Sitting of 14 February 1979

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
MESSAGES FROM THE COUNCIL OF STATE

  DOUBLE TAXATION RELIEF
  The VICE-CHAMBERLAIN OF THE HOUSEHOLD The VICE-CHAMBERLAIN OF THE HOUSEHOLD reported to the House That their Addresses of 26 January relating to income tax had been presented to Her Majesty Queen Elizabeth the Queen Mother and Her Royal Highness the Princess Anne; and that Her Majesty Queen Elizabeth the Queen Mother and Her Royal Highness the Princess Anne had been pleased to receive the same very graciously and to give the following answers:
  We, Counsellors of State, to whom have been delegated certain Royal Functions as specified in Letters Patent under the Great Seal of the Realm dated 8 February 1979 have received your Addresses praying that the Double Taxation Relief (Shipping and Air Transport Profits) (Venezuela) Order 1978, the Double Taxation Relief (Shipping and Air Transport Profits) (Jordan) Order 1978, and the
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  Double Taxation Relief (Taxes on Income) (Malawi) Order 1978 be made in the form of the drafts laid before your House.
  On behalf of Her Majesty we will comply with your request.
  We, Counsellors of State, to whom have been delegated certain Royal Functions as specified in Letters Patent under the Great Seal of the Realm dated 8 February 1979 have received your Addresses praying that on the ratification by the Government of the Grand Duchy of Luxembourg of the Protocol set out in the Schedule to the draft Order entitled the Double Taxation Relief (Taxes on Income) (Luxembourg) Order 1978, and on the ratification by the Government of the Kingdom of Norway of the Protocol set out in the Schedule to the draft Order entitled the Double Taxation Relief (Taxes on Income) (Norway) (No. 2) Order 1978, which drafts were laid before your House, orders may be made in the form of those drafts.
  On Her Majesty's behalf we will comply with your request.

DEATH OF A MEMBER
Mr. Speaker: I regret to have to inform the House of the death of the Right Hon. Reginald Maudling, Member for Chipping Barnet, and I desire, on behalf of the House, to express our sense of the loss we have sustained and our sympathy with the relatives of the right hon. Member.
ORAL ANSWERS TO QUESTIONS
  FOREIGN AND COMMONWEALTH AFFAIRS

    Rhodesia
    Mr. Canavanasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a further statement about Rhodesia.
    The Minister of State, Foreign and Commonwealth Office (Mr. Edward Rowlands): May I also add my words of grief about the death of Reggie Maudling? His loss will be felt in the affairs of Southern Africa to which he regularly contributed from a long and deep knowledge of the situation. We shall all miss his wise counsels and his contributions to such debates.
    My right hon. Friend held discussions on Rhodesia with Mr. Vance in Washington 10 days ago. They agreed that the United Nations supervised elections, following a ceasefire and the establishment of a neutral transitional administration as provided for in the Anglo-American proposals, remain essential for a viable settlement. Tragic recent events make it even more necessary to continue to work to improve the prospects for negotiation through contacts with the parties and with all the Governments concerned.
    Mr. Canavan: Although Members on both sides of the House have rightly deplored the killing of 59 people in the recent airliner incident, does my hon. Friend agree that Smith's public promise of retaliation can only escalate the Rhodesian war? Will he remind those Conservatives who are virtually encouraging a rebel like Smith to invade Zambia—a member of the Commonwealth—that such incitements may mean that in the resultant violence some of the blood may be on their hands?
    Mr. Rowlands: I appreciate that the extension of the conflict and the response—if there is a response which could lead to further escalation of the violence—is one of the dangerous consequences of the act of barbarism that occurred yester-
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    day. The right hon. Member for Cambridgeshire (Mr. Pym) said yesterday that acts of provocation, from whichever quarter at this stage, could only make a settlement that much more difficult to achieve.
    Mr. Pym: On behalf of my right hon. and hon. Friends, may I add to your words, Mr. Speaker, and say what an immense sense of loss we feel in this House at the death of the Right Hon. Reginald Maudling? We feel that his death constitutes a grievous loss to our country, a very real loss to Parliament, a particular loss to the Conservative Party and, above all, a great loss to his family. I thank the Minister of State for his kind words.
    Reginald Maudling was once Secretary of State for the Colonies. I was privileged to be his Parliamentary Private Secretary for a part of that time and he did, indeed, take a deep interest in all colonial affairs. In recent years he has taken part in every debate on Southern Africa. He would certainly have been with us this afternoon had he been spared. He would have taken a very acute interest in the elections that are about to be held.
    Has the Minister received an invitation to send observers to that election? If so, what response has he given?
    Mr. Rowlands: I do not believe that we have received a formal invitation. We have had announcements that the internal settlement leaders in Salisbury would wish us to send observers. The Government have no plans to do so. We do not think that observers are any substitute for internationally-supervised free and fair elections, but of course it will be for the House to decide how it wishes to respond.
    Mr. Steel: May I, on behalf of my colleagues, say how much we, too, miss both the wisdom and friendliness of Reggie Maudling in this House?
    Following the report made by the right hon. Member for Anglesey (Mr. Hughes), although no all-party conference will take place, will the Minister assure us that the Government are maintaining contact with the internal settlement leaders and those outside the country in a continuing effort to secure a settlement?
    Mr. Rowlands: We shall endeavour to do so. Following the meeting between

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    my right hon. Friend the Foreign Secretary and Secretary of State Vance in Washington on 3 February, further approaches will be made to the parties in an effort to get agreement on such essential elements as the United Nations supervised elections and ceasefire. Such approaches are, by their very nature, undramatic and confidential, but we certainly shall pursue them.
    Mr. Robert Hughes: What is democratic about consulting only whites about the kind of constitution in Rhodesia and the black population of Rhodesia simply has to accept what is laid down by the internal settlement? Until the people of Rhodesia are given a proper opportunity to decide freely for themselves their own future there will be no peace in Rhodesia.
    Mr. Rowlands: I agree with my hon. Friend. Certainly the referendum cannot be a test of acceptability of any proposal. There must be a test of opinion of the whole of Rhodesia in conditions which allow free and fair elections to take place.
    Mr. Blaker: Does the Minister agree that the elections are designed to test whether the fifth principle has been observed? Does he realise that if the Government refuse to send observers they will appear once again to be discrediting the men of peace and favouring the men of violence?
    Mr. Rowlands: That is not so. We have pointed out, rightly, that in the situation in Rhodesia at present, where 90 per cent. of the country is under martial law, where radio and the media are censored and where all parties are not allowed to participate in the internationally supervised elections, we do not believe that this is a basis for testing public opinion or acceptability in Rhodesia.
    Several Hon. Membersrose—
    Mr. Speaker: Order. We must move on. This matter comes up again.

    Indonesia
    Mr. Newensasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on British relations with Indonesia.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Evan Luard): Relations with Indonesia
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    remain good. The Indonesian Foreign Minister, Professor Mochtar, paid a successful visit to the United Kingdom as a guest of the Government, in November 1978. We attach much importance to our relationship with the Association of South East Asian Nations, of which Indonesia is an influential member.
    Mr. Newens: How does my hon. Friend justify the sale of another eight Hawk ground attack aircraft to a country with such an appalling record on human rights? Do the Government approve of the annexation of East Timor by force, in which—even according to Mr. Adam Marley—60,000 members of the population of that country were killed?
    Mr. Luard: We have not sold ground attack aircraft to Indonesia. The question under discussion has been the sale of Hawk aircraft which are suitable only for training. On the question of East Timor, I agree on the general importance of the principle of self-determination. We voted in the Security Council two or three years ago in favour of the application of that principle to East Timor.
    Mr. Nicholas Winterton: Does the Under-Secretary accept that Indonesia is a vital link in the defence of South-East Asia against further Communist advance? Does he also accept that there is tremendous trade potential for the United Kingdom in Indonesia? Will he on all occasions extend every courtesy to the Indonesians so that trade with that country, which is friendly to the West, can continue to increase?
    Mr. Luard: It would be an insult to Indonesia to regard that country simply as a bulwark against Communism in that area. Indonesia is an important country in its own right and one with which we have very good relations.

    Cyprus
    Mr. Christopher Priceasked the Secretary of State for Foreign and Commonwealth Affairs what recent action he has taken to support Dr. Waldheim's initiative for a solution in Cyprus.
    The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd): The Government are keeping in close touch with Dr. Waldheim, the Cyprus

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    parties, and other interested Governments, about progress towards a resumption of intercommunal negotiations. We have made clear our full support for Dr. Waldheim's efforts.
    Mr. Price: Is my hon. Friend aware that the Greek Cypriots side has accepted without any reservations at all Dr. Waldheim's agenda, whereas the Turkish Cypriots have submitted reservations which have so far prevented the resumption of these talks? In these circumstances, does he really think it sensible for Britain to participate in the massive economic aid towards Turkey, because the Prime Minister said on his return from Guadeloupe that although there was no formal linkage he very much hoped that the Cyprus negotiations and the aid to Turkey would go hand in hand?
    Mr. Judd: The United Kingdom Government, together with the Governments of the United States and Canada, have been closely following the prospects for restarting the negotiations. We are determined to do all that we can to assist in this matter and we have our own proposals available as a basis for detail in this respect. We must persevere in trying to get the parties together. I hope my hon. Friend will feel that the preservation of democracy in Turkey stands on its own merits as an issue worth our support.
    Mr. James Lamond: Has my hon. Friend noticed the gross violation of human rights in Cyprus, both in the South and more clearly in the North? Does he realise that his and his right hon. Friends' stand on human rights—the speeches that they make and the books that they write—loses a little credibility when they stand idly aside and disregard the violations in Cyprus?
    Mr. Judd: If that were true it would be a serious allegation. It is not true. We have done all that we can to support international efforts to resolve the humanitarian problems. We are now convinced that the best way of doing this will be in the context of a general settlement. In the meantime, we are sorry that the parties themselves have not yet been able to reach practical arrangements for investigating the breaches of human rights which concern us all.
    Mrs. Knight: Does the Minister recognise that there still exist the gravest and greatest difficulties for persons who have come over here as political refugees from Cyprus and who are expected to return now? Will he please think again about directing some of them to return home, as he has some of my constituents, who really could not possibly safely return at this time?
    Mr. Judd: I am sure the hon. Lady will agree with what I said a moment ago. If people are to have the prospect of real security and peace in their homes in Cyprus, it underlines the urgency of achieving a general political settlement and the importance of us all doing all that we can to persuade the parties to come together and start working on Dr. Waldheim's proposals, supported by the more detailed ideas put forward by ourselves, the Americans and the Canadians.

    Zambia (British Nationals)
    5. Mr. Bulmerasked the Secretary of State for Foreign and Commonwealth Affairs what progress he has made in obtaining the consent of the Zambian Government to the repatriation by British nationals of such bank balances as they may hold in that country.
    Mr. Rowlands: My right hon. Friend is satisfied that the Zambian Government are doing their best to speed up the grant of permission in these cases. But they are handicapped by the continuing scarcity of available foreign exchange. They are fully aware of the Government's concern about this matter.
    Mr. Bulmer: Will the Minister confirm that a significant number of Britons have been recruited by the Zambian High Commission without it being made clear to them that they would not be able to bring home their savings? Will he see that any Britons thinking of going out there do not labour under any such illusion in future? Will he also recognise that Britons returning to this country, some in straitened circumstances, find it difficult to accept that they, as taxpayers, should be giving money to Zambia when their savings cannot be repatriated? Will he discuss the problem with his right hon. Friend the Minister of State for Overseas Development?
    Mr. Rowlands: I cannot confirm the first part of the hon. Gentleman's question, but I shall make inquiries about it. I accept that it is important that people should realise the foreign exchange problems besetting Zambia and the problems of remitting money home. I also appreciate the hardships, because I deal with a large number of letters from hon. Members on behalf of their constituents. I also appreciate why people do not understand the support that we are giving, but if it were not for that support the situation would be that much worse. One aspect of the £20 million copper purchase arrangement that we had with Zambia was that the Zambians agreed to use part of that money to reduce the backlog of British individual's funds.
    Mr. Brooke: I recognise the difficulties of Zambia, but will the Minister convey to the Zambian Government that the chances of further investment in that country will be greatly enhanced by a resolution of the present problems?
    Mr. Rowlands: I am sure that the Zambian Government fully appreciate that point. We shall press them again to see whether anything can be done to relieve the hardship caused by the delays and the consequential bad impression that they give.
    Mr. Luce: Since thousands of British subjects and many British companies have their funds frozen in Zambia, and since the British Government have, through the provision of aid and assistance with the IMF loans to Zambia, facilitated the provision of foreign exchange to that country, does the Minister agree that there sould be a clear understanding with the Zambian Government that they should give the highest priority to the repatriation of those funds?
    Mr. Rowlands: The Zambian authorities understand the genuine problems of hardship that have arisen as a result of the failure to allow remittances and the consequences for individuals and the impression created on people who would like to work in Zambia. As part of the recent £20 million copper agreement, we have reached agreement with the Zambian authorities that they will use part of that money to reduce the backlog of British individuals' funds.

    China
    Mr. Macfarquharasked the Secretary of State for Foreign and Commonwealth Affairs if he will visit China.
    Mr. Luard: My right hon. Friend is hoping to visit China before long, but dates have not yet been fixed.
    Mr. MacFarquhar: Is my hon. Friend aware that when the Foreign Secretary goes to China he will find a country which is eagerly studying the English language and that I hope that we shall increasingly help the Chinese in that task? However, is he also aware that the study of Chinese in England is under grave threat, partly because of Government inaction? Is he aware that the Chinese language training facility at Cambridge University, where our foreign service officers receive their first year of training, is under economic pressure? Will my hon. Friend undertake to consult his colleagues at the Ministry of Defence, the Department of Education and Science and the Department of Trade to make sure that the facility does not disappear because of lack of Government support?
    Mr. Luard: Since my hon. Friend and I are perhaps the only two Members who have been students of Chinese, I share his concern. I was not fully aware of all the facts that he has given and I shall look into them. The Government are concerned to promote cultural relations with China and we have reached agreement in principle for a major exchange of students. We hope to receive about 1,000 Chinese students and are urgently pursuing discussions with the Chinese to enable that programme to take place.
    Sir Anthony Royle: Will the Secretary of State raise with the Chinese the question of the Harrier deal? Is the Minister aware that there is some concern that certain elements in the Government in London are dragging their feet and that the behaviour of the Secretary of State for Energy yesterday has caused many raised eyebrows, not only in the United Kingdom, but in China?
    Mr. Luard: There is only one policy on this queston, and it is that of the Government as a whole. That policy was announced by the Prime Minister in the House last month. He said that we were

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    ready in principle to undertake a sale of Harriers to China. Negotiations are taking place on the details of that agreement and some will be announced in due course.
    Mr. Fernyhough: Since China is still a Communist country, and since from 1949 the whole Tory Party would have bombed it to hell—and two-thirds of Labour Members would have done likewise—can my hon. Friend explain what has been the fundamental change that enables us to embrace those so-called wicked enemies of yesterday and to make friends with them today? Can he give a guarantee that, though today we are making changes in our approaches to China because of its so-called anti-Sovietism, we shall not change our attitude towards China if it once more becomes friends with the Soviet Union?
    Mr. Luard: I agree with my right hon. Friend that the change in the attitude of some Conservative Members in a very short space of time is rather remarkable. The Government have always wanted to pursue a friendly policy towards China.
    Mr. James Lamond: And to sell arms.
    Mr. Luard: It is only recently that there has been any discussion about the sale of arms. We have made clear that we are interested only in the sale of defensive arms. Since China has expressed interest in the matter, we have decided that we are perfectly justified in selling defensive arms and we do not believe that that need have any effect on our relations with other countries, to which we continue to attach great importance.
    Mr. Hurd: How can the Government have a credible policy towards China if the Secretary of State for Energy is allowed to contradict, in almost every newspaper today, the Government's declared policy on the sale of Harriers? Does the Minister agree that if Mr. Attlee had still been Prime Minister the resignation of the Secretary of State for Energy would have been obtained by lunchtime today?
    Mr. Luard: I understand that the hon. Gentleman is referring to a private meeting which took place yesterday and what was said there. I cannot take respon-
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    sibility for press reports which are obviously based on conjecture of what may have happened at that meeting.
    Several Hon. Members rose—
    Mr. Speaker: Order. If Mr. Attlee were still Prime Minister, Mr. Speaker Clifton Brown would not have allowed the question of the hon. Member for Mid-Oxon (Mr. Hurd).

    Persian Gulf
    Mr. Temple-Morrisasked the Secretary of State for Foreign and Commonwealth Affairs if he has plans to visit the Sultanate of Oman or any other part of the Persian Gulf.
    Mr. Judd: Yes, Sir. My right hon. Friend is attending on Her Majesty the Queen while she visits Kuwait, Bahrain and Saudi Arabia. I will visit Qatar, the United Arab Emirates and Oman, also in attendance on the Queen next week.
    Mr. Temple-Morris: Can the hon. Gentleman assure the House that while the Foreign Secretary is in those parts he will make every possible effort to rectify the serious lack of confidence in the West and its capacity to act in the defence of that area? Does he agree that we shall not get far towards that end unless there is an effective military alliance to cover that part of the world?
    Mr. Judd: I think the hon. Gentleman will agree, on reflection, that the lesson of recent history is that real security and stability must rest on arrangements that make political sense in the context of the countries concerned. My right hon. Friend and I will, of course, be discussing with Ministers in the Gulf the mutual problems in that area. Obviously, the need for stability in the Gulf is of profound importance for us.
    Mr. Watkinson: Is my hon. Friend aware that we welcome the recognition which the Government have extended to the new regime in Iran? Can he tell the House whether his right hon. Friend will have any contact with that new regime? Ought not we at least to congratulate the new regime on ridding itself of one of the most repellent secret police forces in the world? Has any estimate been made yet of the degree of shortfall in oil supplies coming from the

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    Gulf area as a result of what has taken place?
    Mr. Judd: Evaluations of oil supplies are being made as of now about the implications of what has happened. Of course, there will be serious consequences for world supplies. That cannot be denied. As for the general position on relationships, I am glad to tell the House that our ambassador already is establishing good working relationships with the new Government in Iran.
    Mr. Maurice Macmillan: Will the hon. Gentleman and his right hon. Friend the Foreign and Commonwealth Secretary, as a result of their discussions in the Gulf countries, undertake to open discussions with the United States Government to see what action may be required by the NATO Alliance to provide greater stability in an area of the world where recent events, especially those in Iran, have gone a very long way towards destabilisation?
    Mr. Judd: I do not think that we see NATO as fulfilling, as NATO, a function in the Gulf. However, we believe that because of the inescapability of international interdependence in these matters we must all face the need to support those with responsibility locally for stability in the Gulf in any way that makes sense.
    Mr. Newens: Do not recent events in Iran demonstrate that autocracy and dictatorship have no future in the area against the demands of the people for democracy and elementary rights? In the circumstances, should not we make it clear to the Sultan of Oman that, unless he is prepared to introduce democracy into his country, in the long run his regime can no more survive than did that of the Shah?
    Mr. Judd: What everyone in the House will recognise is that recent events have made it clear that, in any part of the world, eventually the Government depend upon consent—[HON. MEMBERS: "Hear hear!"] As my right hon. Friend the Prime Minister is making plain constantly in the context of domestic issues, that applies in this country as well. I understand that in recent months my hon. Friend, with his own special interest in these matters, has been one of the most prominent hon. Members of the House
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    arguing that we should not interfere in the internal politics of other countries and that we must leave it to the people of these countries to find their way forward.
    Mr. Pym: In view of the implications for all the countries surrounding the Persian Gulf of recent events in Iran, and in view of British interests in the whole area, will the Minister consult his right hon. Friend the Foreign and Commonwealth Secretary when he returns at the weekend and undertake to make a full statement to the House next week about the events in Iran, especially the effect of those events upon trade with Britain, oil supplies, defence contracts and banking?
    Mr. Judd: I assure the right hon. Gentleman that we have every intention of keeping the House fully informed of the implications of what has happened for Britain and, indeed, for our other friends and allies.

    USSR
    Mr. Michael Spicerasked the Secretary of State for Foreign and Commonwealth Affairs when he plans to meet representatives of the Soviet Government.
    Mr. Luard: My right hon. Friend has at present no plans to do so.
    Mr. Spicer: Can the hon. Gentleman assure the House that, when the Foreign Secretary meets his opposite number in the Soviet Union, he will make it clear that this country, together with its allies, will stand firm against any attempt by the Soviet Union to exploit the new circumstances in Iran, especially as they affect Western supplies of oil?
    Mr. Luard: I am glad to say that there is no evidence so far that recent events in Iran have been primarily the result of any action by the Soviet Union. Hon. Members will have read the firm statement in this regard made by the United States Secretary of State, and I am sure that the Soviet Union is aware that we would take a similarly adverse view of any attempt to exploit the present situation in Iran.
    Mr. Flannery: Despite the vertical take-off of the entire Tory Party in the general direction of China, when my right

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    hon. Friend the Foreign and Commonwealth Secretary eventually goes to the Soviet Union, will he try to explore the fact that a new leadership now exists in China and that it is in our general interests to see peace between those two great countries to help the whole world? Will he try to discover whether there is any tendency in those two Governments to move towards a rapprochement of the kind that they had in the past?
    Mr. Luard: I agree that this country and the West generally have no interest whatever in trying to stimulate bad relations between the Soviet Union and China. I said earlier what many members of the Government have said, that we do not believe there is anything in our present good and improved relations with China which need in any way be regarded by the Soviet Union as a threat.

    Vienna
    Mr. Watkinsonasked the Secretary of State for Foreign and Commonwealth Affairs if he plans to seek to visit Vienna.
    Mr. Judd: My right hon. Friend has at present no plans to do so.
    Mr. Watkinson: Will my hon. Friend pass on to his right hon. Friend the Foreign and Commonwealth Secretary the message that he should continue to press for the mutual and balanced force reduction talks to be raised to Foreign Minister level so that we can make some move in this log-jam which has been going on now for five years, the release of which is so vital to security in the central region of Europe?
    Mr. Judd: I agree with my hon. Friend, as I know my right hon. Friend does, that what is most important in arms control matters is to ensure that the detailed technical discussions take place within the framework of real political will to make progress. In this context, we are committed to a meeting at Foreign Minister level when circumstances indicate that serious progress can be made. We do not believe that we have yet reached that stage.
    Mr. Forman: Will the Minister also take the opportunity of an early visit to Vienna to see the people at the International Atomic Energy Agency there and to assure them of Her Majesty's Government's
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    determination to provide more funds and personnel to backup that agency's work on the safeguards side of nuclear proliferation, especially bearing in mind the recent threat suggested by developments in Argentina, for example?
    Mr. Judd: I can think of no more challenging issue for the international community than effective international action in this sphere. I assure the hon. Member that we want to do anything that we can do in the years ahead to make the work of that agency increasingly effective beyond what it is doing already.

    Hong Kong (Refugees)
    Mr. Ashleyasked the Secretary of State for Foreign and Commonwealth Affairs what steps he is taking and persuading other Governments to take to help with the resettlement of temporary refugees now in Hong Kong.
    Mr. Luard: As my right hon. Friend the Home Secretary informed my hon. Friend the Member for Southampton, Test (Mr. Gould) on 17 January, of the further 1,500 Vietnamese refugees to be admitted to Britain, 1,000 will come from Hong Kong. We have also approached 18 other Governments requesting them urgently to accept Vietnamese refugees from Hong Kong.
    Mr. Ashley: Despite those approaches, is it not the case that many countries have refused to accept a fair quota of refugees from Indo-China and that they are as a result imposing an excessive burden on the Hong Kong authorities? Is it not now time for a new initiative by the British Government, through the United Nations Commission or the Commonwealth, to try to persuade more countries in Western Europe and North America to accept more refugees at a faster rate?
    Mr. Luard: There is no doubt that the burden of accepting these refugees has been distributed very badly. It has been borne mainly by a few countries, especially Thailand, Malaysia, Hong Kong and one or two other territories. That is why, as I explained to my hon. Friend in my original reply, the British Government have made an urgent approach to a large number of other countries, asking them to make a better offer of places for these refugees.
    Sir Anthony Royle: Is the Minister aware that his answer is very unsatisfactory? It is rumoured that there are up to 100,000 or more Vietnamese of Chinese extraction who wish to leave Vietnam and who may be making their way to Hong Kong. What action is the Minister taking to help the Hong Kong authorities deal with this influx if these people arrive on their doorstep?
    Mr. Luard: I am sorry to say that the hon. Gentlemen's estimate may be a great underestimate of the total number who might wish to leave eventually. The total number of people of Chinese origin in Vietnam is about 1 million or more. I hope very much that most of them will not wish to leave Vietnam. I also hope that the policies of the Vietnamese Government which have encouraged that flow will cease forthwith. We have made maximum efforts to secure offers of places from other Governments and are giving every assistance to the Government of Hong Kong in dealing with the numbers already there.

  EUROPEAN COMMUNITY

    Council of Ministers
    Mr. Loydenasked the Secretary of State for Foreign and Commonwealth Affairs when he expects to meet Foreign Ministers of the EEC.
    Mr. Hicksasked the Secretary of State for Foreign and Commonwealth Affairs when he hopes next to attend a meeting of the EEC Council of Ministers.
    Mr. Cryerasked the Secretary of State for Foreign and Commonwealth Affairs when he expects to meet EEC Ministers.
    Mr. Skinnerasked the Secretary of State for Foreign and Commonwealth Affairs when he expects to meet EEC Ministers.
    Mr. Roy Hughesasked the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet EEC Foreign Ministers; and if he will make a statement.
    Mr. Judd: My right hon. Friend expects to meet his EEC colleagues next at
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    the Foreign Affairs Council in Brussels on 6 Mareh.
    Mr. Loyden: Will my hon. Friend advise his right hon. Friend that the House is very concerned about the balance of detente, particularly the relationships of the United Kingdom and other European countries with the Soviet Union? Will he give an assurance that this country will continue to strive for detente to restore the balance that may have been affected by the recent visit of the Chinese Vice Premier to the United States?
    Mr. Judd: I assure my hon. Friend that, within the context of political cooperation, members of the Nine take very seriously co-ordination of their approach to CSCE talks. We are already looking keenly at what will come on to the agenda at the next formal round in Madrid. We believe that the success of those talks will depend on the effectiveness of the preparatory work before that formal meeting takes place.
    Several Hon. Members rose—
    Mr. Speaker: I shall call first those hon. Members whose questions are being answered.
    Mr. Hicks: Will the Minister confirm that he intends to raise again with his EEC counterparts the vexed question of the renegotiation of the EEC common fisheries policy? Will he confirm to the House that there will be no sell-out of essential inshore fishing interests as part of a wider EEC package deal?
    Mr. Judd: The next discussion will be at the Fisheries Council due to take place on 19 February. I assure the hon. Gentleman, and, indeed, the whole House, that there is no question of a sell-out on this issue. Equally, we are convinced that it is possible to find an effective common policy which preserves and protects the undeniable rights and interests of the British fishing community, always remembering that 60 per cent. of the common fish stock will come from British waters.
    Mr. Cryer: Does my hon. Friend accept that our membership of the Common Market so far has been an unmitigated disaster? When he meets the Ministers on 6 March, will he make plain to them that we ought to be able to remedy the

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    £2·5 billion deficit with other EEC countries by imposing import controls against other EEC members, unilaterally if necessary? Will he give an assurance that he will come to the House with an amendment to the European Communities Act to enable this Parliament and the Labour Government to decide whether EEC rules and directives apply in this country and so assist in restoring to this Parliament and a Labour Government the power of making economic decisions in this country?
    Mr. Judd: As my right hon. Friend the Prime Minister has made clear, we see the way ahead in the context of membership of the Community within our obligations, as they stand, under the treaties. We believe that a great deal can be done to mobilise common sense and rationality in overcoming the undoubted faults and failures that exist in the life of the Community.
    On the specific question about trade, my hon. Friend is well informed and has had recent experience. I ask him to remember that our overall trade performance with those countries that are now members of the Community was not as impressive as we would have liked before accession. There is no great evidence that it has deteriorated as a result of membership. In fact, the export to import ratio has marginally improved.
    Mr. Skinner: Has the Minister noticed that in the last few weeks a number of Tory MPs have been making remarks about the Common Market that are not altogether complimentary? One is forced to the conclusion that, as we get nearer to direct elections, they are orchestrating an argument, which they hope the electorate will accept, in terms of being slightly less pro-European than they were at the time of Britain's entry. Will he tell the Common Market leaders that he fully supports the NEC direct elections manifesto which says that if there are no fundamental reforms in that Assembly we shall seriously consider—
    Mr. Speaker: Order. The question is getting very long. The hon. Gentleman is giving information instead of seeking it.
    Mr. Skinner: The Common Market has been a long argument, and it is one that will go on for a long time—
    Mr. Speaker: Order. I have no doubt that the hon. Gentleman is right, but he must still ask the question as briefly as he can.
    Mr. Skinner: Will the Minister tell the Common Market leaders that there is a lot of resentment over Britain having to pay £20 for every man, woman and child in this country towards the Community budget while low-paid workers in hospitals and local government are finding it difficult to get off the poverty line?
    Mr. Judd: On the issue of contributions to the Community, we believe that there is a need for a thorough overhaul of the basis on which these are calculated. We believe that as the second highest net contributor to the common budget we are being asked for more than our fair share. While we are in this predicament, we have every right to speak out strongly on the reforms that we believe necessary. Of the reforms needed in the financial area, the highest priority is reform of the common agricultural policy.
    I have a certain sympathy with my hon. Friend over the forthcoming direct elections campaign. Listening to the speeches of some of those who may be involved, it sounds as if it may be rather a coy dance when it takes place. We have to get across clearly to the country, in advance of those elections, that the future of the Community, as we see it, will be based upon the accountability of the Council of Ministers to this House and Houses like this throughout Community member countries.
    Mr. Walters: Does the Minister agree that progress towards peace in the Middle East is very slow? It is beginning to become apparent that the Camp David triumph was not quite the triumph that it seemed. Will he discuss with his European colleagues whether the time is not approaching when Europe should take some initiative, bearing in mind the disastrous consequences to Western Europe if peace is not established?
    Mr. Judd: The hon. Gentleman will recall that during our presidency of the Community we were able to define the common position of the Nine towards the Middle East. We must keep this issue constantly under review. The way forward is to build on the developments

    1129
    that have been achieved and envisaged in the Camp David context, recognising that these have to be seen as part of an approach to an overall comprehensive settlement.
    Mr. David Steel: When the Secretary of State next meets the EEC Ministers, will he be able to give them an unqualified assurance that the Government party in this country will be conducting the direct elections on the basis of contributing to the continuing political and economic development of the Community?
    Mr. Judd: I very much hope that everybody involved in these elections will be looking for ways in which we can mobilise the people of the Community to establish the right priorities in the interests of ordinary men, women and children of the Community and not just remote technicalities, and to make this a live human campaign about issues relevant to ordinary people.
    Mr. Grocott: Does my hon. Friend agree that it is pointless making robust statements about the threat to British interests under the OFP, the CAP and contributions to the Community budget because these statements will be treated with derision by other member States unless he makes plain what he intends to do if our legitimate requests are not met?
    Mr. Judd: With great respect to my hon. Friend, we have first to demonstrate some self-confidence as a nation that we can mobilise support in the Community behind our priorities. We are already making progress. I find it extraordinary that hon. Gentlemen on both sides of the House sometimes fail to recognise the considerable progress made by my right hon. Friend the Minister of Agriculture, Fisheries and Food in stemming this incredible—and endless, as it appeared over the years—rise in food prices, which will only serve to build up wickedly wasteful surpluses in nobody's interest. We are making progress. Let us mobilise support behind that progress.
    Mr. Amery: Will the Minister or his right hon. Friend draw the attention of his colleagues in the European Community to the declarations by leaders of the Iranian Government, just recognised by us, that they intend to withdraw from CENTO, to restructure the oil industry and to cancel a number of contracts con-
    1130
    cluded with European countries, and to the fact that all those matters have far-reaching implications for Western Europe, and indeed for the West as a whole? Will he further draw their attention to the sacking of the American Embassy in Iran and the murder of the American ambassador in Afghanistan and make it plain that these developments constitute a potential threat to peace in the central Asian area? Will he, before these discussions take place, take the opportunity, as my right hon. Friend the Member for Cambridgeshire (Mr. Pym) has suggested, of taking the opinion of the House on these matters?
    Mr. Judd: I am sure that the right hon. Gentleman will be relieved to know that already this week, on Monday, there were Community discussions evaluating the consequences for individual members of the Community and the Community as a whole of what has happened. The common objective of the Community is to work together with the people of Iran for a stable future for that country, which will be in the interests not only of the people of Iran but of the international community as a whole.
    Mr. George Rodgers: Does my hon. Friend agree that major reforms of the Common Market will not be achieved without the consent of all members, and that, since members' interests are in conflict, it is obviously impossible to achieve it by persuasion alone? Is it not the case that the only weapon we have is to demonstrate that in that circumstance we are prepared to withdraw?
    Mr. Judd: If we constantly parade the threat of withdrawal from the Community that undermines our influence within the Community, because those who are then expected to listen to our arguments do not listen to them on their merits. They listen to the argument of someone who is saying "Either we get our way or we withdraw." I believe that there is much evidence that if we use the power of rational persuasion and argument we can mobilise support behind our priorities.
    Mr. Hurd: Returning to the Minister's earlier answer about our contribution to the budget, will he confirm that the main reason why our contribution to the EEC budget has soared when expressed in pounds, as the hon. Member for Bolsover

    1131
    (Mr. Skinner) expressed it, is that the Government have allowed the pound to sink by 30 or 40 per cent. compared with the main European currencies?
    Mr. Judd: I think that the hon. Member is misleading the House. Of course inflation and devaluation have an impact, but the fact remains that we are the second largest net contributor to that budget. That is an unfair burden on the British people.
    Mr. Cryer: In view of the unsatisfactory nature of that reply, I reserve the right to raise the matter on the Adjournment—and I am a Member who has been here.

    Enlargement
    Mrs. Renée Shortasked the Secretary of State for Foreign and Commonwealth Affairs what effect he expects the projected enlargement of the EEC to have on the position of the United Kingdom within the Community.
    Mr. Judd: Although there will be economic costs, we expect that enlargement will in the long run strengthen the Community and its member States, including the United Kingdom.
    Mrs. Short: But is my hon. Friend aware that he is completely misreading the strength of feeling in the House and the country about the economic burdens that we are already facing because we are in the Common Market? Is he aware that the Germans receive £11 per head from the Common Market funds and that Denmark receives £107 per head? Does he not consider that the renegotiation of our membership terms should be carried out before the mediaeval agricultural countries of Greece, Spain and Portugal are accepted into the Common Market? It will be too late afterwards.
    Mr. Judd: My right hon. Friend the Minister of Agriculture has made it plain that we shall stand resolutely against any further price increases which would lead to still more wasteful surpluses this year. He is making that stand, of course, in the centre of the most expensive element of the common budget—the one that leads to this heavy burden on the British people. I hope that we can have the united support of the House for what he is trying to do.
    Mr. Welsh: What consultations has the Minister had with the Minister of Agriculture about Greece's entry into the Common Market? Is he aware of the importance of agriculture to the Greek economy and the increased competition that this will create for limited EEC agricultural funds?
    Mr. Judd: Of course we are aware of the importance of agriculture for Greece. I am sure that hon. Members will have taken account of the fact that, if we want cheaper supplies of some of our foodstuffs, some of the new candidate countries may be able to provide them.
    Mr. Arnoldasked the Secretary of State for Foreign and Commonwealth Affairs what further progress has been made towards enlargement of the EEC; and if he will make a statement.
    Mr. Judd: Negotiations with Spain were formally opened on 5 February. On other aspects of enlargement, I have nothing to add to the reply I gave to the hon. Member on 17 January.
    Mr. Arnold: But what specific obstacles does the Minister now see standing in the way of the successful completion of these negotiations? Can he say more about the kind of changes he would like to see in the common agricultural policy in order to assist the process of enlargement?
    Mr. Judd: Britain has been in the vanguard of those arguing for Spanish accession. As for reform of the CAP, which we do not see tied to the issue of enlargement, our priorities are to eliminate costly surpluses and the financial burden that they place on the British people, to get fairer access for reasonable competitive foodstuffs from third countries and to ensure, as I have repeatedly told the House and as my right hon. Friend is already achieving, a fairer deal for the consumer as weighed against the interests of the producer in the life of the Community.
    Mr. Madden: Is damage to the British textile industry one of the economic factors that the Minister expects to flow from any enlargement of the Common Market?
    Mr. Judd: We have to take very seriously the complications presented by enlargement for the textile industry

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    throughout the Community. That will be high on the agenda in the negotiations.

    Defence of Europe
    Mr. Frank Allaunasked the Secretary of State for Foreign and Commonwealth Affairs if he will resist proposals for the EEC to develop a military arm.
    Mr. Judd: No such proposals are under consideration in the Community or among the Nine. Nor would we favour them if they were. For the foreseeable future the defence of Europe will remain a matter for NATO.
    Mr. Allaun: Will the Minister refuse to make the Common Market an economic base for a military anti-Soviet pact, which the Bow Group is now pressing for, and which some of us warned against years ago? Instead, will he help to end the division between the EEC and COMECON?
    Mr. Judd: I am sure that my hon. Friend knows of the discussions and negotiations on the relationships between the EEC and COMECON which have been under way now for some time. As for defence, I repeat that the Government believe that the Atlantic dimension is absolutely indispensable to the defence and security of this country. We therefore put all our approach to defence squarely on the principle of membership of NATO.
    Mr. Warren: Will the Minister use the forum of the Council of Ministers to encourage France to rejoin NATO as a full member?
    Mr. Judd: I am sure that the hon. Gentleman is referring to the Nine, as distinct from the Community. We do not see the forum of political co-operation in
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    the Nine as the right place to advance this matter, because there are members of the Nine who are not members of NATO. But as friends and allies on a bilateral basis, this is a subject that we shall always keep under review.
    Mr. William Hamilton: Is it not the case that the Nine are seeking to establish and improve relationships with China? Can my hon. Friend confirm that, in the Council of Ministers, the Nine agree with the concept of the British sale of Harriers to China?
    Mr. Judd: We have already dealt this afternoon with the subject of that sale. I am glad to say that the Community is putting a great deal of work into economic relations with China.
    Mr. Eldon Griffiths: Since the defence of Europe cannot be separated from the defence of areas that are vital to Europe, will the Minister, with his colleagues in the Community, address himself to the consequences of the collapse of CENTO? Will he take the opportunity of his visit next week to the Gulf personally to visit the Ayatollah Khomeini in Iran and discuss with him the future position of Iran within CENTO, which I understand would be welcome to the present authorities in Iran?
    Mr. Judd: We are straying a long way from the life of the Community, but I shall not be able to visit the Ayatollah Khomeini during my time in the Gulf next week. I am sorry to disappoint the hon. Gentleman on that score. However, we recognise the implications for us of what has happened in Iran. That is why we had the meeting to which I have referred, on Monday this week, to discuss the implications. We shall keep the matter under active and constant review.

PORTLAND (FLOODING)
Mr. Evelyn King Mr. Evelyn King(by private notice) asked the Minister of Agriculture, Fisheries and Food if, in the light of the Portland flood disaster and the damage sustained by residents on the nights of 13 December and 13 February, he will indicate the action likely to be taken to prevent further loss, either of life or property, and the size and nature of the compensation to be provided.
The Minister of Agriculture, Fisheries and Food (Mr. John Silkin): I should like to begin by expressing my sympathy for the residents in Portland who suffered such a terrible experience on 13 February. We are still collecting information about the cause of the very severe flooding, but it looks as though the wave action that caused the damage was of freak proportions. Subsequent reports from the Meteorological Office suggest that waves of 20 to 25 ft had built up in the Channel as a result of a storm swell in mid-Atlantic. By the time that these waves reached Portland they had increased to 40 or 50 ft, but local weather conditions gave no warning that such an onslaught was imminent.
All our efforts are at present concentrated on dealing with the problems on the spot, and it is too early yet to make a full assessment of the position. However, it is clear that no sea defences could possibly keep out freak waves of 40 to 50 ft. Even if the sea defence improvement scheme which the Wessex water authority at present has in hand had been completed, it would not have protected Portland against these conditions. Nevertheless, I have instructed my engineers to discuss straight away with the water authority what further measures now need to be taken to strengthen the sea defences and how the warning arrangements can be improved. I have told them to offer all their specialist advice to the authority and to indicate that we shall be prepared to consider sympathetically such requests for additional funds as the authority may make.
The question of compensation is a matter for my right hon. Friend the Secretary of State for the Environment. I am glad to see my hon. Friend the Under-Secretary of State for the Environment on
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the Front Bench. He was the previous hon. Member for Dorset, South.
Briefly, the position is that the district council has powers, under section 138 of the Local Government Act 1972, to incur expenditure on assistance to householders and others affected. As on previous occasions, the Government will be prepared to grant aid to the council at the rate of 75 per cent. on any expenditure in excess of the product of a penny rate.
Mr. King: I thank the Minister for the sympathy that he has extended to my constituents. I add my gratitude, and I am sure his, to the Army, the Navy and local and other authorities which are at this moment dealing with the tragedy.
Is the Minister aware that this is the second time that this has happened within two months? Does he realise that this disaster means not only waves 60 ft. high but 70 families displaced? It means a pile-up of motor cars and helicopters. It means that the community is now completely isolated. It has been isolated for some days. Is he aware that this has happened, not always on this scale, twice a year for five years or more? Will the Minister hasten the action that he has indicated the Wessex water authority is prepared to take?
Is the Minister aware that this relatively poor local authority has to find £100,000 before the Department is willing to contribute anything? Does he accept that every other Portlander is a member of the Navy, the prison service or the Civil Service and has served the Government with great loyalty? Is it not now time for the Government to be generous to them?
Mr. Silkin: I tried to make a distinction. I understand that to those who have suffered, that distinction is not all that real, but it is a distinction between the two flood occurrences—the one in December and the one today.
I saw in The Daily Telegraph a report from a local police sergeant, who said, about yesterday's disaster:
"Undoubtedly this is the worst attack by the sea in living memory. None of us has known anything like it."
That is not something that the Government or anybody else can do anything about.

