Wales. I am speaking particularly of Dr. Barnardo's and I am Vice-Chairman of Dr. Barnardo's Council. If Dr. Barnardo's are dealing with or giving a service to local authorities both in Wales and in England and their headquarters are in England, to whose standards do they subscribe?
Lord DONALDSON of KINGS-BRIDGE: The idea that the standards are going to be so different is rather ungenerous. They may deteriorate or may improve. If you give somebody freedom, you take the risks of freedom. This is the point of devolution. Clearly, if Dr. Barnardo's is run from England, then Dr. Barnardo's makes an arrangement with the local authority, wherever it may be, to be paid for the work it does. It must conform with the standards of that local authority which, again, must conform with the Assembly's standards.
Baroness FAITHFULL: Perhaps I used the wrong words when I said "standards". I meant regulations and procedures more than standards. An organisation like
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Barnardo's would not allow its standards to drop. If they have to subscribe to different rules and regulations in Wales from those in England, what is the position?
Lord DONALDSON of KINGS-BRIDGE: It is simple. I think we are making assumptions that they would be very different. I have no reason to think that they will be different, but, if they are, they will have to conform to them. There is a different law in Scotland from that in England. A number of things are quite different there. If you, as an Englishman, go to Scotland and do something then you conform to what is going on there. The same will apply.
Baroness ELLES: May I be permitted to intervene on this and support what my noble friend has said? I can see what difficulties might arise. I am sure the noble Lord can see them. Dr. Barnardo's is an organisation which everybody knows and admires not only in this House but throughout the country. They demand certain criteria to be applied for their children wherever they are. At the moment if certain criteria are not observed or if there is some variation, Dr. Barnardo's can go to a Member of Parliament or direct to the Secretary of State and say that such and such a home is not up to the standard which they would require. They have a means of complaining.
One of the questions that concerns some of us is this. If a Dr. Barnardo's home is under the care of a local authority in Wales and that is, perhaps, being controlled by the Welsh Assembly under devolution, to whom could Dr. Barnardo's go in order to get the matter put right? Do they go to the elected body as a whole, to the committee within the Welsh Assembly responsible for this particular area of devolved matters or to the leader of that committee? I think at the moment that it is the anonymity of a body that does not exist—one cannot imagine what it is going to be like, who will comprise it, how it will run, and who are the officials who are going to support it—which legitimately causes us concern. This Parliament has gone on for 700 years; we know how it works and whom to go to. The worry of some of us on these Benches is: what this thing is going to be like, whom can we go to if something goes wrong and how can it be put right?
Lord DONALDSON of KINGS-BRIDGE: I appreciate the noble Baroness's point. I am not going to lay down, without any authority from anybody, exactly how the future will be. We do not know; this is new. Nobody thinks that it is cut and dry. I will tell you what I think will happen if I were the official of Dr. Barnardo's and I was functioning in a home in Wales which seemed to be going wrong. I should go to the parents of the children and tell them to get hold of their Assembly Members and raise hell. I should do exactly the same thing in England: tell them to go to their Member of Parliament and raise hell. I cannot see any difficulty about this. Obviously, if the Assembly is absolutely no good, nothing will happen—as sometimes occurs with us—but it is quite unreasonable to base any objections to this piece of devolution on the ground that there is not a proper channel for complaint, because it clearly would not take the average Welshman 10 minutes to find one. I do not believe that this is an adequate ground for worry.
We return to the view that the Assembly is being given the power to run education in Wales. Education will be its responsibility. Surely, there cannot be any point in denying the Assembly the power to make those regulations under which local authorities can make provision for children to attend special schools, or the requirement to be complied with by a school wishing to be classed as a special school.
Lord ELTON: The noble Lord has just whizzed past the part that I was asking about: making regulations defining the several categories of people requiring special educational treatment—in other words, who is and who is not educationally subnormal? Is there going to be variation between the Kingdom and the Principality? He left that out of his list.
Lord DONALDSON of KINGS-BRIDGE: I left it out because I do not know the answer at this stage, and neither does anybody else. At the moment, there is a perfectly clear definition within medical circles. If Welsh doctors, under their new devolution, choose to diverge, we cannot stop them, and I do not think that we ought to do so. It is most unlikely that they will do so. I believe this is a will-o'-the-wisp. I do not
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think that your Lordships want me to pursue it. It seems perfectly clear that arrangements at the moment of a medical kind in different parts of the United Kingdom are standard. There is absolutely no reason to suppose that they are going to change.
Baroness FAITHFULL: May I raise something here about which I am very worried? At the moment there are nine categories of handicapped children under the Education Act 1944. We know that the Warnock Committee Report makes different recommendations. If those recommendations are accepted in England, will they be accepted in Wales? If they are not, there will be two separate criteria: the criteria for handicapped in Wales and the criteria for handicapped in this country. That being so, I come back to my original point of voluntary organisations having to work to two separate criteria for handicapped children: one in Wales and one in this country.
Lord DONALDSON of KINGS-BRIDGE: I have just been informed that there are at present different standards in Scotland from those in England. So we are already in that situation. I did not know this before, otherwise I would have said it. Would the noble Baroness remind me of the other part of her question?
Baroness FAITHFULL: It was that at the moment under the Education Act 1944 there are nine categories of handicapped children. The Warnock Committee is recommending that those categories are done away with. Supposing the Welsh Assembly does not agree that they be done away with, but the English Parliament does. We shall then have two different sets of criteria obtaining in regard to handicapped children, yet very many of the organisations concerned with handicapped children deal with them throughout the country.
Lord DONALDSON of KINGS-BRIDGE: Why should you suppose that the Welsh will reject the Warnock Committee, while the English do not?
Baroness FAITHFULL: Personally—
Lord DONALDSON of KINGS-BRIDGE: They may. This is the whole point of devolution; they have the power to do so. If they do so there will be different standards. I do not think that one can legislate for the fact that what is

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in the 1944 Act, which at the moment is in the power of the Secretary of State for Wales, and which we are proposing to transfer to the Assembly, is already covered until the Welsh choose to change it, which of course they can.
This is pushing matters rather far. It seems to me perfectly clear. If one is against devolution then this is a wrecking Amendment. If it is not meant to be a wrecking Amendment, you must assume that people will carry on in a more or less normal way. If they do not, then you can deal with the situation; but we have given them the power not to and I do not pretend we have not.
Lord GRIDLEY: May I make one point on what the noble Lord has said regarding this divergence between powers in the United Kingdom and the proposed Welsh Assembly? The noble Lord has said that if there is a divergence it is up to the people in Wales to complain to the Assembly and get the thing put right. An example was given of there being some difference of opinion on a situation arising in connection with Dr. Barnardo's Homes, and that kind of thing.
I cannot quite agree with what the noble Lord has said about this. I should have thought that we had a responsibility here in the devolution of these powers to see that the powers were devolved in such a way as to create the minimum of disagreement or interference between England and Wales. That is really what my noble friends on this side of the Committee are trying to do, rather than seeking to interfere or being distracted or worried about what powers can be devolved to the Assembly.
Lord DONALDSON of KINGS-BRIDGE: If noble Lords really think that by creating a new body, the Assembly, and giving it specifically the duty of running education within the Principality and then taking away one after the other— three, four or five—of the functions of education, they are not going to produce a lot of friction, I believe they are sadly mistaken.
Lord ELTON: I think there is more feeling about this either than I expected or than the noble Lord, Lord Donaldson, recognises. I think it is more reasonable than he recognises: maybe he is blinded by principle, if I might so put it, to practical
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results. It is all very well to say, "You are taking away some great and important function of the authority when you take away from them the duty of deciding what is or what is not an educationally subnormal child or a handicapped child". I suspect that the effects of the Amendment we are now discussing might ramify further than I had supposed they would when I drafted it, in the light of what has been said. Because much of what we have heard has been new to me and very valuable—and here I must say I am much obliged to my noble friends—I should like to consider the matter before we take a decision as to whether or not to go further with it. I therefore beg leave, at this stage and without committing myself to a final withdrawal, to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.43 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46G:
Page 39, column 2, line 42, at beginning insert—
("The functions under section 37(4A) of the Education Act 1944 (c. 31).").
The noble Lord said: I do not think we need spend quite so long on this pair of Amendments. Amendment No. 46G is a paving Amendment to Amendment No. 108G: and next to it I have 46H, which is a paving Amendment to 108H. These are again reservations of an appellate function, but that does not exist in the 1944 Act because it is devolved and therefore it is necessary first of all to create it.
The first pair deal with the right of parents aggrieved by an attendance order, and the second pair refer to an appeal by parents aggrieved by a requirement to attend a special school. The latter pair, 46H and 108H, have a certain bearing, of course, on what the noble Lord has just been saying, because a special school is where you send a child who is in that category which specifies that it is right for it to receive special education. That is a right which the noble Lord has jealously reserved to the Welsh. That, I think, is the extent of the coincidence of the two Amendments.
I am not sure that it is fair to tempt the noble Lord to his feet yet again on this principle. However, I think he will accept that in the first of this quartet we were dealing with bodies of ratepayers aggrieved by plans for changing schools; in the second we were dealing with managers and governors of schools who had fallen out with the local education authority,