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What should be done to help? I have said that I have taken immediate measures to ensure that all possible help is given. My Department has given the maximum amount for which we have been asked and which we are allowed to give to assist the water authority. I understand that the work that has been going on might have been lost as a result of the second disaster and that consequently additional funds might be needed. I shall give the maximum, as I have during my term of office on each occasion that I have been asked.
The hon. Member asked about compensation under section 138 of the Local Government Act 1972. That is a matter for my right hon. Friend the Secretary of State for the Environment. Obviously he must be asked, and I have no doubt that the local authority will ask.
Mr. Stephen Ross: May I draw the Minister's attention to the fact that what happened at Portland yesterday happened at Torcross a couple of months ago and on the Isle of Wight last year? We all sympathise with those involved. Is it not time that we set up a national disaster fund to deal with such occurrences?
Is the Minister aware that many local authorities are unable to raise a penny rate to deal with such situations? Is it not time for him to persuade the Chancellor and the Prime Minister that we should have a national disaster fund in order to deal quickly with such tragedies?
Mr. Silkin: The question of a national disaster fund is raised from time to time. It is always difficult to take a particular view when one is dealing with a disaster that has hit people in a locality. On a day such as this, one's mind is full of that. But I do not believe that there is any real justification for setting up a national disaster fund. I believe that we must all play our part in building up the sea defences. The Government are doing that now.

ECONOMIC SITUATION
The Prime Minister (Mr. James Callaghan): With permission, Mr. Speaker, I should like to make a statement.
As the House is aware, the Government have been holding discussions with the general council of the TUC to find a better way of conducting industrial relations and to reach a common approach that will secure our economic objectives. The Government and the general council have today agreed a joint statement which sets out the outcome of these discussions. The statement will be placed in the Vote Office.
The statement reports that the TUC is on its own authority separately issuing guidance to its affiliated unions on the conduct of industrial relations covering three areas—first, negotiating procedures for avoiding disputes; secondly, the conduct of industrial disputes where they arise; and, thirdly, trade union organisation and the closed shop.
Hon. Members will find that the documents issued by the TUC on these matters are appended to the joint statement. They lay down comprehensive standards of trade union responsibility and commend the value of conciliation and arbitration.
They say that strike action should be used only as a last resort; that agreements once entered into should be observed by both union members and management; that when a strike does take place there is a vital necessity to maintain supplies and services essential to the health and safety of the community.
They contain detailed advice on the identification and union control of pickets. The third guide acknowledges that aspects of the closed shop have caused concern and that there is a need for agreements to provide for conscientious objectors and certain other categories of workers.
The Government welcome the publication of this authoritative advice by the general council of the TUC, which its affiliated organisations are asked to accept as a basis for their conduct of industrial relations. General observance of this guidance would make for a substantial improvement in our industrial relations.

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The joint statement itself is concerned to find a better way of reaching a consensus on the economic path. We jointly recognise the anxiety about employment prospects, the need for training so that workers will possess the skills to match the new technological developments, the need for greater industrial accountability and democracy and the fundamental importance of increasing productivity.
We agree that industrial regeneration cannot rely on market forces alone and that action is needed by industry, the Government and the trade unions. The document emphasises the need for a close working understanding between the Government and the Trades Union Congress and that the proper handling of this relationship imposes on the TUC the need to accept that its expanding role carries with it wider responsibilities.
We are agreed that the British people must achieve living standards in line with those in the rest of Europe, and that prices can best be kept down by increasing productivity and output and re-equipping our manufacturing industry.
We have agreed on an important objective about the future level of inflation. It is that within three years we must reduce our annual rate of inflation to 5 per cent. or less. We are agreed that the concept of a "going rate" with successive groups escalating the rate by building on the basis of earlier settlements is an obstacle to reducing inflation.
The statement points to advantages that may be secured from the synchronisation of pay bargaining in certain areas, but it recognises the difficulties of introducing this quickly.
We are agreed that each year before Easter there should be a national assessment by the Government and both sides of industry of our economic prospects.
On the question of workers in the public services, both sides have agreed to examine means by which workers in the public services could establish arrangements for negotiating their pay and conditions which would make it unnecessary for them to resort to industrial action. And we agree as a matter of urgency to identify the groups that might be covered by such agreements.
1140
We have also agreed on urgent consultations into the problems of relativities and comparability in pay matters, which are, of course, directly related to the problem of low pay and differentials, and on the continuing arrangements to deal with them.
These objectives have been agreed between us as a guide for action now and in the future, and the joint statement asks trade unions to have regard to all of these objectives from now on.
This is an important beginning, but it will, of course, be necessary for all sections of the community to be involved in this search for a better way. I note that the CBI yesterday published a series of recommendations that overlap some of the matters that I have referred to, and the Government will be ready to have discussions with it to try to secure as much agreement as possible. I appreciate that joint discussions already take place between the TUC and the CBI, and I would welcome their extension.
Our approach is based on the Government's conviction that the most effective and lasting way of improving the conduct of industrial relations is to secure the consent of the trade unions and their members in the manner in which it is embodied in this joint statement.
It is only too easy to propose apparently simple legal answers to these complex issues. They do not exist.
The value of this joint statement is that by discussion, by consultation and, above all, by consent it brings the full authority of the general council of the TUC to bear, alongside the Government, in working out a constructive approach to our economic and industrial future.
Mrs. Thatcher: Before putting three specific questions to the Prime Minister, may I ask whether he is aware that in view of the fate of previous agreements between Labour Governments and the Trades Union Congress—for example, the "solemn and binding" undertaking of 10 years ago, and the social contract under this Government which was sold to the British public as
"the boldest experiment in civilised government that Britain has ever seen"—
we are bound to approach this document and the Prime Minister's statement with a healthy scepticism?

1141
Many of the aspirations we can endorse, but we see a gap between the aspirations and the policies that are necessary to bring about those objectives.
Further, we know that the Prime Minister has had a great opportunity to make a national approach to these matters, in view of the widespread concern of our people and a number of offers that have been made to the Prime Minister. We believe that this statement and this document represent a missed opportunity.
I turn to the three specific questions. First, on the economic aspects of the statement, the right hon. Gentleman referred to the aim of achieving a 5 per cent. rate of inflation or less within three years. What difference will that aim make to his conduct of the present wage round, or to the TUC's conduct of it?
Does the right hon. Gentleman believe that the tactics that he is adopting in the public sector at present, of X per cent.—for example 9 per cent. to public sector employees, accompanied by a promise of deferred comparability into the future—is consistent with the image that he is trying to create of a 5 per cent. figure in three years' time? The Prime Minister cannot have it both ways. He cannot aim for 5 per cent. in three years' time yet be deferring increases into next year or the year after.
Secondly, with particular reference to the industrial relations section of the statement and of the TUC document which accompanies it—
Hon. Members: Speech, speech.
Mr. Speaker: Order. Hon. Members must hear the Leader of the Opposition putting her questions. It is a common thing in this House when hon. Members disagree with questions for them still to listen to them. The right hon. Lady is entitled to put her question.
Mrs. Thatcher: Of course, we welcome the extension of secret ballots and "no strike" clauses, but I want particularly to question the Prime Minister under the second head about codes of practice on the closed shop. Is he aware that we believe that codes of practice are no longer enough to deal with this vital subject? They have an important place as a supplement to law, but they are not a substitute for it.
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Is the Prime Minister aware that it was a Government of which he was a member which used the law to take away from individual members of trade unions the right to compensation for the loss of a job in the event of the imposition of a closed shop? That right was taken away by the law. It cannot be restored by a code of practice. It can be restored only by the law.
The right hon. Gentleman took away by law the right of an individual member of a trade union to appeal to a court of law if he was excluded?—
Mr. Russell Kerr: Too long.
Mr. Speaker: Order. The House listened in silence to a long statement from the Prime Minister. It must now hear the questions arising from that statement.
Mrs. Thatcher: He took away the right—
Mr. Flannery: On a point of order, Mr. Speaker.
Mrs. Thatcher: They are a frightened lot.
Mr. Flannery: On a point of order. Mr. Speaker. I calculate that we have now had nine questions and five statements from the right hon. Lady. That seems to me to be far too long.
Mr. Speaker: Order. In the course of questions this afternoon, one hon. Member asked four supplementary questions in one. By long tradition, when a statement is made—
Mr. Ernest G. Perry: You said it was a long statement.
Mr. Speaker: Order.
Mr. Cormack: Name him.
Mr. Speaker: Hon. Members must not interrupt me when I am trying to make a statement. By long tradition in this House, when a statement has been made it is not regarded in the same way as if a private notice question had been asked. [Interruption.] Order. Hon. Members must not shout when I am standing, because it is unparliamentary to do so.
Mrs. Thatcher: The right hon. Gentleman took away by law the right of an individual member of a union to appeal to a court of law. He cannot restore

1143
that by codes of practice. Will he introduce law to put right matters that he has put wrong in his own legislation?
Coming to the question of picketing, may I ask whether the right hon. Gentleman is aware that what the great majority of our people want is that picketing should be limited to the premises where the dispute between workers and employers occurs, and to people who are in dispute? This document does not limit it in that way at all but gives Government authority to picketing, not only at the premises of workers in dispute but at the r remises of suppliers and the premises of customers. It goes even further and says that "in exceptional circumstances" action in addition to that may be taken. This is to give Government authority to some of the malpractices that we saw in the lorry drivers' strike. Will not the Prime Minister introduce legislation to put these matters right, in accordance with widespread public opinion?
Finally—[Interruption.]
Mr. Speaker: Order. I cannot hear the Leader of the Opposition.
Mrs. Thatcher: Finally, is the Prime Minister aware that unless he is prepared to back up these codes of practice by introducing legislation—for which he will have widespread support—and by introducing the necessary economic measures, his statement and this document are nothing but a boneless wonder?
The Prime Minister: The right hon. Lady asked me, a long time ago, about the fate of previous agreements. I refer her to the advice and guidance issued by the TUC after a previous bout of industrial dispute that we had—what became known as the "who does what" dispute—which disfigured our industrial relations in the 1950s and early 1960s. No one ever refers to that now. Indeed, younger Members of the House have probably forgotten about it.
Mr. Fernyhough: They probably never knew about it.
The Prime Minister: Probably they never knew about it. The advice issued then by the TUC, as has been the case on so many occasions, was accepted by the unions and this aspect of our industrial relations troubles has been removed.
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[Interruption.] I am used to being interrupted. I do not mind. The right hon. Lady should not be so dismissive of the activities of the Trades Union Congress, with which, if she ever came to power, she would have to work. It is an important and responsible element in our community. I sometimes wish that she would drop her nagging and recognise this.
The right hon. Lady is on a fair point if she describes what is contained in this agreement as a series of objectives on which a lot of work has still to be done. That is where we must start from now. As to its impact on the present pay round, it is clear that the higher the level of settlements in this pay round, the more difficult it will be to get inflation down to 5 per cent. within a three-year period. I accepted the advice that I have heard expressed in a number of quarters that perhaps we should not fix a target for one year and that perhaps a three-year attempt upon this national disease would be better. It is better to try to approach it in this way and I am glad that the general council accepts this. I believe that the CBI will do so, too.
As to the impact on current negotiations of this agreement, I am sure that the right hon. Lady will understand if I do not comment—[Interruption.] With respect to hon. Gentlemen on the Opposition Benches, it is better if the House of Commons does not comment now. The negotiations are going on. Public statements made during the course of negotiations are not likely to encourage results. It is for that reason only that I prefer not to enter into answers on these matters.
Turning to the code of practice, I know the right hon. Lady's obsession, over the past month, with the law. It is not an obsession that has been shared by all of the Opposition, certainly not by the right hon. Member for Lowestoft (Mr. Prior), who, only a little over a month ago, was assuring us—this would have been the path of greater wisdom if the Conservative Party had adhered to it, because the recent bout of hysteria will die down—that his attitude was that the practice of the Conservative Party should be to embrace rather than to defeat union power. That was a very wise sentiment, if I may say so. There was nothing that I heard this afternoon

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that would encourage me to believe that that is the policy of the Opposition.
Dealing with picketing, I believe that the House will want to read what is contained in the statement. I do not believe that the right hon. Lady has put a fair interpretation on what is said here. It says:
"Unions should in general, and save in exceptional circumstances, confine picketing—"
That is the operative phrase. It sets out certain exceptions.
Mr. Cormack: Read on.
The Prime Minister: I am ready to read on:
"to premises of the parties to the dispute or the premises of suppliers and customers of those parties."
That is what it should be confined to. If the right hon. Lady or the Shadow Foreign Secretary really believe that the law was successful in these matters, they are saying that they have shorter memories than I know them to have. There are problems in all of these areas, problems of getting the consent and acquiesence of the men concerned. What I am saying, what I have consistently said and shall continue to say—and it is here that I believe the right hon. Lady is profoundly wrong—is that we cannot introduce a law, a rigid inflexible law, into a system for governing this code of practice. That is why it is far better to work with the organised representatives, to get their consent and the acquiescence of all those who will be involved.
Mr. David Steel: If the Prime Minister is serious—as I assume he is—in that part of the statement in which he refers to the British people achieving living standards in line with those in the rest of Europe, may I ask why he is not prepared to look at very different political and industrial structures among our European neighbours which have enabled that success to be achieved? Will he accept that while this area of agreement between the TUC and the Government is to be welcomed, as far as it goes—as is the policy of the CBI, announced yesterday—as a further contribution to the discussion, it is no substitute for agreement in this House on the twin and related issues of pay policy and industrial relations? Does the right hon. Gentleman accept that we cannot go on subcontracting our re-
1146
sponsibilites to create a permanent framework for these matters which will survive more than a few months and which will be more than an agreement with one party in government?
The Prime Minister: I am grateful to the right hon. Gentleman for his modified welcome for what I had to say. He is not correct if he has assumed that we were not ready to look at different structures. I have always been impressed by two aspects of the German structure. The first is the attempt to get a national consensus and analysis of the situation—which is contained in this document. The other aspect—I have not had so much support from certain hon. Members on this—is the extension of industrial democracy as it is practised in Germany. The right hon. Gentleman would not be correct to say that we are not willing to draw the best from everywhere. For all its faults, the British trade union movement is just that it has its origins here. I do not believe that we can graft on other experiences without a great deal of consideration. I ask the right hon. Gentleman to consider that.
There is no attempt to subcontract our responsibilities. If there were a public discussion, every year, of a national analysis of the economic scenarios which could emerge, it would be for the benefit of us all. In that move Parliament clearly has its proper part to play.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. Before I call hon. Members to ask their questions, may I make an appeal to the House?
Mr. Ernest G. Perry: All too long.
Mr. Speaker: Order. Is the hon. Gentleman not well? He continues all the time to interrupt. I make an appeal to the House. If hon. Members will confine themselves to a question rather than to argument, I shall be able to call many more of their colleagues in the time that we shall have before we move on.
Mr. Mellish: Will my right hon. Friend take it that the vast majority of the people of this country will recognise that the trauma of January, and certainly of part of this month, would not have occurred if we had had this concordat and agreement last September? Moreover, will he accept that the vast majority of

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the people will welcome his statement today, which I believe to be what the nation has been crying out for—an understanding between the Government of the day and the unions? Further, will my right hon. Friend understand that it is to be expected that the Conservative Opposition will sneer and jeer at this and show their contempt for the trade union movement, and that his statement today, if it succeeds, will mean for them the end of so much of their carping criticism, upon which they rely in their hope to take office next time?
The Prime Minister: I think it important that we should try to get our economic and industrial relations right. This is a matter that concerns our national fate, quite irrespective of the fortunes of any party, although, naturally, I hope that my party has at least the greater part of wisdom in this matter. As regards the Conservative Party, I say only that I regard it as a little odd that the party that is always trying to exclude the law from every avenue it can—trying to encourage self-discipline and trying to encourage self-regulation—should now be the party that spurns any attempt at self-regulation and self-discipline and says that we must enforce the law.
Sir David Renton: As for the law, is not the real problem the fact that we have given the trade unions immense power—far greater than that possessed by any other section of the community—but have not made them answerable to this House or to anybody for the way in which they use it, or, indeed, for the way in which their members may abuse it? Why, therefore, does the Prime Minister not accept my right hon. Friend's offer to join in a parliamentary effort to deal with the worst abuses now?
The Prime Minister: I have already answered that question. The right hon. and learned Gentleman was in the House when we had the debates over the original Industrial Relations Act. Surely his memory is not so short that he has forgotten the consequences and the failures of that. If he has, let me remind him of what the former director-general of the CBI said about it. He said that that Act, which attempted to import the law, had sullied every aspect of industrial relations. Those were his words, not
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mine. Why return to one's old vomit? Let us try a new way.
Mr. Heffer: Will my right hon. Friend take it that we on the Government Benches will find it very strange if any right hon. or hon. Member cannot accept this document? It is unexceptionable. In fact, it expresses the views of the Labour Party and the trade unions over many years, and it should therefore be welcomed by every Member of the House. But is my right hon. Friend aware that the one failure in the document is in regard to dealing with the immediate situation, and could he indicate that, although we have a long-term project, the Government will put pressure on the Tory councils that are refusing to agree to an increase above the 81 per cent. which the Government have offered to settle the immediate disputes now?
The Prime Minister: My hon. Friend says that there is much of the traditional views of the Labour Party and the Government in this document. That is true. But it also carries our thinking several stages further and forward, and this also has been necessary, I believe, in the light of what has been our experience during the 1970s. I hope that we have all learnt from the 1970s. Certainly, I hope that I have learnt from that experience, and I am not ashamed to say so. I believe that what is contained in this document gives us the basis. There is a lot of work yet to be done on it—it is only a beginning—but it gives us a basis for making a fresh start, and I hope that the whole House —or, if not the whole House, the country—will welcome this new initiative.
As for the current negotiations, for the reasons that I gave earlier I cannot comment on the matters which are now, literally at this moment, I believe, in negotiation between local authorities and the trade unions. With respect, I think it far better that it should be left to them in existing circumstances.
Mr. Donald Stewart: Does the Prime Minister realise that this collection of pious aspirations is now not really enough to take care of the present situation? Since there have been instances, whatever the good faith of the TUC, of the advice of trade union leaders and shop stewards being ignored by strikers, how can the right hon. Gentleman have any

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guarantee or depend on the TUC to deliver? What reason has he for believing that this latest version of "Peace in our time" will avoid future confrontation any more than anything we had to last time did?
The Prime Minister: The right hon. Gentleman is, of course, being practically dubious about it, and I understand that. After all, if this were the Sermon on the Mount he would be entitled to say exactly the same about it, except that, perhaps the Old Testament language is rather more imaginative and colourful than this. [HON. MEMBERS: "New Testament."] I beg pardon—yes, the New Testament. But, of course, the right hon. Gentleman is quite right; I do not expect that heaven on earth will dawn tomorrow.
What I am saying to the House—I dare say that the advice will be disregarded in certain areas—is that experience has shown that when members of the general council of the TUC agree among themselves on a series of proposals that should be put to their unions and ask those unions to accept them, that is the best and most likely way of ensuring success. That is what we are basing ourselves on.
Mr. Watkinson: Does my right hon. Friend accept that if frenzied legislation had been passed through the House on strike ballots or on picketing it would not have helped the present situation at all? Does he further accept that an agreement involving consent is a much better way forward? Further, will he explain the part of the agreement dealing with relationships between the public sector and the private sector? Does he agree that there is a linkage between these two sectors and does he accept that it may be necessary to institutionalise that linkage in some way, taking into account not only pay but terms and conditions of work?
The Prime Minister: I agree with my hon. Friend that legislation at this time on such matters as picketing would not have improved the situation. Indeed, I understand that this is the first occasion when the TUC general council has pronounced on such matters as the scope, the discipline and the organisation of picketing, and this—I beg hon. Members opposite who are perhaps not very close to the trade union movement to believe it—will have a substantial effect. Surely, we all want it to have a substantial effect.
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I believe that this is the best way forward, rather than legislation.
As for the public and private sectors and the linkage that occurs, the statement is carefully drawn. However, it could lead to an institutionalisation, as I think my hon. Friend said, of arrangements that would make it more possible to determine and set pay in the public sector without some of the disturbances that we have been experiencing.
Mr. David Price: As an industrial manager, may I ask the Prime Minister whether he agrees that the basic contract when people go to work is a fair day's work for a fair day's pay? Does he accept that the nearer to the individual worker negotiations take place on what is a fair day's pay and what is a fair day's work, the more likely we are to achieve success, both socially and economically? Is he aware that in my opinion the missing element in his concordat with the TUC is the absence of a reference to trying to get bargaining units smaller and nearer to the shop floor? Does he accept that in industrial relations small is beautiful?
The Prime Minister: I know that the hon. Gentleman has experience in these matters. It is true that the document makes no reference to the bargaining unit. However, a number of trade unions are moving in that direction. We shall have the difficult job of trying to combine national negotiations that are conducted with national executives with settlements at company level. Those who are experienced and practised in industrial matters will have to work that out for themselves. On that score, I do not think that the Government can find a solution.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I must tell the House that we canot debate the matter now. We have spent over half an hour on the Prime Minister's statement. I propose to take three more questions from each side of the House.
Mr. Ashton: Is my right hon. Friend aware that many Opposition Members took little interest in industrial relations until about six weeks ago? Will he add one or two extra pages to the report and list the number of times that the TUC has kept its promise in delivering such

1151
things as the £6 voluntary pay rise, followed the year after by the £4 increase and followed by the 10 per cent. increase? Will he list the number of times that the law has been invoked against unions in the past eight or nine years with disastrous results, such as when the law was used against the Shrewsbury pickets, when the AUEW was fined £75,000, when the five dockers were locked up and had to be released by the Official Solicitor, and the number of days lost in strikes when we had the Industrial Relations Act, all of which culminated in a three-day working week and lights going off throughout the country, which brought it almost to anarehy?
The Prime Minister: My hon. Friend has undertaken my task for me. In a short and succinct statement he has put the classic case against the Opposition's present policy—I do not know how long it will last—on these matters. It will be far better for us to try this initiative and to see how it works. Whenever excesses have been committed, our fellow countrymen have recoiled. There is then a return to what we regard as the right way to handle our affairs and living as a community with each other.
Sir Raymond Gower: Although codes of practice and agreements can be helpful and valuable, why does the Prime Minister exclude so completely any legal framework when many countries that are far more successful than the United Kingdom have found some legal sanction and background necessary and valuable?
The Prime Minister: Because in the United Kingdom it has not worked.
Mr. Urwin: In view of the churlishness with which the Leader of the Opposition received my right hon. Friend's statement, does he agree that she would have been better advised to take a little time to pay tribute to the trade union movement for the enormous contribution that it has made to the reduction of inflation over the past three years? In the ensuing tripartite discussions that my right hon. Friend will be undertaking with the CBI and the TUC, will he keep at the forefront of the agenda the importance of the introduction of a form of industrial democracy, which of itself
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could make a major contribution to conquering the ills from which the country is presently suffering?
The Prime Minister: It is proper for me to say that the TUC has kept its undertakings on many matters. The House should not attempt to deny that. Unfortunately, for reasons that I shall not go into and on which there are various ascriptions of responsibility, we did not have such an agreement with the TUC earlier this year. As has already been said, that lack of agreement was responsible for some of the troubles that we have gone through. However, I hope that we can make a new start and find a better way. My right hon. Friend will note that the extension of industrial democracy and accountability is covered in my statement. He will also find that that is in the joint document that is being issued.
Mr. Crouch: Will the Prime Minister let us know what he understands a concordat to mean? Does he agree that it is an agreement between two parties to observe a certain course of action? If he accepts that definition, is he satisfied that a concordat can be achieved within the trade unions between the leaders and their members?
The Prime Minister: The hon. Gentleman chooses his own word to describe the document. It is not my word. It may be a word that he has culled from the press. On the whole, we prefer to choose our own titles and not those that are thrust upon us by the hon. Gentleman or the press. I have never used the word "concordat". I am not sure that I understand it.
Mr. St. John-Stevas: I do.
The Prime Minister: I am sure that the Shadow Leader of the House is able to give me a very good definition. No doubt he will do so if I give him half a chance.
Mr. St. John-Stevas Mr. St. John-Stevas rose—
The Prime Minister: No, the right hon. Lady will not like it.
The trade unions are voluntary organisations in the degree of control that they exercise over their members. That which has happened over the past 18 months has been to some extent an eruption of basic feeling from the rank and file at

1153
workshop level that the leaders have not been able to control. There is a dilemma. At one and the same time the unions are accused of being too powerful and too weak. Both those assertions may be true. I have found in the past—I know that the hon. Gentleman tries to make a fair approach to these matters—that if the general council sets its hand to something it can usually, by means of persuasion and the authority that it carries, secure general agreement. I am not saying that there will be agreement in every instance and in every way. However, I am certain that the document marks a great step forward for us.
Mr. George Grant: I appreciate the statement made by my right hon. Friend. I think that it is progress. As a life-long trade union member I understand the difficulties that arise after three or four years of restraint. It is my opinion that the present wave of strikes—
Hon. Members: Ask a question.
Mr. Speaker: Order. The hon. Gentleman may find a way of expressing his opinion through his question, but it must be put as a question.
Mr. Grant: I shall do that quickly, as I always do. The present wave of strikes is not against the Government and not against employers—
Hon. Members: Question.
Mr. Grant: Does my right hon. Friend accept that the present wave of strikes is not against the Government and not against employers but against the trade union membership? Everybody is seeking a larger slice of the cake, and while the squabbling takes place the size of the cake is getting smaller. In my right hon. Friend's discussions with the trade union movement, has he suggested that the way forward is not legislation but for the trade union movement, through the TUC, to have the blessing of individual unions to have arbitrary powers in discussing our present difficulties and making decisions?
The Prime Minister: My hon. Friend has longer and more practical experience than most hon. Members have of working in the mining industry and I welcome any contribution that he wishes to make in the House. He also speaks with the knowledge and practical experience of those
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who have sent him here. I agree with him that whenever there has been a period of wage restraint there have always been difficulties afterwards. He is right in saying that the basic problem now is that everybody is seeking, first, to find how to get a bigger share of the cake and, second, how to increase the size of the cake.
The miners of this country, by their actions over the last 12 months and by their present actions in negotiation, have shown that they are not attempting to force a confrontation with the Government, or, indeed, with the Coal Board. I know that my hon. Friend will continue to use his influence with them to see that they get a fair share of the cake but that they do not push their claim beyond the limits that the industry will bear.
Mr. Higgins: After the experience of the Ford dispute, is it not hopelessly inadequate for the statement to do no more than say that contracts should be observed? Should we not at least give an opportunity for those on each side of industry who want to make contracts which are enforceable in the courts to do so?
Since the agreement does nothing whatever to prevent picketing that is carried out by individuals who are not members of trade unions and who have nothing to do with a particular industrial dispute, should we not at any rate legislate to make that illegal?
The Prime Minister: I recognise that the hon. Gentleman has not yet had time to read the code, but he will find that it places picketing under the control of the union that is in dispute, and therefore there is no need for the law to be introduced in this controversial area.
Mr. Prior: Is the Prime Minister aware that his statement this afternoon is disappointing, inasmuch as it does nothing to restore the balance in collective bargaining that is so necessary? Is he further aware that when he says that the law has not a part to play he is underestimating the laws that the Labour Government have passed in the last four years, which have done so much to make that balance less equal than it was before? Is he aware that there is an overwhelming desire in the country and in the House for a limited change in the law, which would have an effect on picketing—such

1155
as my hon. Friend the Member for Worthing (Mr. Higgins) has pointed out— and on the closed shop? Even the Prime Minister, in the past few days, has admitted that it is unfair as it operates at the moment. There is also a need for secret ballots, which could do much to ensure that trade union representation was more democratic than it is at the moment.
To say in 1979, after the experience of the last 10 years, that the only way in which we can proceed is along the lines of the statement this afternoon is a counsel of despair that we on the Opposition Benches cannot accept.
The Prime Minister: But I am not the only one who says it in 1979. The right hon. Gentleman was saying it on 8 January 1979. Indeed, there has been no more sudden conversion since that of St. Paul on the road to Damascus. At least I got that biblical quotation right, Mr. Speaker. The right hon. Gentleman's new-found zeal is being prosecuted in a very bad cause, and I fear that he really knows it.
When the right hon. Gentleman studies the code he will find that there is a strong recommendation from the general council to unions that they should adopt secret ballots. I will not attempt to describe the wording that is used. I think that that is an extension that the right hon. Gentleman, at least until 8 January, would have welcomed. He would not have thought that the law should be introduced to enforce a recommendation of that sort.
It is not my view—and I have never expressed it as such—that the law has no part to play. After all, the law plays a very considerable part in industrial relations. What I have said—experience has shown it to be true, and I stand by it—is that the law has failed in certain of the issues that the Opposition are now putting forward. That is why we want to try the new way.
With regard to restoring the balance in collective bargaining, the weight has shifted to some extent certainly since the war, but that is best dealt with by restraint. The hero of the Conservative Party, Harold Macmillan, said that it can best be achieved by everyone not pushing his weight to the extreme limit. That is a far better way of doing it—Harold
1156
Macmillan was far wiser—than trying to impose the law.
Mr. Gow: On a point of order, Mr. Speaker. You will remember that during the Prime Minister's statement he told the House that a copy of it, and of the documents annexed to it, had been placed by him in the Vote Office. At 4.2 p.m. some hon. Members were trying to obtain copies of the statement and of the documents annexed to it. At that time the deliverer of the Vote—I am talking of the position at 4.2 p.m., which was well after the Prime Minister had sat down—
Mr. Speaker: Order. It has been indicated to me that the document is now in the Vote Office. That might solve the problem of the hon. Member for Eastbourne (Mr. Gow), at least for the time being.
Mr. English: On a point of order, Mr. Speaker. You said earlier that you would call three more Members from each side. As a Member of the Opposition Front Bench rose, you called four speakers from the Opposition Benches. Could we not have one more speaker from the Labour Benches? If so, may I ask my question?
Mr. Speaker: Order. Those hon. Members who are in the Chamber regularly on such occasions—as I believe the hon. Member for Nottingham, West (Mr. English) usually is—will know that when I have said, on many occasions, that I will take three more speakers from each side, that exempts the Front Bench, as I always call a speaker from the Front Bench to put a concluding question. I have said that before and I hope that I shall not have to say it again.
Mr. Brotherton: On a point of order, Mr. Speaker. You will recall that some minutes ago my hon. Friend the Member for Canterbury (Mr. Crouch) asked the Prime Minister to give his definition of "concordat". I wonder whether it would be of assistance to the House if I were to tell the House that—
Mr. Speaker: Order. That would require a concordat on the part of the House, and the hon. Member for Louth (Mr. Brotherton) has no such concordat.
Mr. Rooker: On a point of order. Mr. Speaker. I am not seeking to challenge you, but we have heard from the Prime Minister today one of the most important

1157
statements that he has made since achieving his present office. The Order Paper today places no time limits whatever on the House. After 10 p.m. we shall be on exempted business. If you, in your wisdom, Mr. Speaker, were to allow a few more minutes for questions arising from my right hon. Friend's statement, the time would not be taken from that allocated to any other business of the House. I know that my right hon. Friend will not wish to run away from Opposition questions. I also know that Labour Members wish to press him particularly on the issue of low pay, on which no questions have been asked so far.
Mr. Speaker: When there are questions following a major statement, it is always difficult to decide when to call it a day. However, I exercise my judgment to the best of my ability.

AIRCRAFT AND SHIPBUILDING INDUSTRIES ACT 1977
Mr. Maxwell-Hyslop: 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 discovery that Statutory Instruments Nos. 539 and 540 of 1977, which purport to set a date upon which the assets of firms nationalised by the Aircraft and Shipbuilding Industries Act 1977 vest respectively in British Aerospace and British Shipbuilders, are invalid, and such purported vesting therefore a nullity in law."
I took to your office at 9 a.m. today, Mr. Speaker, a notice that I wished to raise this matter today under Standing Order No. 9. For a completely different reason, I had cause to check the dates when these two orders were made. I then glanced at the text and noted that the section of the Act which allegedly empowered the Secretary of State to make such orders was section 56(1) of the Aircraft and Shipbuilding Industries Act. This rang no bell with me as conferring any such power, so I checked the text of the Act.
Sure enough, section 56 is not an empowering section at all but an interpretation section. In its relevant paragraph it merely defines the meaning of the two phrases "aircraft industry vesting date" and "shipbuilding industry vesting date" respectively. It attaches a specific legal import to these two phrases in the event that the Secretary of State should make an appropriate order by statutory instrument. But it specifically does not endow him with the power to make any such order by statutory instrument. It refers to
"the purposes of section 19(1) of this Act".
But section 19(1) of the Act does not empower the Secretary of State to make such an order either, nor does any other section or schedule of the Act.
Without statutory empowerment to make such an order, statutory instruments Nos. 539 and 540 of 1977 are ultra vires and therefore invalid.
Subsections (7) and (8) of section 1 of the Aircraft and Shipbuilding Industries Act 1977 do indeed empower the Secretary of State to make certain orders by statutory instrument subject to annulment

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in pursuance of resolution by either House of Parliament. But the exercise of this power is confined to alterations in the name of either corporation and does not include the fixing of a vesting date.
That this matter is specific must be clear. It is important because it means that both corporations are in unlawful possession of the assets purportedly taken into public ownership on the purported vesting dates, and cannot lawfully make use of those assets or enter into contracts which assume ownership of them. It should have urgent consideration so that the House can consider what action ought to he taken to mitigate the results of the Secretary of State's ultra vires action in making these two orders without statutory power so to do.
Mr, Speaker: The hon. Member for Tiverton (Mr. Maxwell-Hyslop) gave me notice before 12 o'clock this morning that he would seek 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 discovery that Statutory Instruments Nos. 539 and 540 of 1977, which purport to set a date upon which the assets of firms nationalised by the Aircraft and Shipbuilding Industries Act 1977 vest respectively in British Aerospace and British Shipbuilders, are invalid, and such purported vesting therefore a nullity in law."
I listened with very great care to the hon. Gentleman, and I followed, as best I could, the arguments which he presented to the House. I have given careful consideration to the hon. Gentleman's representations, but I have to rule that his submission does not fall within the provisions of the Standing Order, and, therefore, I cannot submit his application to the House.

EDINBURGH SCHOOLS (INDUSTRIAL DISPUTE)
Mr. Rifkind: 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 which I believe should have urgent consideration, namely,
"the decision that has been taken, as a result of industrial action, to close all schools in the Edinburgh area from tomorrow, including those for the mentally and physically handicapped."
It is ironic that on the very day that the Prime Minister has announced a new relationship with the trade unions which will lessen industrial action a decision has been taken by the National Union of Public Employees to intensify industrial action in the East of Scotland. As a result of this decision, already a number of distressing consequences have become apparent. From tomorrow, all 200 schools and colleges in the Edinburgh area will close, not simply for a day but for an indefinite period.
Secondly, as a consequence of this decision, over 80,000 pupils and students in the Edinburgh area will have no education—either today or the day following, or for all that period for which this industrial action continues.
Thirdly, as a result of this action, those pupils and students who are preparing for examinations will have no facilities made available for their preparation unless, in the words of the chairman of the Lothian education committee, they receive the cooperation of NUPE—such co-operation which as yet has not been seen to be forthcoming.
Fourthly, a distressing consequence of this action, impressing the urgency of the matter, is that the meals-on-wheels service for the elderly, supplying meals which have always been prepared in the school kitchens, will no longer be able to be prepared, and, although it is hoped that alternative facilities will be made available in the social work department, there is no evidence as yet that these will meet the requirement.
Most seriously, the consequence of this action and the decision by NUPE not to make any exemption at all in its industrial action, is that those schools for the mentally and physically handicapped

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will not be open and there will be no facilities provided for the mentally and physically handicapped youngsters in the Edinburgh area for the indefinite future. It is ironic that the Labour majority group on the Lothian region education committee, which is the only majority group in Scotland to have come out in support of the NUPE pay claim, has received no thanks for this—showing that appeasement does not appear to produce any results in this action.
The urgency of this matter is emphasised by the fact that if, at a time when there is so little compassion in industrial disputes, the mentally and physically handicapped, children and the elderly can be made to suffer as a consequence of a pay dispute, this dispute is an urgent and important matter that Parliament should be able to discuss.
Mr. Speaker: The hon. Member for Edinburgh, Pentlands (Mr. Rifkind) gave me notice before 12 o'clock this morning that he would seek 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 that has been taken, as a result of industrial action, to close all schools in the Edinburgh area from tomorrow, including those for the mentally and physically handicapped."
The House will understand that I listened with more than usual anxiety and care to what the hon. Gentleman said. He has raised very serious issues. The House knows that I am instructed, when I give my decision, not to give reasons why I have reached the decision that I announce. After careful consideration of the hon. Gentleman's representations, I have to rule that his submission does not fall within the Standing Order, and, therefore, I cannot submit his application to the House.

INDUSTRIAL SITUATION (SHEFFIELD)
Mr. John H. Osborn: 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 which I believe should have urgent consideration, namely,
"the industrial and commercial chaos in Sheffield and South Yorkshire today, due to heavy snow, and, because of an industrial dispute, the consequential failure to grit, maintain and clear main roads, causing a complete breakdown in public transport, the movement of private vehicles and the provision of goods transport, thereby severely inhibiting the industrial life of the city."
As today there are several applications under Standing Order No. 9, Mr. Speaker, I shall be brief.
Sheffield today is a ghost city. That is due not only to heavy snowfalls but to the inability to clear them as has been traditional. It is a situation that many people in London today may regard as unreal, but it is very real in the city of Sheffield.
At noon today, most main roads in and around Sheffield had not been gritted or cleared due to guerrilla action by public employees. I understand that the parkway into Sheffield was frozen solid and that all roads, where there was the slightest incline, had been either closed by police or were littered with vehicles unable to move. Bus services have been suspended. Commercial life is at a standstill. Many shops are empty, with few customers and even fewer assistants to serve them.
After discussions with the Conservative opposition leaders of the county and city councils, as well as with the chamber of commerce, it is reported that in many factories, shops and commercial premises employees will be leaving early. Once again, essential services for maintaining employment in the city, and a reasonable standard of domestic life, have not been provided by the South Yorkshire county council or the Sheffield city council.
Mr. Canavan: Come on, hurry up.
Mr. Osborn: It is particularly ironic for the citizens of Sheffield, and those concerned about their future employment opportunities, that only a week ago the

1163
city council should have passed a vote of thanks to its employees for keeping the roads open and pavements clear—not very relevant today.
In my case, the situation is also ironic. I flew back from Luxembourg to discuss with industrial leaders and fellow Conservatives the impact of industrial unrest on the life of the city and its ability to meet commitments to its customers worldwide. The Prime Minister's platitudinous statement today about the concordat with the TUC will in no way have alleviated this concern to maintain the day-to-day life of the city. I regard this as a matter of urgency and requiring a debate today.
Mr. Speaker: The hon. Gentleman gave me notice before 12 o'clock this morning that he would seek 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 industrial and commercial chaos in Sheffield and South Yorkshire today, due to heavy snow, and, because of an industrial dispute, the consequential failure to grit, maintain and clear main roads, causing a complete breakdown in public transport, the movement of private vehicles and the provision of goods transport, thereby severely inhibiting the industrial life of the city."
The hon. Gentleman has brought a very serious matter to the attention of the House. I listened with care and concern to what he had to say. He knows that I decide not whether the matter shall be debated but merely whether it shall be debated tonight, as he has requested, or tomorrow. I regret to have to tell the hon. Gentleman that his submission does not fall within the Standing Order and, therefore, I cannot submit his application to the House.
Mr. Molloy: On a point of order, Mr. Speaker.
Mr. Speaker: Before I call the hon. Gentleman, may I say that I can always manage without cheers when I give the result of an application under Standing
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Order No. 9, because, if I accept that cheers are in order, groans and disapproval are equally in order.
Mr. Molloy: I do not wish to detain the House, but there has been a further spate of applications under Standing Order No. 9. I have listened to them all. One seemed particularly poignant and serious, but the others did not seem to come anywhere near the principles of Standing Order No. 9. May I respectfully request of you, Mr. Speaker, if at all possible, to reconsider the application under Standing Order No. 9 that I made yesterday?
Mr. Speaker: The hon. Gentleman may ask me, but he should not be too optimistic.
Mr. Emery: On a point of order, Mr. Speaker. Obviously you have to interpret the rules of the House as they have been established by the House. As the Leader of the House is present, and as in the past few months the use of Standing Order No. 9 for constituency matters —it never used to be so used—has become much more prevalent, I wonder whether he ought to consider asking the Sessional Procedure Committee to look at this matter in view of what has occurred recently.
Mr. Speaker: The hon. Gentleman is the third hon. Member—one right hon. Member and two hon. Members—who in recent days has drawn attention to this matter. The Leader of the House will have heard what has been said, and I have nothing further to say about it.
Rev. Ian Paisley: Further to that point of order, Mr. Speaker. Surely the right of an hon. Member to raise a matter that is of urgent importance to his own constituency should not be challenged in this House.
Mr. Speaker: It is an old custom that hon. Members find their own ways of raising constituency matters. Other avenues are also open to hon. Members.

SECONDARY PICKETING (ABOLITION)
4.46 p.m.
Mr. Peter Temple-Morris: I beg to move,
That leave be given to bring in a Bill to make illegal the picketing of any premises during an industrial dispute other than those directly connected with the said dispute; and for purposes connected therewith.
At the outset, I should say that we are dealing with a real problem. I think that Members on both sides of the House will agree with that. I move this motion in a spirit which I hope will not include union bashing, and I hope that any response from the Labour Benches will not include words such as "jackboots". The hon. Member for Luton, East (Mr. Clemitson) was kind enough to tell me yesterday that he was considering whether to oppose the Bill. Should he be opposing me, I am quite confident that he will approach this debate in the same spirit in which I am initiating it.
I think it is common ground that we face a problem about which the country expects Parliament to take some action. Quite apart from what he said today, the Prime Minister has said that he is not very much in favour of secondary picketing. He has further said that no group has rights over and above the community as a whole. This proposed measure is an effort to translate those bold words into some kind of parliamentary action.
Should the Bill be opposed, it would be yet another example of the Parliamentary Labour Party being fully out of step with the Labour Party in the country, quite apart from the rest of the country. According to a recent MORI poll, which received considerable publicity last week, the Labour Party in the country stands united with the Conservative Party in the country, and, I trust, in Parliament as well. Any hon. Member who opposes this Bill ought fully to realise that, according to that poll by MORI—which, after all, is the Labour Party's private pollster—85 per cent. of Labour voters and 86 per cent. of trade unionists are in favour of a ban on secondary picketing.
The scope of the Bill is limited—I am the first to admit that—to one facet of a very difficult problem. I do not begin to pretend that it is the beginning or end of the matter. Goodness knows, we have
1166
enough trouble from primary picketing. The Bill simply deals with one major sector of abuse, and applies the law to what is potentially a situation which can become criminal. We have seen examples of that. Therefore, the law has to be clear.
By way of definition, picketing under the Bill would be limited to
"at or near the place of employment concerned",
be it a depot, a head office, a factory or whatever.
Why is legislation necessary? First, we should put picketing overall in a proper context. I do not want to be over-legalistic, but there is no legal right to picket as such. That right comes from exemptions to what we all know to be the law. If it is a case of legislative exemptions, the law should properly regulate this situation.
It is claimed in certain parts of the House that the civil law can cover the matter. But the law is confused. I need only remind the House of the occasion when the Attorney-General stood at the Dispatch Box a little while ago and from some of the comments which emanated from his supporters, let alone what the lawyers amongst us felt, it was clear that this House was in a total mist of legalistic confusion. So much for the civil law.
Can this House possibly tolerate the concept of lawful intimidation? The civil law is inadequate in any event because it has to be enforced by a mass of injunctions served individually on pickets. Those injunctions take time to resolve and other pickets could replace the pickets concerned during that time.
It is claimed that the remoteness concept covers this matter, and about that I would add one important comment. If we as politicians begin to rely on a judicially administered remoteness concept, we risk bringing the judiciary permanently into one of the most delicate areas of British politics. That is utterly and completely wrong.
Legislation is necessary so that the police may have clear-cut powers. They should not have to observe picket lines, keeping an ear to the proverbial ground, wondering whether there has been intimidation and whether there is evidence of it, and then, if we follow the Attorney-General's thinking, whether that intimidation is lawful.

1167
It is the duty of the law to protect the majority. The vast majority in these disputes are third parties who have no part in the disputes; they have no say in a code of conduct, concordat or anything else. Most important, they have no say in the way in which that code of conduct or concordat is construed and put into practice. It is clearly necessary for us to legislate about that.
In order to illustrate that there is no other way of dealing with the problem, I shall make two further points. We have heard a lot about a voluntary code this afternoon. As we have seen from recent experience, that will not work. Code or no code, the present situation is part of the far wider issue of trade union leadership control over its members.
The most recent example of this was the road haulage dispute. Whilst I would be the first to admit that the code helped to modify matters in places, I believe that it is a fact that that dispute was not resolved by any code but by the employers conceding virtually the whole claim.
We hear a great deal about the argument that we cannot legislate on the trade unions because we canont enforce such legislation. I suggest that that is a weak argument. This House has a duty, when it sees a clear problem, to deal with it by legislation.
We have heard it said this afternoon that the oft-quoted Industrial Relations Act was ill fated. Remarks such as "Oh, that didn't work. If we could not enforce that, how could we enforce anything else?" have been made. I must say—and I will do so briefly but I hope effectively—that one of the main reasons why that Act did not work was the attitude of the then Opposition. They failed to live up to their previous policies which they knew perfectly well, when in Government, were right. That is why it did not work. If the Opposition of the day realise that legislation on trade unions or anything else is necessary, such legislation is enforceable. Further to this, if we cannot enforce the law, how on earth can we enforce a code of conduct?
May I remind Labour Members, and hon. Members generally, of the serious-
1168
ness of the overall situation and put some simple facts to them? It is a fact, and I defy anybody to say otherwise, that we are tolerating the possibility of minority power being able to blackmail the nation. It is further fact that there has been intimidation, extortion and blackmail. The problems associated with those three matters were admitted by Mr. Kitson and Mr. Moss Evans—and hon. Members can put that in their pipes and try to smoke it.
Another fact is the losses to individual workers, companies, production, exports and shipping. They have been enormous.
What has happened is an abuse of democracy. We all know that what has happened could happen again. It was summed up by a judge in a judgment. I shall not go into the details of that judgment or discuss whether he should have said it, but a judge was reduced to saying that there was a presumption that Parliament would not legislate to bring about its own destruction. If we get to that stage, this nation screams out for some action from Parliament.
I commend this motion to the House.
5.56 p.m.
Mr. Ivor Clemitson: The hon. Member for Leominster (Mr. Temple-Morris) has addressed himself to some serious and important matters concerning picketing. It is important that such matters should be discussed in this House. It is also important that in discussing these issues we do not rush into hasty judgments, however serious the situation may be at the time, or fail to consider all the arguments and counter-arguments coolly and soberly.
The hon. Gentleman referred to the MORI opinion poll. It is important that the public outside the House should be made aware of all the arguments in the matter. We have a duty to inform public opinion.
The object of the Bill, as I understand it, is to ban what has become known as secondary picketing, or, to put it more accurately, to limit the immunities from civil actions for breaches of contract which pickets enjoy to picketing outside their own place of work. Why does the hon. Gentleman wish to impose such a

1169
limitation? The answer must be because of the effect that has been achieved by secondary picketing. It has had an effect. If secondary picketing had had no effect the Bill would never have been introduced, because it would not have been needed.
In other words, we are saying that a large number of people have not crossed picket lines. Why have they not crossed the picket lines? Surely there are, logically, only two possible answers. The first is that the pickets have peacefully persuaded people not to cross the picket lines. People have, of their own free will, decided not to cross the picket line. The other explanation is that people have been prevented from crossing picket lines by violence, threats of violence, extortion, intimidation, or whatever else it may be. All the incidents that have been drawn to the attention of the House in recent weeks fall into the second category. If they were true—I do not wish to judge any particular incident—they are criminal offences under the law as it stands. It is against the law to use violence, to threaten to use violence or to obstruct the highway or footpath in order to prevent people going about their lawful business. It is also against the law to extort money from people or to attempt to do so. Whether they are connected with primary picketing, secondary picketing, tertiary picketing, or whatever, all such actions are against the law. They are actions that should be totally condemned by the House. They have nothing to do with the true spirit and purpose of trade unionism.
The real problem is not whether picketing is primary or secondary but whether it is properly conducted. That is the problem. If criminal acts are taking place, the answer lies not in changing the law but in seeing that the law is properly enforced. If it is said that one of the difficulties of enforcing the law is the difficulty of interpreting it in any situation, because situations vary, the answer surely lies not in attempting detailed legislation but in sensible and agreed codes of conduct. My first objection to the hon. Member's Bill is that he has wrongly identified the problem.
However, if the hon. Member says that he objects to secondary picketing, however peacefully or properly it is conducted, he is really saying that he objects to the
1170
degree of power which trade unions have. That brings me to my second objection to the Bill.
The hon. Member appears to share the analysis that we have heard on a number of occasions from the Leader of the Opposition that the balance of power between trade unions and employers is tilted too far in favour of trade unions and that that balance must be redressed. One of the ways of redressing it is to curb the effectiveness of picketing by banning secondary picketing. That is the argument that the hon. Member was really advancing this afternoon.
I believe that that argument is profoundly misconceived, and therefore we should resist all the practical proposals that flow from it. I am not saying for one moment that trade unions do not have considerable power; of course they do. Neither am I saying that the trade unions' power has not increased over the years; of course it has. But to approach the question of the power of trade unions in quantitative terms—whether it is too little, too much or just right—is negative and sterile. The approach that we should adopt is a positive one. We must ask ourselves how trade union power can be used and channelled into constructive and productive directions. In other words, how can we develop democratic ways of running our industries and services?
The hon. Member has said that he wants the House to give a lead to the country in this matter. I believe that we should give such a lead, but I differ from the hon. Member about the kind of lead that we should give. I believe that the lead that we should give should be in stimulating informed debate on the subject, and encouraging codes of practice for picketing. The hon. Member believes that new laws are needed. I believe that he is wrong in two fundamental respects. He is wrong, practically, in confusing the real problem of abuses of picketing with the question of where it takes place, and he is wrong, philosophically, in his negative approach to the question of trade union power. For those reasons I oppose his Bill.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring

1171
in Bills and Nominations of Select Committees at Commencement of Public Business):—
The House divided: Ayes 187, Noes 170.
[See Division No. 79—at columns 1263–64.]
Question accordingly agreed to.
Bill ordered to be brought in by Mr Peter Temple-Morris, Mr. Stephen Ross, Mr. W. Benyon, Mr. Robin Hodgson, Mr. John Hannam, and Mr. Roger Moate.

SECONDARY PICKETING (ABOLITION)
Mr. Peter Temple-Morris accordingly presented a Bill to make illegal the picketing of any premises during an industrial dispute other than those directly connected with the said dispute; and for purposes connected therewith: And the same was read the First time; and ordered to be read a Second time upon Friday 16 February and to be printed. [Bill 86.]
ORDERS OF THE DAY

  BANKING BILL
  As amended (in the Standing Committee), considered.
  5.15 p.m.
  Mr. Ian Stewart: On a point of order, Mr. Deputy Speaker. I feel that at this stage in our proceedings I ought to place on record the fact that, in my view, the House has been placed in an embarrassing position by having to deal with the Report stage of this complicated Bill without having had sufficient time to consider the amendments and proposals that are to be suggested on Report.
  It is obviously too late to seek a rearrangement of the business of the House in order to take the Report stage at a later date, but many material amendments were tabled only on Monday and were therefore available in print only yesterday. I also received yesterday a long and important letter from the Minister of State, as a result of which I should like to have tabled further amendments and to have considered the possibility of amending some Government amendments —not to mention the fact that we have had no time to have consultations with parties affected by the proposals.
  I understand that a number of amendments promised by the Minister are not ready for the Report stage. My complaint is not against the Minister and his officials. They have done everything in their power to keep me abreast of events and I am grateful to them, but it is unsatisfactory that the House should come to the Report stage of an important Bill when, on the admission of the Minister involved, that Bill is in an incomplete state.
  If we are to take the Report stage now, it should be understood by those taking part and by those who may pay attention to what we are discussing that the Bill is incomplete because of the pressure of time, which was not called for by the nature of the Bill.
  Mr. Peter Emery: Further to that point of order, Mr. Deputy Speaker. It should be pointed out that there are 25 Government amendments covering 11 quite involved subjects and they were tabled only on Monday.

  1173
  I do not blame the Minister or his officials. They were politeness and cooperation personified in Committee, but there is something wrong with the organisation of the business of the House, particularly when we are not in a massive rush to get the Bill on to the statute book. Another two or three weeks would have no great bearing on the matter.
  It is much more likely that the House will have to deal in greater depth with Lords amendments because certain aspects will have to be dealt with in another place and will have to come back here. While that is, of course, in order, it is never the most satisfactory way of dealing with important matters.
  It is sometimes necessary to rush through important Bills, but this Bill does not come into that category and we do not have a whole host of legislation to get through in this Session.
  I should be obliged, Mr. Deputy Speaker, if you could point out to the officials who organise our business the dissatisfaction of certain Conservative Members and our concern that the normal process of allowing time for consultation and consideration of Government amendments on Report should be observed in future.
  Mr. Deputy Speaker (Mr. Oscar Murton): Both hon. Members have aired their views. However, both have been Members of the House for a considerable time and they know that that matter is not one for the Chair. No doubt it has been noted in other places.

Clause 1

  CONTROL OF DEPOSIT-TAKING AND MEANING OF "DEPOSIT"
  Mr. Emery: I beg to move amendment No. 1, in page 1, line 17, at end insert:
  'or
  (c) Notwithstanding Schedule 1 of the Bill, the business is the National Giro.'.
  Mr. Deputy Speaker: With this we may take amendment No. 28, in schedule 1, page 54, leave out line 7.
  Mr. Emery: Basically, the Opposition believe that where similar organisations are operating in both the public and the private sectors and where a nationalised industry or other public sector body is in
  1174
  competition with a company in the private sector, the rules and the supervision of both organisations ought to be not only similar but the same.
  I believe that that is a fair statement of principle affecting all nationalised industries. In this Bill, it affects especially the banks and a body which is now in competition with the banks—the National Giro.
  The Opposition consider that the National Giro should not be excluded by the Government from the provisions of this new Banking Bill. This is especially important because, for the first time in any major sense, regulations are being produced by the Government for the organisation, structuring, control and policing of banks in general.
  It is always a matter of concern to the Opposition when the general principle which I have expounded of the same control and the same structure for both public and private sector companies is deviated from by the Government, and we wish to look at the special position created by it. No one can argue that by excluding the National Giro from the Bill a special position is not being created.
  When we consider banking, I am sure that the Minister will understand if there is considerable suspicion in the minds of the Opposition. We recall the 1976 Labour Party conference when, by a two to one majority and nearly 5 million votes recorded, a proposal was carried to nationalise the major banks. If this amendment is not accepted, the National Giro will be excluded and will continue in a special position in the banking and financial world.
  I am in no way attacking the National Giro. As my speech progresses, I hope that hon. Members will appreciate that I wish to ensure, as I have always done, that when this House decides an industry shall be nationalised, it becomes a major asset of the nation and that it is the duty of the Government and of this House to ensure that it operates as efficiently, profitably and reasonably as humanly possible. At the same time, however, we have to ensure that all nationalised industries—and in this instance the National Giro—operate in such a way that competition with private sector companies is equal and fair.
  When we consider the history of the National Giro, it may be understood why

  1175
  initially it might be considered that it should be excluded from the Bill. When it was established in 1968, the purpose was to provide a rapid and convenient money transfer system through the Post Office. However, the National Giro now offers an expanding range of banking services to private users, to public bodies and to commerce. In 1975, the then Secretary of State for Industry announced that the Goverment had decided upon a number of measures to set the National Giro on what he described as "a surer foundation", and this was all explained in the White Paper entitled "The Development of the National Giro"— Command 6344.
  The wider banking services are very considerable. Under legislation then existing, the Government authorised the expansion of National Giro banking facilities to include facilities for personal loans and personal overdrafts, and overdrafts for local authorities, nationalised industries and business customers on terms which were quite competitive with those of other lenders in the financial world. It was also accepted that the National Giro should be authorised to provide other banking services, such as credit cards, cheque guarantee cards, bridging loans and so on. However, in order to do all this the changes in the capital structure required involved legislation, and in 1976 the Post Office (Banking Services) Act was passed.
  There are some problems in that the National Giro accounts are part of the Post Office accounts. However, it is interesting to note that in a report setting out the views of the Post Office on the White Paper, it was pointed out that the growth of the National Giro had been set stretching profit targets by the Government and that the competitiveness of its charges to business was demonstrated by the continuing rapid growth with deposits into accounts of businesses reaching £10,000 million per annum. That strikes me as an immense figure, and I believe that an additional nought has crept into it.
  The report went on to say that the National Giro was handling more than 250 million transactions per annum and that in its tenth year of operation it was moving from the strong and flexible base which had been established.
  1176
  The accounts are very simple. Indeed, under the Companies Act they would not be acceptable for a bank; they would have to contain much more information. However, from them we are able to see the income of the National Giro in the year 1976–77—the Library does not yet have the 1977–78 accounts—set against an expenditure of £61 million. It is interesting to note that the retained profit for the year, after interest had been paid, is shown as a deficit of £0·9 million. I hasten to add that that is mainly because the postal order service is included in the accounts, the deficit being taken up mainly with the postal order service which is considered to be a social service of the Post Office and which is fairly expensive.
  5.30 p.m.
  I do not find these accounts for a banking organisation as satisfactory as I should like. I would be much happier if control of the National Giro, as envisaged for other banking institutions in the Bill, came from the Bank of England. I understand that legislation places prime responsibility on the Treasury in coordination with the Department of Industry, which is responsible for the Post Office, but that the Bank of England is also involved in decisions of control. Those who have worked in Whitehall know that it is never satisfactory for two or three organisations to be concerned with overall control of something as important as a major banking institution.
  As the Bank of England is already partially involved, why should we not include the Giro as a financial institution covered by the Bill? It is fair to say that public sector organisations need just as much overall supervision as those in the private sector.
  Mr. Nicholas Ridley: Much more.
  Mr. Emery: My hon. Friend says "Much more". I cannot avoid drawing attention to the Crown Agents and the large loss by that public sector organisation. I am not making a major point, but it illustrates how public sector control was inadequate. We now have legislation to alter the whole structure of the Crown Agents.
  Mr. Ian Wrigglesworth: The hon. Gentleman would presumably

  1177
  not want to forget private sector organisations like London and County Securities, United Dominions Trust, Mercantile Credit or many of the other bodies which, like the Crown Agents, got into financial difficulties.
  Mr. Emery: I am not saying that private organisations have not got into trouble. The point I was making was that there is as much need for supervision in the public sector as in the private sector.
  I would like to discuss the position which the Government have previously taken over the National Giro in relation to this Bill. They say that it should be exempted because it is the responsibility of Ministers and already subject to the supervision of the three bodies to which I have drawn attention. I gather that there are regular meetings with the Bank at a high level, chaired by the Treasury.
  It is also claimed that aspects of the legislation are perhaps more stringent than those which would be required by the Bank of England. This has only been suggested. I hope the Minister will tell the House in which areas they are more stringent. I do not believe that the competition about which I have talked should be one-sided. When we say there should be fair and even competition, this does not mean fair competition only in the private sector. It should also be fair and even for the public sector.
  If the House was persuaded to accept this amendment, aspects of legislation already on the statute book would have to be altered in such a way that ministerial control was no greater than for other nationalised industries. The special limitations, hinted at by the Treasury Minister, would have to be abolished so that limits on operations were equal. I believe that this would be accepted by those running the National Giro. They would wish that to happen.
  I hope the Minister will not argue that the National Giro is not in competition with the rest of the banking sector. I have a number of most attractively produced publicity leaflets, one concerned with weekly payments and another with monthly payments relating to loan possibilities by the Giro. They are equally as well, if not better, produced as those of many financial institutions, perhaps because the Giro is not so staid and has paid more attention to public presenta-
  1178
  tion than is usually the case among many of the more stuffy financial bodies in the City of London. If the Giro is to be a competitive body, it should compete equally and should be controlled by the Bank.
  Mr. Roger Moate: I should be grateful for the advice of my hon. Friend. If the Giro is advertising in a more adventurous spirit than other financial institutions, does not this emphasise the importance of its being brought within the control of the advertising deposit regulations to which all other banking institutions are subject? Why should the Giro be in a privileged position?
  Mr. Emery: I would not suggest that any of this advertising goes outside the advertising control provisions which we envisage would be set up by the regulations in the Bill. If our amendment were carried, it would ensure that the Giro had to comply with all aspects of the Bill and not simply in the matter of its supervision.
  I want to make some remarks about the deposit protection fund. Much play was made on Second Reading about the need for the National Giro to contribute to the fund which would be set up. The Government have made clear that they would regard as uncompetitive any contribution that was made. The Minister has announced that the contribution will be made to the Treasury, not to the fund. I do not want to argue about whether or not there should be a fund. If there is to be a fund, the Giro should contribute just as much as any of the joint stock banks.
  I base that argument to some extent on a question which I put to the Minister of State on Second Reading to which I never received a reply. I said:
  "I immediately have to ask whether the Government expect that the joint stock banks or the clearing banks will ever have to draw on the fund."
  I did not receive an answer and, therefore, I answered the question myself. I said:
  "Of course they do not." [Official Report. 23 November 1978; Vol. 958, c. 1541.]
  It is argued that the Giro need not contribute to the fund because it has a Government guarantee and would never have to draw on it. But that argument applies equally to the joint stock banks, which will not have to draw on the fund.

  1179
  I reject absolutely the argument that the Giro's creation puts it in a specialist position. It should not be in that position. Everyone in the financial world would welcome its being brought under the Bill as a normal financial institution. If the Giro is to be encouraged to expand its banking services, increase its deposits and attract more new commercial business, it should be under the same controls and supervision as a joint stock bank.
  I hope that the Minister will not suggest that the amendment is incomplete because the proper title should be National Giro-bank. We could put that right later. The intention is to bring the Giro under the Bill. I hope that the amendment will be supported by my hon. Friends. It should be supported by the Government and those who know the Giro because it would assist the Giro and be fair to both nationalised and private industry.
  Mr. Wrigglesworth: The hon. Member for Honiton (Mr. Emery) has made slightly heavy weather of the argument on behalf of the clearing banks, which want this exclusion removed. He and they should study the National Giro's position more closely. There is no party political difference here. This is a simple practical point about the Giro's position as part of the Post Office and the relationship between such a public body and its sponsoring Government Department. There would have been an anomaly if the Giro had not contributed to the deposit protection fund, but that problem has been overcome by its making an equivalent contribution to the Treasury.
  As was said in Committee, the National Giro is not a separate bank, like those constituted in the City, with its own board of directors and corporate entity. It is a division of the Post Office. That is why its accounts appear as they do, and they give just as much information. The hon. Member should discuss this matter with the accountants of the Giro and study its more recent accounts.
  It is difficult to see how the Giro could at this stage operate otherwise than as part of the Post Office, because it relies so much on Post Office services and counters. It is impossible for it to have the same relationship with the Bank of England for supervision purposes as other
  1180
  banking institutions. As part of the Post Office, it must be responsible to the Department of Industry and the Treasury as well as to the Bank of England.
  5.45 p.m.
  As I said in Committee, and as the hon. Gentleman himself has said, in an ideal world the National Giro would prefer things to be otherwise and to be responsible to one body rather than three. But it is part of the Post Office, which, as a State enterprise, has a relationship with a sponsoring Department. The exclusion therefore follows.
  I was impressed by the willingness of the hon. Member to give freedom to the Giro. His view was not mirrored by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who said that he wanted much stricter control of the public sector than of the private. That is the philosophy that the Conservative Party has practised in power—no more so than in relation to the Giro. The former Member for Chichester, Mr. Christopher Chataway, pawed all over the Giro and considerably restricted its growth when he was Minister of Posts and Telecommunications during the last Conservative Government. He restricted its activities and set un a joint working party and an investigation of its future which lasted well over a year. He was never off the Giro's back.
  I welcome the approach of the hon. Member for Honiton to the relationship between Government and a public enterprise. Should the Opposition ever become the Government—I do not think they will—I hope that his advice will be followed not only about the Giro but about other State enterprises.
  There is a distinction here. The trustee savings banks come into the same category as others covered by the Bill. They are separate entities dealing entirely with banking operations, not a part of a postal service or of an organisation running the country's telecommunications, with massive investment in such things as submarine cables and satellites. They can therefore have a relationship with the Bank of England.
  I hope that the amendment will not be pressed. On practical grounds, if the Opposition were the Government they would realise that it could not operate and that the Government must maintain their

  1181
  relationship with the Post Office as it is today and as it was under previous Conservative Administrations.
  Mr. John Moore: I congratulate my hon. Friend the Member for Honiton (Mr. Emery) on the excellent way in which he moved the amendment. I suggest to the hon. Member for Thornaby (Mr. Wrigglesworth) that there is a degree of confusion between the two sides of the House which is unnecessary. Our objectives are basically similar.
  There are two basic objectives to take into account when we are discussing the National Giro. We all want to see adequate supervision of Giro. Our difficulty involves the different kinds of supervision rather than whether we should have supervision. We all want Giro to compete fairly in the public market place. My hon. Friend the Member for Honiton mentioned this, but it is not well enough seized by the Government.
  It is important to glance briefly at the character of some of the problems associated with a national institution such as the National Giro as opposed to a commercial institution which is owned by investors and private individuals. There are a series of different types of problems which create the need for different types of supervision.
  The fact that an institution is national can and does create in the minds of the public and in the minds of depositors a spurious sense of respectability. I do not suggest that that is not merited by Giro. But a semi-Government institution creates an illusion which makes us consider the necessity of providing additional protections rather than less secure protections for depositors who might be attracted by such an institution because of its national character.
  Such a national institution uses public money, and therefore different kinds of responsibility and supervision are required. I emphasise the words "different kinds" as opposed to the essential thrust of the legislation which is to provide protection specifically for depositors.
  A national institution legitimately can have different objectives from those of similar, competing commercial institutions. Let us imagine, for example, that the National Giro seeks to provide a cheaper form of deposit system. That
  1182
  might be a legitimate aim and it might not be more risky. But there could, in the eyes of those seeking to defend depositors, be that correlation. I do not put it any higher than that.
  The next point was touched upon by my hon. Friend the Member for Honiton. It concerns the difficulties that arise in remunerating or rewarding those who serve in responsible positions in national institutions that are not equity-run and where there is no opportunity to reward people beyond their remuneration. That could create a situation similar to that about which we are hearing in the Crown Agents tribunal. It is difficult to create a sense of equity remuneration as opposed to monetary remuneration for a national organisation. Those are some of the features of the problems that are associated with a national organisation which may not be experienced by a commercial, equity-based organisation.
  We must also consider the non-contribution of an organisation such as Giro to the fund and the impact of that on commercial competitors. The hon. Member for Thornaby said in Committee that Giro must be happier in the commercial market place. But he must recognise that commercial institutions cannot feel on all fours with the National Giro when they believe that that organisation is not contributing equally to the fund and that it is not experiencing the same disciplines and controls.
  Another small but related matter is that if the National Giro does not contribute to the initial fund, that will create disadvantages for other commercial organisations when there is a call on the fund.
  We are making heavy weather of the issues. The solution is clear. We need two kinds of supervision. First, we need supervision for the protection of depositors. In other words, we want to bring the Giro within the scope of the Bill and under the control of the Bank of England which is charged with protecting depositors. We must also ensure that Giro contributes proportionally to the fund.
  Secondly, we need a different type of supervision. I accept the Minister of State's comments in Committee. We must have the supervision of the Treasury and the Department of Industry in the light of the use by the National Giro of public

  1183
  moneys. I am talking of a different type of supervision. Such a dual responsibility is not confusing. It is necessary in the light of the differing supervisory needs.
  I commend the amendment to the House. It represents an important opportunity to help the National Giro and, at the same time, to help the commercial institutions with which it rightly seeks to compete on all fours.
  Mr. Ridley: I declare an interest as a director of a bank. I do not think that that interest conflicts with anything in the amendment or anything that I wish to say.
  This is my first contribution to the Bill. My experience as director of a bank has led me to be humble about the difficulties of supervision and control of banking institutions and to have less faith than the Government and some hon. Members seem to have that merely passing a Bill to control banking will result in profitable and successful banking ventures in the public and private sectors.
  My heart is not with my hon. Friends when they call for fair competition between private banks and the National Giro. I do not believe that that concept can be sustained. There was fair competition between National Giro and the rest of the banking system from the beginning of Giro. What happened? The National Giro lost about £7 million a year in the early 1970s. Finally it accumulated a deficit of £33·4 million, which was written off with State funds. It proceeded to have appallingly bad results. It managed to scratch up a profit of £400,000, which, after it had paid its dividend, became a £900,000 loss. No private sector bank could get away with that performance.
  I admire my hon. Friend the Member for Honiton (Mr. Emery) and agree with his general view. But I do not agree with him about this. If Giro had been a private bank, it would have gone out of business long ago.
  Mr. Emery: My hon. Friend is reinforcing my argument. The postal service represents a major part of the loss which he quoted. That does not alter the main force behind the argument that Bank of England supervision would ensure that no private body could continue to operate
  1184
  with such losses. The Giro would never have been allowed to build up a £34 million loss if it had been supervised by the Bank of England. That is why I say that supervision should be removed from the Government and given to the Bank. Government supervision in the past has been inadequate.
  6.0 p.m.
  Mr. Ridley: I shall come to my hon. Friend's main point, but let me deal first with the subsidiary point concerning postal services. I understand that there is a close connection between the Giro and the Post Office. I do not understand why the Giro cannot pay the Post Office for the Post Office services that it uses, or why the Post Office should not pay the Giro for the services it receives. The transaction could be carried out at arm's length. Any bank in the country probably spends hundreds of thousands of pounds on postal services, but there is no difficulty about any such bank paying the charges imposed by the Post Office. There is no reason why the Giro should be anything to do with the Post Office. The sooner it is not, the better.
  Mr. Wrigglesworth: The Giro may go down that line, but the hon. Gentleman should read the accounts more carefully. If he were to do so he would find that Giro pays for all the postal services, counter services and all the other aspects of postal business that it uses. He would find, in addition, that the Giro has made a profit in each of the last three years.
  Mr. Ridley: I would hate to read the accounts more carefully. I dread to think what horrible creatures would emerge from a close study of those accounts. It is time that the Comptroller and Auditor General went into those accounts with a fine tooth comb. At least the Government have grudgingly given us the point that the Comptroller is able to look into them.
  The time is long since past when we should have had a standard of public audit from nationalised industries such as this, with a code of practice. The cheating, fiddling and fooling that are permitted in the public sector because the public sector is so dominant over its auditors frighten me very much.
  That brings me to the main point raised by my hon. Friend the Member

  1185
  for Honiton. It was that Bank of England supervision would avoid all this trouble. But what about the Crown Agents?
  Mr. E. Fernyhough: What about the secondary banks? They were bailed out by the Bank of England.
  Mr. Ridley: The right hon. Gentleman cannot have been listening to my speech. I said that the secondary banks went bust. If only the Giro had gone bust we would not have been having this silly debate this afternoon. The answer is that the Giro should have gone bust, just like London and County and all the other fringe banks that went bust. There is no way of securing full and fair competition if Giro cannot go bust when it deserves to.
  I come back to the question of Treasury and Bank of England supervision. It was under that supervision, as well as the supervision of the Ministry of Overseas Development, that the Crown Agents were able to lose about £220 million in secondary banking and property ventures. There was a certain degree of supervision after a few years. The various authorities that supervised the Crown Agents were unhappy that the Crown Agents had made all those investments but said that because they were such good investments there was no real need to worry about them.
  Leaving out of account the constitutional question of whether the Crown Agents were entitled to make those investments, those who supervised the Crown Agents were on the whole not worried about their investments because they were in marvellous concerns such as that of Mr. William Stern and many other characters who have since departed from the financial scene. So I have no great faith in Bank of England supervision, and I say that out of personal knowledge.
  When one tries to supervise investments and loans made by a bank, the picture at the time the investments and loans are made is different from the picture when the concern crashes. It takes a man of great skill, not to say genius, to know that a concern which appears to be healthy when a loan is made to it will turn out to be a complete dud. That supervision is one for the directors to exercise. The responsibility should be placed
  1186
  upon their heads, and if they fail it is they who should pay the penalty. That is what happens in the private sector.
  The worst casualties of the secondary banking crash were the directors of the secondary banks. But with Giro and the Crown Agents only the taxpayer loses any money. No individual whose responsibility for supervision had been found wanting personally lost a penny.
  I have difficulty about the whole subject of whether Giro should be included in the Bill. I think that it is a bad Bill, and I think that we should not have a Giro. Therefore, I find it difficult to give a view on whether something that I do not believe should exist should be subject to a supervision and control which I do not think we should have. That difficult question may take me some time to resolve this afternoon.
  The only way to supervise and control the activities of banks is to have in charge of them people who are so committed, either in terms of their own money or that of their shareholders, and that they take the necessary great care and skill to control loans. I am humble about how difficult that is. I do not believe that by examining quarterly returns or by asking a few questions at the year end one succeeds by one iota in helping those who are in charge of banks. I do not believe that supervision of the Giro will stop it from losing another £33 million of public money in due course. With inflation, the figure will probably be higher next time.
  I am, therefore, not happy for the Giro to continue as it is. There are two alternatives. One is to close it down. The other is to denationalise it. Both seem excellent ways of supervising it. I would like to see the Giro either closed down or passed into the private sector by a gradual transfer of its shares or by outright sale. If either of those alternatives were adopted, at least Giro would be suitable for supervision under the mechanisms in the Bill. It would be right to add it to the contributors to the fund because it would be liable to accept contributions from the fund should it get into trouble and its depositors face loss.
  There is, therefore, an argument in favour of the amendment. If and when somethting is done about Giro, as it certainly will have to be, at least by putting

  1187
  Giro into the Bill it could be supervised along with the other banks. We are burying our heads in the sand if we believe that Giro will go on and not lose another packet pretty quickly. There is therefore a case for including Giro in the Bill.
  I often wonder why Labour Members are so keen about Giro and why the hon. Member for Thornaby (Mr. Wriggles-worth) rose to make a minor defence of it. He even interrupted me to say that it had made a profit in the last three years. With the £20 million investment income on the Government stocks that it has been given, I am not surprised that it made a tiny profit. The profit is totally and utterly inadequate to build up reserves against a had period in future. Labour Members do not examine what is the nature of banking. They do not understand its function in the industrial process. They do not begin to consider whether this is the right way to provide banking services. It is simply that the private sector has banks which are grand, important, powerful things—rich things.
  The public sector did not have a bank. Like little boys at school, it asked "Why can't we have a public bank, just like the private sector has its banks?" Out of that desire there was set up this monster. However, no one is responsible for the conduct of this monster. When it next puts its hands into the taxpayers' pockets, which it undoubtedly will do at some stage or other, the public sector will merely say that the loss was due to the oil crisis or the failure of the anchovy crop off the coast of Patagonia, in which the Giro had invested heavily, or that it was blown off course, or something of that sort. But it will not go bust. It will not mean that some man loses his reputation and his fortune in the process. There is no one there who feels that he is remotely at risk.
  The whole point of banking is that a person should be at risk so as to concentrate his mind upon the importance of making the right decisions. We have this problem with the Giro. On balance, my hon. Friends are right to seek to put this provision into the Bill. I hone that at least the Minister will agree that the regulations about advertisements and about the general way in which banks behave in our society should apply
  1188
  equally to the Giro as they will apply to the other banks. There is something extremely obnoxious about saying that, because it is a public sector institution, it will never cross the mind of the Giro to do anything which is unethical in terms of its accounts, its advertisements or the way that it attracts customers and depositors.
  This type of approach does the public sector great harm. If it is necessary to control the advertisements of banks, it seems that this control must apply equally to the Giro. That is desirable because ultimately we shall have to do something about the Giro. I know that Labour Members wash their hands of the events that have occurred, whether they concern the Crown Agents or Giro. Such institutions are always bailed out.
  We must think not about deposit protection but about taxpayer protection. The need for such protection in relation to the Giro is such that anything that we can do to help will be an improvement. My dilemma in not being able to see how to deal with an organisation which I think should not exist in relation to a Bill which I do not believe should have been given a Second Reading is unresolvable. I therefore propose to vote with my hon. Friends and I hope that the vote will do something to impede the progress of the Giro.
  Mr. Moate: Unlike my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), I cannot declare an interest. I only wish that I were a director of a bank, or even a shareholder. I do not even aspire to having an account with the National Giro. I agree with a great deal of what my hon. Friend said, but I have to disagree with some of his more fundamental points. I was happy that he came to the conclusion which I have reached, namely, that this is an amendment which ought, in present circumstances, to be supported.
  Where I disagreed with my hon. Friend was in his general strictures concerning the very existence of the Giro. In the early days of the Giro, the losses which it incurred were certainly alarming and rightly gave cause for a fundamental examination of its right to exist. When discussion took place about the proposition that it should be abolished, it seemed that that was the wrong proposition. It was providing a valuable service. A

  1189
  large number of people for whom the joint stock banks—the clearing banks—were not providing a service were being helped by the Giro. I was particularly involved in one scheme involving the payment of a large number of small amounts of money. It seemed to be essential in such circumstances that individuals should be able to cash their cheques at post offices. It was the only way that working people could cash cheques on, say, a Saturday afternoon.
  6.15 p.m.
  This led me to the view that the Giro was fulfilling a valuable service. Nevertheless, it must pay its way. I felt that it had to be placed on a proper basis, under proper economic and financial disciplines. Inevitably the situation in the past led to the result my hon. Friend has described, when millions of pounds were lost per year, with an eventual write-off of £34 million. I share my hon. Friend's fear that this will happen again. I would have limited the activities of the Giro to what I would describe as post office services. It has gone much further. It has set itself up as a competitor of the banks. It offers personal loans and provides overdrafts. It can provide loans to local authorities and nationalised industries. It can issue credit cards, supply bridging loans, and the like. It is fundamental that, if the Giro wishes to present itself to the people as a banking institution, it ought not to resist the proposition that it should subscribe to the same rules and be subject to the same regulations as the other major banks.
  I would have thought that the Giro would welcome the idea that it should be given the same status as the clearing banks in the eyes of the law. It surprises me that the Government seem to be making heavy weather of this proposition. I thought that the hon. Member for Thornaby (Mr. Wrigglesworth) was about to put forward a powerful defence of the Government's resistance of this amendment. What reason did he give? His reason was basically that there was no objection in principle—it was just that it would be difficult in practice. There was a practical objection. What was that practical objection? It was to do with the close connection of the Giro with the Post Office. I do not see that as a practical objection. While it may be undesir-
  1190
  able to serve more than one master—to be responsible to the Post Office and then to the Department concerned and to the Treasury as well as this other institution which will supervise banks—it is certainly not impractical.
  It is only fair that the Giro should be so regulated. It is feasible that the Giro could be so included and could conform with the rules and regulations. I am sure that, given the will, the Minister could quickly find a way of ensuring that the Giro was subject to these rules and came within the ambit of the Bill. There is no fundamental problem about that.
  What I suggest is that the closeness of the Giro with the Post Office makes it desirable that we should make further demands of the Giro. It is its close connection with the Post Office which makes it more important, not less, that it should be seen to be competing fairly with the other banking institutions. By resisting its inclusion in the Bill, the Government are blurring further the edges of this nationalised banking body.
  I wish further to develop this point about the closeness of the connection between the Giro and the Post Office. My hon. Friend the Member for Cirencester and Tewkesbury rightly said that what we are concerned with here is not the protection of the depositor but the protection of the taxpayer.
  Obviously, there has been some confusion already about the nature of the profits or losses which the National Giro is making. How extraordinary it is that the accounts of a banking institution of this kind should not be absolutely clear. How can that be so? The answer lies in the closeness of connection with the Post Office, with all the possibilities of cross-subsidy between one Department and another.
  How do we know whether Giro is making a profit or a loss? How do the employees and the senior executives of the National Giro know whether they are operating under proper financial disciplines, whether they are taking too great a risk or too little a risk in a particular loan, and so on? They are not subject to the same risks themselves—certainly not the same risks in their employment as would be faced by an employee in the private sector. Their jobs are not at stake. The shareholders' money is not

  1191
  at stake. What is at stake, perhaps, is Post Office money, and there is a possibility of Post Office funds being used in some way, perhaps through the reduction of hidden overheads, which would amount to a form of subsidy to Giro.
  We do not know, and we shall not know, unless we have a far better view of the National Giro accounts and much clearer accounting than we have now. We cannot know whether the National Giro is truly competing with the banks, bearing all the overheads which it should bear and making the sort of profit or return which it should on the taxpayers' capital.
  Even if the Government do not concede the amendment, or it is not carried by the House, the least we are entitled to is much clearer accounting and a clear separation of the accounts of the National Giro so that, if it has banking pretensions, one can see whether it conforms to our banking standards and requirements.
  I go further and say that the National Giro ought to welcome the case which we are making from the Opposition Benches. If the National Giro seeks to perform the wide-ranging activity which it is empowered to engage in, and if it aspires to that sort of status, it should be kept more apart from the Post Office. It should show separate accounts. It should be separately capitalised, and it should be separately accountable to the House. It should be separately examined by the Comptroller and Auditor General. By that I am not suggesting denationalisation. I am saying merely that it should stand on its own and be separately accountable.
  If, however, the National Giro were separately accountable and if it were successful and profitable, there might be a case for allowing it to have a part-equity taken up by the private sector. Perhaps that would be right, and one might have, so to speak, a BP-type solution, with part-public and part-private equity. At the initial stage, however, it should be kept separate and be separately accountable.
  As I say, I should have expected the National Giro to welcome that proposition. I should expect the Government to welcome it, too. If they were to accept
  1192
  the inclusion of the National Giro in the Bill, the Government would be giving the National Girobank that extra status in meeting all our banking requirements. Presumably, that would be a commercial attraction to Giro. It could then say to potential depositors and its customers "We have full bank status, and we conform to all the banking standards laid down in the Government's new Bill." Surely, that could be only to its advantage, and I fail to understand why the Government resist it.
  I come now to the question of fairness in competition. I am coming to the Bill afresh, as it were. I was not privileged to be on the Standing Committee, if "privileged" be the right word. As I look at part III, I cannot understand why all other banks should be subject to fairly stringent, or potentially stringent, control over advertisements whereas the National Giro should not be so regulated and controlled.
  My hon. Friend the Member for Honiton (Mr. Emery) produced a pamphlet and said—I am recalling his words—that it was a very good pamphlet and rather more adventurous and inviting than, perhaps, some of the advertisements used by the rather more staid banking organisations. He was not criticising it on those grounds. I took him to be commending it, and so would I.
  I do not suggest that banking advertisements should not be adventurous and inviting to the depositor, but, if the banks are to be controlled in their advertisements, why should not the National Giro be similarly controlled? It seems to me that the point is so self-evident that even hon. Members on the Government Benches should agree. The National Giro should be on the same basis as all the other banks, and in regard to advertisements in particular it should follow exactly the same lines—and be seen to follow exactly the same lines—being subject to the same rules and regulations. I regard that as fundamental.
  Finally, I come to the question of the compensation fund. I understand that the Government have, in effect, conceded the principle and accepted that it would be unfair if the National Giro were not to make a payment equal to the contribution which it would have to pay to the deposit protection fund if it were included

  1193
  in the Bill. It seems strange to concede the principle in that way and then to say that the Treasury will receive a payment from the Giro equal to the amount which would otherwise have been paid into the fund, since, as I understand it, that will be of no benefit to the fund. It might be of benefit to the taxpayer, but it will be of no benefit to the other banks which will have to contribute to the fund in the event of a call upon it.
  That arrangement reminds me of the procedure for contracting out of the political levy in the trade union movement. Where there is any question of a closed shop, in certain circumstances it is conceded that a worker need not join the union but must make a payment to charity equal to the amount of trade union dues. In this case, the National Giro is to be allowed to contract out and make its equal contribution to the Treasury, corresponding, presumably, to the contribution to charity in the trade union analogy which I have drawn.
  That is an illogical proposition because the National Giro, which is being heavily supported, or has been heavily supported, by the taxpayer is now to make a small contribution, probably a pitiful contribution, back to the Exchequer—to the Exchequer of all people—when that contribution should be paid to the fund, just for the sake of some spurious equity which the Government are trying to introduce into the system. In my view, it should be part of the fund or not be part of the fund—one way or the other. It would be part of the fund through the inclusion of the National Giro in the Bill.
  I congratulate my hon. Friend the Member for Honiton on his introduction of the amendment. I hope that the Minister has been persuaded by our arguments and will accept the logic of the case. I ask the House to decide that the National Giro should be subject to the same rules and regulations as those governing other banking institutions and should be covered by the Bill.
  The Minister of State, Treasury (Mr. Denzil Davies): The debate has, in effect, been about whether the National Giro, as the hon. Member for Faversham (Mr. Moate) has just put it, should be subject to the same rules and regulations as those governing all other financial institutions. As I said in Committee, the answer is that
  1194
  it is now subject to all the same rules and regulations as those governing other financial institutions. It is supervised certainly as stringently as, and perhaps even more stringently than, private commercial banks are at the moment. It is supervised by the Treasury and the Bank of England. Ultimate responsibility to the House lies with the Department of Industry, but the regulation and supervision is carried out by the Treasury and the Bank of England, although, as I say, the constitutional position is that the Department of Industry has ultimate responsibility for the Post Office.
  The hon. Member for Honiton (Mr. Emery) said that, where a public body is competing, the rules ought to be the same. I accept that entirely. I accepted it in Committee, and I accept it now. The rules are the same. In fact, the restrictions on Giro are greater. I am not talking necessarily about supervision here, but on what it can do and how it can go out and compete for deposits the restrictions are greater than those upon a normal private sector commercial bank.
  At that point in the speech of the hon. Member for Honiton the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), speaking from a sedentary position, said "Much more". Indeed, although I do not accept what the hon. Gentleman says about the public sector or about Giro, if one argues from his premise, yes, indeed, there is much more supervision and regulation. The National Giro is subject to more stringent rules than is the private sector.
  Mr. Ridley: What happens if Giro loses £34 million? Who suffers? Who pays up? Who loses his job?
  Mr. Davies: That is a separate point, and I shall come to it in a moment. Behind some of his cynicism, if I may say so, with respect, the hon. Gentleman made a good speech. The hon. Gentleman's conclusion did not follow his argument. However, the vote was nearing and he had to square his argument with party loyalty. He did not do himself justice by drawing such a conclusion. To some extent I agree with his analysis.
  6.30 p.m.
  The hon. Member for Honiton introduced the amendment reasonably and in