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and in this third group we are dealing with individuals who, in a sense, have the weakest voice of all and, as the parents of handicapped children, possibly the greatest emotional strain and, one might feel, need greater protection, I would not expect the noble Lord to cede the point.
I wish to put it on record that we are here, once again, looking at not a derogation of powers from Wales, but a role of supervision for the Welsh Secretary of State. I do not think we shall ever get that point accepted on the other side of this Table and that is a pity, because it is our position. I do not know whether the noble Lord has anything to add at this stage on these Amendments, but I should like to give him the opportunity, and indeed to give my noble friends an opportunity, before I withdraw them. I beg to move.
Lord DONALDSON of KINGS-BRIDGE: I would only repeat that we think the insertion of a third tier is wrong. We believe that in each of these cases the individual has the same recourse to the courts as he has in England, when the person to whom he appeals—who in England is the Secretary of State and in Wales will be the Assembly—gives him a decision which he does not like. We think that it should be left at that.
Lord ELTON: I do not think it is fair to say that this is the introduction of a third tier. The Secretary of State is already there; the Welsh Assembly is not. If there is a new tier, it is the Welsh Assembly. But we are not talking about that. We are talking about administrative justice. The noble Lord seems to be convinced that a right of appeal from something which someone had done to anybody other than the ombudsman is, in a way, a derogation. What we are looking for is an umpire, and games are usually better played with an umpire. However, the noble Lord persists in regarding this as a third tier and a derogation. I believe that the Pope has a word for his condition, which perhaps the noble Lord would think was derogatory, so I shall not use it. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 46H not moved.]
9.48 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46A:
Page 39, column 2, leave out lines 42 to 46.
The noble Lord said: We now come to what I spoke to at the beginning. This is a probing Amendment, as I recall, and the noble Lord therefore need not expect me to press it. This is a very peculiar provision, because it seems to relate to a kind of educational institution which barely, if at all, exists in Wales. The right reserved from the Welsh Assembly is the innocent one of requiring offices of local education authorities to communicate freely with local employment offices. It was a kind of collector's curiosity which prompted me to put down this Amendment, because I cannot think what on earth is in mind in reserving that esoteric function to the Secretary of State, when so much of greater significance has been given away. I beg to move.
Lord DONALDSON of KINGS-BRIDGE: It is a curious Amendment, because it is the other way around from all the others we have had, which, at any rate, makes a change. The effect would be to devolve to the Assembly the power of the Secretary of State for Employment of England to instruct local offices of that Department, with regard to consultation between those offices and local education authorities. As we all know, it is an important job of local education authorities to consult with the Department of Employment. But the Department of Employment is run by the Secretary of State for Employment, and it would be very odd indeed to take this power away from him and give it to the Assembly. I do not think that the most ambitious devolver—as I am —would wish to do as much as that. I hope the noble Lord will not find it necessary to pursue this any further. It seems to me not to make sense.
Lord ELTON: It is very pleasant to have brought a smile to the noble Lord's lips. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ELTON Lord ELTON moved Amendment No. 46J:
Page 39, line 43, leave out ("the Education Act 1944 (c. 31)") and insert ("that Act").
The noble Lord said: This is a drafting Amendment which was tabled in the anticipation that we might by now have carried something, and we have. Therefore, I take it that this is what we want. The words that I have struck out, "The Education Act 1944 (c. 31)" seem, in the

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light of what we have put into the Bill, now to be inappropriate since they were already contained in the Amendment we have carried. In their place we wish to put "that Act". I beg to move.
Lord DONALDSON of KINGS-BRIDGE: I think I have no alternative but to accept this Amendment.
On Question, Amendment agreed to.
9.52 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46K:
Page 39, column 2, line 46, at end insert—
("The functions under section 67(1), (2) and (4) of that Act.").
The noble Lord said: I apologise for the fact that we have here a rather rambling group of Amendments. As I understand it, Amendment No. 46K goes with 46R and 46S. They are various combinations of ways of dealing with the reservation or otherwise of the power of dealing with disputes between local education authorities and managers and governors. One way, of course, would be to cut out the Assembly and make the appeal direct to the Secretary of State—and, understandably I think, that would bring a cry of horror from the noble Lord. Some of these cases are more difficult than others. The one which is probably of most importance is that under Section 67(4):
"If in the case of a county or voluntary school a question arises whether a change in the character of the school or enlargement of the school premises would be a significant change or enlargement, that question shall be determined by the Secretary of State".
I think that a very small debate on this Amendment ought to centre on emphasising the importance of this question about whether or not a change of character of a school has arisen—and here the noble Lord will recall the Enfield case. In the light of what the noble Lord has said, it is evident that he will not think that anybody but the Welsh Assembly should determine this matter. I take it that in no circumstances does the noble Lord think there will ever be an occasion on which an appeal ought to lie from the Assembly in administrative terms and not in legal terms. In other words, the state of aggravation of somebody living under the administration of the Welsh Assembly has to be such that they will go to court before there can be any appeal.
If that is the case, of course there is not much more to be said, but it would be
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interesting to know whether the noble Lord thinks at the end of this series of Amendments that that is the case—that he can never conceive of occasions on which there ought to be machinery in which somebody other than the local authority can have the final say. For instance, compare the responsibilities of the Welsh Assembly with those of the Greater London Council. Would the noble Lord be equally content to leave the final words, "in administering justice in all fields", in the hands of the Greater London Council, from which the power of appeal at present lies to the Secretary of State in, I think, all of the fields which we have so far discussed? It is an interesting point. I am surprised to find the noble Lord so resolutely entrenched upon it, because it shows, I think, not a commendable trust in the Welsh people but—dare I say it?—a slightly naive trust in human nature.
Lord DONALDSON of KINGS-BRIDGE: I should not wish to deny a naive trust in human nature. I think that to some extent I have one, and we are hearing many doubts about this matter which I myself do not feel. The position is as it has been all the way through. If one sets up an Assembly and tells it to do something in place of somebody else who is doing it, and if there is no appeal to the somebody else who is doing it, it is clearly a derogation of what one is giving it to do if one puts an appeal above it. That is what we are doing. The Secretary of State has powers. There is no appeal beyond him. The Assembly is to have the same powers. There will be no appeal beyond it. I believe that this is logical and correct and that anything else will be damaging.
May I make one remark about something which the noble Lord said earlier. He said that the effect of the Bill was that references to the Secretary of State in Schedule 11 would be converted into references to the Assembly, unless specifically reserved. That is not the case. Schedule 11 sets out the position as it will be after devolution. That is, references to the Secretary of State will remain as such.
Lord ELTON: I am sorry, but I should like the noble Lord to take me through that a little more slowly. I did not quite follow him. He is saying, is he, that the

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powers in the Schedule are not devolved? Are they reserved and, if so, where?
Lord DONALDSON of KINGS-BRIDGE: The noble Lord suggested that the effect of the Bill was that references to the Secretary of State in Schedule 11 would be converted into references to the Assembly, unless specifically reserved. That is not the case. Schedule 11 sets out the position as it will be after devolution. That is, references to the Secretary of State will remain as such.
Lord ELTON: Are we speaking about Schedule 11 to this Bill?
Lord DONALDSON of KINGS-BRIDGE: Yes.
Lord ELTON: The noble Lords says that the amendments of an enactment in Schedule 11 are therefore exempted from the effects of the listings in Schedule 2. Where is that stated in the Bill?
Lord DONALDSON of KINGS-BRIDGE: I am a little confused about this. Perhaps I had better write to the noble Lord. I have been given a note on this, because it was thought to be important to explain it to the noble Lord. As I have failed to explain it to him, I had better do so in writing.
Lord ELTON: Yes. I think that this is important. I should be obliged if the noble Lord would write to me, because it affects the drafting of other Amendments.
Lord DONALDSON of KINGS-BRIDGE: Yes.
Baroness ELLES: May I come in here once more? If I understood him correctly, the noble Lord said that whereas now there is an appeal to the Secretary of State, under the devolved powers appeal will be to the Assembly and that from the Assembly there will no appeal. There is no appeal now from the Secretary of State. Consequently, there will, in parallel, be no appeal from the new devolved body, the Welsh Assembly.
The fact of the matter is that one cannot compare both bodies. If the Minister of State appears to make a decision which is contrary to natural justice he can be sacked by his boss, the Prime Minister. There can be a row in Parliament. Complaints can be made. In the last resort, I assume that in either case one could go to the High, Court, under the new Order 53,
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for judicial review. We are arguing a hypothetical case, because in either case the individual can appeal. I suggest that the way in which the noble Lord put it was not quite correct, in that there is always an ultimate appeal from an administrative action to the courts.
Lord DONALDSON of KINGS-BRIDGE: Of course.
Baroness ELLES: That is very important because what we are concerned with are the rights of the individual on this and it would help noble Lords on all sides of the Committee, because when one is talking about the right of appeal one is talking only in a circumscribed way with regard to the Secretary of State and the Welsh Assembly. In fact, the individual will always have a right of appeal to the High Court when injustice has been done. The point that I want to make is that it is not the same thing to appeal to somebody who is appointed to a position as it is to a political body which, after all, is elected for a term of years. If one gets injustice from a Minister of State, as the noble Lord himself was advising the people of the country to "make hell", you can make hell against X and say that he has been incompetent and so on, and he may in the end be removed. But you cannot do that against an elected body which is there for four years whether you like them or not. I am not saying whether they are going to be more incompetent or more efficient, but the situation is not comparable and one cannot say that it is.
Lord DONALDSON of KINGS-BRIDGE: I think the situation is certainly comparable although I do not think it is identical. After all, the position of an elected body is that it has electors; it is very sensitive to its electors, and this is the way one has to deal with it. Four years is only true for a week; after that it is four years less a week because the time runs out. I really think that one has a perfectly good defence with the courts behind one. On each occasion I have objected to what I call the third tier of appeal, and I have always justified that by the fact that one has recourse to the courts.
Lord ELTON: I am obliged to the noble Lord for what he has said and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ELTON Lord ELTON had given Notice of his intention to move Amendment No. 46L:
Page 39, column 2, line 46, at end insert—
("The functions under section 67(5) of that Act.").
The noble Lord said: This is a pair with Amendment No. 108J and I have to apologise to your Lordships for a misprint in the latter. In subsection (5) as it is there printed, the reference to subsection (2) should be a reference to subsection (4). I would not therefore be able to press this Amendment in any case and in fact the noble Lord may have been sitting absorbing to the best of his ability a brief on the wrong subject. Great as is the temptation to get him to commit himself further to it without revealing any toils under which he is travailling, I shall resist it. Therefore, as it is also a question of an appeal from the Assembly I do not think that we should drag out the discussion further on this, beyond my saying that I cannot agree with the noble Lord that a chap who is the Secretary of State is the same animal as a lot of chaps, which is an Assembly, and to treat them as though they were is not advisable. However, we have been over that ground already.
Lord ELTON Lord ELTON moved Amendment No. 46M:
Page 39, column 2, line 46, at end insert—
("The functions under section 68 of that Act.").
The noble Lord said: This deals with Section 68 of the Act and it is a very wide power which used to be discharged by the Secretary of State for Education; in Wales it is now discharged—and the noble Lord will correct me if I am wrong—by the Secretary of State for Wales and if this Bill is enacted it is going to be discharged by the Welsh Assembly. It gives the Secretary of State or the Welsh Assembly the power to prevent unreasonable exercise of functions.
If your Lordships pause to think, you will see that that is a very wide power indeed. If the Secretary of State is satisfied, either on complaints by any person or otherwise, that any local education authority or the managers or governors of any county or voluntary school have acted or are proposing to act unreasonably with respect to the exercise of any power conferred or the performance of any duty imposed by or under this
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Act, he may make such directions as appear to him to be expedient. Your Lordships will see the most inquisitorial —if that is the right word; I think it is not though I have searched for the right word: the adjective that would go with the French "intendant" in the ancient regime would be the right word, but I do not know what it is—possibilities.
I cannot think there is anything more like the power of an intendant than that of being able to decide that a local education authority or the governors of a school are proposing to act unreasonably, without even having their proposals complained against to him; that is a very large power. It is a catch-all clause. The Secretary of State has only to be satisfied—and the case of Robinson v. The Minister of Town and Country Planning in 1947, to quote only one example of many, makes it beyond doubt that he only determines whether or not he is satisfied—so he is here the absolute final arbiter of all things in the operation, as I see it, of the 1944 Act and subsequent Acts.
I should like to know how an Assembly determines whether it is satisfied. If the noble Lord is in doubt about his satisfaction, at the end of reflection he makes up his mind one way or the other. To the rest of the world, the noble Lord, Lord Donaldson, is satisfied 100 per cent. If the Assembly is in doubt as to whether or not it is satisfied, it presumably goes to a vote, and perhaps a casting vote. I do not know whether this is so. I do not know—and I am sure the noble Lord w ill tell us, as he has told us before, that he does not know, either—under what rules of procedure this important function will be discharged; whether it will be remitted, as it may be, to a committee. I have seen no place in the Bil1.where that power is denied. I do not know whether, within that committee, it is proposed to remit this to an individual, thus overcoming the difficulty of having somebody like Lord Donaldson declaring himself 100 per cent. satisfied and maintaining his doubts in secret.
This is an extraordinarily interesting section of the Act. If ever there was a derogation to the Secretary of State from everything else in the Act, it is this. The temptation to us would be—and I suppose might be in the light of what is said afterwards—to dispense with other