  1195
  a reasoned manner. He went so far as to say that Giro should be allowed to compete on all fours with the private sector and that the restrictions should be lifted. I shall bear that in mind. From time to time we consider the deposit-taking restrictions placed upon Giro. I understand that if a person does not have a current account he or she cannot have a deposit account. We shall consider the restrictions and consider whether we should put Giro on all fours with the private commercial banks.
  I accept the hon. Gentleman's remarks about the difficulty of supervising banks. It is a difficult operation. There is no perfection. Other countries have realised that. However, we must try to make the effort. That is what the Bank of England will do when the Bill is enacted.
  Giro competes with the private sector, but it is not necessarily on all fours with it. That is because the restrictions on Giro are greater than those on other banks. There is no advantage to Giro from being outside the deposit protection supervisory provisions. The hon. Member for Faversham thinks that Giro would wish to be included. It probably would. It probably would not object to the effect of the amendment. I do not think that it would object to being included in private sector supervision. Indeed, inclusion might enhance its reputation. In resisting the amendment, there is no question that we are conforming to the wishes of Giro. It is possible that we are doing the very opposite.
  The hon. Member for Cirencester and Tewkesbury said that we should liquidate Giro or sell it off to the private sector. There lies a dilemma. We are not liquidating it and we are not selling it off to the private sector. We are talking about a public sector bank. The hon. Gentleman asked who will bear the risk if the money is lost. He said that the risk will not be borne by the directors or those who work for Giro. At the end of the day the risk, if that is the right word, lies with Ministers. The risk lies with Ministers, who are responsible to the House, when public money and a public body are involved. That may be an imperfect responsibility. It may be that we need better rules. The system is imperfect and we recognise the limitations, but ultimately responsibility for a public sec-
  1196
  tor body and public sector money should lie with Ministers. That is the present position with Giro.
  If we accepted the amendment, Giro would come into private sector supervision. It would become responsible to the Bank of England. Under the Bill the Bank of England is responsible in a different way. It is responsible for the whole operation of its supervision, not necessarily the way in which it supervises each institution. That is why I cannot accept the amendment.
  It may be rather old-fashioned to say that ultimately responsibility for public money should lie at the Dispatch Box. That is the only real reason why the Government resist the amendment. I do not say that there are great practical difficulties. The difficulties could be resolved. It may be a small constitutional argument, but by putting Giro into the supervisory system that we have designed for private commercial institutions we are removing it from public sector accountability to a great extent. I believe that responsibility should lie with Ministers through Government Departments.
  Mr. Moate: Surely, if Giro is included and made accountable to the Bank of England, that does not reduce the accountability of Ministers for the profits, losses or operations of Giro.
  Mr. Davies: The hon. Gentleman is saying that total supervision of Giro should lie with the Bank of England and that Treasury Ministers, who have no say in that supervision, should still be responsible to the House. That is crazy. I happen to believe that nationalised industries are not sufficiently accountable to the House. The way in which they were set up did not permit that responsibility. I should have preferred a closer responsibility.
  Opposition Members are saying that public money is involved and that they are afraid of losses. Over the past few years the figures have been good, but they are saying that they are afraid of losses and that Giro, despite the fact that public money is involved, should be pushed further into the private sector and its responsibility to the House diminished. That is why I said that the conclusion of the hon. Member for Cirencester and Tewkesbury did not follow the analysis that he drew. In view of his remarks,

  1197
  it seems that he will not be able to support the amendment.
  I advanced the same argument in Committee. It is the real reason for resisting the amendment. I do not believe that some other reasons that have been mentioned are conclusive. Surely it is only right at the end of the day that a public sector body and a public sector bank should be supervised and examined through a Government Department and through Ministers and made accountable to the House. That is why I advise the House to reject the amendment.
  Mr. Ian Stewart: Before I turn to the subject matter of this interesting debate about the status of Giro, I wish to make a declaration and a reference outside the debate.
  First, I declare an interest. I remind the House, as I said on Second Reading and in Committee, that I am a director of Brown Shipley and Co. Ltd., a merchant bank and a member of the Accepting Houses Committee.
  Secondly—my reference may strictly be out of order, but I hope that I shall be allowed to make it—as we are dealing with Treasury business it is right to think for a moment of the memory of a former Chancellor of the Exchequer. I refer to the sad death of Mr. Reginald Maudling. I did not come to know him well until the last year or two when my wife went to work with Mrs. Maudling on the Westminster Hospital Research Trust. During that time I came to know him and his wife well. He must have been one of the nicest and most able Members that the House has had for a long time. Many of us feel deeply for Mrs. Maudling at this sad time.
  We have had an interesting debate about the status of Giro. We had similar debates on Second Reading and in Committee. The debate hinges on the measure of importance of the difference in emphasis of the two sides of the House. My hon. Friend the Member for Honiton (Mr. Emery) moved the amendment with his usual eloquence. My hon. Friend put the case satisfactorily. We are concerned with how to define the boundary between the public and private sectors of the economy.
  In a mixed economy such as ours there is bound to be a substantial public sector element. Some of my hon. Friends—
  1198
  my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) expressed his own feelings—think that it would be better if there were not a public sector and if a body such as Giro did not exist. However, dealing with matters as they are, there are a number of public bodies in industry and in the financial sector that are competing with their counterparts in the private sector. The burden of our argument is that, when that is the position, the public sector companies and the private sector companies should, as far as is possible, be placed on all fours. We say that that should apply, not only in formal legislation but in administrative procedures and commercial practice. We say that when there is direct competition there should be a fair balance.
  I have no hostility to Giro. If it were to receive exactly the same treatment and not the compromise that the Government wish, that might be to its advantage. I was not surprised when the Minister said that Giro might welcome being brought on all fours with its private sector counterparts. That point was also made by my hon. Friend the Member for Faversham (Mr. Moate).
  There are two main elements in parity between Giro and the private sector banks. The first is the deposit protection fund. The Government have fairly recognised that it would be wrong for Giro not to bear a cost equivalent to that borne by private sector banks that under the new arrangements in the Bill will make contributions to the deposit protection fund. For that purpose they have arranged that the Giro shall pay a sum equivalent to what its contribution would have been had it been a member of the fund, but that it shall be paid to the Treasury instead. This is not to put the Giro on exactly the same footing. The size of the fund is affected. If the Giro had been making contributions to the fund, then, relatively speaking, although it may be by a small amount, the other participants in the fund would not have had to contribute so much.
  My hon. Friend the Member for Honition put again the question that he asked on Second Reading—that is, whether the Government seriously thought that the deposits of the clearing banks were likely to be at risk. The clearing banks have to put up two-thirds of the total

  1199
  amount of money in the protection fund. While the clearing banks and other recognised banks and other licensed deposit-taking institutions will be making contributions to the fund—and will thus in a sense be subsidising the activity of the riskier institutions at the cost of the saver—the Giro will not be part of those arrangements. If there are defaults, and payments are made out of the fund, it will in the first instance be for the banks in the private sector to meet that deficiency.
  The other area of difficulty that we have had all through our discussions concerns supervision. It is true, as the Minister has said this afternoon—and as he explained at greater length in Committee—that there are arrangements between the Post Office and the Treasury to determine the various ratios which apply in the conduct of the Giro banking business. There are also agreements about the classes of business which it can undertake. There is, therefore, a sort of tripartite responsibility for the Giro on the part of the Bank of England, the Treasury and the Department of Industry. That is right, because the Giro depends on the Treasury for its capital. It is right that the Giro should be accountable, in that sense, through Ministers to the House of Commons. But all this seems to me to turn on the interpretation of the word "supervision". After all, when the Bank of England supervises banks in the private sector, it does not control their policy, it does not organise the business which they can do. and it does not exert a proprietary control over the business of those banks.
  I am a director of a bank which is a subsidiary of a holding company, which has a separate board of directors and which is responsible to the shareholders. That bank is run as a result of decisions taken in the broadest terms by shareholders, through the articles of association of the company, through the holding company's board, and through the management of the bank itself. That is not supervision. That is management, control and operation. The bank, like many others, goes to the Bank of England for supervision of the nature of its balance sheet, its assets, its liabilities and so on.
  1200
  What we are proposing in the amendment is that the supervisory function in relation to the Giro should be carried out by the Bank of England in exactly the same way as it is carried out now for literally hundreds of banks in the private sector. It is not quite right, therefore, for the Minister to say that the same rules apply. They are in some ways equivalent rules, but they are not the same rules. It is on a small but important point that there is an issue of principle between us. There seems to be a mental block in the bureaucracy when these matters are looked at. Civil servants say, in effect, "We shall try to get everything in practice as nearly the same as possible, but we shall stop short of putting matters on all fours as between the public and the private sector."
  6.45 p.m.
  Mr. Emery: My hon. Friend was talking of the supervision of the management. The Minister suggested earlier that the supervision was as great as anything that could be expected in the private sector. I draw his attention to the report of Touche Ross and Company, the auditors of the Post Office accounts for 1976–77. The accounts are noted specifically in regard to the Giro, and note XIII states that
  "an acceptable level of control over Giro processing could not be maintained at all periods during the year".
  The auditors go on to say that
  "Any errors arising are, in our opinion, unlikely materially to have affected the total of the Giro customer balances … at £188 million".
  The auditors point out in note XIII that in
  "one of the five main areas of transaction processing"
  the control during parts of the year is "unacceptable".
  If any bank had to note its accounts in that manner, it would be out of business. I suggest, therefore, that the stringency of the private sector is what the amendment requires of the Giro. Indeed, it strengthens the point—made so adequately by my hon. Friend—that I tried to make in my speech.
  Mr. Stewart: My hon. Friend has made an interesting and important intervention. I am sure, however, that he would not expect me now to follow

  1201
  through the implications of his remarks. I have no doubt that his words will not be lost on the Minister when he considers them.
  It is a pity that the Government, having come so far in their proposals for the National Giro, have stopped short of bringing its supervision and its contribution to the funds exactly into line with

  Division No.80]

  AYES

  [6.47 p.m.

  Arnold, Tom

  Hicks, Robert

  Prior, Rt Hon James

  Atkins, Rt Hon H. (Spelthorne)

  Hodgson, Robin

  Pym, Rt Hon Francis

  Atkinson, David (B'mouth, East)

  Holland, Philip

  Rathbone, Tim

  Baker, Kenneth

  Hooson, Emlyn

  Rees, Peter (Dover & Deal)

  Benyon, W.

  Howell, David (Guildford)

  Rees-Davies, W. R.

  Berry, Hon Anthony

  Hunt, David (Wirral)

  Renton, Rt Hon Sir D. (Hunts)

  Biffen, John

  Hunt, John (Ravensbourne)

  Rhodes James, R.

  Biggs-Davison, John

  Hurd, Douglas

  Ridley, Hon Nicholas

  Boscawen, Hon Robert

  James, David

  Ridsdale, Julian

  Braine, Sir Bernard

  Jessel, Toby

  Rifkind, Malcolm

  Brooke, Hon Peter

  Johnston, Russell (Inverness)

  Roberts, (Michael (Cardiff NW)

  Brotherton, Michael

  King, Evelyn (South Dorset)

  Ross, Stephen (Isle of Wight)

  Buck, Antony

  Kitson, Sir Timothy

  Rossi, Hugh (Hornsey)

  Budgen, Nick

  Knight, Mrs Jill

  Rost, Peter (SE Derbyshire)

  Clark, Alan (Plymouth, Sutton)

  Knox, David

  Sainsbury, Tim

  Clark, William (Croydon S)

  Le Merchant, Spencer

  Shaw, Giles (Pudsey)

  Clegg, Walter

  Lester, Jim (Beeston)

  Shelton, William (Streatham)

  Cockcroft, John

  Luce, Richard

  Sims, Roger

  Cope, John

  McCrindle, Robert

  Speed, Keith

  Costain, A. P.

  Macfarlane, Neil

  Stainton, Keith

  Crowder, F. P.

  MacKay, Andrew (Stechford)

  Stanbrook, Ivor

  Douglas-Hamilton, Lord James

  McNair-Wilson, M. (Newbury)

  Stanley, John

  Dunlop, John

  Mather, Carol

  Steel, Rt Hon David

  Dykes, Hugh

  Mawby, Ray

  Steen, Anthony (Wavertree)

  Eden, Rt Hon Sir John

  Maxwell-Hyslop, Robin

  Stewart, Ian (Hitchin)

  Emery, Peter

  Miller, Hal (Bromsgrove)

  Stradling Thomas, J.

  Eyre, Reginald

  Mills, Peter

  Taylor, Teddy (Cathcart)

  Fairgrieve, Russell

  Moate, Roger

  Tebbit, Norman

  Fisher, Sir Nigel

  Monro, Hector

  Temple-Morris, Peter

  Fletcher, Alex (Edinburgh N)

  Moore, John (Croydon C)

  Townsend, Cyril D.

  Fletcher, Ted (Darlington)

  More, Jasper (Ludlow)

  Viggers, Peter

  Fowler, Norman (Sutton C'f'd)

  Morgan, Geraint

  Walker, Rt Hon P. (Worcester)

  Freud, Clement

  Morris, Michael (Northampton S)

  Wall, Patrick

  Fry, Peter

  Nelson, Anthony

  Weatherill, Bernard

  Gardner, Edward (S Fylde)

  Page, Rt Hon R. Graham (Crosby)

  Whitney, Raymond

  Gilmour, Rt Hon Sir Ian (Chesham)

  Page, Richard (Workington)

  Wiggin, Jerry

  Glyn, Dr Alan

  Paisley, Rev Ian

  Winterton, Nicholas

  Gow, Ian (Eastbourne)

  Pardoe, John

  Young, Sir G. (Ealing, Acton)

  Gower, Sir Raymond (Barry)

  Pattie, Geoffrey

  Younger, Hon George

  Grist, Ian

  Penhaligon, David

  Hall-Davis, A. G. F.

  Percival, Ian

  TELLERS FOR THE AYES:

  Harvie Anderson, Rt Hon Miss

  Prentice, Rt Hon Reg

  Mr. John MacGregor and

  Hawkins, Paul

  Price, David (Eastleigh)

  Mr. Peter Morrison.

  Hayhoe, Barney

  NOES

  Allaun, Frank

  Carmichael, Nell

  Dormand, J. D.

  Areher, Rt Hon Peter

  Cartwright, John

  Douglas-Mann, Bruce

  Armstrong, Ernest

  Clemitson, Ivor

  Edge, Geoff

  Ashley, Jack

  Cocks, Rt Hon Michael (Bristol S)

  Evans, John (Newton)

  Ashton, Joe

  Corbett, Robin

  Fernyhough, Rt Hon E.

  Atkins, Ronald (Preston N)

  Cowans, Harry

  Fletcher, Ted (Darlington)

  Bagier, Gordon A. T.

  Cox, Thomas (Tooting)

  Foot, Rt Hon Michael

  Bain, Mrs Margaret

  Cralgen, Jim(Maryhill)

  Ford, Ben

  Bates, Alf

  Crawford, Douglas

  Freeson, Rt Hon Reginald

  Bean, R. E.

  Crawshaw, Richard

  Gould, Bryan

  Bishop, Rt Hon Edward

  Crowther, Stan (Rotherham)

  Grant, George (Morpeth)

  Blenkinsop, Arthur

  Cryer, Bob

  Grant, John (Islington C)

  Boardman, H.

  Cunningham, Dr J. (Whlteh)

  Grocott, Bruce

  Boothroyd, Miss Betty

  Davidson, Arthur

  Hamilton, W. W (Central Fife)

  Bray, Dr Jeremy

  Davies, Bryan (Enfield N)

  Harrison, Rt Hon Walter

  Buchan, Norman

  Davies, Rt Hon Denzil

  Hayman, Mrs Helene

  Buchanan, Richard

  Davies, Ifor (Gower)

  Heffer, Eric S.

  Callaghan, Jim (Middleton & P)

  Deakins, Eric

  Home Robertson, John

  Campbell, Ian

  Dempsey, James

  Horam, John

  Cant, R. B.

  Doig, Peter

  Hoyle, Doug (Nelson)

  what they would be if it were part of the private sector, with which it will be competing. It is on the basis of that difference that I advise my right hon. and hon. Friends to support the amendment.
  Question put, That the amendment be made:—
  The House divided: Ayes 126, Noes 140.

  Division No.80]

  AYES

  [6.47 p.m.

  Arnold, Tom

  Hicks, Robert

  Prior, Rt Hon James

  Atkins, Rt Hon H. (Spelthorne)

  Hodgson, Robin

  Pym, Rt Hon Francis

  Atkinson, David (B'mouth, East)

  Holland, Philip

  Rathbone, Tim

  Baker, Kenneth

  Hooson, Emlyn

  Rees, Peter (Dover & Deal)

  Benyon, W.

  Howell, David (Guildford)

  Rees-Davies, W. R.

  Berry, Hon Anthony

  Hunt, David (Wirral)

  Renton, Rt Hon Sir D. (Hunts)

  Biffen, John

  Hunt, John (Ravensbourne)

  Rhodes James, R.

  Biggs-Davison, John

  Hurd, Douglas

  Ridley, Hon Nicholas

  Boscawen, Hon Robert

  James, David

  Ridsdale, Julian

  Braine, Sir Bernard

  Jessel, Toby

  Rifkind, Malcolm

  Brooke, Hon Peter

  Johnston, Russell (Inverness)

  Roberts, (Michael (Cardiff NW)

  Brotherton, Michael

  King, Evelyn (South Dorset)

  Ross, Stephen (Isle of Wight)

  Buck, Antony

  Kitson, Sir Timothy

  Rossi, Hugh (Hornsey)

  Budgen, Nick

  Knight, Mrs Jill

  Rost, Peter (SE Derbyshire)

  Clark, Alan (Plymouth, Sutton)

  Knox, David

  Sainsbury, Tim

  Clark, William (Croydon S)

  Le Merchant, Spencer

  Shaw, Giles (Pudsey)

  Clegg, Walter

  Lester, Jim (Beeston)

  Shelton, William (Streatham)

  Cockcroft, John

  Luce, Richard

  Sims, Roger

  Cope, John

  McCrindle, Robert

  Speed, Keith

  Costain, A. P.

  Macfarlane, Neil

  Stainton, Keith

  Crowder, F. P.

  MacKay, Andrew (Stechford)

  Stanbrook, Ivor

  Douglas-Hamilton, Lord James

  McNair-Wilson, M. (Newbury)

  Stanley, John

  Dunlop, John

  Mather, Carol

  Steel, Rt Hon David

  Dykes, Hugh

  Mawby, Ray

  Steen, Anthony (Wavertree)

  Eden, Rt Hon Sir John

  Maxwell-Hyslop, Robin

  Stewart, Ian (Hitchin)

  Emery, Peter

  Miller, Hal (Bromsgrove)

  Stradling Thomas, J.

  Eyre, Reginald

  Mills, Peter

  Taylor, Teddy (Cathcart)

  Fairgrieve, Russell

  Moate, Roger

  Tebbit, Norman

  Fisher, Sir Nigel

  Monro, Hector

  Temple-Morris, Peter

  Fletcher, Alex (Edinburgh N)

  Moore, John (Croydon C)

  Townsend, Cyril D.

  Fletcher, Ted (Darlington)

  More, Jasper (Ludlow)

  Viggers, Peter

  Fowler, Norman (Sutton C'f'd)

  Morgan, Geraint

  Walker, Rt Hon P. (Worcester)

  Freud, Clement

  Morris, Michael (Northampton S)

  Wall, Patrick

  Fry, Peter

  Nelson, Anthony

  Weatherill, Bernard

  Gardner, Edward (S Fylde)

  Page, Rt Hon R. Graham (Crosby)

  Whitney, Raymond

  Gilmour, Rt Hon Sir Ian (Chesham)

  Page, Richard (Workington)

  Wiggin, Jerry

  Glyn, Dr Alan

  Paisley, Rev Ian

  Winterton, Nicholas

  Gow, Ian (Eastbourne)

  Pardoe, John

  Young, Sir G. (Ealing, Acton)

  Gower, Sir Raymond (Barry)

  Pattie, Geoffrey

  Younger, Hon George

  Grist, Ian

  Penhaligon, David

  Hall-Davis, A. G. F.

  Percival, Ian

  TELLERS FOR THE AYES:

  Harvie Anderson, Rt Hon Miss

  Prentice, Rt Hon Reg

  Mr. John MacGregor and

  Hawkins, Paul

  Price, David (Eastleigh)

  Mr. Peter Morrison.

  Hayhoe, Barney

  NOES

  Allaun, Frank

  Carmichael, Nell

  Dormand, J. D.

  Areher, Rt Hon Peter

  Cartwright, John

  Douglas-Mann, Bruce

  Armstrong, Ernest

  Clemitson, Ivor

  Edge, Geoff

  Ashley, Jack

  Cocks, Rt Hon Michael (Bristol S)

  Evans, John (Newton)

  Ashton, Joe

  Corbett, Robin

  Fernyhough, Rt Hon E.

  Atkins, Ronald (Preston N)

  Cowans, Harry

  Fletcher, Ted (Darlington)

  Bagier, Gordon A. T.

  Cox, Thomas (Tooting)

  Foot, Rt Hon Michael

  Bain, Mrs Margaret

  Cralgen, Jim(Maryhill)

  Ford, Ben

  Bates, Alf

  Crawford, Douglas

  Freeson, Rt Hon Reginald

  Bean, R. E.

  Crawshaw, Richard

  Gould, Bryan

  Bishop, Rt Hon Edward

  Crowther, Stan (Rotherham)

  Grant, George (Morpeth)

  Blenkinsop, Arthur

  Cryer, Bob

  Grant, John (Islington C)

  Boardman, H.

  Cunningham, Dr J. (Whlteh)

  Grocott, Bruce

  Boothroyd, Miss Betty

  Davidson, Arthur

  Hamilton, W. W (Central Fife)

  Bray, Dr Jeremy

  Davies, Bryan (Enfield N)

  Harrison, Rt Hon Walter

  Buchan, Norman

  Davies, Rt Hon Denzil

  Hayman, Mrs Helene

  Buchanan, Richard

  Davies, Ifor (Gower)

  Heffer, Eric S.

  Callaghan, Jim (Middleton & P)

  Deakins, Eric

  Home Robertson, John

  Campbell, Ian

  Dempsey, James

  Horam, John

  Cant, R. B.

  Doig, Peter

  Hoyle, Doug (Nelson)

  Hunter, Adam

  Mellish, Rt Hon Robert

  Stewart, Rt Hon M. (Fulham)

  Irving, Rt Hon S. (Dartford)

  Mikardo, Ian

  Stoddart, David

  Jay, Rt Hon Douglas

  Milian, Rt Hon Bruce

  Stott, Roger

  Johnson, James (Hull West)

  Molloy, William

  Strang, Gavin

  Jones, Dan (Burnley)

  Morris, Rt Hon Charles R.

  Summerskill, Hon Dr Shirley

  Kerr, Russell

  Morton, George

  Taylor, Mrs Ann (Bolton W)

  Lambie, David

  Murray, Rt Hon Ronald King

  Thomas, Jeffrey (Abertillery)

  Lamborn, Harry

  Newens, Stanley

  Thomas, Ron (Bristol NW)

  Lamond, James

  Noble, Mike

  Tierney, Sydney

  Latham, Arthur (Paddington)

  Orme, Rt Hon Stanley

  Tinn, James

  Leadbitter, Ted

  Palmer, Arthur

  Urwin, T. W.

  Lewis, Ron (Carlisle)

  Park, George

  Wainwright, Edwin (Dearne V)

  Litterick, Tom

  Parker, John

  Walker, Terry (Kingswood)

  Lofthouse, Geoffrey

  Radice, Giles

  Watkins, David

  Loyden, Eddie

  Richardson, Miss Jo

  Watkinson, John

  Lyon, Alexander (York)

  Roderick, Caerwyn

  White, Frank R. (Bury)

  McCartney, Hugh

  Rodgers, George (Chorley)

  White, James (Pollok)

  McDonald, Dr Oonagh

  Rodgers, Rt Hon William (Stockton)

  Whitlock, William

  McElhone, Frank

  Rooker, J. W.

  Wilson, Gordon (Dundee E)

  Macfarquhar, Roderick

  Ross, Rt Hon W. (Kilmarnock)

  Wilson, William (Coventry SE)

  McGuire, Michael (Ince)

  Rowlands, Ted

  Wise, Mrs Audrey

  McKay, Allen (Penistone)

  Shaw, Arnold (Ilford South)

  Woof Robert

  Maclennan, Robert

  Silkin, Rt Hon John (Deptford)

  Wrigglesworth, Ian

  McMillan, Tom (Glasgow C)

  Silverman, Julius

  Young, David (Bolton E)

  Madden. Max

  Skinner, Dennis

  Marks, Kenneth

  Snape, Peter

  TELLERS FOR THE NOES:

  Marshall, Dr Edmund (Goole)

  Spriggs, Leslie

  Mr. James Hamilton and

  Marshall, Jim (Leicester S)

  Stewart, Pt Hon Donald

  Mr.Ted Graham.

  Question accordingly negatived.

Clause 6

  GROUNDS FOR REVOCATION OF RECOGNITION OR LICENCE
  Mr. Denzil Davies: I beg to move amendment no. 2, in page 2, line 6, at end insert—
  '(ff) the institution is an unincorporated institution other than a partnership and is formed under the law of another member State and an event has occurred with respect to it which, in that member State, appears to the Bank to correspond, as near as may be, with any of the events specified in paragraphs (a) to (d) of subsection (2) or paragraphs (a) to (f) of subsection (3) below, or '.
  Mr. Deputy Speaker (Sir Myer Galpern): With this it will be convenient to take Government amendment nos. 16, 17 and 18.
  7.0 p.m.
  Mr. Davies: These are technical amendments and they deal with the position of an unincorporated institution which is neither a partnership nor a company in relation to insolvency provisions. In the EEC, there are various organisations which do not fit very well into the partnership or corporate forms that we know in this country. It is necessary to provide for insolvency provisions in relation to them. That is why these amendments have been tabled. They are purely technical and relate mainly to institutions in France and Italy which are not
  1204
  strictly either limited liability companies or partnerships.
  Mr. John Moore: The Minister of State will recognise that the technical nature of the amendments does not exclude the degree to which they impinge on many other interrelated points. The right hon. Gentleman was kind enough to send all members of the Committee a crucial letter dated 12 February concerning certain undertakings given in Committee that impinge upon our present discussions.
  I should like to raise several points relating to this series of technical amendments. My hon. Friend the Member for Hitchin (Mr. Stewart) raised three particular technical points in Committee. The first related to the difficult problem which might occur due to the interpretation of the word "deposits ". We were concerned about the possibility of an inadvertent triggering of the revocation provisions by a legitimate change in the nature of the bank's mix of business.
  It is relevant to put on record the useful comments that the Minister of State made in that letter. He said:
  "The Bank will take all relevant circumstances into account in deciding whether to proceed with revocation on the grounds that an institution has not carried on a deposit-taking business (as defined) for six months or more, and the provision will be interpreted flexibly."
  Secondly, my hon. Friend the Member for Hitchin raised the complicated question of the composition of creditors. The Minister thought that this was covered. I

  1205
  am delighted that in his letter he was able to stress that he was
  "confident that there is no need to provide for revocation on the grounds of a composition with creditors in the case of companies. Section 206 of the Companies Act 1948, which I assume you had in mind"—
  the right hon. Gentleman was referring to my hon. Friend the Member for Hitchin—
  "is generally directed towards reconstructions and amalgamations, where the company is to continue as a going concern."
  Thirdly, my hon. Friend raised the point about the language in subsections (4) and (5) which could create the possibility of there being a slight gap in the status of the institution. The right hon. Gentleman said that he would re-check this, and in his letter he said:
  "I am confident that the clause as drafted ensures that there will be no gap between the expiry of one authorisation and the grant of another."
  I thought it important to put those points on record because this is an exceptionally difficult technical question. To that extent, it is important to the banking community outside.
  We are also considering an area relating to an extension with regard to the EEC. It will be recalled that members of the Committee were concerned about the nature in which confidential information of the bank was provided to other central banks. Under the proposed EEC directive, we thought that we would be forced to accept a commitment to divulge information to member States' central banks. An amendment that was not moved sought to limit it to them and to exclude other, non-member States.
  The arguments were covered extensively in Committee, and I shall not seek to labour the point tonight. The thrust of that debate was very simple. We argued that there were very different kinds of legal, political and social systems in many other States, and to that extent we could not assume that following the disclosure of confidential information they would base their action in the same way as we would, especially with regard to risks to institutions and individuals.
  To be fair to the Minister, he did not deny these risks, and in his letter of 12 February he said that
  "essentially they would be very remote contingencies".
  My difficulty is that in Committee we were told that essentially it would be
  1206
  wrong to help the EEC by limiting the information we would give to it, because it would be unfair to organisations such as the Federal Reserve Bank of the United States or the central banking authorities in, say, West Germany, which would be hurt by not receiving that amount of information.
  However, I should like to read one other paragraph from the right hon. Gentleman's letter in which he said:
  "Nor would it be possible to confine 19(5) to EEC authorities, since it could be argued that the extra degree of confidentiality thereby afforded to customers of third country institutions amounted to favourable treatment of these institutions, which is again precluded by the directive."
  I imagine that by this stage all hon. Members are as confused as I have become. With respect, I think that the Minister of State's advisers are a little wrong here. Surely the EEC directive must be concerned with seeking to give more information to help the EEC central banking supervisory authorities in the exercise of their supervisory functions. To that extent, any additional information that can be given is positive. Therefore, the provision of less information to non-EEC central banks cannot be regarded as less favourable treatment to the EEC. I accept that there is a lot of confusion here. Perhaps the Minister of State's advisers were a little confused by their acceptance—may be subconsciously—of the sensible arguments that we made in Committee that it was right not to extend the break in confidentiality of information.
  I hope that the Minister of State will accept that his advisers were wrong in suggesting that this particular extension is precluded under the directive. These are obviously very technical points, and I appreciate the Minister of State's patience. However, this is a useful juncture at which to have a response from him, if it is at all possible.
  Mr. Denzil Davies: Perhaps I can deal with the hon. Gentleman's last point, because the amendment relates to the EEC. I do not think that there is confusion, although I accept that this is a difficult area.
  The argument put forward in Committee, and the main argument that I put forward now, is that if information were passed to the central banks within the

  1207
  EEC, and not to the central banks outside the EEC, that would be prejudicial to the Federal Reserve Bank and other central banks. It would make it difficult for the Bank of England to get information from them, because this is the one way in which supervision on an international basis takes place.
  If we were denied the opportunity, in very limited circumstances, to give this information to other central banks, they would not respond to us if for very good reasons we wanted that kind of information.
  As to the EEC directive, we are really talking about the customers of banks in other countries. I am not saying that the point within the EEC directive is a substantial one, but it is a point. It is that if information about customers can be released to central banks within the EEC but not to central banks outside the EEC, it could be said that the customers of banks outside the EEC were in a slightly better position than the customers of banks within the EEC. That is where the direction comes in. I am not saying that it is a very strong point. I agree it is a rather confused and difficult area, but that is the distinction.
  Mr. Moate: I wonder whether the Minister could help me on what is, I imagine, essentially a drafting and technical point. The amendments seek to cover unincorporated institutions formed under the law of another member State. There has been reference to the EEC directive, which, of course, does not need to be referred to in the Bill. Nowhere in the Bill can I see from a fairly quick scrutiny any reference to the European Economic Community, and there is no definition of what is a member State. I wonder whether the Minister is sure that we know that the Bill is correct in referring to a member State without defining the organisation it refers to.
  Mr. Davies: I take the hon. Gentleman's point that perhaps we have not defined member States, but I do not think that it is necessary. Other Acts refer to member States, and I think the drafting is quite clear. The term "other member States" is fairly common now since we have entered the European Community.
  Amendment agreed to.

Clause 8

  POWER TO GIVE DIRECTIONS IN CONNECTION WITH TERMINATION OF DEPOSITTAKING AUTHORITY
  Mr. Denzil Davies: I beg to move amendment no. 3, in page 10, line 19, after 'depositors', insert 'whether'.
  Mr. Deputy Speaker: With this we may take Government amendments nos. 4, 5 and 6.
  Mr. Davies: All the amendments are basically similar.
  Amendments nos. 3 and 4 are concerned with the words in the clause regarding the safeguarding of the assets of the institution. The Bank might wish to take steps under the clause which perhaps could be said not to be strictly for safeguarding the assets of the institution, but certainly would be in the interests of depositors, because the moneys deposited with the institution are the assets of the institution. On the other hand, the Bank may still want to take action in the interest of depositors. This prevents anyone taking the point that any action taken by the Bank was not strictly for safeguarding the assets of the institution, although it might very well be for the benefit of depositors. It is a small technical point.
  Amendment no. 5 deals with the Bank's ability to issue directions in respect of both existing and new deposits. It gives the Bank a certain flexibility, because the Bank might be quite happy to allow existing term deposits to be rolled over but would not wish the institution concerned to be able to call or advertise for new deposits. As the Bill is drafted, there is some doubt about the flexibility of the Bank. Amendment no 5 deals with that point.
  Amendment no. 6 deals with additional licences and also enables a distinction to be drawn, if necessary, between existing deposits and new deposits.
  7.15 p.m.
  Mr. John Moore: I do not wish to cavil on the detail, but would not the Minister of State like to say a little more on that? Am I not right in thinking that amendments nos. 5 and 6 are a little more than technical amendments in the sense that they essentially extend the protection to

  1209
  potential as opposed to actual depositors? I am not denying it, as I think that it fits into the character and pattern of the debate in Committee, but to the extent that it is something of an extension I should have thought that the point required comment and confirmation.
  Mr. Denzil Davies: It is more than just a technical amendment.
  Mr. Ian Stewart: While my hon. Friend the Member for Croydon, Central (Mr. Moore) was on his feet, I was thinking about the implications of what the Minister said on amendment No. 5. As I understood it, he said that there might be a difference in attitude between existing deposits and the seeking of new ones. As the amendment is phrased, it appears to prohibit the institution from soliciting deposits, either generally or from persons who are not already depositors. Does that mean that the powers would enable the Bank to issue directions which would prohibit it from soliciting deposits only from persons who are not already depositors?
  Mr. Denzil Davies: Yes.
  Mr. Stewart: It would?
  Mr. Denzil Davies: Under the amendment, the Bank could look at either existing depositors or new depositors and say that the institution could solicit deposits for rolling over existing deposits, but there might be instances where the Bank would not wish to allow it to get new deposits.
  Amendment agreed to.
  Amendment made: No. 4, in page 10, line 20, after institution', insert or otherwise'.
  No. 5, in page 10, line 27, after deposits', insert
  'either generally or from persons who are not already depositors'.—[Mr. Denzil Davies.]

Clause 10

  CONDITIONAL LICENCES
  Amendment made: No. 6, in page 12, line 7, leave out from of 'to' already 'in line 9 and insert
  'deposits, either generally or from persons who are not'.—[Mr. Denzil Davies.]

Clause 14

  DUTY TO NOTIFY CHANGES OF DIRECTORS ETC.
  Mr. Denzil Davies: I beg to move amendment No. 7, in page 15, line 15, leave out fourteen 'and insert twenty-one'.
  This amendment results from an undertaking I gave in Committee. There was some discussion as to whether 14 days should be 14 working days. There are problems of drafting, and in Committee I said that I would prefer to extend the period. This amendment extends the period to 21 days.
  Mr. Emery: I have to speak as I find my name placed on this amendment immediately under that of the Chancellor of the Exchequer. That is not because I have changed sides but because we both, together, put down amendments of exactly the same wording. Therefore, occasionally my drafting can be accurate and correct.
  I am grateful to the Minister for taking the point I made in Committee. I understand his wish not to proceed with the period of 14 working days. For anybody who comes in to this debate new and does not know quite what we are talking about, the reason why there appeared to be the need for a longer period which a company could have before it was in default concerning notification of a change of director was best illustrated by the holiday period this Christmas.
  If a decision on a change of director had been made on 21 December 1978, in the 14 days originally in the Bill we would have had two Saturdays, two Sundays, a bank holiday for Christmas day in lieu of the Saturday, a boxing day holiday in lieu of the Sunday, and a new year's day holiday. Therefore, the 14 days would have been cut to seven. If we include the Friday prior to the Christmas holiday weekend, when most Government offices in Whitehall were closed and many civil servants on leave—so were many bankers; it was not one-sided—then we would have reduced the period of 14 days to six.
  In Committee we were considering using working days, and this would have extended the period from 21 December 1978 to 12 January 1979. The amendment

  1211
  that we now look like accepting would extend that period from 21 December 1978 to 11 January 1979. That seems quite reasonable, and it overcomes some difficulties which large companies have in processing board minutes before notification can go forward to the necessary authority.
  I am delighted to welcome the Minister's amendment, which seems to meet all the points we wished.
  Amendment agreed to.

Clause 18

  WINDING UP ON PETITION FROM THE BANK
  Mr. Denzil Davies: I beg to move amendment no. 8, in page 18, line 33, leave out
  "by obtaining additional deposits or".
  This amendment, too, results from a debate in Committee. The point was raised by the hon. Member for Honiton (Mr. Emery) initially in relation to powers to declare an institution insolvent and to wind it up. The problem was that, if the institution could balance its liabilities and assets by obtaining the additional deposits, it was not very clear as the Bill was drafted whether it would be outside the powers of insolvency and winding up. We have knocked out the words
  "by obtaining additional deposits or"
  which meets the point made in Committee.
  Mr. Emery: The Minister has done exactly what we urged in Committee. We accept that he needed to consider this matter further and we are grateful that he has used usefully the time between fir Committee and Report stages. We applaud the amendment.
  Amendment agreed to.

Clause 20

  INFORMATION DISCLOSED TO THE BANK FROM OTHER SOURCES
  Mr. Denzil Davies: I beg to move amendment no. 11, in page 22, line 27, leave out "(4)" and insert "(3)".
  This amendment ensures that the information which is passed to the Bank by
  1212
  the Department of Trade or the Northern Ireland Department of Commerce can then be passed by the Bank to its professional advisers under clause 19(3). This amendment is consequential on the principle agreed in Committee which allows the Bank to pass information to its special advisers where this is necessary to enable it properly to discharge its functions under the Bill. This relates to information which, under the Bill, the Bank can obtain anyway from the Department of Trade or the Northern Ireland Department of Commerce.
  As the Bill stood, that information could not have been passed on to the Bank's professional advisers. If this amendment is accepted, the Bank will be able to do that, but confidentiality will be protected because the provisions of section 111 of the Companies Act 1967 still apply to that information. Whether that information is in the hands of the Department of Trade or the Bank of England's professional advisers, its confidentiality is protected by the 1967 Companies Act.
  Mr. John Moore: I do not wish to delay the proceedings, but the Minister of State acquired an enviable reputation in Committee for having a delicate manner of introducing amendments which always seemed to carry a good deal more relevance than we first thought.
  When I first saw this small amendment substituting (3) for (4), it took a considerable time to assess it. I associate myself with the remarks of my hon. Friend the Member for Hitchin (Mr. Stewart) about our having these amendments only last night and being forced to try to relate clause 20 to clause 19. This is an extension of an area of great importance—the disclosure of information by the Bank which it has received from other sources. It interrelates very closely with clause 19. Although I accept that it tidies up the provisions for Northern Ireland, to the extent that clause 19 is very important, I hope that the Minister of State will recognise that we shall want to return to this matter on Third Reading as many of us are disturbed about the way in which information under clause 20 is very wide.
  The limitations that we discussed in Committee and the degree to which decisions may be made in the public interest

  1213
  need to be referred to on Third Reading. The Minister of State would be fair to tell the House that we are adding somewhat to the degree to which information can be disclosed to the Bank and can be given to sources other than supervisory bodies. It is specifically given here to those who are professional advisers to the Bank. It is an extension, and it is an extension of a breaking of a confidence. I think that there is more to it than the Minister of State has said.
  Amendment agreed to.

Clause 23

  CONTRIBUTORY INSTITUTIONS AND GENERAL PROVISIONS AS TO CONTRIBUTIONS
  Mr. Ian Stewart: I beg to move amendment No. 12, in page 25, line 2, leave out 'five' and insert 'two'.
  The point of the amendment, which follows a debate in Committee, relates to the length of deposits which should be excluded from the deposit base of a bank or a licensed institution for the purpose of assessing its contributions to the deposit protection fund.
  In Committee I suggested that it would be unfortunate if we introduced for varying purposes different lengths of time of deposits which would be excluded for one purpose or another. In suggesting two years in this context, I had in mind that two years rather than five is the time limit of the deposits which qualify for being included in the interest-bearing eligible liabilities in the banking system, which have become such an important part of monetary control and the money supply.
  In my experience in banking, deposits of more than two years in length are pretty exceptional. Therefore, it would not greatly affect the operation of the deposit protection scheme if two years were substituted for five. On the basis that we should try to have the same length of time for as many purposes as possible, I think two years is preferable. Computers must be programmed to throw out exceptions to any rule, and if deposits over five years for one purpose are to have an importance and deposits over two years are to have an importance for another purpose this leads to complications.
  1214
  The Minister said that he would reconsider this matter. In his letter of 12 February he said:
  "I have considered whether the term to maturity under which deposits would be excluded from the deposit base and from protection should be reduced to two years, but in the absence of conclusive arguments I prefer that the present wording should stand."
  The Minister has reported his view, which I thought it was proper to place on the record. It is not a matter which we would want to press, but we still prefer two years to five.
  Mr. Denzil Davies: These cases are always difficult. I have considered this again with advisers from the Bank of England and the Treasury. There is no great issue of principle here. On balance, my advisers prefer five years to two. I accept entirely what the hon. Member has said. I try to be as accommodating as possible, but in this case I should accept the advice of my technical advisers. I prefer therefore to stick to the period of five years.
  Amendment negatived.