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Amendments about appeals and substitute this one, because that would cover the whole range of the activities of the Act. My view is that the noble Lord would find that less tasteful than what we have already asked him to swallow. But I think the principal points of interest are these: one, the final oversight of everything in the Act which is devolved is devolved to the Assembly, which must surely be a reassurance to the noble Lord about our intentions as to whether devolution should be real or only apparent; and secondly, what is the difference between a decision to be satisfied of an individual and a decision to be satisfied of an Assembly, and whether in fact there are legal implications within that which would not be known to laymen such as myself and some of my noble friends. I hope the noble Lord will impart those parts of the contents of his brief to us as well. I beg to move.
Lord DONALDSON of KINGS-BRIDGE: My brief does not contain a description of how the Assembly will work, I am afraid, but I can tell the noble Lord what I think, which is exactly what he said. I think there will be cornmittees; it is laid down that there should be. There will be sub-committees who will deal with particular things, and reports will be made to them in exactly the same way as they are made to people in the Department of which one is a Minister. Then instead of coming up to the Minister for decision they will come up to the committee for decision, and they will be ratified by the Assembly. Your Lordships may say it is a clumsy way of dealing with it, but it is a perfectly honourable, democratic and well-tried way. It does not worry me, and I am sorry it worries the noble Lord.
As regards the Amendment we are talking about, this, like so many of the others I have been talking about, is simply removing a most important power, and the noble Lord has said how important it is, from the body that we are asking to be responsible for education in Wales and giving it to the Secretary of State, or letting the Secretary of State keep it. In other words, we are saying: You can have the whole responsibility for education in Wales, but we are not going to give you this very important power; we
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shall keep it for the Secretary of State". If they do not think that that means because we do not trust them, I shall be very surprised. However, in either case I think that it would be absolutely wrong, because I do not think that they can do the job properly without it. It is essential, if we are to give the Assembly powers to run education in Wales, that it should have all the powers, and not bits and pieces. I have said that about six times this evening, so I shall not say it again.
Lord ELTON: And the noble Lord has done so very elegantly and with great patience, too. In the light of that not very revelatory statement—but at least it was friendly—I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
10.11 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46N:
Page 39, line 46, at end insert—
("The functions under sections 70, 71 and 72(3) of that Act.").
The noble Lord said: My Lords, I beg to move Amendment No. 46N. Your Lordships will be pleased to know that we are in pastures new. We enter the field of non-maintained or independent schools. The Amendment is a probing Amendment which seeks to reserve the functions under Sections 70, 71 and 72(3) of the 1944 Act. I regret to say that the last of them deals with the determination of complaints which the noble Lord will say is the same, but of course there are different people complaining from a different system. The other two deal with the registration of independent schools and complaints within the system as opposed to complaints from the system.
It would be very nice to draw from Her Majesty's Government some indication of their intention of establishing or otherwise any uniformity of policy towards private education in the United Kingdom. They are always enigmatic —perhaps I should say less than enigmatic —in their approach to private education. They are now splitting off a whole chunk of an area, in which policy development is in a sensitive stage, to a devolved Assembly. It is sensitive in a number of ways.
Questions have been raised about whether or not private educational establishments shall remain registered as, for instance, charities and have charitable status. There is also the recent and, I think, most regrettable decision to suspend or terminate—I am not clear which—the process by which independent schools have hitherto been recognised as efficient. One is also interested to know what process of inspection of independent schools will continue, because the provisions of the 1944 Act requiring inspection have not been repealed, although the recognition of efficient service has been withdrawn.
Will the Welsh Assembly be in any way expected to attune its procedure and its policy to that of the United Kingdom? In the remotely improbable event of a landslide victory for the Conservative Party in the Welsh Assembly, would it be allowed to reinstitute direct grant schools, to decomprehensivise—I do not know that it would wish to do so—or indeed to build a lot of schools with public money and make them independent? Will there be any correlation in this area or none?
Those are perhaps somewhat fanciful speculations, but what I think is needed from the noble Lord, of a more serious nature, is some indication of what the Government's attitude will be to the future of private education in Wales. Moreover, I suppose that if the provisions are to differ on either side of the Border we may have emigration beginning. Can the noble Lord tell us anything as regards the whole sphere of the future of private and independent education in Wales? I beg to move.
Lord DONALDSON of KINGS-BRIDGE: I shall not be induced into a discussion on the general policy about independent schools. This might take longer than we have, and is absolutely nothing to do with the Bill. What I can say with complete clarity is that the supervision of independent schools is part of the integrated education system, and to divorce these powers from all the others devolved to the Assembly would make no sense at all. How can it work out a coherent approach towards the provision of schools if it is denied any powers in relation to the independent sector? The Amendment seems designed to cause
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difficulties, not only for the Assembly, but also for the Secretary of State, who would be faced with administering a corner of the schools' programme by himself. That is really quite unthinkable.
The answer to the more general question which the noble Lord asked is as follows. If these powers go to the Welsh Assembly, it can use them and, as the noble Lord said, in the very unlikely and rather disagreeable possibility of a violent change of politics, it can act on them. This is what devolution means, and we must not pretend that we are not giving the Assembly that power. This is what devolution is and we are not backing down from it.
Lord ELTON: Brief, stark and illuminating is how one would describe that. In other words, it will be open to the Assembly to withdraw the registration of independent schools as a follow up to withdrawing the recognition of efficient service. Can the noble Lord tell us whether the Assembly will be able to make any change in the policy about the charitable status of schools? This must he a matter of importance. If the noble Lord does not have the answer before him, perhaps he could let me know, because I think people will want to know.
Lord DONALDSON of KINGS-BRIDGE: I should like notice of that question because I think that the Charity Commissioners are part of Great Britain and are not devolved. However, ever, I shall write to the noble Lord on that because I am not sure of the answer now.
Lord DAVIES of LEEK: In another place, it would be out of order to go too far into the latter part of the reference made by the noble Lord, Lord Elton, as to what would happen to private and other schools. As someone who went through the Welsh educational system, I have no fear whatever that any Welsh Assembly would neglect the possibility of giving first-class education to the children of Wales. Not being a class society, we have no class distinctions in Wales. It is far from our minds to think of private education. Our old-fashioned elementary schools which took the trouble to teach mathematics, physics and even philosophy to the children were so good. The scholarships given by Wales and, for

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example, the County of Glamorgan, in the days when Glamorgan existed, were first-class. I would have no fears at all about Welsh or Scottish education. If we had anything, although we were poor, it was a first-class education system.
Lord ELTON: I am sure that the noble Lord is right, but I am also sure that he will understand that anyone concerned with private education in Wales will wish to know exactly what the future may hold. That the noble Lord, Lord Donaldson, has been kind enough to tell us, in so far as he can without prejudging the issues at stake. I think that that is probably all that we can gain from this, and I am happy to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ELTON Lord ELTON had given Notice of his intention to move Amendment No. 46P:
Page 39, line 46, at end insert—
("The function under section 72(2A) of this Act.").
The noble Lord said: I think that there is an error in this Amendment and I shall not move it.
10.19 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46Q:
Page 39, line 47, leave out ("section") and insert ("sections 62 and").
The noble Lord said: Here we are on really very important ground on which I hope the noble Lord, Lord Donaldson, will be able to enlighten us. Section 62 of the 1944 Act, to which this Amendment relates, is the section which imposes upon the Secretary of State the duty of seeing that there is sufficient provision for the facilities for the training of teachers for service in schools, colleges and other establishments maintained by local education authorities. The noble Lord will be well aware that we on this side of the Committee are very interested in the programme of the training of teachers. I know that the noble Lord will come out again with this question of derogation of powers, but I think that there is a different issue involved here. What we are concerned with is that throughout the United Kingdom, and particularly in England and Wales, there shall be an adequate supply of adequately trained teachers: adequate to maintain the standards within
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the profession; adequate to enable teachers who have, as one might put it, burnt out, to retire early.
That statement in itself has two implications. One is that there must be some indication of how many—I gather we cannot adjourn. I understand that events at the other end of the corridor to my left, which might have led us to be able to adjourn proceedings at this stage and enable some of us to go happy to bed, have been forestalled, no doubt by the friends of the noble Lord on my right: five of his friends.
Lord LLOYD of KILGERRAN: Can the noble Lord be more explicit about the matter to which he is referring so secretly?
Lord ELTON: If the noble Lord has difficulty in understanding what I think the rest of the Committee has understood, I gather that a vote at the other end of the corridor has determined by five that the present Government should remain in office.
Lord LLOYD of KILGERRAN: I am very much obliged to the noble Lord.
Lord ELTON: I must say that it is rather nice to go down in the record as bringing news to the Liberal Party of the vital role which they play in the politics of this day. I could only wish that I approved of the role more heartily.
Lord LLOYD of KILGERRAN: I thank the noble Lord for that tribute, but I am making just a probing request to the noble Lord on a statistical matter as to what the number of the majority was.
Lord ELTON: The noble Lord, Lord Davies of Leek, would have pointed out, if he had been in this place, that this is beyond the bounds of what would be permitted in another place, and we must return to our muttons.
This question is one of considerable importance because the quality of education in this country depends almost exclusively upon the quality of the teaching force. In my view, the proportion of children in Wales to the rest of the United Kingdom, as such, is such that to split off that area and make it responsible not only for standards—we have been over that

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ground now, and the noble Lord knows that I do not agree with him and I will make no more of it— but also as to the sufficiency of the numbers of teachers, does not seem to us to be a viable decision.
What happens when you have training places in surplus in Wales and in deficit in the United Kingdom? Who decides, when there is an overall deficit, what part of it shall be made up in Wales and what part in England? Moreover, as to the actual content of the training given, will it be necessary in Wales to devote such a proportion of time for training in Welsh that the standard reached in other topics by students in major subjects will not be acceptable in the United Kingdom? Is the career prospect of a teacher trained in Wales going to be different from that of a teacher trained in the United Kingdom? I am sure the answer to this will be, yes. Will the qualifications given by one authority be accepted by those of another?
It is difficult to see how the Government propose to run a system of acceptable standards throughout the United Kingdom by this devolved method, and I do not know whether we can hope to get from the noble Lord more than yet another attribution of general principle; but we are talking about people, bricks and mortar, and beds and books. We want to be assured that the plans as set out in this Bill will not act against education in the United Kingdom and, a fortiori, against education in Wales, because you will not get people flocking eagerly to teach in Wales if they feel that their careers are going to be limited; and that in itself must cause some alarm on the other side of the Border.
Lord DAVIES of LEEK: I trespass on the time of the Committee at this late hour to point out that the debate on this Amendment is valuable because it enables us to point out that there should not be any disparity in educational standards throughout the United Kingdom. I am sure that my noble and learned friend the Lord Chancellor would, if he were in his place—because he went through the same educational system—agree that years ago there were various matriculations. The Welsh matriculation was different from the London one, and those of us who went through those examinations recall
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that we had to pass in every subject; if one failed in, say, mathematics, one did not get a certificate. The situation today is very different.
We must not allow devolution, be it in Scotland or Wales, to interfere with the educational opportunities available to British children. If that were to happen we should be doing a disservice to the future of Britain in its standing throughout the world. Whatever happens to this Bill, I hope we shall have enough sense —I mean everybody throughout Britain—to ensure that examinations throughout the country are of the same standard, and that the same names are given to them in the English language, whether they are speaking Welsh or Gaelic. We must do that if we are to maintain the unity of Britain and the charisma of Britishness.
Baroness ELLES: Following that stimulating speech by the noble Lord, Lord Davies of Leek, I return to the question not so much of equal standards as of equal opportunities, an aspect that has not been raised at this juncture. I say that advisedly, because I am probably one of the few in your Lordships' House who has had the benefit of education, by chance rather than by design, at two Welsh universities, one year at Aberystwyth and one year at Bangor. That was at the beginning of the war when London University was evacuated. I have therefore had the benefit of sharing in the benefits of Welsh education, and I must mention the very high standard of the young undergraduates who came from schools of all types throughout Wales and among whom I am happy to say I had many good friends.
Many of those undergraduates were to become teachers and they were anxious about their jobs; they realised there would not be sufficient jobs for them in the Welsh schools in which to earn their living. The same position will probably continue to apply. If we have different educational methods, books and subjects, as my noble friend suggested might happen, in teachers' training colleges in Wales, what chance will Welsh teachers trained in Welsh training colleges have of getting jobs in other schools throughout the British Isles? This point must be of concern.
The noble Lord, Lord Davies, talked about universal standards throughout the

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United Kingdom and I think we all agree that whether it is the Welsh Assembly or England or Scotland dictating standards—the noble Lord, Lord Donaldson of Kingsbridge, has said this on many aspects of this subject—this is really an act of faith. We must assume they will be as efficient and capable as other parts of the United Kingdom. Indeed, I hope they will be more efficient and effective.
That may be so, but at the moment we do not know and I am not saying whether it will be better or worse. But if it is different, then not only will we be seeking to destroy a certain unity of the Kingdom —I would emphasise, say, the teaching of history, the use of certain types of history books; noble Lords will be aware that that can be a means of political manipulation, and I am not saying whether it is good or had or which Party it is or which attitude is being taught—but by allowing different methods and controls and different people controlling teachers' training colleges, we should be destroying for the people of Wales who want to be teachers the opportunity to move throughout the United Kingdom and have an equal opportunity with other teachers trained in other parts of the Kingdom to have jobs.
I should have thought that localising this particular vocation is a great mistake, unless the noble Lord can assure us that there will be some method of co-ordination between the civil servants in Cardiff and the civil servants in London, who work both in the Welsh Office and in the Department of the Secretary of State for Education. We have had no assurance from the Government that there is to be any system of co-ordination, at any level, for all the subjects that we have been discussing. This is what has been missing from the debate, and I should be very glad if the noble Lord can help us on this particular aspect.
10.30 p.m.
Lord DONALDSON of KINGS-BRIDGE: Honestly, this Amendment strikes at the heart of the devolution of the education service. Its acceptance would mean that the Assembly would be deprived of the ability to make arrangements to train teachers for its schools. It would place this power on the Secretary of State, and the Secretary of State would have no other responsibilities for the administra-
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tion of the schools themselves. The effect, once more, would be split responsibility for the education service in Wales. I would remind your Lordships that earlier this year responsibility for further and higher education was transferred from the Department of Education and Science to the Welsh Office, in order that the education service in Wales could be dealt with as a whole, the previous arrangements having been the source of complaints by local education authorities, who were previously having to deal with two Departments. Surely, it could not be right to split the responsibility once more.
I appreciate that sonie noble Lords are concerned that the transfer of these powers to the Assembly could somehow empower that body to place requirements on English education authorities. Perhaps I should explain that the effect of the Wales Bill is to split the provision of teacher training facilities between England and Wales. The Secretary of State for Education and Science will remain responsible for such facilities in England, and the Assembly will take on these responsibilities in Wales. The Assembly will be able to give directions only to local education authorities in Wales. This would not, however, preclude the Assembly entering into an agreement with authorities in England for the provision of places; and of course teachers can apply for a job in England as easily as they can apply for a job in Wales, and vice versa—
Baroness ELLES: May I intervene? My whole point is that it will not he as easy for the teachers because they will not have had the same kind of training. They may have been trained in completely different subjects, and in completely different ways of education; and so they will not have the same opportunities.
Lord DONALDSON of KINGS-BRIDGE: The noble Baroness is saying that the development of education in Wales—which has been very well described by my noble friend behind me as being as good as that anywhere else—will suddenly change. Well, it may; and if it does I accept that devolution gives the right to do that. I have said this probably eight times this evening, and I say it again: the Bill has that eject. We do not pretend that it does not; we mean it to