Clause 26

  SPECIAL CONTRIBUTIONS AND POWER TO BORROW
  Mr. Ian Stewart: I beg to move amendment No. 13, in page 26, line 37,
  leave out 'should' and insert may'.
  This was another point which occurred in Committee. It is not significant and it relates to a technicality. In Committee I suggested that there was an inconsistency in the wording between clause 26(5) and the preceding clause. The wording of clause 26(5) is:
  "Any amount borrowed by virtue of subsection (3) above shall be disregarded in ascertaining whether the amount standing to the credit of the Fund is such that the Board should exercise their power to levy further contributions … "
  Clause 25(1) says:
  "the Board may, with the approval of the Treasury, levy further contributions … "
  I was in error in Committee, because I was contrasting the word "shall" in the second line of subsection (5) with the word "may" at the beginning of clause 25 rather than "should" in the third line with "may". That may have been a simple error or it may have been a slip

  1215
  of the tongue. The Minister felt that it was not necessary to do anything about it and he was right, because I think that I must have made the wrong point. Let me now make the right point. It is "should" which should be altered to "may" in order to harmonise the two.
  7.30 p.m.
  Mr. Moate: I congratulate my hon. Friends on the attention to detail which must have engrossed them in Committee if they had to concern themselves with the difference between the words "shall", "may" and "should". I am sure that they all have great implications, but they are a little difficult for some of us to follow.
  I wish to ask a question that is in order in terms of the amendment and I do so because I think that a technical mistake may have been made in the Bill. The problem arises over the initial funding of the board. It is clear that the board can borrow substantial sums to supplement its funds and that the expenses of the board can be met not only from the initial fund but from subsequent levies or from the money that it can borrow, but where do the expenses come from when the board is initially established?
  The board has to be in existence before it can make a levy on banks, send out requests and make assessments or borrow money. At some stage there will be initial expenses, and I can see no provision for them. I should hate there to be a slip-up on such a detail.
  Mr. Denzil Davies: There is no problem about what the hon. Member for Faversham (Mr. Moate) has said. The fund is part of the Bank of England and all the expenses will be met through the Bank. There will be no levy on banks for expenses and no licence fees will be charged to banks by the board.
  The hon. Member for Hitchin (Mr. Stewart), with his keen eye for the detail of the Bill, has made a good point, and, in view of the reasonable way in which he always moves amendments, I am happy to recommend that the House should accept the amendment.
  Amendment agreed to.

Clause 27

  MAXIMUM AND MINIMUM CONTRIBUTIONS
  Mr. John Moore: I beg to move amendment no. 14, in page 26, line 42, leave out "£5,000" and insert "£2,500".
  The amendment raises an important issue which we discussed in Committee. For those who were not privileged to serve on the Committee, may I say that the amendment relates to the minimum initial contribution and proposes that it should be reduced to £2,500 for institutions.
  Despite the extremely co-operative attitude of the Minister of State throughout the Committee proceedings, this is one area in which no answers were given to the case made by many of my hon. Friends on behalf of smaller institutions. I shall reiterate briefly the arguments that we advanced in Committee, because we have not yet had rejoinders to them.
  The evidence of the Consumer Credit Trade Association was the basis for some of the points that we made. I accept that there is a great deal of doubt about the number of institutions covered by the association that would come within the purview of the legislation, but that does not alter the fact that many similar small institutions may be hurt.
  We were told by the association that it had about 560 finance house members and that 150 of those took deposits. We are not sure how many of those 150 come within the purview of the legislation, but, if we extend those figures and take into account the institutions that are not members of the association, we could suggest that there may be as many as 440 such finance houses taking deposits. That is a substantial number. There may be other small institutions that we do not know about, and I know that some of my hon. Friends wish to raise issues concerning particular small institutions.
  The association's survey showed that 39 of the 150 deposit-taking members had deposits of less than £10,000 each. The suggested minimum initial contribution would be the equivalent of 50 per cent. of their deposit base. Another 25 institutions had a deposit base of less than £20,000 each and the minimum initial contribution would represent about 25 per cent. of their deposit base. An

  1217
  additional 20 institutions had deposits of less than £50.000 and the minimum initial contribution would be the equivalent of about 10 per cent. of their deposit base.
  For a substantial proportion of those institutions the proposed miniumum initial contribution would be a significant percentage of their overall deposit base. It would be an absurdly high proportion. It is relevant to remind the House of the key thrust of the nature of the fund and the character of the legislation that we are discussing.
  The legislation seeks to protect depositors. In Committee, we began to see, when we considered the character of the initial contribution and, particularly, its impact on small institutions, a confusion in the Government's arguments concerning the protection of depositors, as opposed to the character of the club being set up by those making contributions. We were told in Committee:
  "£5,000 is a kind of entrance fee".
  We were also told that:
  "If an institution could not pay the £5,000, it might not be in very good shape."
  In addition, the Minister said:
  "I do not accept that it is a lot of money for a small deposit-taking institution."—[Official Report, Standing Committee A, 23 January 1979; c. 287-8.]
  The Treasury wrote to Mr. C. McNeil Greig, the head of the Consumer Credit Trade Association, in response to its comments to the Treasury. That letter of 6 February said:
  "it is necessary to provide for some minimum contribution in order to give balance to the scheme and we believe that a minimum figure of £5,000 gives the correct balance."
  But none of those points has any relevance to the protection of depositors. They show how the setting up of such organisations often leads to the development of a bureaucratic "tidy" frame of mind. We have decided, legitimately, that there must be a fee, but we have adopted the peculiar characteristic shared by so many people of thinking that if a reasonable club is established it must have reasonable dues and that if they are too inexpensive the club cannot be respectable. The figure of £5,000 sounds respectable, but it has no relevance to the nature and character of the institutions which the Government intend should pay it as the club fee.
  1218
  Not only does this proposal not concern itself with protecting depositors but, in so far as the size of the initial contribution could hurt some small institutions—I do not say that it could mean the difference between whether they did or did not go into this business—it could create difficulties for depositors when the Bill seeks to protect them.
  The case made by the Opposition in Committee has not been answered other than by the administrative decision that it was necessary to have a fee. That is not sufficient to carry the case in the House. especially when we are seeking to encourage the development of small institutions.
  Mr. Hector Monro: I am glad to support this important amendment. It may be that I can bring home to the Minister some of the practical problems affecting two of the three savings banks in Scotland, both of which happen to be in my constituency. I refer to the Annan savings bank and the Lockerbie savings bank, which did not opt to join the trustee savings bank movement and which, for very good reasons of their own, still operate under the 1819 Act.
  We in Parliament have a duty to see that small savings banks are not affected adversely by this legislation. Unfortunately, they will be. The two of which I speak are small, efficient and effective and have first-class boards of directors. The Annan and the Lockerbie banks are very similar in many ways. However, I take the Lockerbie bank as an example.
  In 1877, more than 100 years ago, deposits and reserves were of the order of £10,000. Today, more than 100 years later, they are more than £800,000, with 2,400 depositors—mainly local farmers, small business men and professional men, who are proud of that bank.
  The Government should be concerned to protect minorities such as small banks which are trading perfectly legitimately under their own names. It is important also to ensure that there are some small banks which retain their local identities and associations with the areas in which they are situated.
  I accept that in the moves towards this Bill over the past two years the Treasury has been helpful. It made a number of

  1219
  concessions before introducing it, although the permission to savings banks to keep their own names was very minimal. Had it not been accepted, I suggest that there would have been a major row.
  The main issue involved in this amendment is the deposit protection scheme. As my hon. Friend the Member for Croydon, Central (Mr. Moore) pointed out, the scheme is reasonable in principle. But it will not work in practice as fairly as, I suspect, the Minister hones.
  7.45 p.m.
  The scheme calls for a minimum subscription of £5,000. I suspect that the Minister and his colleagues worked that out on 0·3 per cent. of deposits. Of course, that may be perfectly satisfactory for the vast majority of our major banks. But, in the case of the Lockerbie savings bank, 0·3 per cent. of deposits equals £2,200. That means that this small bank will have to pay a deposit to fund the scheme which represents a very much higher proportion of its deposits than that of almost every other bank which the Minister may care to name.
  Under the Bill, instead of paying £2,200, which even the Bank thinks is fairly hefty, the Lockerbie bank will have to pay £5,000 and, although we all hope that subventions of this type will be required to be paid infrequently, for all we know it could happen annually. It will depend entirely on the claims on the fund.
  This is a big sum for a small bank, even if it is highly efficient. For the Lockerbie bank, a contribution of £5,000 is equivalent to putting up administrative charges by between 25 per cent. and 30 per cent. At a time when we are all trying to keep down costs, this is not a very encouraging way to proceed.
  The sum is also equivalent in lost interest to about 10 per cent. of management expenses and, of course, it will reduce the bank's income by about 1 per cent., thereby reducing its reserves.
  The assets of the bank have never fallen in the 156 years of its existence to less than 75 per cent. of deposits.
  What is the justification for treating small banks in this way? We want to help small businesses and not discourage them in the way that this heavy imposi-
  1220
  tion must. It may be administratively convenient, but it is manifestly unfair to these small saving banks.
  I wish to echo one of the quotations read from the proceedings in Committee by my hon. Friend the Member for Croydon, Central. The Minister said:
  "But my point is that £5,000 is not a lot for a small institution to pay, and the protection for its depositors should help it in its business. If an institution could not pay the £5,000, it might not be in very good shape."— [Official Report, Standing Committee A, 23 January 1979; c. 288.]
  I have shown from the various figures that I have given that the money involved here could be much better used than for the deposit protection scheme. What is more, because the bank is in such good shape, the Minister's words fall to the ground there and then.
  It may be through inadvertence or because the Minister was not apprised of the position of the small savings banks, but the £5,000 appears to have been grasped out of the air as being a sum about which a major bank could not care less. However, it appears that no consideration was given to the small banks.
  I hope that the Minister will think again about this. If he will not accept this reasonable amendment, bearing in mind that it will affect comparatively few banks in practical terms, it may be that he will consider redrafting the clause so that the small banks may pay either the equivalent of 0·3 per cent. of their deposits or the £2,500 which we propose. After all, even that is high in the view of the two banks to which I have referred.
  In my view, the small banks have a cast-iron case. I am sure that this proposal has been introduced by the Government through inadvertence. The Minister ought to take the opportunity to put it right in another place if necessary and bring back to this House the news that he has seen fit to help the small savings banks. After all, they are doing an immensely important job. We are crying out for everyone to make savings. Here are banks which are accepting them and paying a very reasonable rate of interest. They are doing just the sort of practical work in terms of banking which the Treasury commends. Here is a chance to reciprocate and help these small banks. I ask the Minister to think about this amendment very carefully.
  Mr. Emery: I wish to urge the Minister yet again to deal with this matter as we did in Committee, where there was a tied vote. I still feel that the Minister's arguments in Committee do not accord with his general approach of trying to look after the smaller end of the financial industry. My hon. Friend the Member for Croydon, Central (Mr. Moore) spoke much more succinctly on the statistics that I had used in Committee. He referred to the Bill as being a protection for depositors Bill. It would be wrong for people to believe that this is the only or major aspect. The major aspect of the Bill is contained in the first sentence of the long title:
  "To regulate the acceptance of deposits in the course of business; to confer functions on the Bank of England with respect to the control of institutions carrying on deposit-taking …."
  The major point of the Bill is therefore the control of the banking system rather than protection for the deposit-taking side.
  Mr. John Moore: I always listen with care to the wisdom of my hon. Friend the Member for Honiton (Mr. Emery). He is totally right. I would not wish only to emphasise the protection of depositors aspect. But we are now discussing the concept of the fund which is essentially the outcome of the legitimate demand to seek some form of protection. Whether or not we like that form, that is what we are discussing.
  Mr. Emery: I agree entirely with my hon. Friend. It would be a mistake if the Minister did not accept this amendment. A number of deposit-taking bodies provide banking services as part of their business operation and should come within the scope of the Bill. It has been suggested by one of the associations concerned that these smaller organisations will stop taking deposits. They will go outside the Bill. I do not want to see that happen.
  Nor did I believe that was the intention of the Minister. I did not think that he was attempting to make any of the bodies at the bottom end—as long as they were respectable—which have been carrying on a deposit-taking business which might assist their overall financial operation, cease that business.
  The management of companies which might have to pay a contribution of 20
  1222
  per cent., 25 per cent. or 30 per cent. of their deposit side into the fund would find that unacceptable. It may be better for them to return the deposits and stop doing business of that nature. I do not think that was the Bill's intention. We do not want to drive them out. There is some reason for having them within the Bill, hoping that they may expand. There is obviously room for expansion if they are taking deposits of only £20,000 or £30,000 a year. They should come within the general supervision of the Bank of England.
  The Treasury is fighting on a partially false point. The one real argument is that it is not charging a registration for the licence and that the Bill replaces that. For the big bodies, that is sensible. But the argument does not hold much sway with the small firms at the bottom end of the industry. The fee in small areas of profitability of £40,000 or £50,000 is much too high for these small companies It should not be asked. The fund would not lose much money. The number affected would be very small. What is the point, other than the stoical principle that the Government have said that this is what they will do and they will hold to it? This has not been the Minister's approach in Committee. It is difficult for me to see the objection to the amendment that has been moved.
  Mr. John Moore: My hon. Friend will not have seen the letter sent by the Treasury to the Consumer Credit Trade Association. It adds to the point that he is making. The letter states:
  "Without detailed information in respect of the deposit-taking activities of the particular institutions, it is, of course, not possible to say precisely which institutions will be excluded by the provision, but we believe that it will exclude a very large proportion of cases"—
  I am being as fair as I can—
  "where a small business is financed by friends or relatives."
  I am trying to help my hon. Friend. There is clearly an area of great doubt. We do not know the number of small institutions we are talking about. It makes it even more important, when the Treasury is unaware of the total number, that we should not seek to create difficulties that would reduce the size of this sector.
  Mr. Emery: I thank my hon. Friend. This greatly helps my argument and reinforces the point I am making. Why do

  1223
  we want to appear beastly to these very small bodies? It seems unnecessary and a little insidious. If my hon. Friend the Member for Dumfries (Mr. Monro) wishes to press this matter to a Division, I would be willing to go into the Lobby to support him.
  8.0 p.m.
  Mr. Moate: As I have said, I come fresh to the Bill, but I understand that the Minister has been very reasonable in previous debates. I am therefore surprised to receive the impression that he is being obdurate in this respect.
  Mr. Denzil Davies: I have not said anything yet.
  Mr. Moate: That is true—how unfair can I be? Perhaps I am misjudging the position and the Minister will concede the point.
  My hon. Friends seem to have made an overwhelming case for reducing the minimum figure from £5,000 to £2,500. My hon. Friend the Member for Honiton (Mr. Emery) concluded his admirable speech by suggesting that the present limit was beastly to small businesses. I am sure that the Minister is not one of those Labour Members who want to be beastly to businesses, big or small. I expect that argument from his hon. Friends below the Gangway—they seem to think that any "financial institution" must be large, impersonal and profitable, extracting large sums from ordinary people—but the Minister of State and the hon. Member for Thornaby (Mr. Wrigglesworth) know better. I expect that the latter will speak and vote in support of the amendment. I certainly shall, because it is fundamentally right, but I hope that the Minister will accept its logic and equity.
  It is inequitable that many worthy small businesses will be penalised by this provision. My hon. Friend the Member for Croydon, Central (Mr. Moore) mentioned a survey—it could not represent all the financial institutions affected—which showed that 39 had deposits totalling less than £10,000. No one suggests that they will not be licensed to take deposits or that the Bank of England will frown on them. They are apparently perfectly acceptable and will be allowed, even encouraged, to carry on business.
  1224
  Are such institutions to be asked to pay £5,000 into the central fund? That proposal cannot be defended.
  That survey also showed that 25 other institutions have deposits of less than £20,000 and 20 more of less than £50,000. Yet these are only representative figures and there will be many other institutions which will be properly licensed and will have to pay out £5,000. I have seen no justification for that.
  My hon. Friend the Member for Honiton talked of the main purpose of the Bill. Surely it is not to protect depositors by paying compensation on a collapse. It is to prevent collapse—prevention rather than cure. The object is a full licensing procedure, a system of scrutiny, control and regulation, which will prevent collapse in the first place. If a collapse occurs, in many ways the system proposed by the Bill will have failed. It will not make a scrap of difference to depositors then whether that little institution had paid out £2,500 or £5,000. The institution will have been weakened because the Bank of England had been required to take £5,000 rather than £2,500.
  The £5,000 minimum does not meet the main objectives. It undermines them by weakening the institutions that the Bill and previous Acts seek to sustain. This is an unfair penalty on small businesses; it is a regressive form of taxation. I cannot believe that that is the Minister's intention. I hope that he will continue his consistent helpfulness and accept the amendment.
  Mr. Denzil Davies: Hon. Members have made impassioned pleas for a reduction of this figure from £5,000 to £2,500. If the Bill had specified £2,500, no doubt there would have been an amendment to reduce it to £1,250 and we should have heard impassioned pleas on behalf of institutions with deposits of £5,000. But that is the nature of the House. When a concession is given, another is requested and concession follows concession.
  The hon. Member for Dumfries (Mr. Monro) made a strong plea for some smaller institutions in his constituency. We are well aware of their representations. They are not backward in putting their representations to the Treasury—quite rightly—and at least, as he said, we have been able to help them in some ways.

  1225
  The argument for £5,000—any figure is bound to be arbitrary to some extent—was the need to preserve some balance. On Second Reading, Opposition spokesmen said that, because the clearers would have to pay out large sums and they would never get into difficulties, they would in effect be subsidising the smaller banks. Now the argument is reversed: we are told that the smaller banks should not pay so much. There has to be some balance between the contributions of the larger and smaller institutions.
  Also, although hon. Members may not thtink it very important, it will be helpful to smaller institutions that we shall not charge licence fees. There is also a tax liability which reduces. I do not know the profits of the Lockerbie savings bank, but if it were paying corporation tax or income tax at 40 per cent. or 50 per cent., that would halve its contribution. At least we were able to meet that point.
  However, despite all that, despite what the hon. Member for Faversham (Mr. Moate) said, despite this Government's good record on small businesses, in whose regard we have done more than any previous Government, and because the hon. Member for Dumfries comes from that other Celtic fringe of Great Britain—this is the sort of thing which sways Ministers on Report—I am prepared to say that I shall be happy to accept the amendment.
  Mr. John Moore: With the leave of the House, Mr. Deputy Speaker, I will say a few more words. I am sure that my hon. Friend the Member for Faversham (Mr. Moate) will understand why the deliberations in Committee were so delightful since the Minister of State, with intelligence and generosity, has accepted the amendment. One could say nothing but complimentary things about him. The extent to which the activities of the Celtic fringe are beginning to focus the attention of minds is remarkable.
  I compliment my hon. Friend the Member for Dumfries (Mr. Monro). If we had had his help in Committee, the Minister of State might have accepted each of the amendments that we pressed. I also thank my hon. Friends the Members for Honiton (Mr. Emery) and for Faversham. It is an important victory. I am delighted that we pressed this amendment. I am glad that our arguments have been met. This represents an
  1226
  important victory for the smaller institutions. I thank the Minister of State for accepting the amendment.
  Mr. Deputy Speaker: With such pleasantries, perhaps hon. Members will begin to lend each other money.
  Amendment agreed to.

Clause 28

  PAYMENTS TO DEPOSITORS WHEN INSTITUTION BECOMES INSOLVENT
  8.15 p.m.
  Mr. Emery: I beg to move amendment no. 15, in page 28, line 3, at end insert—
  'which amount shall be increased to ninety per centage of the protected deposit if the deposit was made by an individual or a partnership'.
  I am not sure that I carry all my hon. Friends with me on this amendment, but it is a new amendment covering a matter with which we did not deal in Committee.
  I am not arguing the case for or against the deposit protection fund. There are strong arguments for saying that we do not need the fund because the protection can be provided by insurance. I am arguing on the basis that the fund will exist. But I wish to make that fund as sensible and as reasonable as possible.
  As the Bill stands, a protected deposit is defined. The Bill provides that, if any deposit-taking institution or bank goes into liquidation or runs into financial problems, the depositors shall be protected. They are to be protected up to an amount of £10,000, and 75 per cent. of their deposits up to that sum will be paid back from the fund.
  The amendment attempts to differentiate between companies, private individuals and partnerships. If the amendment is not accepted, the individual small depositor will have no greater protection than a company. What is more, the protection that the depositor will receive will be less than he receives at present. I cannot believe that that is right.
  I have said that we should afford different treatment to companies and individual depositors, and I have some good precedents for saying that. The Policyholders Protection Act protects the small individual policyholder. Under that Act the protection is 90 per cent. for individuals and partnerships. The Minister has

  1227
  been in the House long enough to know that there is sense in legislation which runs in parallel and on similar terms. There is, therefore, sense in providing the same type of protection.
  In Committee and on Second Reading I said that no depositor, whether British or foreign, has lost a penny of any deposit that he has placed in a City of London bank. I extend that statement and say that no one has lost a penny deposit in a British bank.
  The Minister said that he had received a letter from someone who wanted his money back. I am sure that the Minister will discover that that person was not a depositor but a shareholder in a deposit-taking institution. I stand to be corrected, but the information that I have obtained shows that in this century no depositor has lost a single penny. If that is so, the Bill reduces the protection to the consumer.
  Today the consumer knows that should something go wrong the financial organisations will come together, sometimes under pressure from the Bank of England, to buy out or inject money into the weak institution or, in the worst instances, to put into operation a major rescue operation such as the lifeboat. Today depositors have the massive assurance of the solidarity of British banking. They have never lost one penny of their deposits.
  The Bill weakens the consumers' protection. We should ensure that we provide more than 75 per cent. protection to the weakest section of depositors.
  Many individuals in banking who may not know much about banking or anything else might turn themselves into limited companies. It is argued that they should receive as much consideration as individual depositors or partnerships. I concede part of that argument, but the issue is not as comprehensive as that.
  If we had to define the depositor with the least knowledge of banking institutions, we would name the private individual and not the company. It would be a private individual whether on his own or in partnership. It might be argued that the amendment was less acceptable to the major banking houses because it would involve them in more work and greater cost in reporting while failing to
  1228
  make a distinction between themselves and private companies, which might reasonably be regarded as small depositors.
  The amendment is not supported by the clearing banks association, or by the finance houses. The big organisations are not necessarily concerned with it. I am advancing this proposal as an act of consumer protection, because I believe that if there is to be protection it should be for the small individual depositors.
  The Minister might accuse me of adopting an Alice-in-Wonderland approach and say that I was fabricating a case which on the whole was based only on supposition. I could almost accept that argument. If he made it convincingly, I probably would accept it. It is unlikely that the fund will have to pay out. I realise that in saying that I am looking into the crystal ball, which is a dangerous thing for a politician to do. I do not say that that would apply on the insurance side, but I believe that the fund is unlikely to have to pay out on the banking side. I believe that in the interests of the reputation of the City of London and British banking, the same support will be sustained after the Bill becomes law as was operative before.
  Therefore, if the Minister wished to argue against my amendment by saying that it was unlikely that the fund would ever have to pay out, I would accept his argument, but I would turn it on him and ask why we need a fund at all. However, I promise the Minister that I will not get into that argument because it is not relevant to the amendment and I know you well enough, Mr. Deputy Speaker. to know that you would get me back into order soon enough if I digressed into that area for too long.
  I realise that I am ploughing a lonely furrow with this amendment. The bigger institutions see no major benefit from it. They argue that it could encourage people to make deposits with the less reputable deposit-taking institution or bank. That argument, however, is unacceptable, because there is at present 100 per cent. protection for any of those institutions. The clearing banks and the Bank of England have accepted that duty. Therefore, under my amendment there would be less protection than now exists.

  1229
  I hope, therefore, that the Minister will take this opportunity not only to make a mark for himself as the protector of small businesses but as the guardian of the small depositor. I hope that I have persuaded him that the amendment is not unreasonable. If I have succeeded, I shall have to make my peace with some of my hon. Friends.
  Mr. Deputy Speaker: The hon. Member for Honiton (Mr. Emery) has had two victories already this evening.
  Mr. Denzil Davies: Much of the substance of this amendment was discussed in Standing Committee. I tried to explain then why we had decided to go for a figure of less than 100 per cent. I tried to deploy the arguments on both sides, bearing in mind that some people wanted 100 per cent. protection. We had ultimately to accept that there should be a certain amount of risk because without risk some institutions would be encouraged to pay a higher rate of interest than would otherwise be prudent, knowing that they could be protected.
  This is not a matter of large versus small. A larger organisation might decide to pay a higher rate because of the protection that was available.
  The hon. Member for Honiton (Mr. Emery) has said two or three times that no depositor has ever lost money with a British bank. I do not know how he defines a British bank, but I see the hon. Member for Monmouth (Mr. Stradling Thomas) present. I will not regale the House with the trials and tribulations of my uncle some years ago in West Wales, but the hon. Member for Monmouth will probably recognise the situation to which I am alluding.
  Mr. Deputy Speaker: If the Minister wants examples, I, too, can give one. My wife has a bank. I deposited money with it and I never saw the money again.
  Mr. Davies: I hope that the hon. Member for Honiton will not again tell us that nobody has ever lost money deposited with a British bank. I am grateful to you, Mr. Deputy Speaker, for corroborating my argument.
  In considering the amendment, one could say that there was no reason to bring in partnerships. That would be a
  1230
  fairly easy debating point for me to score. Why should a firm of accountants in the City of London—perhaps 40 firms in a partnership—get 90 per cent. protection when a small business man in West Wales who forms his own company can get only 75 per cent.? The accountants are far more sophisticated than the small West Wales business man. One cannot therefore draw that kind of distinction.
  It is difficult to determine what figure to choose. We think that 75 per cent. is fair, but in choosing the figure one cannot differentiate between individuals and companies. There is great difficulty in that, and it would be unfair to small businesses that incorporated for good reasons. Therefore, on this occasion I cannot help the hon. Gentleman, and I advise the House not to accept the amendment.
  Mr. Ian Stewart: With your intervention, Mr. Deputy Speaker, with the presence of my hon. Friend the Member for Monmouth (Mr. Stradling Thomas) in the Whip's seat, and with the Minister's speech, the Celtic fringes of the kingdom are exerting their effect in a less happy way than occurred earlier in our proceedings.
  My hon. Friend the Member for Honiton (Mr. Emery) said that he thought he might not obtain the support of his colleagues for the amendment. I have to say that, for reasons similar to those advanced by the Minister, I believe that it would be wrong to go to a figure of 90 per cent. On Second Reading I said that I wondered whether 75 per cent. was not too high to provide the incentive to prudence which is clearly needed in this scheme. Since then I have given the matter greater thought and reached the conclusion that a figure lower than 75 per cent. would not be proper.
  On the other hand, I feel, equally, that a figure higher than 75 per cent. would remove a critical element, namely, that a depositor must have some regard to the nature of the riskiness of the institution with which he makes the deposit. I therefore feel, as does the Minister, not entirely in sympathy with the proposal in this amendment, although I compliment my hon. Friend on the way in which he has presented his argument since it has raised a number of interesting points lying behind the choice of the percentage figure.
  8.30 p.m.
  Mr. Emery: By leave of the House, may I thank my hon. Friend the Member for Hitchin (Mr. Stewart) and the Minister for their answers? I do not entirely accept them. The point of most relevance concerns the variation between partnerships and the private individual. I take the point that a large partnership of major accountants in the City should not be excluded in this way. I was trying, as a matter of consistency, to use the same type of judgment as had been used in the Policyholders Protection Act.
  I give notice that I shall try to urge some of my noble Friends in another place to raise this point as it applies to the individual, since such an approach might whittle away some Treasury resistance. I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Amendment made: No. 16, in page 28, line 34
  '(4A) For the purposes of this Part of this Act, an unincorporated institution which is formed under the law of another member State and is not a partnership becomes insolvent on the occurrence of an event which, under the law of that member State, appears to the Board to correspond, as near as may be, with any of the events specified in paragraphs (a) and (b) of subsection (3) or paragraphs (a) to (d) of subsection (4) above.'.—[Mr. Denzil Davies.]

Clause 29

  PROTECTED DEPOSITS
  Amendments made: No. 17, in page 30, line 6, leave out from "is" to "unless" in line 9 and insert—

  '(a) a body corporate formed under the law of a country or territory outside the United Kingdom,

  (b) a partnership whose principal place of business is in such a country or territory, or

  (c) any other unincorporated institution formed under the law of another member States'.

  No. 18, in line 10, at end insert—
  'or, as the case may be, under the law of that member State '.—[Mr. Denzil Davies.]

Clause 36

  RESTRICTION ON USE OF CERTAIN NAMES AND DESCRIPTIONS
  Mr. Ian Stewart: I beg to move amendment no. 19, in page 38, line 8, leave out
  "or is carrying on a banking business".
  I am afraid that we shall have to spend a few moments on amendment No. 19. Clause 36, which is the equivalent of clause 35 in Committee, gave us as much trouble and anxiety as any other part of the Bill. It relates to restrictions on the use of banking names and descriptions by those in the licensed sector. We had a preliminary discussion of this on Second Reading and followed that through on a number of further debates in Committee.
  One of the consequences of our debates was that in Committee the Government tabled amendment no. 119, which inserted a new subsection (4) in clause 36, which is meant to allow some reference to banking services provided by members of the licensed sector. In essence, the basis of clause 36 involves the separation of the recognised banking sector from the licensed sector. It permits the free use of the terms "bank", "banker" and "banking business" only to those who are members of the recognised banking sector. A large number of bodies of varying kinds which can expect to be in the licensed sector will not be able to describe themselves as banks. Those involved will not be able to call themselves bankers and they will not be able to say that they carry on a banking business.
  On Second Reading I said that I was very doubtful whether it was possible in that way to redefine the meaning of a common word by Act of Parliament, and having sat through a fairly lengthy Committee stage and given the matter a good deal of further thought, I still believe that it is not desirable—certainly not desirable, and quite likely not possible—to redefine these words and make the use of "bank", "banker" or "banking business" much stricter than it has been in the past in this country.
  The bodies which will be affected have naturally welcomed the Committee amendment no. 119, which allows them provided that they carry on certain banking services, to say that that is what they

  1233
  are doing, but I understand that they have continued to make representations to the Treasury, as they have also to me and to other members of the Standing Committee, that that does not go very far.
  The purpose of the present amendment, therefore, is to open up the question whether there is anything particularly sinful or dangerous in licensed deposit-takers describing themselves as carrying on a banking business. This does not go nearly so far as we suggested in Committee, when we argued that they should not only be able to describe themselves as carrying on a banking business but should be allowed also to describe themselves as banks or bankers so long as it was not for the purpose of taking deposits.
  In the present amendment, the suggestion is much more limited. We are not saying that they should be allowed to call themselves banks or bankers, although I think that the case for that may still stand. We suggest here that when such a company is not to become a recognised bank but is in fact carrying on a banking business, it should be allowed accurately to describe what it is doing.
  From conversation with a number of the institutions concerned, it is apparent that they are banks and that they will continue to be banks and will continue to carry on a banking business, but they will not be allowed to say so under the terms of the Bill as now drafted. Their difficulty will be quite far-reaching. I have said that amendment No. 119 in Committe, now subsection (4), is an advance on the way the Bill originally came forward, but after further thought I still believe that it does not go far enough.
  The licensed sector will be placed at a disadvantage against, for example, foreign competition. A company which is a bank in, say another member State of the EEC may not have to satisfy nearly such strict criteria to be allowed to use the word "bank" or the equivalent in its name as British companies will have to do if the Bill remains unamended in this respect. That should always give us pause for thought. I do not believe that we should allow ourselves to put our own companies in this country at a disadvantage against foreign competitors where we have the option to do otherwise. Indeed, I could put it more strongly and say that if we were to have a bias in any
  1234
  direction we should try to give an advantage to our own companies as against those from overseas. Certainly, we should not do the opposite.
  I return to the point made by my hon. Friend the Member for Honiton (Mr. Emery) in an earlier debate, that the prime purpose of this part of the Bill is to protect depositors. It should not be to change the meaning of everyday words such as "bank", "banker "or "banking business". I doubt that any depositors would be put seriously at risk if a company carrying on a banking business which is a licensed deposit-taker reporting regularly to the Bank of England and therefore supervised in many of the details of its business and backed up by the existence of a deposit protection fund, which, under the terms of the Bill, could be anything up to £250 million, were allowed to say what it was doing. Is there likely to be much extra risk to a depositor if the institution were allowed to say that it was carrying on a banking business when that was in fact the case?
  It is possible to suggest amendments to clause 36 almost without limit by adjusting the words here or there to reduce the restrictive force of the way in which it is at present drawn. Amendment no. 19 was tabled because we felt that we did not satisfactorily resolve in Committee why we could go as far as "banking services" and not as far as "banking business". It is a modest amendment. I was tempted to return to the whole business of including the words "bank" and "banker". "Banking business" is not such a deceptive description for a licensed deposit-taker to use if he is conducting a banking business. None the less, it would be difficult, even if the amendment were acceptable, for such a body not to be able to describe itself as a bank or banker. However, the description would not be so restrictive as if the clause remained in its present form.
  When the Bill is considered in another place, it may be that their Lordships will take account of what has been said not only in Committee but on Report. I shall listen with great care to what the Minister says about possible Government objections to an amendment such as No. 19 that would allow a licensed deposit-taker to use the term "carrying on a banking business".

  1235
  If we draw the conditions of clause 36 so tightly that members of the licensed sector are not able to describe their activities properly and are not able to obtain an equivalent status with foreign competition on a similar level, we shall possibly be sowing the seeds for the destruction of the system upon which the Bill is based.
  If the system breaks down and proves unworkable in practice, nothing will have been gained for the Government, for the Bank of England, for the recognised sector, for licensed deposit-takers or for those who have placed deposits with licensed deposit-takers. I ask the Minister yet again whether he is confident that the licensed deposit-taking sector will be able to carry on successfully its existing businesses unless the restrictions in clause 36 are loosened.
  The bodies concerned range from large companies—some of them finance houses that may in some circumstances be the subsidiaries of clearing banks—to small private companies conducting a banking business that have not been operating long enough to acquire sufficient reputation or standing. It may be that they do not qualify for other reasons to become recognised banks. All these bodies, from their different standpoints, will be dramatically affected by the terms of clause 36 if it proves workable in practice.
  A licensed deposit-taker which is conducting a banking business and aspires to be a recognised bank may find it exceedingly difficult to cross the boundary if in the stages before it hopes to qualify it is so restricted that it cannot accurately describe what it is doing. That is a danger area. That would apply to an amendment stronger than the one that I have tabled. It would apply to the whole use of the words "bank" and "banker" as well as "banking business". However, the essence of the argument is the same, namely, that restrictions on the members of the licensed sector under clause 36 are so severe that many of them will not be able to operate as freely as they should. That is why this is one of the major areas of contention in the Bill. I hope that it is not too late for the Minister and his advisers to think again about the implications of clause 36.
  1236
  8.45 p.m.
  If we decide not to press the matter to a Division tonight, it will not be because we underestimate its importance. It will be because we know that there will in a sense be a further Report stage of the Bill in another place. There will, therefore, be perhaps a rather more extended opportunity for the matter to be raised again. But before it is raised again in those circumstances it is right for the House once more to consider the implications of the clause, and in particular to ponder anything that the Minister may have to say to justify the tightness with which the clause is drawn.
  Mr. Denzil Davies: The hon. Gentleman has moved his amendment, as he has indicated on several occasions, on the basis that he is not happy with the way in which the Bill is drawn, in that the Bill prevents any body except a recognised bank from describing itself as carrying on a banking business.
  The amendment seeks to allow licensed deposit-taking institutions to describe themselves as
  "carrying on a banking business".
  The amendment as drafted, so I am advised, would allow practically any body to describe itself as
  "carrying on a banking business".
  Even a bureau de change could do so, in the way that the amendment is drafted, although I accept at once that that is not the intention of the amendment.
  As I said in Committee, if we were to extend the dispensation to the description of
  "carrying on a banking business"
  we would be going to the heart of the Bill, which is concerned with the distinction between recognised banks and licensed deposit-taking institutions. I do not feel that it is possible for an institution to say that it is carrying on a banking business without its being a bank. Indeed, the hon. Gentleman used words to that effect in his speech when he said that institutions are carrying on a banking business and are indeed banks.
  It could be argued, in relation to clause 36(1), that if we were to delete the words
  "or is carrying on a banking business"
  the institution concerned would still fall foul of subsection (1), because it would

  1237
  reasonably be understood to indicate that it was a bank or banker. Somebody who described himself as carrying on a banking business could reasonably be said to be indicating that he was acting as a bank.
  Mr. Emery: The clause states quite clearly in subsection (1) that
  "no person carrying on a business of any description"
  may describe himself as a banker. I declare an interest. In my own company my financial director is a fellow of the Institute of Bankers. He has spent many years of his life as a banker. He is employed particularly because he gives certain banking advice. If professionally he is ever called upon, he is in the position of having the qualification of the Institute of Bankers, and he describes himself as a banker. Would he be debarred from doing so by the wording of the clause?
  Mr. Davies: I should not have thought that in those circumstances that person could be said to be carrying on a business. I understand the hon. Gentleman to say that this person was the financial director. There has to be a business. Obviously, it is a question of fact, but I should not have thought that he was carrying on a business.
  My argument is that the amendment goes to the heart of the Bill. I cannot really see the distinction between "a bank" and "a banking business". Once one accepts that argument, one has to look at the words "bank" or "banker" in the subsection itself.
  As I said in Committee, we have reached a practical limit, or as far as we can go. We can say "banking services" without going as far as "banking business". Once we cross that threshold and go to "banking business", we are into the realms of a bank, and then we are into the debate as to whether the split is the right one. The split is based to some extent on present practice. We have been over the arguments previously.
  Therefore, for that reason and for the technical reason that I have mentioned, I could not accept the amendment.
  Mr. Emery: I see the argument that the Minister is propounding. There is a very great difficulty. Equally, I see the argument that has been put forward by my hon. Friend the Member for
  1238
  Hitchin (Mr. Stewart), who has led so competently for the Opposition on the Bill.
  I see that there is a kernal of assistance in that "banking services" has been excluded. I am inclined to say to my hon. Friend that the Opposition ought to see whether those who have made representations to us on the aspect of excluding the banking business would not be content to structure their presentation as carrying out banking services. That, indeed, is probably what they may well be doing.
  The Minister has a fair point as regards the amendment. We seem to be crossing party lines fairly frequently this evening. The moment that one structures that one has a business which is banking, I do not quite see how one can exclude oneself from being a bank or a banker.
  If my hon. Friend can present arguments to substantiate any feeling that he may have that the amendment must be pressed, I shall listen carefully to what he has to say.
  However, rather than press the amendment, I believe that we should go back to the people who have made representations to us to see whether the points they have made would be covered by "banking services" as opposed to "business".
  Mr. Ian Stewart: When I moved the amendment, I said that I was not sure that it was in a condition in which it either should or could be pressed. However, the further debate that we have had on the very sensitive area of definitions of banking, banking business and so on has not been without its value. It would have been very difficult for anyone to draft a suitable amendment to widen the freedom within the restrictions in the clause. I know that the Minister and his advisers spent a great deal of time thinking about the precise wording of Government amendment No. 119 in Committee—which is now subsection (4). I am perfectly well aware of the drafting difficulties of making small adjustments in such a dangerous area. For that reason, if for no other, it would not be right to press the amendment.
  However, I am not so sensitive as the Minister about the opportunity for using banking descriptions. It is at the heart of the Bill. It is an administrative matter.