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have that effect. We have absolute faith that it will be w ell used. I think that many noble Lords opposite have the same faith. But it would be absurd to pretend that one can give people the power both to run the education service and, at the same time, take great chunks of it away; and teacher training is an absolutely fundamental chunk. I agree that at the moment training requirements are dealt with on an England and Wales basis, but the fact remains that a very large number of teachers are trained in Wales, and matters in Wales have always been very different from matters in England. Thus there is not a close similarity.
It will obviously be in the interest of the Assembly and the Secretary of State for Education and Science in England to consult closely on these matters, but it would be, as mentioned, a source of discord if the Secretary of State made assessments on this matter in Wales, when he would not be responsible for the education service as a whole. The reservation of pay is not a relevant comparison because it is not concerned with numbers of teachers, only with the pay that any individual teacher in England and Wales receives.
There is a certain plausibility in what the noble Baroness has said. Clearly, if standards changed very much there would be a new situation; but I do not think one can go into devolution saying that if there is any change we are going to put it back again. You had much better not start it—which is a view certain people have, I know. But I have said before this evening that, viewed in their literal sense, a number of these Amendments are basically wrecking Amendments. I know that the noble Lord does nct mean them to be, but the noble Baroness has just said that she would be glad if they were. I am afraid I cannot budge on this. I think it would be a real derogation from the powers we are offering to the Assembly to do a proper job in education.
Lord DAVIES of LEEK: Before my noble friend sits down, may I say that I did not think the noble Lord intended to wreck. I thought it was exploring, as a matter of fact; that is why I entered into it.
Lord DONALDSON of KINGS-BRIDGE: I quite agree.
Lord DAVIES of LEEK: Of course my noble friend quite agrees. I should like to point out, though, something about the educational system as it now is. I might remind the Committee before I sit down that a relative of mine said that when he left school he was not going to university; he was going to go for his higher Welsh, woodwork and scripture. When we asked him, "What the devil is the use of that to you?", Welsh as he is, he said, "Don't worry; I'm going to be a businessman. I'm going to be an undertaker in Aberystwyth." There are great opportunities in the educational system for those who are not privileged with the grey matter that some other people have; but, for goodness' sake!, do not think that the Welsh are morons.
Lord ELTON: Nobody in this Committee, knowing the ancestry of the noble Lord, Lord Davies of Leek, would accuse the Welsh of being morons. I do not think that the noble Lord, Lord Donaldson, has gone quite far enough in revealing what the results of this new arrangement will be, particularly on the question of how we shall arrive at the numbers of teachers trained. Is it no longer a national problem? Will it be only the Welsh who have to supply the right number of teachers, with the much less flexible margins they will have because it is a very much smaller market they have to supply? It really is very small. How is that going to be arrived at?
I share the interest of the noble Lord, Lord Davies of Leek, in examinations. I am in fact a councillor of the City and Guilds of London Institute, and, naturally, one of its functions is to secure uniformity across borders. I think that will be useful under forthcoming circumstances. But the noble Lord, Lord Donaldson, has not mentioned, for instance, the functions of the National Council for Academic Awards, which secures the standards, basically, of university education and teacher training college education, because most colleges are either departments of education within universities or else have their degree courses, at least, validated by the universities in association with which they operate. Is that body going to be split? Is there going to be

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one NCAA in England and another in Wales? Will the standards vary, and will that not matter, either?
Three things, really, concern us. There is the volume of the actual unit, the group of teachers required to service the Welsh schools. That is a rather small unit, and it will have to operate within tight limits. It means very accurate planning of the number of teachers trained if it is going to be a separate unit. Is it going to be separate in that there will be no national accounting for the number of teachers required, as there is at present? What about the Council for the Training and Supply of Teachers? Is that going to be divided, so that there will be separate advice for Wales and for England; or are they going to be treated holus-bolus? That is one thing. The second thing is a career structure. Is a student teacher who is embarking on teaching in Wales going to be faced with a different—a longer, shorter, wider or narrower—ladder than his colleague in England? That is the second thing. If the noble Lord could tell us more about that, I would be disposed to go away and think about it. I am not quite sure whether he has given me enough to think about at present.
10.40 p.m.
Lord DONALDSON of KINGS-BRIDGE: If the noble Lord will really go away and think about it, I will try to say a little more. First, over the number of teachers, the situation is that today there are a certain number of teacher training colleges in Waies with a certain number of trainees being taught. This will not change the moment we have devolution. They will behave in the same way as any teacher training college behaves. They will try to fill themselves and if they find they are teaching more people than can find jobs, they will reduce; and if they find they are teaching fewer people than can find jobs, they will increase. This is natural. There is no change; this will go on in the normal way. Quite a lot of trainees who go to Wales will be English and quite a lot of Welsh trainees will come to England. None of this will change. The Welsh Assembly will have responsibility for providing the facilities and the places for teachers in Wales. This seems to me a perfectly
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understandable and simple situation which need not worry anybody.
Over the ladder, the ladder is not confined in any sense to Wales, in that a teacher can apply for a job at a school in any part of England, Scotland, Wales or Northern Ireland, today and tomorrow. If, as the noble Baroness fears, standards become different, we may, in 20 or 30 years, run into a problem; but not within that time, I think.
Lastly, the noble Lord referred to universities. Universities are not being devolved. I cannot tell the noble Lord the answer to the academic awards, but I will find out. I should have thought it would remain national and advice and attention would be given on both sides of the border, but. I shall have to take advice on that.
Lord ELTON: While the noble Lord is taking advice, I shall take thought. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 46R and 46S not moved.]
Lord ELTON Lord ELTON had given Notice of his intention to move Amendment No. 46T:
Page 39, line 47, leave out ("section") and insert ("sections 68A and").
The noble Lord said: We have dealt with something like this Amendment. This relates to Section 68. We have covered the ground to the satisfaction of almost everybody, I think.
Lord ELTON Lord ELTON had given Notice of his intention to move Amendment No. 46U:
Page 39, line 47, leave out ("section") and insert ("sections 68AA and").
The noble Lord said: Again, we come to the question of complaints. It is Section 68. Again, I think I would be wasting the time of the Committee if I moved this Amendment. The drafting is very similar. It was produced at two different times on two very late nights.
Lord ELTON Lord ELTON moved Amendment No. 46V:
Page 40, line 5, at end insert—
("The functions under section 92 of that Act.").
The noble Lord said: This is very much a probing Amendment. I hope the noble Lord will enlighten me. It is really based on a desire to know whether the receipt of a report and return is, in fact, a function in the sense in which the word "function" is used in the Bill. If it is—and this is information which will be useful later on—then what would be lost by the devolution of this function? The principal section, I should tell noble Lords who do not have the benefit of the Act before them, is Section 92. It is very short. It says:
"Every local education authority shall make to the Secretary of State such reports and returns and give to him such information as he may require for the purpose of the exercise of his functions under that Act.".
I shall be raising this again on a later Amendment. It seems to me that when reports are made as a matter of course in some areas within the system, perhaps by Her Majesty's Inspectors, or when visiting special schools, for instance, it would be as well if the Secretary of State were to know what was going on and to have a copy thereof. There are particular instances of that which I should like to raise later. But on this particular point, which I have done is to insert the reservation of Section 92 of the 1944 Education Act to discover whether it is a function and what would be the results of devolution if it is devolved.
Lord DONALDSON of KINGS-BRIDGE: The answer is very simple: the Secretary of State has power today to require such reports and returns, and that power is devolved by the Wales Bill to the Assembly. The section in the 1944 Act contains a function of requiring the report, and that is a function. The Amendment would be disastrous. As it is probing, I cannot do more than ask the noble Lord not to press it.
Lord ELTON: The noble Lord must become accustomed to probing Amendments being disastrous; it is only a moment of apprehension if he does not know whether or not they are probing that ought to concern him. I am obliged to him. I see the function in the terms of the Act is the requirement for the making of reports. That explains that. Therefore, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
10.46 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46W:
Page 40, line 5, at end insert—
("The functions under section 93 of that Act.").
The noble Lord said: This is a similarly obtuse request for information about Section 93 of the Education Act 1944. All I have written in my brief to myself is, "Explain, please". Section 93 is the power of the Secretary of State to direct local inquiries. All the clause says is that the Secretary of State—
"may cause a local inquiry to be held for the purpose of the exercise of any of his functions under this Act; and the provisions of … the Local Government Act, 1933, shall have effect".
I should like the noble Lord to tell us —and the lawyers among us will know this already—what is implied by the power to direct a local inquiry? I take it that a local inquiry is a particular legal procedure, and that it is normally exercised by a Minister who wishes to extract information under certain rules of evidence. I am not particularly alarmed by this, but I think that those of your Lordships who are not familiar with the law will be obliged for a shorthand explanation of what is being given away. I beg to move.
Lord DONALDSON of KINGS-BRIDGE: The noble Lord has put his finger on an interesting point which, I hasten to say, I will take away and consider. It is a matter which needs consideration. The position is that, under the Bill as it stands, the power to hold an inquiry is devolved outright; but the Secretary of State will have some residual powers, and it should be possible for him to hold an inquiry in relation to them. I am not quite sure of the best way to deal with this. I should like to come back on it. I am grateful to the noble Lord for his constructive Amendment.
Lord ELTON: I am astonished and delighted by what the noble Lord has said—and grateful, too. What he appears to be saying—is he not?—is that this ought to be a case for concurrent powers. Perhaps we could come back to this