  1239
  It is certainly not a party political matter. Looking at it as objectively as possible, however, it seems to me that it is not such a ghastly thing if those who are carrying on a banking business are allowed to say that they are doing so. The difficulty of the clause as it is drawn is that it is always possible to produce a tight restriction. The tighter the restriction, the easier it is to draft it.
  I rather fear that, because of the difficulty in drawing a boundary between the use and the non-use of permissible banking names, refuge has been taken behind the expedient of using the narrowest definition and not the wider definition which is actually required by the circumstances of the case.
  For the reason that I advanced earlier, I beg to ask leave to withdraw the amendment in the hope that there will be further stages of the Bill at which this crucial aspect can receive further attention.
  Amendment, by leave, withdrawn.
  Mr. Ian Stewart: I beg to move amendment No. 20, in page 38, line 32, leave out second 'the' and insert such'.
  This amendment proposes a small adjustment to the subsection that was inserted by the Government in Committee. It is designed to clarify the position so that only banking services can be described as banking services by licensed institutions that are able to take advantage of subsection (4). This was a small point that I raised in Committee. I do not know the result of the Minister's deliberations, but if he is anxious for precision it may well be proper for him to accept the amendment.
  Mr. Denzil Davies: I believe that the amendment would be over-restrictive. It seeks to freeze the list of services in schedule 2. But, of course, that list is not meant to be exhaustive. Further banking services may be developed in future which are not covered by schedule 2, and it would be equally wrong to prevent a licensed institution from developing banking services.
  We debated this matter in Committee. The hon. Gentleman rightly said that banking and financial institutions develop, and that there is a danger when legislating of preventing natural develop-
  1240
  ment in the future. I think that I will use his argument against him, although I have others as well. For that reason, I cannot recommend the House to accept the amendment.
  Mr. Stewart: By leave of the House, Mr. Deputy Speaker, may I say that the Minister has a fair point, but I think that I also had one. Perhaps I should have suggested that the subsection should read "to any banking services provided by it". But I do not want to continue this semantic discussion, and, therefore I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.
  Mr. Denzil Davies: I beg to move amendment no. 22, in page 39, line 24, at end insert—
  "(7A) Subsection (1) above does not pro hibit the use by a licensed institution which has its principal place of business in another member State of the name under which the institution carries on business in that member State if the name is used in immediate conjunction with the description "licensed deposit taker" and, where the name appears in writing, if that description is at least as prominent as the name.'.
  Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this we may take Government amendments nos. 24 and 25.
  Mr. Davies: This amendment is consequential on the deletion of the old clause 35(2). This occurred as a result of debates in Committee, when the Committee accepted that a non-EEC financial institution should not be allowed to describe itself as a "bank" if it was a licensed deposit-taking institution.
  In effect, the amendment is consequential on that vote in Committee, except that we have taken the opportunity to redraft it. Now an EEC body which will be able to call itself a "bank", because of the EEC directive, will immediately after its name have the description "a licensed deposit taker" if it does not qualify as a recognised bank in the United Kingdom. That will be displayed prominently after the name. To some extent, that is an improvement on the original legislation.
  For example, any body incorporated in France which calls itself a "bank" but which does not qualify as a recognised bank in this country will have to state immediately after its name the fact

  1241
  that it is a licensed deposit-taker. That at least will provide some safeguard in respect of competition with British institutions.
  Amendments nos. 24 and 25 are similar except that they apply to a representative office where it does not take deposits. The amendment amends the original clause again as a result of that decision of the Committee.
  9.0 p.m.
  Mr. John Moore: A couple of comments are relevant at this juncture because, as the Minister of State quite fairly said, we had a lengthy debate in Committee on this whole clause. It might be interesting for those hon. Members who were not present in Committee to glance at this clause, which was clause 35 in Committee. They will see that an inordinate number of amendments have been brought in at this late stage. It is clearly a clause of great significance. It concerns the degree to which the Minister of State argued in Committee, quite rightly, on the importance of the use of the word "bank".
  One of our difficulties is that we have had this amendment for 36 hours only and have not had an opportunity to take soundings and discuss what is obviously an important factor concerning the relative competitive position of EEC member State institutions which will not be recognised banks but will be licensed deposittakers, in comparison with the competitive position of similar British institutions.
  I call the attention of the House to what was discussed in Committee, because it is important. The Minister of State quite rightly said that we won, in a key division in Committee, the withdrawal of such advantages that non-EEC member State banks and EEC member State banks had in comparison with licensed deposit-taking institutions in the United Kingdom. What we have now done is to restore the EEC banks. I hope that in another place this can be explored at some length because we have created almost an absurdity. That is understandable. I understand the Minister of State's position. He is seeking to put back, according to the directive, the EEC member State banks.
  But let me try to illustrate what I think has now occurred. This is only on a first reading, and we have had no time
  1242
  to scrutinise this matter. Suppose that an EEC bank, not capable of being described as anything other than a licensed deposit-taker in the United Kingdom, seeks to do business in the United Kingdom in competition with similar United Kingdom institutions. Let us suppose that it is called a "respectable bank". The term "respectable bank" becomes "respectable bank/licensed deposit-taker". It could be suggested that that almost adds a further degree of respectability and credibility to the institution as opposed to a limitation. It may be absurd, but it could equally be said "Why do we not call it "respectable bank—not a recognised bank, but a licensed deposit-taker?" That is what it is according to the character of the legislation. In that way we would not have deprived it of its rights under the EEC legislation of describing itself as a bank, while under our own new banking legislation it would be a licensed deposit-taker.
  I understand the Minister of State's dilemma, but I think that more reflection is needed because we are likely, with the acceptance of this amendment, to put a greater degree of respectability or a greater degree of commercial advantage —not to put it too strongly—on foreign institutions as opposed to United Kingdom institutions. We are trying, in many ways, to reconcile the irreconcilable, in so far as "bank" is an important word. I should have thought that in another place we could do even better in our choice of words. I am not suggesting that they should be in the category "respectable bank—not a recognised bank but a licensed deposit-taker", but at least we ought not to part finally from this clause without ensuring that we do not put a foreign institution in a position of advantage vis-a-vis British licensed institutions and to some extent create the possibility of disadvantage to United Kingdom depositors. I do not think that it is a very satisfactory position for us to be in. I hope that the Minister of State will enable us to return to the matter, if possible, especially after discussions in another place.
  Mr. Denzil Davies: No doubt the hon. Member will return to this point. I must point out that this has occurred as a result of hon. Members not accepting my arguments in Committee. Had the Committee accepted my arguments, as it

  1243
  usually does, we would not be in this turmoil. I await with interestto see whatever amendments the hon. Member tries to put down to resolve this state of affairs. It is not quite as easy as hon. Members thought at one time.
  Mr. John Wells: Will this rule apply to all foreign banks in whose British name the word "bank" does not occur? There are a large number of highly reputable, large and middle-sized foreign banks trading in the City of London—I have in mind a number of Spanish institutions—in whose name the word "bank" does not occur. Let us imagine the case of a bank calling itself "Respectable Company Limited", which everyone would recognise to be a bank in its national State. Would it have to have the words "Licensed Deposit Taker" tacked on to its name when it traded in the United Kingdom?
  Mr. Davies: No. We are concerned with foreign institutions which use the word "bank" in their name. Under the original provisions of the Bill we decided that they would be allowed to use the word "bank", although the Bank of England might not designate them as recognised banks. The Committee took exception to that and said that it was unfair to British institutions which would not be allowed to use the word "bank". Then the Committee accepted an amendment to confine that to EEC countries. We could not do otherwise because of the directive. Therefore, our position at the moment is that an EEC bank which wants to use the word "bank" in its name but which is not recognised by the Bank of England will have to describe itself as a licensed deposit-taker. The problem arises with the use of the word "bank".
  Amendment agreed to.
  Mr. John Moore: I beg to move amendment no. 23, in page 39, line 24, at end insert—
  '(7A) Subsection (1) above shall not prohibit a stockbroker or a dealer in securities licensed under the Prevention of Fraud (Investments) Act from describing himself as an investment banker or from describing his business as "investment banking" where in the context in which such description is used it refers or would reasonably be understood to refer to transactions concerning securities.'.
  1244
  This is an important point. Without seeking to disturb the tranquillity of our discussions, I think that the Minister seems quite genuinely and legitimately to be unaware of the point we have been trying to make. I can only deduce this from the comments that he made in Standing Committee on clause 36 in relation to the term "investment banking". It is important to get on the record the very important distinction relating to this term, especially in so far as it might seek to create difficulties for British, as opposed to foreign, institutions.
  I declare an interest as I am the chairman of an investment banking institution but a foreign-owned one, and to that extent I am speaking against my own personal commercial interests. However, on this matter we must put the interests of British institutions first. We are liable to create difficulties for them.
  It is crucial for the House to know that in banking there is a functional area called investment banking where specifically in many cases much of the activity is disconnected from deposit taking. It is important to describe why. Essentially the reasons are linked with the changes in banking structure in the United States in the late 1920s, 1930s and into the 1940s which related to the successful attempts to break up the monopolistic position that existed in that country between corporate or investment banking, on the one hand, and commercial banking, on the other. Those activities were segregated so that institutions could not be involved in both sorts of banking. That is, I accept, a simplistic description of the history of he matter. The reason why it is important to our debates and germane to this part of the Bill is that in so many of those areas the United States is a dominant feature in the world investment banking scene.
  The Minister of State seemed in Committee to concern himself more with stockbroking activities. I do not suggest that there are not investment banking institutions that are not connected with stockbroking as well as with other investment banking activities, but that is not the prime area with which we are concerned. An institution in the United Kingdom or overseas could be involved in investment banking without having an involvement in stockbroking. It may be involved in underwriting new issues, dealing in the

  1245
  Euro-dollar market, whether in a primary or secondary sense, or in advising corporations involved in private placements.
  It is crucial to remember that we are trying to concern ourselves with the ability of British institutions to compete with foreign institutions. There is a series of firms, such as Goldman Sachs, none of which has "investment banking" in its title but all of which, because of their dominance in the United States market and their ability to communicate there through publicity and advertising, are very well known for their investment banking functions.
  On this side of the Atlantic, a United Kingdom institution may be seeking to do business in investment banking in competition with such organisations. The United Kingdom institution may not be involved in deposit-taking and may want to establish its investment banking activities in the United Kingdom in order to provide jobs and to add to the already dominant position of the United Kingdom as a financial and banking centre.
  The world of investment banking is a market of great mobility. The organisation of the market does not have to be in any one place. With existing communications, it could be in Frankfurt, Bonn, Paris, Geneva, Zurich or London. A marginal distinction creating a disadvantage could lose for the United Kingdom and our institutions the possibility of an organisation establishing its headquarters or its European headquarters in the United Kingdom. That is an important issue for many British institutions.
  What have we been told since the Committee stage about the ways in which a United Kingdom institution can or cannot communicate its ability competitively with similar United States institutions when it seeks the business of Los Angeles or companies in other American cities for which it wishes to raise money in, say, the Euro-dollar market? In his letter of 12 February, the Minister of State said:
  "I have looked again at the use of the term 'investment bankers' and see no reason to alter what I said in Committee. It is relevant that nothing in the Bill prevents an institution based in London from describing itself as an investment banker abroad."
  An institution in London is reaching the stage of absurdity where one of its members visiting Los Angeles or San Francisco can give a business card or write
  1246
  on a piece of stationery with the title "investment banker" describing his capacity or the capacity of his organisation, but when seeking to do business with overseas corporations visiting London, or even when writing from London, he is unable to use the title "investment banker" on his stationery. We are clearly producing a potential disadvantage for United Kingdom institutions.
  9.15 p.m.
  Mr. Denzil Davies: It is the American position which is absurd in describing as bankers people who by no stretch of the imagination are bankers.
  Mr. Moore: With respect, we live in the real world and I should have thought that we were seeking to create legislation which would enable our organisations dealing in a world which now performs a function known as "investment banking" to compete on all fours. Whether the dominant factors in investment banking are following our traditions is irrelevant.
  We have not heard a sound argument from the Minister to counter our propositions. If there is a sound argument which does not limit the intention of the Bill in seeking to protect depositors, we understand it. But, essentially, we say that we are not putting on all fours with its overseas competitors a United Kingdom institution which seeks to provide a different kind of banking service from those of the clearing banks seeking deposits. The investment banking institutions are quite different, and I do not feel that we have had the beginning of an answer. I hope that the Minister will make one in response to my comments tonight.
  Mr. Denzil Davies: The answer is the same as the one which I gave in my intervention and the one which I gave in Committee. As I understand it, a banker is someone who at least takes deposits. I am sure that we can agree about that. We had long arguments in Committee about what a banker was.
  For someone who does not take deposits and who merely carries out the corporate finance side of merchant banking to be described as a "banker" is absurd. I quite understand that this is investment banking in the United States, but really it is the American description which is the absurd one. To call a body which is merely giving financial advice,

  1247
  acting as an underwriter and arranging new issues a "banker" seems absurd, and I do not think that we should legislate for an absurdity.
  There are plenty of problems in the Bill without going further and saying "Here is someone who does not take money at all and who possibly does not lend money, either, but is merely giving financial advice, and we believe that he should be described as a 'banker' in this country". What happens in the United States depends on United States law. If a British institution of this type is operating in the United States, it can call itself an investment banker according to American law. But we are framing the law of the United Kingdom.
  After all our debates about the meaning of "banker" and "banking", it would be absurd for us now to say that someone who does not even take deposits should be allowed to call himself a banker.
  Mr. Peter Brooke: This is only my second intervention in the deliberations on this Bill, and both have come late in its stages.
  I attended the Second Reading debate, when I held a kind of watching brief on behalf of certain of my constituents in case any rude comment was made about them. I intervened briefly in the speech of the hon. Member for Thornaby (Mr. Wrigglesworth) when I asked him about the Edge Act. The hon. Member is not here, so I feel a little unkind about saying it, but the record shows that perhaps he did not fully understand my question. The Edge Act is relevant to a degree to what we are discussing in this amendment. Therefore, I hang my second interjection on the hook of the first.
  I was unlucky in that in the week in which we took the Second Reading of this Bill we also took the Second Reading of the Companies Bill and I was selected to serve on the Standing Committee which is considering the Companies Bill and, therefore, did not have the opportunity to serve on the Committee stage of this one. However, I am perhaps unique amongst those hon. Members present who did not take part in the Committee stage in having read the report of the proceedings with the greatest
  1248
  possible assiduity. I must say that it is a great deal more interesting and exciting than the Companies Bill. One or two of the speeches—I remember especially a speech by the hon. Member for Stoke-on-Trent, Central (Mr. Cant)—seemed to cover the ground at great length, but they have made extremely good reading and they are valuable to anyone coming to the Report stage in this way.
  Mr. Moate: My hon. Friend is not unique in not having served on the Standing Committee, but I am sure that he is unique if he has studied the report of the Committee's proceedings with assiduity.
  Mr. Brooke: It is clear from a reading of the report of the Committee proceedings that the case from this side of the House has been handled with extreme competence. I am full of admiration. I have not read the letter from the Minister of State to which my hon. Friend the Member for Croydon, Central (Mr. Moore) referred. I am at some disadvantage intervening on this amendment without seeing it. However, having read what was said in Committee and in listening to the debate, I feel we are in some danger of making fools of ourselves if heed is not paid to the amendment.
  Those of us who have spent our lives doing business on both sides of the Atlantic are aware that there are alternative languages and vocabularies. By and large, it does not matter. It is possible to explain that a prep school in one country is different from a prep school in another. At the same time, my hon. Friend the Member for Croydon, Central is right to say that the phrase "investment banker" is widely used in the United States to describe the people to whom he makes reference. I make no apology for intervening on behalf of my constituents in the City who have to compete in an international world and not a purely domestic world.
  I have spent my professional life outside this House in a consulting firm. When we set up our office in the United Kingdom in 1961, we were required to state on our letterhead that we were licensed. As an activity that had started off in the United States, we had the greatest difficulty in persuading the licensing authority that we should be able to state our licence in a particular form of words which would not be misleading

  1249
  on both sides of the Atlantic. We eventually did so but it took an enormous amount of time.
  Following that experience, I have great sympathy for those who would be affected if the phrase "investment banker" was ruled out at this stage. It would be singularly unfortunate if the City of London, which has prospered and thrived over the last 30 years in circumstances of extreme foreign exchange control, was to be shackled by semantic differences of this sort.
  I fear that the Minister does not understand the issues being put to him. An elaborate amount of debate has occurred on the word "bank", which is also affected by directives from the European Community.
  This issue applies to the United States rather than to the United Kingdom. My colleagues involved in consulting would be deeply surprised if, as a consequence of the Bill, it was not possible to use the term "investment banker" in the common patois way it has been used across the Atlantic. The Minister of State says that the American situation is absurd. Perhaps that it right. The fact remains that it is a reality. That is the manner in which we conduct our affairs. The City of London does a remarkable job in competing in that international world, given the limited financial resources of this country in terms of economic strength. It would be unfortunate if the City of London, which has built up a reputation over many years, was to be hobbled by a restriction of this sort. I strongly support my hon. Friend for Croydon, Central in bringing this amendment back to the House on Report.
  Mr. Ian Stewart: I do not expect the Minister to make a further reply but I want to make two points before we leave this debate. The first is a technical one. My hon. Friend for Croydon, Central (Mr. Moore) quoted from the letter of 12 February, which, unfortunately, my hon. Friend the Member for the City of London and Westminster, South (Mr. Brooke) has not seen, in which the Minister says:
  "It is relevant that nothing in the Bill prevents an institution based in London from describing itself as an investment banker abroad"
  1250
  That may be the case, but it is not how I read clause 36(1). That subsection says:
  "… no person carrying on a business of any description in the United Kingdom"—
  other than certain exceptions—
  "may use any name or in any other way so describe himself".
  It does not say that no one "may in the United Kingdom" use any name. If a representative of a business in this country went to North America, I would think that that description still applied. I raise that point so that the Minister may give it thought.
  The Minister is not sufficiently aware of the difficulties which confront those in British firms who have to take the world as it is. Investment banking is not a form of banking as "banking" is defined in the Bill, but that is the fault of the Bill.
  Mr. Denzil Davies: It is not banking by the ordinary common rules, either.
  Mr. Stewart: I was just about to say that technical terms are often invented in which all the parts are not strictly logical in the original sense of the words used, but this term is used widely. I was taught at school that the Holy Roman Empire was neither holy, Roman nor imperial, but no one has thought of calling it anything else.
  If a term such as "investment banking" exists in international business, we should not needlessly put our nationals at risk by refusing to use it. This is another example of the Government's excessive preoccupation with terminology rather than reality.
  Amendment negatived.
  Amendment made: No. 24, in page 39, line 27, leave out
  'which consists of a name'.
  No. 25, in page 39, line 29, leave out from 'Kingdom' to 'and' in line 30 and insert
  'if the name is used in immediate conjunction with the description "representative office" and, where the name appears in writing, if that description is at least as prominent as the name'.—[Mr. Denzil Davies.]

Caluse 39

  REPRESENTATIVE OFFICES OF OVERSEAS DEPOSIT-TAKING INSTITUTIONS
  Mr. Emery: I beg to move amendment no. 26, in page 43, line 23, leave out '£1,000' and insert '£5.000'.
  I was under the impression that the Report stage was likely to be concluded by 8 p.m. and I am already about an hour and a half late for an engagement. Therefore, as I thank the Minister for consideration that he has given our amendments, I also apologise for the fact that I shall not be speaking on Third Reading.
  The amendment deals with penalties for representative officers of foreign firms which decide to set up an office in Britain and which are deposit-taking institutions overseas. We had a similar debate in Committee, when the Minister agreed to look at the matter.
  The amendment increases the size of the fine for anyone who does not comply with this clause and deal with the registration in time. At the moment the fine to be £1,000 if the registration has not made within a month of the establishment of the office. An institution has give written notice to the bank within that period.
  I am inherently suspicious. Any properly constituted body which is going to set up a representative office in London or elsewhere in this country will do so only after considerable thought and planning. It will not do so overnight. It should and will discover the regulations, customs, and so on, of the financial institutions of this country well before that office is established.
  9.30 p.m.
  If a company has not registered within 30 days, there can be only two conclusions—either it is darned inefficient, which is worrying, or it has some reason for not doing so. I shall not bore the House with all the possible intents.
  There can be no justification for a company not registering within the period. If a firm is inefficient it should not be registered at all. If it does not register for intent which we would not applaud, fine should be much more than £1,000, even if it is £1,000 per day. That would
  1252
  mean that a month's delay could lead to a fine of £30,000.
  I am not sure that the courts would impose such a fine. My information is that they would not. Even if the courts did impose such a fine, the type of organisation that would not register because of an evil intent would not worry about £30,000, and might not even worry much about £150,000, which is the cumulative effect of a fine of £5,000 a day for a month. I am sure that there would not be many prosecutions, and I hope that the Minister will regard my proposal as an improvement to the Bill.
  Mr. Denzil Davies: I have sympathy with the amendment. But there are other provisions in the Bill dealing with fines for not providing information. They are provided for in clauses 14, 16 and 17. The figure in those clauses is £1,000. That is not a conclusive argument, but the Treasury must consult the Home Office about fines. There must be some consistency in legislation. We could decide ourselves, but it would not be right to go against the advice of the Home Office.
  The £ fine applies only to the first offence of failing to provide information. Under other provision in the Bill another £1,000 fine can be imposed for subsequent failures to provide information. The amendment would throw the other fines provisions in the Bill out of line. For that reason, I cannot accept it.
  Mr. Emery: I am surprised at the Minister's reaction since he showed such staunch independence in Committee. I did not think that he would accept without question directives from the Home Office. I hoped that he would see that there is a considerable difference between fines involving internal information and those that might be imposed upon people from overseas who set up a registered office. In such cases business could be transacted and the organisation could disappear within a short period. There have been such examples.
  I am sorry that the Minister will not accept the amendment. I hope that before the Bill goes to the House of Lords the Minister will accept the amendment and override the advice from the Home Office. I beg to ask leave to withdraw the amendment.
  Amendment, by leave, withdrawn.

Clause 47

  MEANING OF "DIRECTOR", "CONTROLLER" AND "MANAGER"
  Mr. Ian Stewart: I beg to move amendment no. 27, in page 50, line 24, leave out "immediate".
  The subsection to which this relates, subsection (4), contains a definition of the word "manager". It says:
  "(4) 'Manager', in relation to an institution means a person (other than the chief executive) employed by the institution who, under the immediate authority of a director or chief executive of the institution—"
  We had a brief debate in Committee on clause 41, relating to exemptions from the provisions of the Rehabilitation of Offenders Act. It is as a follow-through to that debate that I have tabled amendment no. 27 to raise once more, in a slightly weaker form, the amendment which I moved in Committee which sought to widen the term "manager" to cover all employees.
  The Minister said that he did not feel that it was right to widen exemptions from the Rehabilitation of Offenders Act in that way because it would breach the whole purpose of the Act, which is that, after a time, spent convictions may be disregarded for the purposes of employment and for many other reasons. There remains a problem here because the exemptions for banking purposes are drawn narrowly.
  We are dealing only with directors, controllers or managers. That would be all right if the word "manager" had its normal meaning, if it meant those who had full management responsibility. But in the larger institutions in particular the term "manager" covers a number of executives, many of whom may not be under the immediate authority of a director or the chief executive. Nevertheless, they may have senior managerial functions and it may be quite proper that the bank or employing institution should have the right to know about convictions, even if they are spent for other purposes.
  Most of those who graduate to the position of director or chief executive will have moved in the recent past through the office of manager, and so on, where they may not have been under the immediate authority of a director. They
  1254
  may have been one or two positions removed but, nevertheless, exercising genuine managerial functions.
  I doubt whether the Minister will accept even this widening of the definition. It seems much narrower than the general one relating to "employee" which I moved in Committee. So far, the point is not quite dealt with. Perhaps, even though we may not be successful tonight, this is something which ought to be raised again, bearing in mind that there are further stages of the Bill when the Minister's thoughts can be taken further into account.
  Mr. Denzil Davies: I do not think that there is a normal definition of "manager". This is part of the problem. The definition does not just apply to the legislation dealing with the rehabilitation of offenders. It goes wider and has to comprehend all the provisions in the Bill. We have received representations from the Finance Houses Association to the effect that the present formulation goes too wide, especially in respect of branches where each branch manager reports direct to the chief executive.
  It could be said that in that case if there was immediate reporting that person would be a manager. Again, therefore, one must try to balance one against the other. As I have said, there is no natural meaning of the word "manager", but bearing in mind that we do not want the definition to be extended too widely the draftsman chose the word "immediate". and I have heard nothing to convince me to change that.
  Amendment negatived.

Schedule 1

  EXCEPTIONS FROM PROHIBITION IN SECTION 1
  Mr. Denzil Davies: I beg to move amendment no. 29, in page 54, line 25 at end insert—
  "11A. A body of persons certified as a school bank by a trustee savings bank, the National Savings Bank or a recognised bank."
  The amendment would exclude school banks from the Bill provided they were certified as such by a trustee savings bank, the National Savings Bank or a recognised bank. We dealt with this point in Committee. Provided that a

  1255
  school bank is under the aegis of one of the banks specified, there is no reason to bring it within the Bill.
  Mr. Ian Stewart: I wish to thank the Minister for moving the amendment, which is perhaps better than those that we sought to make in Committee. It achieves the same effect. I am glad that this improvement can be incorporated in the Bill.
  Amendment agreed to.
  Mr. Denzil Davies: I beg to move amendment no. 30, in page 54, line 27, leave out from beginning to "which" in line 31 and insert "Any other body".
  Mr. Speaker: With this we are to take Government amendment no. 31, and amendment No. 32, in page 54, line 34 at end insert—
  "14A. The Letchworth Garden City Corporation."
  Mr. Denzil Davies: The two Government amendments arise as a result of what the hon. Member for Hitchin (Mr. Stewart) said in Committee about the Letchworth garden city corporation. He pointed out that we had forgotten about the corporation, which has an unusual constitution and does not fit into schedule 1.
  The draftsman has redrafted the schedule so as to include other bodies which might be similar, although I understand that Letchworth garden city corporation is unique. Nevertheless, there may be other similar such bodies in the future, and while the amendment does not spell out the name in the Bill, the redraft meets the point raised by the hon. Member.
  Amendment No. 32, in the name of the hon. Member for Hitchin, seeks to spell out the name in the Bill, but since there might be other such bodies in future it is preferable to handle the matter as we propose.
  Mr. Ian Stewart: I rise not as the Opposition spokesman on the Bill but as the hon. Member for Letchworth, and I do so to thank the Minister for having tabled amendment No. 30. It widens the definition in schedule 1 to cover the Letchworth garden city corporation most admirably. I hope that by choosing these words the Minister will have established
  1256
  a precedent which will find its way into other legislation. In the Committee stages of other Bills, should I find myself participating, I shall in future not always have to table a separate amendment to protect the interests of the corporation.
  Four out of six of the members of the corporation are appointed by the Secretary of State, while only one is appointed by the district council and one by the county council. Therefore, the provision that the majority of the members have to be appointed or elected by one or more local authority does not apply in this case.
  The use of the words "any other body" which is enabled to issue a precept to a local authority, or to which a local authority can be required to contribute, covers not only the Letchworth garden city corporation but any other such anomalies of this kind in the future. Therefore, I hope that a similar wording will find its way into other Bills of this nature and save me much work in Committee in future years.
  Amendment agreed to.
  Amendment made: No. 31, in page 54, line 33, leave out from 'Scotland' to end of line 37.—[Mr. Denzil Davies.]

Schedule 2

  MINIMUM CRITERIA FOR DEPOSIT-TAKING INSTITUTIONS
  9.45 p.m.
  Mr. Ian Stewart: I beg to move amendment no. 33, in page 55, line 33, leave out 'and' and insert 'or'.
  This amendment takes up a point raised in Committee about the restrictive nature of the criteria set out in paragraph 2(2) of this part of the schedule, which defines the banking services which need to be provided for the purpose of qualification.
  In Committee, my hon. Friend the Member for Honiton (Mr. Emery), who had originally raised the matter, was not available to move the amendment and to develop his argument, so it was left to me on that occasion to pick up one point which I felt needed further attention, namely, that there may well be cases in which it is not necessarily in the ordinary course of business that an institution would have both current and deposit account facilities. It might wish

  1257
  not to have current accounts. Indeed, some of the recent directions of banking indicate that current accounts are not necessarily part and parcel of banking, other than retail banking, and that some merchant banking and financing activities may be conducted in another manner. The Minister of State said that he would give the matter further thought.
  I have tabled the present amendment in order, I hope, to obtain a comment from the Minister. Perhaps he will even find it acceptable.
  Mr. Denzil Davies: I take the point made by the hon. Member for Hitchin (Mr. Stewart). As he said, the amendment arises out of our discussions in Committee. I am quite happy to recommend its acceptance.
  Amendment agreed to.

Schedule 5

  THE DEPOSIT PROTECTION BOARD
  Mr. Denzil Davies: I beg to move amendment No. 34, in page 62, line 22, leave out 'not more than'.
  This amendment has the effect of requiring the Governor of the Bank of England to appoint three members from contributory institutions to the deposit protection board. As the Bill is at present drafted, he could appoint only one.
  Here again, I gave an undertaking to the Committee that I would amend the Bill to this effect.
  Mr. John Moore: Again, I thank the Minister of State. He has met the point made in Committee by my hon. Friend the Member for Hitchin (Mr. Stewart), and I thank him for taking it so completely.
  Amendment agreed to.
  Mr. Denzil Davies: I beg to move amendment No. 35, in page 63, line 27, after 'unless', insert '(a)'.
  Mr. Speaker: It will be convenient to consider at the same time Government amendment No. 36.
  Mr. Davies: These amendments meet a point made in Committee by the hon. Member for Hitchin (Mr. Stewart) which, I believe, also has the backing of the
  1258
  accountancy bodies. It allows a person to be appointed as auditor by the board if he is authorised by the Secretary of State as having qualifications obtained abroad equivalent to membership of one of the bodies referred to in what will now be paragraph 4(4)(a). It meets a point raised especially in relation to American qualifications, for example. Such persons will now be covered by the amendment.
  Mr. John Moore: I seem to be constantly on my feet thanking the Minister of State, and it is my pleasure to do so. Again, I thank him for taking note of the point that we made in Committee.
  Amendment agreed to.
  Amendment made: No. 36, in page 63, line 31, at end insert:
  or
  (b) he is for the time being authorised to be appointed as auditor of a company under section 161(1)(b) of that Act as having similar qualifications obtained outside the United Kingdom.'.—[Mr. Denzil Davies.]

Schedule 6

  CONSEQUENTIAL AMENDMENTS
  Mr. Denzil Davies: I beg to move amendment No. 37, in page 67, leave out lines 5 to 7 and insert—
  'in paragraph 7 for the words "Companies which have satisfied the Secretary of State" there shall be substituted the words "Recognised banks, within the meaning of the Banking Act 1979, and any other companies as to which, immediately before the repeal of the Protection of Depositors Act 1963, the Secretary of State was satisfied"'.
  Mr. Speaker: With this we are to take Government amendment No. 38.
  Mr. Davies: The amendment provides saving provisions in respect of institutions that at present come within the definition of lending and saving institutions for the purpose of the Home Purchase Assistance Act and the Northern Ireland order but would be excluded by virtue of the amended definition, namely, those saving institutions that do not gain recognition under the Bill. The amendment ensures that there will be no break in continuity of savings notwithstanding the fact that an institution had not received recognition from the Bank of England. If there were a break, there would not be qualification under the assistance given under

  1259
  the Home Purchase Assistance Act. We have ensured that there will be no problems arising from the Bill in respect of that legislation.
  Amendment agreed to.
  Amendment made: No. 38, in page 67, line 11, leave out from 'institutions)' to the end of line 14 and insert—
  'in paragraph 4 for the words "Companies which have satisfied the Department of Commerce" there shall be substituted the words "Recognised banks, within the meaning of the Banking Act 1979, and any other companies as to which, immediately before the repeal of the Protection of Depositors Act (Northern Ireland) 1964, the Department of Commerce was satisfied"'.—[Mr. Denzil Davies.]
  9.52 p.m.
  Mr. Denzil Davies: I beg to move, That the Bill be now read the Third time.
  We have had long and important debates on the Floor of the House and in Committee. I hope that we have covered most of the difficulties We have not been able to resolve all the difficulties or to reach agreement on them all, but we have given the Bill a good airing. I hope that it is a better Bill than when it went into Committee. I believe that it is.
  I gave various undertakings in Committee. There is a slight problem concerning British overseas banks. We hoped to introduce an amendment on Report to deal with the problem. There were some difficulties on account of the EEC directive. The difficulties have now been resolved and a suitable amendment will be introduced in another place.
  There was some discussion about the exemptions in schedule 1, the order-making provisions and stockbrokers and solicitors. We are now confident that we can put into the Bill, as opposed to proceedings by order, an exemption for stockbrokers. That will have to be done by amendment in another place. We were not able to complete our consultations in time to allow us to introduce an amendment on Report. As I have said, the exemption for stockbrokers will be written into the Bill. The exemption for solicitors will have to be introduced by order as it is not possible within the Bill to meet all the points that arise.
  We have been in discussion with Lloyd's and the insurance brokers to ascertain whether there is any problem. We do
  1260
  not yet know whether there is a problem because the information that we have received is not sufficient to enable us to form a judgment. If there is a problem, we shall exempt those bodies. The Law Society has agreed that we may exempt solicitors under the regulatory provisions.
  The Bill protects depositors. It also provides a statutory form of supervision of banks and licensed deposit-taking organisations. It gives the Bank of England considerable discretion, as we have to in legislation, but it provides legislative backing, which is important, so that people may know what their rights are and so that they have some redress through the appeal provisions in the Bill against decisions taken by the Bank.
  9.56 p.m.
  Mr. Ian Stewart: First, I congratulate the Minister of State on the careful and constructive way in which he has handled the proceedings on this long and rather difficult Bill, both in Committee and on Report. The right hon. Gentleman has brought his considerable abilities to bear on it and it is the better for it. I thank him for the way in which he kept my hon. Friend and me and other members of the Committee informed of the Government's intentions as regards amendments and other matters and for keeping us similarly informed in the past few days.
  As I said on a point of order at the beginning of today's proceedings, we have been in some difficulty because it was not clear until recently how the Government wished to proceed on a number of outstanding matters. The Minister has properly said on Third Reading that there were certain matters that it was not possible to cover by amendments in time for Report and that these matters could be and would be dealt with by regulation or by amendments when the Bill goes to another place.
  One item which has received a good deal of comment during our proceedings is the letter to me from the Minister dated 12 February, which has been circulated to all members of the Standing Committee. It contains five pages of important comment on several points which were raised in Committee. I suggested in conversation that it would be helpful if such letters could be published as an annex to the report of Committee proceedings. It may very well be that

  1261
  the rules of the House are such that only the spoken word can be reported. An alternative was suggested to me. It was that if I tabled a parliamentary question to the Chancellor of the Exchequer, asking for the text of the letter to be printed in the Official Report, it would be likely to receive a favourable answer. I have tabled such a question today and I hope that within a day or two the contents of this invaluable document will be available to other hon. Members and to those outside this House who may be interested in it.
  I should also like to thank my hon. Friend the Member for Croydon, Central (Mr. Moore), who most gallantly took up the running with me part-way through the Committee stage, when I unexpectedly found responsibility for the Bill falling on my shoulders. He has been of the greatest possible help to me. In particular, I congratulate him on his first appearance at the Dispatch Box this afternoon. I thought that he conducted himself most excellently, and he has greatly assisted our deliberations on the Bill. I also extend my thanks to my hon. Friend the Member for Honiton (Mr. Emery), who brought his knowledge and ministerial experience to bear, both in Committee and today. They have both been of great help.
  As the Minister said, the Committee and Report stages of the Bill have brought about some considerable improvements in the Bill. The most significant amendment that we carried in Committee was, I think, in regard to clause 35(2), where we dealt with the problem of foreign competition, whereby the free use of banking names was available to some branches of foreign businesses. By carrying that amendment in Committee I think that we have redressed the balance in favour of British-based firms in the banking sector. That was a useful amendment to have carried. Government amendments have also been tabled, and I am sure that the arguments so excellently advanced by my hon. Friends, as well as the representations which were made, have played a strong part in bringing this about.
  The main amendments were, first, the amendment to clause 35, as it then was, now clause 36, on banking services. That, as I said earlier, although not going as far as I or many other hon. Members outside this place would think necessary,
  1262
  is a considerable improvement for the licensed deposit-taking sector as compared with the way in which the Bill was first drafted. There was also the new clause, which is now clause 33, regarding the tax treatment of contributions to the deposit protection fund.
  That was a matter which had caused anxiety to the banks, which felt that they might have to make their initial contributions to the fund without their being tax-deductible. It has, indeed, lessened the irritation felt by many banks that they have to have a physical fund as well as a strong system of supervision, backed up by guarantees of enormous figures, running into hundreds of millions of pounds. The fact that the contributions are now tax-deductible lessens that irritation. I do not feel that it was necessary to have a fund, but that was not the main point at issue, and we do not dispute that there should be the deposit protection scheme. It was a matter of the technical arrangements which involved the need for a fund.
  We debated earlier today the matter of the Giro, and there was a close vote on that. There is a difference of emphasis between the two sides here, and I am sorry that, after further reflection, the Government still find themselves unable to put the Giro exactly on to all fours with institutions in the private sector. We have had that debate already and I do not, of course, wish to repeat it at this hour.
  I should like to say a further word on what seems to be the main continuing problem raised by the Bill—the difficulty, for those who will fall into the licensed sector, with the restriction on banking names, discussed this evening under amendment No. 19.
  I said in Committee—I repeat it now—that we realise that one has to have different tiers or categories whatever supervisory system is brought in. We have a two-tier system—
  It being Ten o'clock, the debate stood adjourned.
  Ordered,
  That the Banking Bill may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Bates]
  Question again proposed.
  Mr. Ian Stewart: We recognise that some form of categorisation is essential if we are to have a system of banking supervision. In the Bill as it stands, there is a two-tier system. Although doubts were expressed on Second Reading, that is the system with which we have had to deal.
  I think that it is perfectly acceptable have two tiers for the purposes of supervision, but not for names and terminology. We have been over this ground earlier on amendment No. 19. I do not wish to repeat the arguments. However, I think that it may cause serious difficulties, perhaps in some cases a crippling handicap, to the business of certain licensed deposit-takers. The alternative to that is that the Bill may well be flouted in regard to this important pro-

SECONDARY PICKETING (ABOLITION)
Division No. 79]

AYES

[5.04 p.m.

Arnold, Tom

Gilmour, Rt Hon Sir Ian (Chesham)

McCusker, H.

Atkins, Rt Hon H. (Spelthorne)

Gilmour, Sir John (East Fife)

Macfarlane, Neil

Atkinson, David (B'mouth, East)

Glyn, Dr Alan

MacGregor, John

Awdry, Daniel

Goodhew, Victor

MacKay, Andrew (Stechford)

Baker, Kenneth

Goodlad, Alastair

Macmillan, Rt Hon M. (Farnham)

Bell, Ronald

Gow, Ian (Eastbourne)

McNair-Wilson, M. (Newbury)

Bennett, Sir Frederic (Torbay)

Gower, Sir Raymond (Barry)

Marshall, Michael (Arundel)

Benyon, W.

Grant, Anthony (Harrow C)

Mates, Michael

Berry, Hon Anthony

Grey, Hamish

Mather, Carol

Biffen, John

Grimond, Rt Hon J.

Mawby, Ray

Biggs-Davison, John

Grist, Ian

Maxwell-Hyslop, Robin

Blaker, Peter

Grylls, Michael

Miller, Hal (Bromsgrove)

Boscawen, Hon Robert

Hall-Davis, A. G. F.

Mills, Peter

Boyson, Dr Rhodes (Brent)

Hamilton, Archibald (Epsom & Ewell)

Monro, Hector

Brittan, Leon

Hampson, Dr Keith

Montgomery, Fergus

Brotherton, Michael

Hannam, John

Moore, John (Croydon C)

Buchanan-Smith, Alick

Harvie Anderson, Rt Hon Miss

Morgan, Geraint

Budgen, Nick

Haselhurst, Alan

Morgan-Giles, Rear-Admiral

Carlisle, Mark

Hastings, Stephen

Morris, Michael (Northampton S)

Chalker, Mrs Lynda

Havers, Rt Hon Sir Michael

Morrison, Hon Charles (Devizes)

Channon, Paul

Hawkins, Paul

Morrison, Hon Peter (Chester)

Clark, Alan (Plymouth, Sutton)

Hayhoe, Barney

Neave, Airey

Clark, William (Croydon S)

Hicks, Robert

Nelson, Anthony

Clegg, Walter

Holland, Philip

Neubert, Michael

Cormack, Patrick

Hooson, Emlyn

Newton, Tony

Costain, A. P.

Howe, Rt Hon Sir Geoffrey

Nott, John

Crawford, Douglas

Howell, David (Guildford)

Oppenheim, Mrs Sally

Crouch, David

Hunt, David (Wirral)

Page, John (Harrow West)

Dodsworth, Geoffrey

Hunt, John (Ravensbourne)

Page, Rt Hon R. Graham (Crosby)

Doig, Peter

Hurd, Douglas

Page, Richard (Workington)

Douglas-Hamilton, Lord James

James, David

Paisley, Rev Ian

Drayson, Burnaby

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

Penhallgon, David

Dunlop, John

Jessel, Toby

Percival, Ian

Durant, Tony

Jones, Arthur (Daventry)

Peyton, Rt Hon John

Eden, Rt Hon Sir John

Jopling, Michael

Prentice, Rt Hon Reg

Emery, Peter

Joseph, Rt Hon Sir Keith

Price, David (Eastleigh)

Eyre, Reginald

Kaberry, Sir Donald

Prior, Rt Hon James

Fairgrieve, Russell

Kitson, Sir Timothy

Pym, Rt Hon Francis

Fell, Anthony

Knight, Mrs Jill

Raison, Timothy

Fisher, Sir Nigel

Knox, David

Rathbone, Tim

Fletcher, Alex (Edinburgh N)

Lawrence, Ivan

Rees, Peter (Dover & Deal)

Forman, Nigel

Le Marchant, Spencer

Rees-Davies, W. R.

Fowler, Norman (Sutton C'f'd)

Lester, Jim (Beeston)

Renton, Rt Hon Sir D. (Hunts)

Fox, Marcus

Lewis, Kenneth (Rutland)

Renton, Tim (Mid-Sussex)

Fraser, Rt Hon H. (Stafford & St)

Lloyd, Ian

Rhodes James, R.

Freud, Clement

Luce, Richard

Ridley, Hon Nicholas

Fry, Peter

MacCormick, Iain

Ridsdale, Julian

Gardner, Edward (S Fylde)

McCrindle, Robert

Rifkind, Malcolm

vision. I hope that that will not be so and that it will all work out. But clearly, if it does not work out, a considerable review will have to take place after experience of the operation of the Bill, and it may well be that substantial changes will have to be brought forward.
This is not the final stage in the parliamentary passage of the Bill. As has been pointed out, the discussion on the Bill in the other place will have to pick up some points which we have left uncovered. However, the Bill leaves this House at this stage in a better condition than that in which it came before us. I congratulate the Minister of State and thank all my hon. Friends for the contributions they have made to ensuring that the Bill does so.

Roberts, (Michael (Cardiff NW)

Steel, Rt Hon David

Watt, Hamish

Ross, Stephen (Isle of Wight)

Steen, Anthony (Wavertree)

Weatherill, Bernard

Ross, William (Londonderry)

Stewart, Rt Hon Donald

Wells, John

Rossi, Hugh (Hornsey)

Stewart, Ian (Hitchin)

Welsh, Andrew

Rost, Peter (SE Derbyshire)

Stradling Thomas, J.

Whitelaw, Rt Hon William

Sainsbury, Tim

Tapsell, Peter

Whitney, Raymond

St. John-Stevas, Norman

Taylor, Teddy (Cathcart)

Wiggin, Jerry

Shaw, Giles (Pudsey)

Tebbit, Norman

Winterton, Nicholas

Shersby, Michael

Thatcher, Rt Hon Margaret

Wood, Rt Hon Richard

Sims, Roger

Townsend, Cyril D.

Young, Sir G. (Ealing, Acton)

Skeet, T. H. H.

Trotter, Neville

Younger, Hon George

Speed, Keith

Viggers, Peter

Spence, John

Wakeham, John

TELLERS FOR THE AYES:

Sproat, Iain

Wall, Patrick

Mr. Peter Temple-Morr's and

Stanbrook, Ivor

Walters, Dennis

Mr. Roger Moats.

Stanley, John

Warren, Kenneth

NOES

Allaun, Frank

Garrett, W. E. (Wallsend)

Murray, Rt Hon Ronald King

Anderson, Donald

George, Bruce

Newens, Stanley

Archer, Rt Hon Peter

Gilbert, Rt Hon Dr John

Noble, Mike

Armstrong, Ernest

Gould, Bryan

O'Halloran, Michael

Ashley, Jack

Graham, Ted

Orme, Rt Hon Stanley

Ashton, Joe

Grant, George (Morpeth)

Palmer, Arthur

Atkins, Ronald (Preston N)

Grant, John (Islington C)

Park, George

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

Grocott, Bruce

Parker, John

Bagier, Gordon A. T.

Hamilton, James (Bothwell)

Pavitt, Laurie

Barnett, Guy (Greenwich)

Hamilton, W. W. (Central Fife)

Perry, Ernest

Bates, Alf

Harrison, Rt Hon Walter

Radice, Giles

Benn, Rt Hon Anthony Wedgwood

Hart, Rt Hon Judith

Rees, Rt Hon Merlyn (Leeds S)

Bishop, Rt Hon Edward

Hattersley, Rt Hon Roy

Richardson, Miss Jo

Blenkinsop, Arthur

Heffer, Eric S.