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question at Report stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ELTON Lord ELTON moved Amendment No. 46X:
Page 40, column 2, line 5, at end insert—
("The functions under section 99 of that Act.").
The noble Lord said: This Amendment relates to Section 99 of the Education Act 1944. I do not want to delay the Committee on this Amendment. We already know the answer to one matter that I wished to raise, which was whether or not the Assembly would be a local authority under the meaning of the Act. Section 99 of the Education Act 1944 is one which allows the Secretary of State to act in default of local education authorities or managers or governors when they fail to carry out a duty. I do not see the objection to their doing this as a devolved function.
I had it in mind to ask the noble Lord one question, which was whether historically the Secretary of State had had to make use of his power on a recognisable number of occasions. I have not heard of its being done, and it would be interesting to know whether he has that information, because we could then know the extent of the power that is being devolved. I am not wishing to resist this.
Lord DONALDSON of KINGS-BRIDGE: I have not the information but I will get it for the noble Lord before we meet again. I think from what he has said the noble Lord is satisfied that this power should be devolved. So there is nothing between us. However, I will find out the use that has been made of this power in the past.
Lord DAVIES of LEEK: If I may take just one minute, I think there is a point in this, because noble Lords will remember there is an old-fashioned system of school managers. In some rural areas all over Britain you may get some old curmudgeons as school managers who, instead of wanting children to have an education—I had better be careful in what I say—may want the children at ploughing time
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or potato-gathering time, and thus interfere with their educational opportunities. It has happened in some cases that the central authority has had to come down fairly heavily where children have been misused at certain times and seasons of harvests. I am not going to say in which countries it happens or in which counties, but it is universal.
Lord LLOYD of KILGERRAN: I would, if I might, intervene on a technical matter. The noble Lord, Lord Donaldson, in his dialogue with the noble Lord, Lord Elton, has said from time to time that he will be writing to him with information. Would it be possible for me to have a copy of the information?—because certain interesting matters have been raised and we should like to consider them further.
Lord DONALDSON of KINGS-BRIDGE: It will be a great pleasure.
Lord ELTON: Many a crop of potatoes would not have been lifted in days gone by were it not for the procedures which would have fallen before this sector! However, the mechanisation of agriculture seems to have helped towards the improvement of education. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 46Y not moved.]
Lord ELTON Lord ELTON moved Amendment No. 46Z:
Page 40, leave out from beginning of line 6 to end of line 14.
The noble Lord said: I shall be very interested to hear how the noble Lord will play again the tune which says that if you take anything away from the Assembly you are in fact derogating from it and that what is left is a hollow shell. Amendment No. 46Z proposes leaving out certain lines on page 40 relating to reserved functions: these refer to functions under Section 100(1)(b) of the Act:
"so far as relating to terms and conditions of service, pensions, gratuities or allowances payable on retirement or death, or compensation for loss of office or employment or loss or diminution of emoluments".
In other words, the Government have, properly in my view—of course, this is a probing Amendment—reserved the right to establish nationally what are to be the standards of pay, emoluments and conditions of service of the teaching service. That is a vital function in education. The educational profession is in competition with other professions for recruits. Recruiting is determined by two things, if you set aside the old adage which says:
"Those who can, do: those who cannot, teach".
If you set aside that, then there is competition for employment in education, as in other professions, and the supply of teachers will be largely controlled by this provision. Earlier, the noble Lord gave us to understand that the supply of teachers is something which is of peculiar interest to the Welsh Assembly and it ought not to be derogated from them. How in fact does he square what he says now about the one bunch of principles with what he is about to say regarding the other?
Lord DONALDSON of KINGS-BRIDGE: I do not think that this is very difficult. The Scotland and Wales Bill contained provisions to devolve the powers to fix teachers' pay and related conditions to the Assembly. But after representations from the teachers' unions and others, the Government decided that the balance of advantage lay in reserving teachers' pay, so as to maintain the present uniform arrangements for England and Wales.
We believe that the provisions in the Wales Bill for dealing with the arrangements for fixing pay and related conditions of service, like superannuation, in respect of teachers in Wales are fair and satisfactory to all concerned. At present there are uniform arrangements for dealing with pay in England and Wales, and it is our intention that these should continue after devolution. The principal teachers' unions have supported reservation of pay negotiations and settlements —that is, for the continuation of the present England and Wales arrangements—although they recognise that there may be representation for the Assembly in these arrangements. Likewise, the arrangements have the support of the
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employing local authorities. Moreover, the Government also see considerable advantage in ensuring that there should be no hindrance to mobility within the profession, arising from any discrepancy in pay and related conditions. These are strong arguments which, in the Government's view, justify making an exception to one of the principles of devolution; that is, devolving where possible those areas of activity where decisions primarily affect people living in Wales. The noble Lord ought not to make too much of my doing in this case what he has wanted me to do on every other, and I shall be surprised if he can really make that one stick.
Baroness ELLES: While allowing my noble friend to have one minute's rest, perhaps I can come in on this Amendment. As the noble Lord has said, the question of teachers' pay is an area which he is specifically reserving to the Minister. I perfectly well see the reasons for it, and they are quite justifiable. But the noble Lord will realise that there will be a dichotomy if, as I suggested earlier, there is any radical change in the type of teacher training that goes on, because there will be the same pay for, perhaps, totally different standards, qualifications, ability and training. This is not a question of conflict between the Welsh Assembly and the Secretary of State; that has nothing to do with it. But it might be a matter of conflict between teachers who have been trained in one part of the country and teachers who have been trained in another part, who are getting the same wages and conditions of work, but are providing totally different services and have totally different abilities. If one has one, then one should have the other.
I accept that certain matters have to be devolved. But it is not a question of derogation, because the powers have not yet been given to anybody. But how are you to provide a viable system for the country, and for Wales, in particular? In view of what the noble Lord has said, there is a very strong argument for, at least, considering again the question of teachers' training. Or perhaps the noble Lord can assure us that there will be some co-ordination—I do not say that there should be control—in the pattern of training between England and Wales.
Lord DONALDSON of KINGS-BRIDGE: In a way, standardisation on pay between England and Wales will ensure some liaison. Obviously there will be liaison in any event. We have a Department of Education here and we have the Welsh Office, which have always been in the closest touch; and the Welsh Office has recently taken on new powers. So I do not have the faintest fear that there will not be liaison. But this will ensure it, and I hope that what I have said will go some way to put the noble Baroness's mind at rest.
Lord ELTON: I am much obliged to the noble Lord, and to my noble friend, for that exchange, which was very illuminating and will make rather good reading. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
[Amendment No. 46ZA not moved.]
11 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46AA:
Page 40, line 14, at end insert—
("The functions under section 112 of that Act.").
The noble Lord said: I hasten to assure the noble Lord that this is a probing Amendment. It is an odd provision, is it not? Section 112 of the 1944 Act requires all regulations made under this Act to be laid before Parliament, and a great many of the regulation-making powers have been devolved. I want to ask the noble Lord whether it is his intention that all the instruments generated by the Welsh Assembly are intended to be laid before this House and the other place. It makes quite a lot of difference. And what is all this about people breathing over other people's shoulders, when in fact in future we shall have to endorse everything that comes out of the Assembly?
Lord DONALDSON of KINGS-BRIDGE: The effect of the Wales Bill is that this provision ceases to apply in Wales, but that any regulations made by the Assembly must normally he made in plenary session.
Lord ELTON: Could the noble Lord direct us to this very valuable and important passage in the Bill which has escaped my notice?
Lord DONALDSON of KINGS-BRIDGE: I will see if I can come to it. I shall have to look into this because it is a very long Bill and I cannot tell exactly where this provision comes. It is Clauses 76 and 23; I am sorry to have delayed the information which was not at my fingertips. The Amendments are not very clear, but the effect of this probing Amendment would be to require Assembly regulations to be laid before Parliament in the event of an objection. This surely would not be correct constitutional practice. We do not want to bring in another level of executive decision in relation to something entirely devolved. My first comment has probably satisfied the noble Lord on this.
Lord ELTON: I am obliged to the noble Lord. There is a limit to what I can discover for myself, and it is helpful of him to have sent for it. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord DONALDSON of KINGS-BRIDGE: Before the noble Lord speaks to the next Amendment may I make a correction? It was not Clause 23 but Clause 20.
Lord ELTON: I have that, my Lords, and it will be in the record.
Lord ELTON Lord ELTON moved Amendment No. 46AAA:
Page 40, line 28, at end insert—

("The Education (Miscellaneous Provisions) Act 1948 (c. 40).