Robertson, George (Hamilton)

Boothroyd, Miss Betty

Home Robertson, John

Roderick, Caerwyn

Bradley, Tom

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

Rooker, J. W.

Brown, Hugh D. (Provan)

Hoyle, Doug (Nelson)

Ross, Rt Hon W. (Kilmarnock)

Brown, Robert C. (Newcastle W)

Huckfield, Les

Rowlands, Ted

Buchan, Norman

Hughes, Robert (Aberdeen N)

Sedgemore, Brian

Callaghan, Jim (Middleton & P)

Hunter, Adam

Shaw, Arnold (Ilford South)

Campbell, Ian

Irving, Rt Hon S. (Dartford)

Sheldon, Rt Hon Robert

Canavan, Dennis

Janner, Greville

Short, Mrs Renée (Wolv NE)

Carmichael, Neil

Jay, Rt Hon Douglas

Silkin, Rt Hon John (Deptford)

Cartwright, John

Jeger, Mrs Lena

Silverman, Julius

Castle, Rt Hon Barbara

Jenkins, Hugh (Putney)

Skinner, Dennis

Clemitson, Ivor

Johnson, James (Hull West)

Smith, Rt Hon John (N Lanarkshire)

Cocks, Rt Hon Michael (Bristol S)

Judd, Frank

Snape, Peter

Coleman, Donald

Kelley, Richard

Spriggs, Leslie

Cowans, Harry

Kerr, Russell

Stallard, A. W.

Cox, Thomas (Tooting)

Lambie, David

Stewart, Rt ton M. (Fulham)

Craigen, Jim(Maryhill)

Lamborn, Harry

Stoddart, David

Crowther, Stan (Rotherham)

Lamond, James

Strang, Gavin

Cryer, Bob

Latham, Arthur (Paddington)

Summerskill, Hon Dr Shirley

Davidson, Arthur

Lestor, Miss Joan (Eton & Slough)

Taylor, Mrs Ann (Bolton W)

Davies, Bryan (Enfield N)

Lewis, Ron (Carlisle)

Thomas, Ron (Bristol NW)

Davies, Rt Hon Denzil

Lofthouse, Geoffrey

Tierney, Sydney

Davis, Clinton (Hackney C)

Loyden, Eddie

Tilley, John

Deakins, Eric

Luard, Evan

Tinn, James

Dean, Joseph (Leeds West)

McCartney, Hugh

Urwin, T. W.

Dempsey, James

McDonald, Dr Oonagh

Wainwright, Edwin (Dearne V)

Dewar, Donald

McElhone, Frank

Walker, Harold (Doncaster)

Dormand, J. D.

Macfarquhar, Roderick

Walker, Terry (Kingswood)

Douglas-Mann, Bruce

McGuire, Michael (Ince)

Watkins, David

Eadie, Alex

McKay, Allen (Penistone)

Watkinson, John

Edge, Geoff

Maclennan, Robert

White, Frank R. (Bury)

Ellis, John (Brig & Scun)

Madden, Max

White, James (Pollok)

English, Michael

Marks, Kenneth

Willey, Rt Hon Frederick

Ennals, Rt Hon David

Marshall, Dr Edmund (Goole)

Williams, Rt Hon Alan (Swansea W)

Evans, Fred (Caerphilly)

Marshall, Jim (Leicester S)

Wilson, William (Coventry SE)

Evans, John (Newton)

Maynard, Miss Joan

Wise, Mrs Audrey

Fernyhough, Rt Hon E.

Meacher, Michael

Woodall, Alec

Fitt, Gerard (Belfast W)

Mellish, Rt Hon Robert

Woof Robert

Flannery, Martin

Mikardo, Ian

Wrigglesworth, Ian

Fletcher, Ted (Darlington)

Millan, Rt Hon Bruce

Young, David (Bolton E)

Foot, Rt Hon Michael

Mitchell, Austin (Grimsby)

Fowler, Gerald (The Wrekin)

Molloy, William

TELLERS FOR THE NOSE:

Freeson, Rt Hon Reginald

Morris, Rt Hon Charles R.

Mr. Robin Corbett and

Garrett, John (Norwich S)

Morton, George

Mr. George Rodgers.

Question acccordingly agreed to.

BANKING BILL
10.1 p.m.
Mr. Wrigglesworth: The Bill is a longoverdue measure. I have greatly welcomed the opportunity of being able to help its passage through the House. The Bill has been long overdue because there was a need to reassure public opinion about the supervision of banking after the collapse in the early part of the 1970s. The Bill helps to reduce the risk of abuses taking place. It will also reduce the risk of there being confusion, which has undoubtedly existed under the present rather complicated system of banking supervision.
I make only one point to the Minister. Although we have said in the Bill that the deposit protection board should make an annual report about its activities, we have not, as I understand it, insisted that the Bank of England shall make a report upon its activities and its responsibilities as laid down in the Bill. I hope that that will not mean that the Bank of England will not report upon the new responsibilities that it will have under the Bill. They are quite substantial responsibilities.
I hope that through the Bank of England Quarterly Bulletin we shall hear, on an ongoing basis, how the responsibilities are being discharged, and that in the Bank of England's annual report each year there will be a substantial report on the supervisory functions, how they are developing, how the Bank is carrying them out and any comments that the Bank cares to make, so that the Select Committee on Nationalised Industries can look at that area of the Bank's activities and, indeed, so that hon. Members may raise matters arising from the Bill in this Chamber.
I hope that the Minister will take that point on board. In the past, the Bank of England has been rather secretive—I have criticised it for this—about some of its activities. It would be unfortunate if an area as important as this were not given an airing by the Bank at least in its annual report. I hope that it will be more often than that.
I hope that the Minister will discuss this with the Governor of the Bank of England and ensure that an annual report of the Bank's discharge of its duties under the Bill is made.
10.4 p.m.
Mr. Moate: It seems to me that the House is tonight asked to give a Third Reading to a Bill of quite considerable significance. The Bill is a considerable milestone in the history of banking. It is certainly welcome to me in that it sets up what appears to be a very sensible framework of regulation for all the banks in this country and for other deposit-taking institutions.
The Bill is also significant because of the political background to it. It is a remarkable achievement, in view of the controversial political arguments that have raged about banking and the threats of banking nationalisation and the like which have emanated from certain quarters of this House, that the House of Commons is tonight—in an atmosphere of co-operation and in a constructive approach—putting on the statute book a moderate and sensible piece of legislation.
One hopes that this Bill, when it becomes an Act, will remain on the statute book in its present form and be successful for many years to come. I believe that it is a recognition by the Government of the effectiveness of our banking institutions. It is also a recognition by the Government of the outstanding role of the Bank of England.
One of the reasons why to me the Bill makes a great deal of sense is the role that it gives to the Bank of England, which has the role of paternalistic supervision over the banking sector. That is what makes the Bill sensible and acceptable. Indeed, very little is understood in the country about the great skill exercised by the Bank of England during the period of the lifeboat operation. I suspect that in times to come that will be seen as probably one of the most skilful operations in the history of banking. It was conducted with a great deal of sensitivity at little or no cost to the taxpayer, yet at the same time it preserved the competitiveness of the secondary banks of this country. That was a remarkable achievement, and it is right that it should be implicity recognised by the role given to the Bank of England in future in the supervision of all the deposit-taking and financial operations in this country.
There is one aspect of the Bill that gives me a little concern. I was not privileged to take part in the Committee

1269
proceedings, and perhaps my concern has already been dealt with. From my reading of the debates that have taken place, it seems to me that it is still probable that some advantage is likely to be given to foreign banks with branches operating in this country. It seems to me that those banks are likely to satisfy less stringent criteria, which might have to be accepted by the Bank of England because of our international commitments, than banking operations in this country.
It is only when Bills such as this have operated for some time that we really know whether they are totally effective. It is still possible that in years to come we shall find some rather dubious branches of some dubious foreign banks springing up in some remote part of the country, purporting to be banks yet securing the protection of the deposit fund and thereby having an unfair competitive edge over British banks. I believe that that loophole still exists.
Part of the parentage of the Bill comes from the EEC directive on banking. At this stage I should emphasise that, although I am no fervent supporter of the EEC, I believe it to be very desirable indeed that the greatest uniformity of banking rules should be adopted throughout the Community. We want to see the maximum of fair competition between our financial institutions and the least amount of Government interference in the movement of capital and the freedom of banking competition within the Community.
It is that desire for fair competition which causes me concern about the deposit protection scheme. In that respect, I believe that the British banks will be burdened with a levy or cost which foreign banks operating in other parts of the EEC will not be burdened with.
To that extent, British banks are unfairly burdened and therefore we are diminishing their competitiveness, and not enhancing it. We are going much further than the EEC directive requires and even perhaps operating against the spirit of it. Nevertheless, the maximum competition is what we should be seeking. If this harmonises laws on banking throughout the Community, I think that makes it a great deal more sense.
During our earlier proceedings the Minister of State made a very helpful
1270
concession towards small businesses. Despite that, protection schemes and licensing schemes of this kind are always in danger of becoming a charter for the establishment to protect existing institutions. In banking, as in all other areas, we must ensure that new organisations and innovators can take advantage of a situation and can create new competition and bring in new ideas.
What we must be certain of when we license and control is that we are not simply protecting the existing institutions and preventing new organisations and companies from introducing new services to the consumer. I hope that the Bill will not become a charter for the establishment and that we shall continue to see increased competition in the banking world. I hope also that this fairly moderate and sensible legislation before us will do that—act as a framework for sensible control without interfering with or dampening down much-needed competition.
10.12 p.m.
Mr. Brooke: The infectious amity that has surrounded this Bill has persisted this evening through the Report stage and Third Reading. My intervention will be extremely brief. Rather in the manner of the dodo in "Alice", members of the two Front Benches have, perfectly rightly, thanked and congratulated each other for their contributions to the Bill. Everything that I have read suggests that those comments are wholly justified.
Since a large number of my constituents will be among those institutions partly affected by this Bill, I should like to say a word of gratitude to those who worked on this Bill, making it a very much better Bill than it was when it first came before the House. I remember at the time of Second Reading a degree of disquiet about the advantages which appeared to be given to foreign banks, particularly in the context of their nomenclature. While I have not followed the progress of the Bill in Committee on a daily basis, as perhaps I followed the Test series in Australia, I am nevertheless extremely glad—and it obviously arose through cross-voting—that good sense persisted on the particular clause and amendment which affected that decision. It seemed to me to be the House of Commons at its best when it reached that conclusion.

1271
I am genuinely grateful on behalf of my constituents in the banking community for all the work that has been done on the Bill, not only by the Minister but by all those concerned.
10.14 p.m.
Mr. John Moore: It seems to me that the mood of the House suggests that the lengthy Third Reading speech that I prepared would not be greeted with great applause by the House. Therefore, I shall put it to one side. The words of my hon. Friend the Member for City of London and Westminster, South (Mr. Brooke), and the sense of balance that he has about the things that are more important to him, will reflect very well for him at the polls. The cricketing scores are clearly a great deal more interesting to most sane and rational people than our debates. I shall just take one or two moments to touch on a few points which, though not carping, are small points of criticism that still linger in one's mind from our lengthy deliberations.
First, I do not think that any of us, whatever our view, can be satisfied about the character of the foreign banking institutions that are not recognised banks, or would not be under the Bill. None of us is terribly happy with this arrangement, and I hope that in another place we can come to some better form of words. We have managed, though we have not seen the amendments yet, to see stockbrokers, solicitors, Lloyd's and all the other small organisations of great importance brought in, and I would have thought that investment banking could equally be reconsidered at some stage.
Another small point is that I do not think any of us—and I am sure the Minister of State will allow me to include him—would be happy at the way in which in Committee we were not able to obtain data to allow us to assess the number of depositors in institutions throughout the land who have deposits in excess of £10,000. This was a crucial element in terms of the protection scheme. All of us, on both sides of the Committee, felt a little lacking in the absence of clear conclusive data.
Another point which I would have made at much greater length had there been time is one that we discussed at some length in Committee—the way in
1272
which the Bank of England is able to act under the catch-all phrase of "the public interest". Many of us are rather uncomfortable about that. We must watch out for such catch-all phrases in Government legislation in future.
I am delighted about the innate assumption throughout our debates that because it was the Bank of England that was being asked to do the job of supervisory agent we could all rest a little easier. That sense of trust in that institution which permeated the Committee debates is an important and crucial feature. I was glad that my hon. Friend the Member for Faversham (Mr. Moate) also brought out the role of the Bank of England in the lifeboat crisis.
On a personal note, I thank the Minister of State and the Treasury. We hear a lot of criticism of the way in which the House of Commons conducts its duties in scrutinising legislation. This was an example of the House of Commons at its best, due to a great extent to the courtesy and kindness of the Minister of State. Beyond that, whether by accident or inadvertence, at some stage during our debates members of the Committee were each given a splendid set of cyclostyled notes from the Treasury. These notes analysed clause by clause and line by line certain parts of the Bill and showed serious and responsible thinking about the legislation.
I should like such sensible additions to be given to all those who seek to improve legislation in Committee. Obviously it puts many of us at a disadvantage if we have to rely on outside sources of information. These notes made our Committee's deliberations more sensible, and to that extent we would like to see this practice carried on with other legislation.
I thank my hon. Friend the Member for Hitchin (Mr. Stewart). It is an odd feeling for me to stand here at the Dispatch Box for the first time, so I thank my hon. Friend for his help and for the skilful way in which he led the Opposition in a very detailed and technical piece of legislation. We all respect him for the work he did.
10.18 p.m.
Mr. Denzil Davies: I should like to thank Conservative Members, especially the hon. Members for Hitchin (Mr. Stewart) and Croydon, Central (Mr.

1273
Moore), for the very reasonable but penetrating way in which they have scrutinised the Bill. As a result of their efforts, the Bill is better, and I pay tribute to them.
I shall go over the main points of the Bill briefly. It establishes a deposit protection fund to protect people's deposits in banks. This is an innovation in this country and I believe that we shall see it developing in other countries. The hon. Member for Faversham (Mr. Moate) said that European countries did not have such a scheme, but European countries are beginning to show an interest—West Germany is already looking at this. I think that such a scheme will develop in the EEC, and it already exists to some extent in the United States. For the first time we are providing statutory protection for people up to a certain limit if their deposits are in banks or in licensed deposit-taking institutions.
The Bill also establishes the statutory framework for supervision to be carried out by the Bank of England. I believe that the old system of relying upon administrative controls is not right in the middle of the twentieth century. We needed a statutory backing. Once one starts doing that, there are difficulties of drafting because one does not want to become over-restrictive. That is why we have given discretion to the Bank of England, but we have also provided statutory backing.
My hon. Friend the Member for Thornaby (Mr. Wrigglesworth) asked that the Bank of England should be required to lay a report before the House. Clause 4 provides for a report from the Bank of England including not only the list of institutions that it has recognised and given licences to but a general synopsis on the way it operates its supervisory functions. For constitutional reasons, that report will be laid before the House by the Chancellor of the Exchequer and questions can be asked about it. It is important that accountability should come back to the House, at least for the general system of supervision
The hon. Member for Faversham touched on an important point when he said that the system must not become too establishment-oriented. Obviously we need competition in banking—but perhaps not too much competition. There is a danger in too much competition, but
1274
there is also a danger in ossification and the establishment shutting others out. I do not suggest that that is likely to happen with the Bank of England operating the system, but we have provided a system of appeal from the decisions of the Bank in relation to recognition and licensing. It is important to have a final court of appeal so that newcomers do not think that the establishment is ganging up on them.
We also have in the Bill the controversial banking names provision. I appreciate the difficulties that that provision will cause. The trouble is that, as with all other legislation, we are not starting from scratch and we have a fairly open society for banking. In a smaller country it might be possible to say that any institution taking deposits could call itself a bank. But we operate in a worldwide environment and we have to start from the existing two-tier system. I appreciate the difficulties, but I do not believe that we had any alternative but to draw a distinction between banks and licensed deposit-taking institutions.
Those are the main points of the Bill. It is the first piece of banking legislation that we have had. We do not want to make legislation, in this area or in any other, too restrictive, but in the modern world we must have a legislative framework. We have tried to provide it sensibly and moderately.
Question put and agreed to.
Bill accordingly read the Third time and passed.

HILLINGDON LAW CENTRE
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]
10.23 p.m.
Mr. F. P. Crowder (Ruislip-NorthWood): Nearly 500 years ago a statute was enacted in the reign of Henry VII which provided that
"Every poor person … shall have … writs … therefore paying nothing to your Highness … and the Lord Chancellor shall assign … learned counsel and attorneys for the same without any reward taking thereof".
It was from that statute that the modem community law centres first came into being. The House will agree that a law

1275
centre is entitled to find and use any remedy available at law for its clients, but, if it is in receipt of public funds, it is not entitled to show affiliation to any political party or to promote any party's programme.
For some years, my constituency, which lies within the London borough of Hillingdon, has felt serious concern about the activities of the Hillingdon law centre. Incidentally, I am glad to see my hon. Friend the Member for Uxbridge (Mr. Shersby) in his place at this late hour because his constituency also falls within that borough.
Although the councillors always supported the provision of a service of free legal advice and representation for the residents of the borough, the council is, naturally, unwilling to fund subversive and socially destructive activities under the guise of community work or educational work. I wish to emphasise that there is evidence of a political trend in this direction. Whereas it is most desirable for citizens to be aware of their rights and obligations under the law, the efforts of this law centre appear to he somewhat misdirected in certain instances.
Let me give an example. Not long ago, in that centre was to be found a poster headed "Trouble with social security?" That poster depicted an officer of the Department of Health and Social Security as a Nazi blackshirt with an SS armband. Naturally, such a representation was deeply offensive to the staff of the DHSS who work to help their fellow citizens who are in need, and, fa from helping those in need of assistance to seek it, it was calculated to deter them from taking their problems to the agency of government whose aim is to help them.
There was another instance. When we faced the trouble at Grunwick, the centre displayed posters urging support for the pickets who were acting to deny the company's employees who wished to work their right of freedom of action. To my mind, that constitutes political activity of a most reprehensible character within the centre.
Recently, the leader of the council visited the offices of the law centre, where he found a poster of a revolutionary nature displaying the words "Support Revolutionary Socialism". That poster
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was displayed on the wall of an office in the centre.
Hon. Members will understand that there is natural concern in the borough of Hillingdon that political propaganda of this nature, which of course is acceptable in other circumstances, is to be found in a centre which is kept going at public expense, and that concern is felt very keenly and deeply, especially by my constituents and, I think, those of my hon. Friend the Member for Uxbridge.
Let me refer shortly to the history. After meetings between the leader of the council and representatives of the management committee, from which it was clear that the management committee remained unable or unwilling to control the activities of the staff, the policy committee of the council at its meeting on 3 July considered its future policy towards the law centre. It resolved to discontinue funding with effect from 30 September 1978 and to investigate alternative means of providing a legal advice centre.
On 23 October, there was a further meeting between the chairman of the law centre management committee, a member of the committee representing the Law Society, the leader of the council and the chief executive at which an interim agreement was reached as a basis for the law centre to continue until the end of the current financial year. The basis of the agreement was that the management committee would reconsider and form its own composition and constitution in agreement with the council, the staff of the law centre would not in that capacity indulge in political activities, the management committee would reduce the activities of community workers to the giving of legal advice, which is the purpose for which the centre was established, the new management committee would reconsider its general policy with the approval of the council as a funding agency, and, finally funds should be made available to enable the centre to continue for the remainder of the year, subject to the conditions which have been mentioned.
That agreement was subsequently endorsed by the management committee and the policy committee of the council. As a result of activity by my hon. Friend the Member for Uxbridge and the hon. Member for Hayes and Harlington (Mr. Sandelson), who is out of the country at

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the moment, a meeting was convened with no less a person than the Lord Chancellor. The meeting, held in the Lord Chancellor's office, was between representatives of the council and the management committee. There was at that stage every hope of a satisfactory long-term solution being reached. However, it was not to be. On 19 December last year, the management committee approved a revised constitution which flew in the face of the interim agreement which had been reached. It contained no proposals to eliminate the community work which the council finds unacceptable and proposed a composition of the management committee which the council considers will not ensure a committee representative of the community.
The council has now suggested amendments to the constitution to accord with the interim agreement reached and has resolved not to fund the centre after 31 March this year unless the management committee comes forward with acceptable proposals before that date.
Mr. Bruce Douglas-Mann: Does not the hon. and learned Gentleman agree that the proposals now being put to the management committee would deprive the law centre of the opportunity of taking up cases which involve conflict with the council? Where a law centre is operating in any area, it is inevitable, because the council is the major landlord and responsible for the maintenance of the streets and for the enforcement of public health, that the centre must come into conflict with the council from time to time if it is doing its job properly. The structure now proposed by the Hillingdon council would deprive the law centre of the opportunity to fulfil the basic functions of a law centre.
Mr. Crowder: I am glad I gave way to the hon. Gentleman. I have been speaking only this evening to the leader of the council. That is far from being its attitude. The council is anxious that this law centre should work on the basis of the guidelines set out by the Lord Chancellor and should be completely nonpolitical.
At the last meeting, the management committee adopted an uncompromising attitude and gave notice to the staff. The present position is that the law centre
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will close on 31 March, taking away from the residents of the borough a useful legal service, only because the intransigent management committee is unwilling to restrict its activity to legal advice and representation. What is the solution? I am glad to see that the Solicitor-General is to reply on behalf of the Government.
I suggest that further discussions should take place on the lines laid down by the Lord Chancellor. I would like to refer particularly to guidelines 3 and 4, namely, that a law centre shall be under the control of a management committee, the majority of whose members should normally represent the interests of the recipients of the law centre's services, and that no local or central Government representatives shall be ex-officios chairmen, vice-chairman or secretary of the committee.
A law centre's primary objective should be to provide a legal service for people living or working within its catchment area. In performing this service, it is entitled to seek out those who are either not aware of their legal remedies and, I stress, Obligations or who may have a fear of law and lawyers. I hope that, as a result of my having raised this matter on the Floor of the House of Commons, this centre will remain in being on the guidelines set out by the Lord Chancellor.
10.35 p.m.
Mr. Michael Shersby: I am very grateful to my hon. and learned Friend the Member for Ruislip—Northwood (Mr. Crowder) for the opportunity to intervene briefly in this debate. He has been able to bring to the attention of the House a matter of great concern to the people of Hillingdon and the Members of Parliament for constituencies in the borough. I am sure that the hon. Member for Hayes and Harlington (Mr. Sandelson) would have taken part in the debate had he been present, but we all know that he is unavoidably detained by his parliamentary duties.
My hon. and learned Friend has set out the position, but perhaps I may add a few details. The Hillingdon council, although it has always supported the provision of a legal service in the borough, is unwilling to fund the so-called educational work which the law centre management committee wishes to undertake

1279
as part of the general law centre activities. Secondly, the council is insisting that the management committee should adhere to the interim agreement reached on 23 October 1978. Unhappily, however, it seems that the management committee is unwilling to confine the work of the law centre to a free legal advice and representation service and is very keen to undertake this so-called educational or community work.
Perhaps I might say something about what that work might be if the law centre were to receive the agreement of the council to go ahead with it. I would draw on the memorandum of evidence by the law centre's working group to the Lord Chancellor and his advisory committee, entitled "Towards Equal Justice". It says:
"Another part of the educational work of the law centre is to talk with small and large groups in the area where the centre operates. The members of a tenants' association may wish to know how to enforce their rights in dealing with their landlords, those of a youth club their rights in a police station and those of a local authority social service department a whole host of things."
There is not a word there about the tenants' obligations to their landlords, be they private or municipal. There is not a word about the obligations which a member of a youth club has to uphold the law or to assist the police in their duties. What, in any case, would members of a youth club be doing at a police station such that they would need the advice of the law centre on their rights only and not their obligations?
It is this rather anti-establishment attitude which worries people in Hillingdon and elsewhere. It is one of the aspects of the matter which has rightly led the council to confine its agreement to a legal service being operated in the borough—which is far from being an area of social deprivation. In fact, the law centre is located in Hayes, which is a prosperous area with local industry in close proximity to London airport.
That is the situation in which the council finds itself, and it is determined to discharge what it sees as its responsibilities to the ratepayers of Hillingdon, to spend their money wisely and to ensure that it is legal advice, rather than educational
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or community or political advice, that is being given in the area.
I am personally grateful to the Lord Chancellor, as I know are my hon. and learned Friend the Member for Ruislip-Northwood and the hon. Member for Hayes and Harlington. The noble Lord has gone a long way to try to resolve this matter. There is a good chance of resolving it satisfactorily, given good will by the members of the law centre management committee, many of whom are personal friends, and who I know strongly believe that the provision of legal advice is a desirable activity in the area.
We now need a genuine understanding by the management committee of the law centre that there is genuine concern about this work. The committee should accept the council's offer of continued funding at the rate of £45,000 a year, based on the new constitution. That is a considerable prize to those who wish to continue the law centre work in Hillingdon, as I do. I believe that, if the opportunity is grasped now, the law centre will be able to continue. If the opportunity is not taken, there is every chance that the centre will be closed. I hope that will not happen.
10.40 p.m.
The Solicitor-General (Mr. Peter Archer): I am grateful to the hon. and learned Member for Ruislip-Northwood (Mr. Crowder) for raising this subject and to both hon. Members who have taken part in the debate for expressing the hope that there is still time to save the Hillingdon law centre. The House will understand that I am anxious not to say anything which will make that less likely.
When the annals of the law centre movement are written, they will show that Hillingdon law centre featured prominently in the movement's early years. This is not the first time that the centre has attracted public attention. The first occasion was in 1976. The argument then was whether the Law Society should grant a waiver from the solicitors' practice rules. Those rules forbid touting for work by solicitors.
But the point about law centres is that their services must be known to those whom they are intended to benefit. Happily, those difficulties were overcome with the help of the Lord Chancellor, who acted as a mediator, and of a number of solicitors who used their common sense

1281
and powers of persuasion. So completely were they overcome that I am told that in the present dispute the centre has benefited from the goodwill of the Law Society.
I do not believe that the various agencies which offer advice are in competition. The private profession, the law centres and the citizens advice bureaux have a contribution to make. I wish that the resources were so plentiful that the problem was to choose between them. But the need is so vast and the resources so circumscribed that the primary need is to co-ordinate those activities so that each supplements the others. When people are aware of the need to take advice, persuaded that it is worth while, and encouraged to seek that advice, the private profession will also benefit.
Now, the Hillingdon law centre is back in the news. The Hillingdon borough council, which is the centre's funding agent, has expressed concern that, in addition to individual case work, the centre has undertaken what is sometimes known as community work.
Community work is not necessarily wicked. The hon. Member for Uxbridge (Mr. Shersby) gave some examples which do not seem to require discouragement. Community work means offering legal advice to groups within the community or the residents of a locality with a collective problem, preparing leaflets on welfare benefits or employees' rights, or educating groups in various aspects of the law. Sometimes that may extend to offering advice in a campaign for the redress of a grievance.
It would be wrong to approach the matter without a sense of perspective. These activities normally form a small part of a centre's work. The primary role of such a centre is to give advice on individual cases. I understand that in two years this centre has dealt with 3,056 individual cases.
However, I make no secret of my view that a law centre is not simply a substitute for a firm of solicitors. On 25 September 1974 I spoke to the Legal Action Group in London. What I said was subsequently published in the LAG bulletin under the title "Law and the Little Guy."
I ventured to suggest that people with a problem are not interested in theoretical
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distinctions between the various methods of redress. A politician might offer legal advice; a lawyer might suggest a press campaign; a law centre might seek to redress a grievance by more than one method. That is proper.
But it is sometimes difficult to decide when activities of this kind have reached the limits of the functions of a law centre. One law centre, in its annual report last year, said:
"To provide these people and communities with greater access and greater confidence in using the various professional services and, indeed, self-help procedures available, means inevitably some slight redistribution of power in society. However, organisation to achieve a common goal (whether it be workers joining a union, or tenants fighting for repairs) is clearly a political decision and one in which many of those who fund law centres believe law centres should not be involved. Such involvement becomes more intolerable when the opponent is the local authority."
In addition, and partly as a consequence, the council has now objected to the constitution of the management committee. There have been discussions about this and some willingness to make concessions, but there remains a dispute as to whether the management committee should consist purely of nominated representatives, as the council wishes, or whether some members should be elected.
There is as yet no single accepted constitution for a law centre. Some centres have elected representatives, and some do not. The only conditions which my noble Friend the Lord Chancellor has required are that each centre should he independent of its funding agent and of local government or central Government and the Law Society, that it should enjoy freedom to choose its own areas of work, and that it should be free from interference in the advice given to those who consult it.
This word "freedom" is at the heart of the present disagreement. The council has said, in effect, "We do not like the way that the centre has conducted its affairs in the past and we want it to concentrate on providing advice and representation for residents in the borough to the exclusion of community and educational work." It is clear that the council has lost confidence in the centre, although I hope that is only temporary. In consequence it has threatened to discontinue the centre's grant from the end of

1283
next month unless the management committee is restructured to its satisfaction.
That leaves the centre with a problem, and it has led to renewed arguments by those who believe that law centres should be funded by central Government. The annual report, which I quoted earlier, goes on:
"As the community development projects, which were influential in the earlier stages of the Urban Programme discovered, it is dangerous to bite the hand that feeds. Law centres are increasingly convinced that the only long term answer is central funding."
I doubt whether central Government funding is the answer. lf, as I hope, the number of centres is to grow, central Government may not be the most suitable funding agent. Law centres are most effective where they are locally inspired, and, money apart, inspiration is what the centres require most of all. They need inspiration for the staff who work in them—often for long hours on low salaries—and inspiration for members of the management committee who are prepared to give up so much of their time, not only to attend meetings but to keep in touch and offer advice and guidance. I believe that that inspiration arises most readily where the local community accepts responsibility for the centre.
But, in any event, the question of funding law centres is being considered by the Royal Commission on legal services. My noble Friend is keenly awaiting its recommendations. As he indicated last week in another place, until the Commission has reported it would not be right to embark upon any major initiative. He hopes to provide some limited support next year for one or two new projects which are in embryo, but it is quite certain that he will not be in a position to accept responsibility for centres which are presently supported by local authorities. Even if it were possible for one existing centre to be offered central funding at this stage, other local authorities might feel that they would be well advised to withdraw grants and leave the taxpayer to rescue the chestnuts from the fire.
There would be calls in other areas which do not yet have law centres but where the problems are no less intense, such as the metropolitan borough of Sandwell, part of which I represent, for central Government funds.
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In fairness, I should add that the Hillingdon borough council has not indicated any intention to withdraw its grant purely on financial grounds. I am grateful for the question that my hon. Friend the Member for Mitcham and Morden (Mr. Douglas-Mann) posed to the hon. and learned Member for Ruislip-Northwood and for the assurance that the hon. and learned Gentleman gave in return. It is true that we invite local authorities to provide a rod at their expense which will be used partly on their own backs. That so many of them do so is a tribute to their tolerance and to their regard for the rule of law.
This, then, is the unhappy story. For the second time my noble Friend the Lord Chancellor has entered the story of the Hillingdon law centre as a mediator between the council and the management committee. He has no financial or other responsibility for the centre, but he is concerned, as are some hon. Members who have put their names to early-day motion 188 and others who have put down the amendment, that those whose legal needs are less easily met through citizens advice bureaux or through solicitors in private practice should have access to legal advice and representation.
My noble Friend's involvement culminated, as the hon. and learned Gentleman said, last November in a meeting attended by my hon. Friend the Member for Hayes and Harlington (Mr Sandelson), by the hon. Member for Uxbridge, by the leader of Hillingdon borough council, and by the chairman of the management committee. At that meeting my noble Friend formulated the guidelines which were mentioned by the hon. and learned Gentleman, which he suggested that the respective parties might wish to consider. They were generally welcomed, I thought, by all concerned as a basis for further discussion about the centre's constitution, and especially the composition of the management committee. Unhappily, the discussions have faltered over the question whether all the representatives should be nominated or whether some should be elected.
It is my noble Friend's hope, as it is mine, that the two sides to the dispute will reconsider their respective positions and find common ground to enable the law centres to remain in being. He has indicated to them and to me that he will do

1285
whatever he can in the way of mediation to attain this end, which must, after all, be in the interests of the people of Hillingdon. It is they whose needs are in some danger of being overlooked in what seems to be a battle of principle, and it is they,
1286
Mr Deputy Speaker, whose needs are paramount.
Question put and agreed to.
Adjourned accordingly at nine minutes to Eleven o'clock.

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

NORTH SEA OIL: TENSION LEG PLATFORMS
The Earl of LAUDERDALE: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper, and at the same time to declare an interest in a company which has design patents in this area.
The Question was as follows:
To ask Her Majesty's Government what arrangements they foresee to enable tension leg platforms designed by the United States Fluor Corporation's subsidiary "Deep Oil Technology" to be built in the United Kingdom and used in the North Sea.
Lord STRABOLGI: My Lords, the decision whether or not to order a tension leg platform to the deep oil technology design, or to any other design, is entirely a matter for the oil companies who select the production system best suited from both the technical and commercial viewpoints. However, I understand that commercial arrangements have been made, which would enable this particular design to be built in the United Kingdom if a requirement for it arises.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that reply, may I just ask him whether the Government, through the Offshore Supplies Office, have inquired whether there may be British designs in this area which might be worthy of encouragement for research and development?
Lord STRABOLGI: Yes, certainly, my Lords; the Department of Energy is in constant touch with the oil companies and the offshore contracting industry, and new technology is frequently discussed. The Offshore Supplies Office in Glasgow
1242
is always willing to discuss proposals for research and development work on such systems.
The Earl of LAUDERDALE: My Lords, I thank the noble Lord.

DISARMAMENT: MINISTERIAL RESPONSIBILITY
2.37 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will appoint a Minister for Disarmament.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE, (Lord Goronwy- Roberts): My Lords, disarmament is an essential part of our foreign policy which must be conducted as a whole by my right honourable friend. I have special responsibility for arms control and disarmament questions.
Lord BROCKWAY: My Lords, in view of the fact that there are now weapons which could destroy all mankind, would not the Minister agree that disarmament is of the greatest precedence in world affairs? Would he not also agree that my proposal has now become a practical, realistic proposal, with the Committee at Geneva reconstructed and extended to report to the United Nations next year? Would not a Minister, whose first aim was disarmament, prove the sincerity of Her Majesty's Government in this matter and give hope to the millions who desire peace in the world?
Lord GORONWY-ROBERTS: My Lords, the sincerity of the desire of this Government, and I beg leave to say of any other British Government, howsoever composed, to achieve as soon as possible general and complete disarmament under effective control is not, I think, in question. I do not think it is in question outside this country, from my experience of disarmament meetings and the response which I get when in those gatherings I put forward British policy. As to my noble

1243
friend's point that a Minister exclusively devoting his attention to disarmament questions would be preferable to one who, as has been our practice for some time now, deals with disarmament but in relation to other foreign policy questions, this is debatable. It has been the conclusion of successive Governments since, I think, 1967 that arms control and disarmament questions are best and most effectively studied and promoted in relation to two other considerations; namely, détente and deterrence. My own experience, extending over some years now, is that the present system is the best for this country, and I cannot at once recall any comparable country that organises its disarmament work, ministerially, on the lines that my noble friend has suggested.
Lord AVEBURY: My Lords, would the Minister agree that one of the most important contributions that can be made by the United Kingdom and her allies is agreements between arms suppliers to cut down the flow of arms into the Third World? Would the Minister not further agree, in view of what has just happened in Iran, that it would be not only morally and ethically desirable for us to cut down this flow but also economically wise for us not to become dependent on it as a nation?
Lord GORONWY-ROBERTS: My Lords, I can certainly reassure the noble Lord and the House on this question. We are constantly trying to promote the objects that he has in view in regard to lessening the demand for arms from the Third World. It is not at all just a question of arms producers thrusting arms on Third World countries. Too often, I regret to say, it is that Third World countries demand these arms. Indeed, I believe that the increase in Third World armaments over the past seven or eight years has been 60 per cent. and, indeed, as a whole, that group spends more money on armaments than it receives totally in aid. But the noble Lord's point is valid and we are pursuing it at every possible opportunity. As to the position in Iran, the noble Lord will understand that we are in discussion, or are attempting to get into discussion, with the new Government on this and other questions. We have recognised the new
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Government, and we hope that we can achieve a useful and fruitful relationship with it on this and other questions.
Lord SHINWELL: My Lords, is my noble friend aware that while most of us—probably every one of us—recognise the genuine convictions of my noble friend Lord Brockway, a previous Labour Government not so long ago appointed a Minister for Disarmament? He was a Member of your Lordships' House, though I do not see him present at the moment and I hope he will not mind my making reference to him. No politician should mind being mentioned: in fact the more he is mentioned the more popular he becomes! But is my noble friend aware that, despite the genuine efforts of that Minister, which were supplemented by activities at the United Nations and the efforts of the Soviet Union, in the way of détente—whatever that may mean—we still want to sell armaments to China and to any other country that wants them, and we regret that we sold so many to Iran? What about those armaments we sold to Iran? Are we going to be paid for them? Is it not about time that we indulged in a little less hypocrisy and humbug about this? Is it not about time we recognised that the world, as it is today and with the tension that exists, requires a deterrent, and that the most effective deterrent is to be strong?
Lord GORONWY-ROBERTS: Yes, my Lords, strength can rest in properly verified measures of global disarmament. Disarmament is well worth pursuing for every kind of reason, but with it must go verification. That, I think, is the essence of our policy and what must be the policy of this country.
As to what my noble friend also said, indeed we did have a Minister definitively for disarmament for two or three years after 1964, and my noble friend Lord Chalfont rendered distinguished service in that capacity. He moved on to other duties at that point. An appraisal was made of how best to promote disarmament questions, with the result that for the last 10 years we have found that this is the best way to do it: that is, to link disarmament with defence and détente.
My noble friend referred to China. Of course we are prepared to trade with the

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Peoples' Republic of China, but not exclusively in arms. There is some suggestion that we might supply defensive arms to them but only as a part, and not the predominant part, of a very large package, largely civil, of goods and services which that country may prefer to get from this country.
Lord DUNCAN-SANDYS: My Lords, does the Minister agree that, having regard to the deplorable state of military weakness of Britain, we are hardly in a position to do very much to negotiate disarmament with other countries?
Lord GORONWY-ROBERTS: My Lords, I reject the noble Lord's premise and therefore the conclusion. I know he reads German but, if he did not, I could give him a translation of my right honourable friend's article in reply to certain strictures in Der Spiegel, published in Germany, where the facts and figures show that this country is devoting a larger proportion of its wealth to defence and armaments than probably any other comparable member in the Alliance. This does not betoken a weakness or an unwillingness to take part in collective defence by this country, and it is time that these facts and figures were more widely known, not only in Europe but in this country.
Lord PAGET of NORTHAMPTON: My Lords, has not experience shown that, so far as the export of arms to the Third World is concerned, the most effective weapon of disarmament has constantly been to supply them with sophisticated weapons that they are incapable of using? But if it be true that, so far as we are concerned, we are spending more money than other people, how can a Minister for Disarmament really improve on our present impotence?
Lord GORONWY-ROBERTS: My Lords, the noble Lord raises two questions. The first is a matter of opinion, and the second is one that he should put down as a separate Question for a considered Answer.
Lord BOYD-CARPENTER: My Lords, reverting to the Minister's reply to my noble friend Lord Duncan-Sandys, is not the relative comparison as to the percentage of national product devoted
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to defence not with our allies but with the Soviet Union, which every year increases its armaments to a formidable degree? In the light of that, does not the Minister think that we have carried unilateral disarmament dangerously far?
Lord GORONWY-ROBERTS: My Lords, one could conclude from that, that if we have done that then certain of our friends and allies in the Alliance have gone even further than we have.
Lord BOYD-CARPENTER: My Lords, that makes it worse!
Lord GORONWY-ROBERTS: My Lords, in that case it is time that due weight was given to that consideration before we constantly "knock" this country for its performance, which in my view, in regard to questions of security and other subjects, compares very favourably with that of most of our friends and allies.
Baroness ELLES: My Lords, the noble Lord mentioned the article in Der Speigel. Could he perhaps make this article available in the Library—and perhaps not in percentage terms but in real terms of what is spent on defence as between members of NATO?
Lord GORONWY-ROBERTS: My Lords, it can be made available in whatever terms the noble Baroness wishes; but on whatever terms it is given the message is the same: this country is doing better than many of us are prepared to accept that it is doing. It will give me very great pleasure to make this excellent article available in both languages—in German and in English, and possibly in Welsh as well. It is an article written by a great and patriotic Foreign Secretary who speaks for Britain in this article, as he always does.
Lord BROCKWAY: My Lords, is the Minister aware that many of us appreciate his own activity in connection with this issue, and in particular his speech at the Special Assembly of the United Nations? Would he not agree, however, that there are three functions which a Minister for Disarmament could fulfil? The first would be by constant contact in the discussions at Geneva and by his presence there on many occasions; the second

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would be by association with those Governments which signed the British proposals for disarmament; and the third would be by leading public opinion as to the necessity for disarmament.
Lord GORONWY-ROBERTS: My Lords, I agree unreservedly with my noble friend about the three objectives for any Minister concerned with arms control and disarmament, and I am most grateful to him for what he said at the beginning of his supplementary question. I have had the privilege of doing my best in these gatherings, with some little success from time to time, always keeping in mind the relationship of disarmament to security and detente. There is no disarmament without security. This is not to controvert the idealism of my noble friend. It is a practical as well as an idealistic matter.

OFFSHORE OILFIELD ROYALTIES
2.52 p.m.
The Earl of LAUDERDALE: 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 will now complete their incomplete reply to the Question tabled in his name for Written Answer on 14th December (Hansard 16th January, col. 932) about their willingness to forego royalties on otherwise unprofitable off shore oilfields, by stating—

(i) how they would determine their stated criterion, namely "the balance between the cost of the refund and the benefit to the nation"; and

(ii) when royalties would be refunded in cases where a refund is agreed.