The functions under section 6.")

The noble Lord said: This Amendment, together with Amendment No. 46 AAB, deals with the question of recoupment of expenses by one authority when it has educated somebody who is the responsibility of another. The first Amendment relates to the Education (Miscellaneous Provisions) Act 1948, Section 6. In this section we read that where provision for a primary or secondary education is made by an LEA in respect of a pupil who does not belong to their area they are entitled to recoupment of an amount equal to the cost to them of the provision; if the pupil belongs to the area of another such authority from that authority the amount in that case being determined by agreement between the authorities

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or in default of agreement by the Secretary of State.
As I read the Act, if it is not amended as I suggest, the function of the Secretary of State under this section will be discharged by the Welsh Assembly. The question which then suggests itself to me is this. What happens when a child from Cardiff is educated, for one reason or another, in a special school in Hereford or Worcester? In a case where the Cardiff authority and the Worcester authority cannot agree, the arbiter will be the Welsh Assembly. I should have thought that here a degree of partiality might be suggested, even if it did not exist, which would not be acceptable.
The next Amendment, grouped with Amendment No. 48AAC, amends the Education (Miscellaneous Provisions) Act. In Section 7, again we get recoupment to the local education authority of the cost of providing further education for persons not belonging to its area. The provisions are approximately the same. I am asking the noble Lord to explain why it is, if I am right, that the Welsh Assembly is thought to be the right body to adjudicate in a dispute between one authority which is subordinate to it and another one which is not. I beg to move.
11.7 p.m.
Lord DONALDSON of KINGS-BRIDGE: The noble Lord, Lord Elton, will be very surprised to hear that I do not think that he is entirely wrong! In general, the powers are certainly ones which seem to us to fall squarely within the functions which ought to be devolved. Given that the effect of devolution will be to allow differences to develop between England and Wales, there should be few, if any, cases where cross-Border problems arise. However, it appears to me, on serious consideration, that some such cases may occur. I am grateful to the noble Lord for drawing my attention to these provisions, and I undertake to reconsider and return to the matters in question at the Report stage.
Lord ELTON: I am grateful to the noble Lord not only for the generosity of his reply—indeed, for the good sense of his policy—but also for at last vindicating the burning of the midnight oil. We have
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gone three Amendments beyond the ones which my daughter had been sticking into my book of briefs, and where she had written "Hooray!", because last night we thought that that was as far as we were going. If the noble Lord gives that undertaking, of course I withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ELTON Lord ELTON had given Notice of his intention to move Amendment No. 46AAB:
Page 40, line 28, at end insert—

("The Education (Miscellaneous Provisions) Act 1948 (c. 40).

The functions under section 7.")

The noble Lord said: This Amendment deals with the Education (Miscellaneous Provisions) Act 1948 and the functions under Section 7. These are Amendments which are designed to modify the requirements of conformity to prescribed standards of school premises. Noble Lords will recall that we had a debate on this requirement rather a long time ago, at the beginning of the exchanges between the noble Lord and myself. This is correctly to be considered as a linked Amendment. However, it occurred on a later print of the Marshalled List, and when I made out my list of linked Amendments it was not there; so I did not put down the link. We have covered the subject adequately. Unless, therefore, any of my noble friends wish to intervene at this stage, which I do not think they do, I will not move the Amendment.
[Amendment No. 46AAC not moved.]
11.9 p.m.
Lord ELTON Lord ELTON moved Amendment No. 46AAD:
Page 40, line 28, at end insert—

("The Education Act 1962 (c. 12).

The functions under section 3.").

The noble Lord said: We come now to an Amendment of the Education Act 1962; we are getting rather closer to home. It deals with the functions under Section 3 of that Act. With your Lordships' permission, I shall refresh my memory about it. It deals with the provision of State grants for the training of teachers and awards for postgraduate

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courses and to students over the prescribed age.
I find this provision to be confusing. It may only be that it is late at night and that it was late at night when I first came to it. But we have been told that provision for teacher training is to he devolved whereas provision of university education, which must in fact include postgraduate courses, is not devolved. It therefore seems to me that this section which I have put down as a probe for reservation, actually does the splits on the division between what is devolved and what is not devolved.
I know it is late at night and I apologise to your Lordships for introducing minutiae, but this is our only opportunity—indeed anybody's opportunity—to understand the minutiae of the Act; and if you are a lecturer in a college of education, as I once was, it is of great interest to know who will be paying your salary cheque, as it is if you are a student, as I once was, to know who will be paying your grant. Could the noble Lord relieve the anxieties of those who are now in a similar position? I beg to move.
Lord DONALDSON of KINGS-BRIDGE: Once again, the noble Lord has raised a point in regard to a difficult situation, and I will look at it again. I will not give the text saying why, as it is late and all the noble Lord wants is the satisfaction of knowing that he has raised a point which we think requires further thought.
Lord ELTON: I think the noble Lord is almost accurate in his assumption of what I want, although it is not always like that. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ELTON Lord ELTON moved Amendment No. 46AAE:
Page 40, line 30, at end insert—

("The Remuneration of the of Teachers Act 1965 (c. 3).

All the functions Secretary of State.").

The noble Lord said: This relates to the Remuneration of Teachers Act 1965 and I take it that the term "the Education Acts 1944 to 1972" includes this. This is the machinery by which teachers' salaries are negotiated. I do not know the extent to which the situation has
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changed since the Act was drafted or my copy of it was annotated, but as I understand the position this is a national body, and in view of the reservation of powers as to remuneration that we discussed earlier in column 2 of Schedule 2, I take it that the functions of this committee will remain undevolved and so therefore will any involvement of the Secretary of State with it. We find the Secretary of State mentioned in subsections (4), (5) and (6). If this is all part of the machinery which is to be operated to bring about a non-devolved function it seems odd that this is not itself reserved. There may be an explanation of it, and that is what I should like to have from the noble Lord. I beg to move.
Lord DONALDSON of KINGS-BRIDGE: On this particular Amendment, once again, I should like to look at it further and come back to the noble Lord.
Lord ELTON: The noble Lord has not been quite so generous: he has not said that I have a point. He has merely intimated that he aoes not know the answer.
Lord DONALDSON of KINGS-BRIDGE: I am not quite happy with it as it is.
Lord ELTON: That is marginally more generous, and at this late hour I will accept that. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ELTON Lord ELTON had given Notice of his intention to move Amendment No. 46AAF:
Page 40, line 30, at end insert—

("The Education (No. 2) Act 1968 (c. 37).

The functions under section 1(2).").

The noble Lord said: I think this is the one that we have been waiting to see come over the horizon. This is an Amendment to the Education (No. 2) Act 1968 and it is a suggestion to reserve the functions under Section 1(2), which is a function in relation to the changes in character, size or situation of schools, and your Lordships will recognise, I think with relief rather than resignation, that this is ground that we have already trodden.
Your Lordships have been very patient with me. I hope you will not feel that I have trespassed too much upon that patience. We have, after all, like tiny nuggets, discovered in the great mass of sand we have sifted this evening one, two or possibly three points upon which the noble Lord will take advice, and a great many more about which he is going to write to me and sundry other noble Lords, not forgetting Lord Lloyd of Kilgerran. The noble Lord must remember that others have been at the wicket before him, and the postman's bag will be heavy. I am grateful. I shall not move the Amendment.
Lord STRABOLGI: I beg to move that the House be resumed.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

TUVALU BILL [H.L.] OATHS BILL [H.L.] EXPORT GUARANTEES AND OVERSEAS INVESTMENT BILL [H.L.]
Returned from the Commons agreed to.
COMMONS REGISTRATION (CARDIGANSHIRE) BILL
Returned from the Commons with the Amendments agreed to.
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