Lord STRABOLGI: My Lords, in determining the balance between the cost of a royalty refund and the benefit to the nation from granting it, we would consider all relevant factors. These would include as well as the amount of the refund, the contribution of the develop-
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ment concerned to national income, the timing of that contribution and the estimated cost of the development.
Any refund granted would be the subject of an agreement between the Secretary of State and the applicant and the refund would be paid in accordance with the terms of that agreement. The terms would include provisions on the timing of refund payments.
The Earl of LAUDERDALE: My Lords, I thank the noble Lord for that Answer to what I agree is a complicated Question. May I, however, ask him this further question: Would he not agree that a company which wants to seek a refund of royalties, if it is going to enter upon an activity which is on a relatively unprofitable scale, will wish first to convince its financial backers that this is going to happen? Therefore, what I think I must call the elegant rigmarole read out by the noble Lord is not going to be very helpful in that situation. Does not the noble Lord realise that the statement which he made just now was of a rather general nature?
Lord STRABOLGI: My Lords, the advantage to a company of a refund rather than a remission of royalties is that the refund is free of PRT and corporation tax. That is why the 1975 Act was worded in this way and approved by Parliament, in its wisdom.
The Earl of LAUDERDALE: My Lords, I thank the noble Lord for that further answer. Since he has referred to PRT, may I also ask him whether or not it might be possible to allow the latest submission on PRT, which has been made to the Treasury by the United Kingdom Offshore Operators' Association, to be published? Would not the noble Lord agree that this would now be worth while?
Lord STRABOLGI: Yes, my Lords, Ministers and officials have discussed royalty refunds with a number of companies during the consultations on the proposed PRT charges. These consultations, which are confidential, are continuing. The Government have no objection to the Association publishing their submission and making the best of their case publicly, as they see it.
The Earl of LAUDERDALE: My Lords, if I may ask the noble Lord for one further piece of information, going back to the refund of royalties and estimating all the relative facts, could he say whether the Government give greater weight to the benefit to the balance of payments or whether greater weight is given by them to the production of energy for our national use?
Lord STRABOLGI: My Lords, the contribution to the national income would be the increase in Government tax and royalty receipts and also in the profits of United Kingdom companies. I may say, though—I want to be helpful to the oil companies because we value the importance of their work—that we are ready to enter into agreements to refund royalties in time to enable licensees to rely upon receiving a refund, subject to any agreed conditions, before they undertake a major investment.

PORTLAND FLOOD DISASTER
Lord SANDYS: My Lords, I beg leave to ask Her Majesty's Government a Question, of which I have given Private Notice. The Question is as follows:
"To ask Her Majesty's Government whether, in the light of the Portland flood disaster and the damage sustained by residents on the nights of 13th December and 13th February, they will indicate the action likely to be taken to prevent the further loss, either of life or property, and the size and nature of the compensation to be provided."
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30, my noble friend Lord Strabolgi will answer this Question in the form of a Statement and my noble friend the Leader of the House will then repeat a Statement being made in another place on the economy, the Government and trade union responsibilities.

DIRECT LABOUR (MAJOR CONSTRUCTION WORKS) ACCOUNTING BILL [H.L.]
The Earl of KINNOULL: My Lords, I beg to introduce a Bill to provide for an
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accounting system for major construction works undertaken by direct labour organisations employed by local authorities; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Earl of Kinnoull.)
On Question, Bill read 1a, and to be printed.

RURAL DEPRIVATION
2.56 p.m.
Lord WALSTON Lord WALSTON rose to call attention to the problems of rural deprivation; and to move for Papers. The noble Lord said: My Lords, in moving this Motion, I have no desire to assess the relative merits and hardships of urban deprivation and rural deprivation. To my mind, they are big and serious problems but they are complementary, not rival problems. The only point I should like to make is that rural deprivation (which I hope I can persuade your Lordships does exist) although not nearly so dramatic as the urban deprivation that we so often see in the slums of our cities and read about and see pictures of and, I freely admit, although not nearly on so large a scale, since it does not affect so many people, still is a very real problem: one which affects not only the lives of the people who live in deprived rural areas but also, as I hope I shall be able to convince your Lordships, the lives and wellbeing of all of us in this country.
To start on a pedestrian note, it is perfectly true that, even with the spread of sewerage and water supplies, of electrification and all the rest of it throughout the whole country—and remarkable progress has been made—there are still areas and individual houses which are deprived of these services; and there is still a painfully large number of cottages and houses in the country where the privy is down at the bottom of the garden and where there is no inside sanitation of any kind. But bad housing is by no means the commonest or, indeed, the most serious aspect of rural deprivation. What, of course, is needed is more housing and, above all, housing at a price that the poorest members of the community, living in rural areas, and the

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youngest members of the community can afford. Unfortunately, that is rarely the case. So housing comes high on the list of priorities.
Also very high on the list of priorities are schools. As we know all too well, many schools are already closed. Many others are under the threat of closure, while many schools are in painfully old buildings. Indeed, very many of them lack the amenities which our educationalists tell us are essential for proper modern education. In addition, and in my opinion possibly the most important of all, is the question of jobs. Where should the young people of the villages go to get work?
I am not going to devote any time at all to the problem of agriculture. Obviously it is the most important of all rural industries. It is indeed the most important of all our national industries but, for all that, the contribution that it can make to alleviate rural deprivation is, at the best, no greater than the contribution it has made in the past. It employs—what is it?—2·8 per cent. of the total working population. Of course, in rural areas that rises to a considerably higher proportion, but I do not believe that it will, or indeed that it should, increase its labour force significantly. I hope it will not diminish its labour force, but we cannot look to agriculture to solve the problem of creating more jobs for people living in the rural areas. Therefore, my third point is the absence of jobs in rural areas.
The fourth point is facilities for shopping. Frequently in villages today there are no shops, or there is just one shop. Such shops as they are—good though they are and pleasant though they are to shop in, thanks to the owners who run them themselves—of necessity charge prices which are almost invariably higher than prices in the supermarkets in the towns. Their turnover is lower; more transport, and all the other things connected with it, are involved. So for those living in rural areas the cost of shopping is higher, unless they can get into the towns, and many of them are unable to do that because of my final point—public transport services are poor or non-existent. There are still very many people living in rural areas who do not own cars, who are unable to drive them; or even if the family does own
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a car, for most of the day it is away, taking the husband to work and therefore leaving the wife isolated and unable to shop except by public transport.
Those are the main factors leading to rural deprivation. The result of that is that, above all, young people are leaving our villages and because there are fewer young people now living in the villages the average age of the population is rising. It means that fewer children are being born in the villages; fewer children of school age are growing up in the villages, and therefore there is a greater threat to those village schools which still exist because in 10 years' time there will be fewer children than there are even today to go to them.
In remote areas—and as your Lord ships will know there are many of them—this leads to dying villages; the deserted villages which we have heard about from the days of Goldsmith onwards and certainly in more recent times in the inter-war years. They still exist. Dying villages are still to be found in many parts of the country. But where villages are not dying—and there are many of those, too—two other factors have come into the picture. One is that where the village is attractive, where it is on the coast or is scenically beautiful and has a good climate, more and more people are buying the houses that otherwise would be derelict, in order to have retirement homes or possibly week-end homes. In other areas not quite so remote, those within commuting distance of, not only London but the other big centres and the not-so-big centres, the professional classes, the managerial classes and the representional classes come to live, and of course go away to work 20 miles or even 50 miles away. In my own village in fact, some 50 miles from London, there are now people who commute to London every day.
Therefore, in those villages we are getting an entirely different form of population, and very largely a population which sleeps there and which looks after its garden there but increasingly does not send its children to the village school and does not shop in the village shop because these people have cars to go into the towns where there are a better choice and cheaper commodities. They find their recreation elsewhere, go off to the local

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golf club or drive many miles to a different pub instead of patronising the village pub. So the whole character is changing. One finds that either the village is dying or is providing homes for the elderly and retired, or becoming a dormitory. In any event the villages lose their character. They are very different from the villages we have known in the past and have come to love.
Does this in fact matter? Is there anything sacrosanct about village life as we knew it? Is not this perhaps a change to which we should say, "Well, some of us are rather set in our ways, we do not like changes, but there is nothing essentially wrong with it", or is there something essentially wrong with it? Yes, my Lords, I believe there is.
I believe there is for two reasons, to which I will give first a very short answer and then a somewhat more explicit answer. The short answer is that in village life there is a mixed society (and I shall develop that point a little more in a moment) and there is a small society. Today I believe one of the troubles in this country is that too few people understand the problems of other people. They live together in a street in a district of a town, in a suburb, where most of the people with whom they rub shoulders, their neighbours, those whom they meet on the way to work, on their way to school or on their way to the shops, are of roughly the same age, roughly the same income group, with roughly the same interests, roughly the same type of family. They are people who have the same interests and who take their holidays in similar places, and so on. People have little opportunity to have any contact at all with others: people who are older than themselves, people who are younger than themselves; people who are richer or poorer, people who are better or worse educated. They are insulated, as it were, in a cocoon, living in a form of monastery, protected from very much of the real world, knowing their own problems, ambitious for their own ambitions, knowing their own joys and their own disappointments, but with very little opportunity to understand or comprehend the ambitions, problems, joys and disappointments of other people.
This I believe to be very bad for adults. The more you can know about people different from yourself, the better; the
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less you know about them, the more you look upon yourself as belonging to the only important group of people. I believe this is one of the reasons why we have so many strikes today: people are so insulated that they do not realise the effect of their actions on others until it is too late. Of course they realise it now, but not when they are taking the initial steps. It is even worse for young people growing up. They do not know anything about the world outside. That ignorance of other people is the breeding ground for hooliganism, vandalism and crime.
In a village that does not happen at all. It is entirely different: you meet all types. There is the retired professor or the retired colonel, there is the roadman, the businessman, the tractor driver, the commercial traveller, the farmer. There are the bedridden old people and the rowdy children—they are all around you. The village gossips and the recluses, those who organise the Women's Institute and those who run the cricket club. They are all there, rich and poor, sick and healthy, and of necessity you know them all. You know of their problems, you know they exist and you talk to them, walking about in the village, watching the cricket match, simply because you are in a small community.
Because of the smallness of the community there is this feeling of involvement, of responsibility—responsibility for everybody, not just for yourself and your family. And it is very much harder for young people growing up in a village to become hooligans and vandals, to take to crime, when they are so much involved in the community and the whole village community is so much involved in them. It is very much harder for a worker in a village community to go on strike when the sufferers from the strike are people he knows and meets every day. I would just mention one statistic, the only one I shall mention. In my own region of East Anglia the days lost through industrial disputes in the past years were only one-sixth of the national average, and East Anglia is, of necessity, a rural community with far more villages and far fewer large conurbations than virtually any other region in the whole of the country.
While I do not want to trespass on what the right reverend Prelate may be saying

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later, I should like to put in one word for the village parson. His job must be, and I am sure is, very much easier, especially if he lives in the village itself, when he is able to walk round on a summer evening, talk to people working in their gardens, make contacts in that way, rather than in a town when he has, as it were, to pay an official call on his parishioners, with all the difficulties that ensue from that.
These are some of the qualities of village life that are of value, and I believe them to be of ever-increasing value today in our urban, impersonal, uncaring society. These are the values that are at risk; far more at risk than the lovely old houses, the thatched cottages, the village green, the trees, the elms struck by disease, the oaks still growing, the hedgerows, and far more important than all those things, important as they are. Fortunately, there are societies—I am very glad there are—to protect these inanimate objects, but there is no society to protect the far more important and elusive values that I have been talking about, the values which arise from small communities. So I would most strongly suggest to your Lordships that villages have very much to offer to the whole of the country, and that it is in the interest of all of us to see how the good things of the village can be preserved.
I have mentioned some disadvantages and I shall make some concrete proposals for overcoming the disadvantages that I have mentioned. All the well-known things are needed; of course, there must be better rural bus services, and I know that much thought has been given to this and that progress has been made in certain areas with the minibus. This is very valuable indeed. I know that there are already—and they have been in existence for a long time—subsidies for rural bus services, but they are still diminishing every year. I would like to quote briefly from the National Consumer Council, who have written to me on this subject. The main conclusions of their very valuable report on rural public transport are that the various experimental services that have been tried can make a very real contribution to the lives of rural communities, but are limited in scope and cannot solve all the problems of access of people living in rural areas.
While the report praises the qualities of imagination, innovation and self-help demonstrated by the schemes, the National Consumer Council strongly opposes the replacement of conventional with unconventional transport schemes. It goes on to say that there is widespread evidence that local authorities are not nearly as involved as they should be in joint planning with the Post Office on post-bus services in rural areas. So we cannot be complacent over what has been done. Let us give credit to those who are trying, but above all I would very strongly support anything that can involve the rural bus services with the postal services. It has been done in many countries: Switzerland is an example where it has been very successful, and I believe we can make very real progress in helping with the rural transport problem by making use of postal buses at the same time.
So what is needed is bus services, rural transport, far better infrastructure, which is always needed, and more houses to let, council houses for young married couples. This is of vital importance. All this imposes still more upon the local authorities, upon the rates; it means that more money must be available. We have heard a great deal about the urban renewal programme, a very good and valuable one, but I make a plea to the Government that this should not be at the expense of money which otherwise would be available for the rural areas.
Then, of course, we come to this very vexed problem of the rate support grant. I will not weary your Lordships with any long details of it; I do not know them myself in any case, and I think it would be out of place to attempt to do so. I said that I would not give any more statistics. I apologise, but I have one or two very small ones here. The rate support grant in 1978–9 for the whole of England works out at £145 per head of population, out of general taxation. The county of Suffolk, not a county I live in but one I am close to and fond of, gets not the £145 which is the average for the whole of England, not the £161 which London receives, or the £175 which the North-West receives, or the £185 which the North receives, but £116, in spite of the very heavy burdens that it, in company with all other rural communities, has to bear.
So far as education is concerned, I have some figures here which show that the amount spent on education in the same county is higher than the average. It has a larger number of school-children in need of education and that population of school-children has been rising steadily year by year. But its share of the needs grant has diminished from a figure of 0·92 per cent. in 19747–5 to 0·74 per cent. in 1977–78. The only point of those figures is to show that the picture is by no means getting better, that there is in fact a deterioration in it throughout the whole of the country, throughout all the rural areas.
So far I have spoken only of those things which require money, and I know that it is very difficult for any Government at the present time to say, Yes, to any proposals which require more money. But there are other things which do not require money. For instance, the village schools always have difficulties with regard to teachers. But why should they not have peripatetic teachers moving round the villages, specialising in history, geography, music, whatever the subject may be, so that on Monday one village has it and on Tuesday the next, with a great saving in money and a great improvement in standards of education in the rural districts, with the one resident head but the peripathetic specialist teachers?
Secondly, there should be—and again no money is needed in this connection—a far greater willingness on the part of the planning authorities to give permission for small factories and extensions to existing ones, and for small offices too, in selected villages. So, ideally, everyone living in a village—other than the most remote in the Highlands of Scotland or in the vastnesses of Wales—will have a choice of employment, a variety of jobs in factories and offices, within the maximum of half an hour's travelling from his or her home. That would be the ideal.
I am glad to see my noble friend Lord Northfield present and I hope he will take part in the debate. His organisation and especially COSIRA are doing very valuable work in this respect. However, they cannot put factories, however willing they are to do so, in areas for which local authorities will not give them permissions. It is the relaxation of those permissions that I believe to be one of the most vital
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needs at present. Of course, people will say that if one puts factories, or even offices, however small, in a village it will change the character of the village. It will do so, but I have tried to show to your Lordships that the character of the village is changing in any case, and changing for the worse.
I believe that if the sites were properly chosen, if the architecture were good, if the tree planting around the factories was well thought out, then, although the character of the village would change, it would change for the better. There would be more jobs. The young people would remain in the villages—provided the other changes were made also—and we would have live communities ready for the 21st century rather than the dying communities still trying to live in the 19th or even the 18th century.
Why are we so appallingly defeatist about our new buildings? After all, a village is nothing if it does not have buildings. We love our villages and we love the buildings in them. Is it a fact from which we cannot escape that our architects in this country are so lamentable that there is nothing that they can build anywhere at any time which will enhance the site on which it is built rather than detract from it? I do not believe that to be so. We have good architects and we have some damn bad ones too, and we have seen the results of their work. However, we do have some extremely good ones, and if they are given the opportunity and encouragement I believe that just as the great houses, the small houses, the manor houses and the cottages have enhanced the appearance of our villages, it is possible that even factories and places for offices—I shall not call them "office blocks"—can also enhance the beauty of our villages and will certainly make life for the people living in the villages far better than it would otherwise be.
Rural deprivation exists. It has not ruined our village life yet, but the warning is present. It is there for all of us to see who are not so obsessed with the problems of the inner city, with urban deprivation, slums and the rest of it in the large towns, that they have no understanding whatsoever of the values and the advantages of village life. Even with no extra expenditure much can be done to

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halt the decline. With relatively small amounts of money wisely spent, our villages will still be able to play their part in the aesthetic, economic and spiritual wellbeing of the country. I beg to move for Papers.
3.24 p.m.
Lord ELTON: My Lords, the House is fortunate to have someone with such a very wide experience as the noble Lord, Lord Walston, to introduce this subject to it. He has his roots in farming and agriculture but his knowledge extends right through the affairs of this country and, indeed, the world.
The proper point from which to start a review of the subject is a recognition that we are one nation. It would not be right to look at the problems of the countryside as if they were separate and distinct from the problems of towns or, indeed, of the inner cities. Many painful situations that countrymen sometimes believe are theirs alone have an exact counterpart in the conurbations. The noble Lord, Lord Walston, took that point, but I think perhaps did not place it at the centre of his theme. Certainly, one can be acutely isolated in a fenland cottage, but one can be just as remote from the community in a high-rise flat. Certainly, there are low paid jobs on the land, but so, as we are all aware, there are in the cities. Certainly, some urban councils keep many houses empty in spite of homelessness, but so, regrettably, do some landowners. In many of the problem areas at which we are looking there is a direct parallel between what is happening in the country and what is happening in the towns. At some point we must recognise that town and country are in competition with each other for the same scarce resources, the same sparing Government assistance.
Secondly, we must recognise that the diversity of the countryside defies generalisation in most of the subject areas. The differences are not merely geographical. The difference is not only that between the hill-farms of Cumbria and the hop gardens of Kent: it is also economic. The contrast is between the compact gentility of subtopia, the lengthening urban shadows of Manchester and Birmingham, and those parts of the West
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country and Wales which are saturated by tourism.
Thirdly, we must recognise that a large and vital area of political thought and, hence, of economic action has, since the 1950s, been captured by what I shall loosely term the conservationist lobby. The reasons for that have been sound, but like all conscious political fashions I fear that this may have gone too far. The effect has too often been to preserve rather than to conserve. And what has been preserved has, in some areas, been too often an idealised notion of a life-style that never existed.
Perhaps the most emphatic conclusion of a conference which I recently attended on the future of the rural community was that the countryside is a place in which to earn a living and not just a place in which to live or, worse still, to which one goes to die. The fields are not just landscape: they produce 71 per cent. of all the wheat we need in this country; 100 per cent. of the milk; 38 per cent. of the butter and cheese; 87 per cent. of the beef; 61 per cent. of the mutton, and 40 per cent. of the sugar. Together with the ancillary industries, agriculture generates £2,500 million-worth of exports a year and, of course, saves us a staggering sum by import substitution.
Is it not, therefore a little odd, in the light of those figures, that it is necessary for the noble Lord, Lord Walston, to ask us today to consider rural deprivation? It becomes less odd when one realises that this huge industry employs what he puts at 2·8 per cent.—and what I think is probably nearer 2·5 per cent.—of the working population. It came as a jolt to me to discover yesterday that there are fewer workers in agriculture than there are in British Leyland, and when one compares their average wages and average strike records one begins to realise that while there are large areas in which town problems and country problems are the same, there are also large areas in which town conditions and traditions are sharply different from those of the country, and that is perhaps why this is such an important debate. However, if we start to think of the country merely as a place in which a loyal workforce can be employed for long hours at a low wage and without striking, we shall get off to a very poor start indeed and shall be going in the wrong direction.

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Therefore, agriculture is economically important, but numerically small. As it provides few jobs it does less to support the rural community than is commonly supposed. It provides fewer customers for the village shop and post office; fewer passengers on the local bus and fewer pupils in the village school, and the noble Lord, Lord Walston, referred to that matter. The extent to which agricultural employment has shrunk since the war has made all those services more expensive to provide. Yet, as each of them is in turn withdrawn, the community crosses another threshold of decline and the recovery becomes that much more difficult.
I have the clear impression that not enough has been done to counteract the decline of agricultural employment since the war and that what has been done has been directed not at the condition but at its results. In medicine a detectable symptom is often evidence of the natural reaction of the body to a disease. Therefore, if we try to cure the symptoms, we are in danger of encouraging the disease. The countryside is our patient. For instance, our planning regulations are admirable in their intentions and have been applied by admirably-intentioned people, among them the noble Lord, Lord Walston, against whom I make no charge. But wherever, by prohibiting the introduction of light industry, they have been used to preserve the elegant repose of a village street that has grown quiet only because of the loss of jobs in the area, when it used to be noisy, dirty and bustling, they have, in fact, been preserving the fabric of the community while stifling its life. That is not the principle upon which human communities are based; it is the principle of the coral polyp, it is the principle of the coral reef: a mass of pretty dwelling places abandoned by their inhabitants.
As planning decisions are functions of democratically-elected authorities, why then is there a tendency for them to be used to stifle the economic and so eventually the social life of the communities that elect them? In part, it may be that the level of decision has been too far removed from the level of impact. I believe that that may be remedied by changes in the rules about what a county council may reserve to itself in planning matters, and that is in hand. In part it is, I think, a result of
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what I call the institutional disease; that is to say, that convenient administrative criteria have too much inertia to be overset by elected people not sufficiently closely engaged in the problem. This also may be dented, if only marginally, by the lowering of the effective level of decision.
However, I fear that the third reason is much more serious and much more intractable. I fear that it is also difficult to express without giving unintended offence. It is that the elected bodies themselves are too often in the hands, not just of interest groups that may not favour a particular development, but of people who have not recognised that, if it is to survive, the rural community must be a place in which one can earn one's living. It is the vocal who get their way in politics because they motivate and inform those who take the action, and they also appear to control the votes.
Local government is a thankless task. The reward is much more often measured in kicks than in ha'pence; it is a voluntary occupation and can be pursued only by those with adequate spare time at the cost of their own leisure. This usually means that there is a fair proportion of the elderly and the well-to-do; and it often means very humane and enlightened people as well. I deeply and honestly admire those who are prepared to dedicate themselves to this task. But I ask myself: have they recognised what is going on and what they can do to put it right? I hope that after today's debate they will, and will also recognise the causes.
In part, of course, this is due to the fact that the electorate simply does not know what is going on; nor does it know the resources available to it. I believe that this can be remedied in a number of ways. The first is a revival in visible democracy. I believe that we must look again at the parish council. With the disappearance, upwards, under reorganisation of the functions of the RDC most significant decisions have been taken so far from the man in the cottage that they are above the cloud base. The parish council is irrelevant, and the district council out of sight. Maybe we ought to return some responsibility to the parish. Certainly, as the point at which government actually reaches right into the community, it ought to be drawn more effectively into the central and effective network. If there

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are such things as grass roots, surely these councils are the most fibrous and tender tips of the whole system. Like other local authority bodies, they are composed of amateurs and are themselves often woefully short of information. When I became a parish councillor, I rapidly became acutely aware of this very fact.
I should like to see local education authorities prepared to run short, voluntary, part-time courses for councillors at all levels. They might start with very short courses for parish councillors, and the system might then reach upwards, just as the courses for justices of the peace seem to have been extended to the higher benches of justice. A very few hours could prove invaluable.
I also hope that more local authorities will consider the appointment of a stipendiary clerk to serve groups of parish councils and to act as a channel of information on the enormously wide and complex range of services, both voluntary and official, available, not just to the council, but to the community it serves, for whom it should be acting as the information point. This could include everything from Citizens Advice Bureaux to legal aid. What is not known cannot be used.
One powerful aid about which far too little is known is the National Housing Corporation. An approach to this body is the essential first step in setting up a housing association. To set up such a housing association is often the first essential step in enabling the next generation to live in a village rather than to leave behind it tumbledown and picturesque cottages. That, in turn, can be the actual turning point from decline to development. Here is a case in point of direct competition for resources between rural and urban communities. The funds of the Corporation are earmarked for areas of stress. For an extraordinary reason, it appears that the countryside does not seem to be recognised as an area where there is stress. Perhaps this is another example of the idealised or what some call the "gentrified" view of the countryside and one wonders whether the gentry have read, Wuthering Heights.It hurts as much to be battered in a village as it does to be battered in a deprived urban area, and yet the
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funds of the Corporation, as I understand it, are not available for refuge homes in rural areas.
Lord NORTHFIELD: My Lords, if the noble Lord will allow me—
Lord ELTON: My Lords, I understand that the noble Lord will speak later. I was going to say later on, but shall say now, that I am new to this subject and if I am wrong I stand ready to be corrected on every point. I wish merely to put ideas into people's heads and not to lay down categories.
From the general, I have now begun to be drawn into particulars, and there is not time—nor do I have the knowledge—to speak at length on every facet of this complex problem. Noble Lords are already aware of the rate of closure of village shops, village schools and village post offices. In Wiltshire, the rate of decline in the provision of all these, particularly the shops, is alarming. No one who has lived in a village will doubt the central role of each to the community. This was most sharply pointed up by a married couple who recently took over a shop in a village in Cornwall. Until then the husband had been a probation officer and his wife a social worker. After two years they both emphatically said that in their new job they were far more effective in the same role of supporting and helping their fellows in the community than ever they had been before.
In a village, people are individuals and are known to one another. The noble Lord, Lord Walston, devoted one of his most important passages to this. This is what should give it its stability. The local resident community—the people who take jobs where they live rather than live where their jobs take them—are all known to one another personally and very often have been personal friends since they first entered the reception class of their village school. The effect this has upon industrial relations in rural industries is very marked. Friends deal more fairly with each other than with strangers, regardless of their social position.
But villagers must know that the village shop will be extinct if they do not support it. In a community of 500 any shopkeeper would be working at or below

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subsistence level and is entirely dependent on the patronage of his clientèle, who, on average, have only £6·50 per week per head to spend. Apparently prosperous concerns—there has been research on this—are run by people working 70 and 80 hours a week for £65 gross and less and no annual holiday. The fact that a concern looks prosperous does not mean that it affords a good life to the person who runs it. If the shop is vital to the community, it should be supported by the community. I think that there should be some form of rate relief, and I hope that this will be achieved by Clause 3 of the Local Government Finance Bill which is at present in another place.
The closure of schools is a very tender matter about which, under other circumstances, I would speak at length. The effect on very young children of busing even quite a short distance is bad. I am not certain that I follow the noble Lord, Lord Walston, in his idea of a sort of gyro of peripatetic teachers dealing with large numbers of children in different places. But I believe that in Cambridgeshire the experiment of having a key school in the centre of satellites, with the head teacher and the junior departments in the middle and the infant departments and reception classes in the satellites is one that ought to be followed. I believe that local education authorities somewhat tend to consider a school as being a social net cost or, at least, regard the social credit side as being only the provision of a desk not too far from the back door.
First, of course, there is the focussing effect of the school on the community: the twice-daily pilgrimage to the school gate and the gathering of the peer group of the mums. Secondly, there is the effect of out-of-school fund-raising activities, sports days, and so on. Thirdly, and most often forgotten, schools provide employment, and not only jobs for teachers; there are also the caretakers, the dinner ladies, and the crossing attendants. Above all, let us remember that in education small is, within limits, more efficient than big because everybody knows and can care about everybody else.
The Church, I believe—and I am glad to see the most reverend Primate here—has a role to play that is no less crucial
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than it ever has been, but it is different. We do not live in the days of Trollope. Too many parsons, I fear, still try to act out, and exhaust themselves in trying to act out, the roles of the 19th century. What they are ideally placed to do as, one hopes, neutral and ecumenical as well as committed and Anglican, is to identify social needs within the whole community, and identify them not only to their congregation but to the community, and also to identify the needs of the community in its wider surroundings. And this goes not only for the old, the sick, and the lonely, but for things like bus services and schools as well.
The post office is another vital link at the centre of village life, but also between the village and the outside world. I can only say in passing that if the level of stipend necessary to maintain sufficient sub-postmasters is too high to fit in with the costings imposed on the Post Office, the social role they play should be recognised. It would not be improper for this to be recognised financially by the Department of Health and Social Security. We are, after all, considering deprivation, and the Department was built to look after the deprived.
On transport I hope to learn much of interest this afternoon. The market research of the National Bus Company is one of a number of useful inputs—including some very useful experiments in post buses and the like. Because your Lordships are anxious to hear a Statement I shall not expatiate on that, or on the report that the noble Lord mentioned, although I hope that I may briefly say that I believe that we ought to be looking at the present criteria by which British Rail cost the running of existing branch lines and the opening of new ones, which seems to militate against a policy of expansion.
When I sat down to write this speech I despaired both of covering the whole canvas of rural conditions in detail and of distilling a philosophy to meet its demands in general. As I reach the end I recognise how wise I was, but I think that we must return to essentials and to the beginning of what I said. Over a wide range of its needs the countryside is in competition with the towns, not just for customers but for services. It is the infrastructural services that are proving too expensive to

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support in relation to diminishing employment. The one area in which this balance can be adjusted without direct Government interference in policy in local matters, which is a bad thing, is in the allocation, as Lord Walston so percipiently said, of the rate support grant. Recently this was shifted to favour the inner cities. Certainly the inner cities have a claim to special treatment, and were we debating inner city deprivation we would be saying the same thing the other way on. Is it not time that a comparison of the conflicting claims was examined again? It can then be left as it is, or adjusted in either direction. What we must not assume is that it is correct for all time.
I have omitted large and crucial subjects altogether. I have scarcely mentioned the admirable work of COSIRA, and the contribution of the Commission chaired by the noble Lord, Lord Northfield (I am sure that he will at least make good that omission); the Highlands and Islands Development Board, the Development Board for Rural Wales, and the various tourist boards. I hope that in indicating the direction in which their policies should lead us, while sparing your Lordships a long catalogue of my views on each, I have shortened the debate without impoverishing it.
In conclusion, without British agriculture this country would either go bankrupt or starve within a matter of years. Without the rural community there would be no agriculture. The countryside is a part of the British way of life. It is not simply an eventide home for the retired—though there is room for that. It is not only a healthy and relaxing dormitory for urban commuters, though there is room for that. It is not only a pretty place for second homes, attractive as these may be. But did your Lordships know that there is a booming industry now in selling second homes to Belgians, Dutch, and other members of the Common Market, who leave them empty for large parts of the year?
It is the scene of essential extractive industries such as gravel, china clay and gypsum, but it is also, and above all, a reservoir for our people of all those values and strengths that come from living in a caring community small
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enough for its members to know one another as individuals; where that knowledge brings them to resist the centrifugal forces of a rapidly changing technology and economics, and where many of them, getting their living in the face of natural forces that no strike, no concordat, and no parliamentary regulations can alter, recognise human life for what it is—a very small and precious thing that must be protected by courage and held together with mutal affection and respect by all of us. If we are not in the end to perish in confusion this must be done. Those are the values we are talking about today because they are under threat. The noble Lord, Lord Walston, deserves our thanks for bringing this threat to our attention so effectively.

PORTLAND FLOOD DISASTER
3.46 p.m.
Lord STRABOLGI: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place in answer to a Private Notice Question on the Portland flood disaster. The Statement is as follows:
"I would like to begin by expressing my sympathy for the residents in Portland who suffered such a terrible experience on 13th February. We are still collecting information about the cause of the very severe flooding but it looks as though the wave action which caused the damage was of freak proportions. Subsequent reports from the Meteorological Office suggest that waves of 20–25 ft. had built up in the Channel as a result of a storm swell in mid-Atlantic. By the time that these waves reached Portland they had increased to 40 or 50 ft., but local weather conditions gave no warning that such an onslaught was imminent.
"All our efforts are at present concentrated on dealing with the problems on the spot, and it is too early yet to make a full assessment of the position. However, it is clear that no sea defences could possibly keep out freak waves of 40 to 50 ft., even if the sea defence improvement scheme which the Wessex Water Authority at present has in hand had been completed it would not have protected Portland against these conditions. Nevertheless, I have instructed

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my engineers to discuss straightaway with the Water Authority what measures now need to be taken to strengthen the sea defences, and how the warning arrangements can be improved. I have told them to offer all their specialist advice to the Authority and to indicate that we shall be prepared to consider sympathetically such requests for additional funds as they may make.
"The question of compensation is a matter for my right honourable friend the Secretary of State for the Environment, but briefly the position is that the district council has powers under Section 138 of the Local Government Act 1972 to incur expenditure on assistance to householders and others affected. As on previous occasions the Government will be prepared to grant aid the council at the rate of 75 per cent. on any expenditure in excess of the product of a penny rate".
My Lords, that concludes the Statement.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Strabolgi, for repeating the Statement. I must begin from this side of the House by joining with the noble Lord in expressing our sympathy, as he so rightly did, to the residents in Portland. Those who watched on their television screens news reports last night and have read reports today in the Press must, in some measure, be aware of the magnitude of the disaster which took place. When one considers that the height of the waves concerned was probably a little higher than this Chamber, one realises that the problem suffered by them has been truly terrible.
We are of course glad to hear that arrangements are being made with the Meteorological Office to see how the early warning system can be improved. But at the same time are the Government going to combine this system with efforts which might be made through the Chamber of Shipping and the coastguards, who perform such a valuable service in this regard, and Trinity House? It seems remarkable that this very severe swell which developed in mid-Atlantic was largely undetected, or so it seems from the Statement, until its appearance in the form of those enormous waves on the night of 13th February.
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Turning to the actions which we hope will be taken, we note in the Statement that further administrative action will be taken to improve arrangements. Does that mean the Government will be consulting, through the Home Office, with the county councils, particularly those with coastal areas, about the normal emergency schemes and the question of bringing those up to date where necessary? These particularly concern the actions of both the emergency services and the Armed Services, and we on these Benches wish particularly to couple our appreciation of what the Armed Services have done in this disaster.
In regard to compensation, we note the Government are offering the standard expenditure which has been offered on previous occasions and which does not seem over-generous. We wonder whether the Government may be a little more forthcoming, bearing in mind that two disasters have taken place on a short stretch of coastline within the short passage of two months. We hope the Departments concerned will consider this very favourably and generously.
Earl GREY: My Lords, I, too, wish to thank the noble Lord, Lord Strabolgi, for repeating that Statement and we from these Benches would like to express our sympathy to the unfortunate inhabitants of Portland. Would the Government reconsider the urgent need for a national disaster fund to be set up at the earliest possible date to give immediate assistance not only to those who suffered at Portland but those at Torcross in South Devon?
Lord STRABOLGI: My Lords, I will see that the sympathy of the noble Lord, Lord Sandys, and the noble Lord, Earl Grey, is transmitted to those concerned, and I wish to add my own. Lord Sandys asked a number of questions. He asked, first, whether we would combine the Meteorological Office's information with that provided by coastguards and Trinity House. I cannot answer that at present; the disaster happened only yesterday. However, we certainly take the point on board and I will let him and your Lord ships know later on. Earl Grey asked about a national disaster fund. I will also put that point to my right honourable friend the Secretary of State.

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To sum up the action which the Government have taken, we have instructed our engineers from the Ministry of Agriculture, Fisheries and Food to discuss at once with the water authorities what measures are needed to strengthen the sea defences and how the warning arrangements can be improved, and we will take account of what the noble Lord, Lord Sandys, said. We are therefore offering whatever specialist advice we can and what is required. Her Majesty's Government will also be prepared to grant aid through MAFF for the defences and, through the Department of the Environment, for the relief of households. I know, too, that the Royal Navy, the Army and the voluntary associations are doing what they can to help the unfortunate people who have been afflicted by this terrible natural disaster.
It is of course for the local authority of the area affected to decide the extent to which they exercise their powers, including the making of grants or loans to other persons or bodies, under the Local Government Act 1972. The Government will reimburse the local authority for any excess expenditure, as I explained when I repeated the Statement. Of course one hopes that householders will be covered by insurance on their houses, as I think most householders are, but if any further compensation or relief is required, I am sure that will be considered very seriously by the Government.

THE ECONOMY: GOVERNMENT/TUC JOINT STATEMENT
3.56 p.m.
The LORD PRIVY SEAL (Lord Peart): My Lords, with the leave of the House, I will repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"As the House is aware, the Government have been holding discussions with the General Council of the TUC to find a better way of conducting industrial relations and to reach a common approach that will secure our economic objectives. The Government and the General Council have today
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agreed a joint statement which sets out the outcome of these discussions. I will place the statement in the Vote Office.
"The statement reports that the TUC is on its own authority separately issuing guidance to its affiliated unions on the conduct of industrial relations covering three areas: first, negotiating procedures for avoiding disputes; secondly, the conduct of industrial disputes where they arise; and thirdly, trade union organisation and the closed shop.
"Honourable Members will find that the documents issued by the TUC on these matters are appended to the joint statement. They lay down comprehensive standards of trade union responsibility and commend the value of conciliation and arbitration.
"They say that strike action should be used only as a last resort; that agreements once entered into should be observed by both union members and management; and that when a strike does take place there is a vital necessity to maintain supplies and services essential to the health and safety of the community.
"They contain detailed advice on the identification and union control of pickets. The third guide acknowledges that aspects of the closed shop have caused concern and that there is a need for agreements to provide for conscientious objectors and certain other categories of workers.
"The Government welcome the publication of this authoritative advice by the General Council of the TUC, which their affiliated organisations are asked to accept as a basis for their conduct of industrial relations. General observance of this guidance would make for a substantial improvement in our industrial relations.
"The joint statement itself is concerned to find a better way of reaching a consensus on the economic path. We jointly recognise the anxiety about employment prospects, the need for training so that workers will possess the skills to match the new technological developments, the need for greater industrial accountability and demo-

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cracy and the fundamental importance of increasing productivity.
"We agree that industrial regeneration cannot rely on market forces alone and that action is needed by industry, the Government and trade unions. The document emphasises the need for a close working understanding between the Government and the Trades Union Congress and that the proper handling of this relationship imposes on the TUC the need to accept that its expanding role carries with it wider responsibilities.
"We are agreed that the British people must achieve living standards in line with those in the rest of Europe; that prices can best be kept down by increasing productivity and output and re-equipping our manufacturing industry.
"We have agreed on an important objective about the future level of inflation. It is that within three years we must reduce our annual rate of inflation to 5 per cent. or below. We are agreed that the concept of a 'going rate' with successive groups escalating the rate by building on the basis of earlier settlements is an obstacle to reducing inflation.
"The statement points to advantages that may be secured from the synchronisation of pay bargaining in certain areas, whilst recognising the difficulties of introducing this quickly.
"We are agreed that each year before Easter there should be a national assessment by Government and both sides of industry of our economic prospects.
"On the question of workers in the public services, both sides have agreed to examine means by which workers in the public services could establish arrangements for negotiating their pay and conditions which would make it unnecessary for them to resort to industrial action. And we agree as a matter of urgency to identify the groups that might be covered by such agreements.
"We have also agreed on urgent consultations into the problems of relativities and comparability in pay matters which are of course directly related to the problem of low pay and
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differentials, and on the continuing arrangements to deal with them.
"These objectives have been agreed between us as a guide for action now and in the future, and the joint statement asks trade unions to have regard to all of these objectives from now on.
"This is an important beginning.
"But it will of course be necessary for all sections of the community to be involved in this search for a better way. I note that the CBI yesterday published a series of recommendations that overlap some of the matters I have referred to, and the Government will be ready to have discussions with them to try to secure as much agreement as possible. I appreciate that joint discussions already take place between the TUC and the CBI, and I would welcome their extension.
"Our approach is based on the Government's conviction that the most effective and lasting way of improving the conduct of industrial relations is to secure the consent of the trade unions and their members in the manner in which it is embodied in the joint statement.
"It is only too easy to propose apparently simple legal answers to these complex issues. They do not exist.
"The value of this joint statement is that by discussion, consultation and, above all, by consent it brings the full authority of the General Council of the TUC to bear, alongside the Government, in working out a constructive approach to our economic and industrial future."
My Lords, that concludes the Statement.
4.3 p.m.
Lord STRATHCONA and MOUNT ROYAL: My Lords, the House will be grateful to the noble Lord for repeating this very wide-ranging Statement, and we shall look forward to reading the TUC's statement in full in due course. However, I must say that the history of the last 10 years, since the publication of In Place of Strife, is not wholly reassuring in this matter. I remember Mr. Healey saying at the time of the Social Contract, I think in 1974, that that was the New Deal Britain

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had been waiting for. Yet after all these years we find today's Statement now talking about this being "an important beginning."
It must also be said that the Statement contains its fair ration of platitudes. I am sure that most of us would, as the Statement puts it,
"commend the value of conciliation and arbitration".
Most of us believe that,
"strike action should only be used as a last resort…".
Almost all of us would agree—and here is a supreme irony—
"that agreements once entered into should be observed by both union members and management".
It would indeed be something if we could achieve that. I do not think that that was what the other side were saying when we debated this question in relation to the 1971 Industrial Relations Act, if my memory serves me right.
However, we can certainly welcome the Government's declaration of the
"vital necessity to maintain supplies and services essential to the health and safety of the community",
and the
"identification and union control of pickets".
Further, it seems to me a rather belated repentance to talk about possible limitations of the closed shop. Again, I doubt very much that that was the kind of advice which the TUC was giving to the Government at the time of some of our previous debates on industrial relations legislation.
Unfortunately, to recognise some of these problems is not to solve them. They are simply not going away. Again, it is welcome to find the Government and the TUC saying that they recognise the limitations of the TUC's constitutional authority, and they talk about giving it wider responsibilities. However, I suggest that it is possibly a little facile to talk about
"apparently simple legal answers to these complex issues",
and to say, "They do not exist." Anybody who has ever had anything to do with the law knows that it is seldom simple and very rarely intelligible. It is also true to say that surely in our present situation exhortation has been demonstrated as not being enough. How can we have confidence
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that what the Statement refers to as the "common approach" will really secure anything?
I am afraid that for me the Statement reinforces a conviction that by their inaction the Government are missing a national opportunity to secure all-Party support for what I believe should be stern and binding measures, even if of a temporary or emergency character, to curb some of the wilder excesses of certain elements of society, who have allowed their sense of grievance to outweigh their sense of responsibility, their compassion and their common sense.
4.7 p.m.
Baroness SEEAR: My Lords, we on these Benches also wish to thank the noble Leader of the House for repeating the Statement made in another place. We welcome many of the items included in it, yet we must at the same time say that it leaves, perhaps inevitably, many questions unanswered, and, from our point of view, in many respects it does not go far enough. Outstanding among examples of the questions unanswered is the fact that it has nothing to say about the immediate situation which confronts us, and with which everyone in your Lordships' House, and indeed throughout the country as a whole, is greatly concerned. Perhaps in the proposals put forward here there are hints of matters which might have a bearing on the present situation. For example, may we interpret the hope that by 1982 the inflation rate will be down to 5 per cent. as a suggestion that those people who in the present pay round receive a much higher rate of increase than is granted to other people will in the years between now and 1982 be prepared to accept a lower rate, so that there may be some hope that the 5 per cent. inflation rate is other than the pious hope to which the noble Lord, Lord Strathcona and Mount Royal, has already referred?
Of course we welcome the fact that the TUC is prepared to lay down guidelines for behaviour in relation to strikes and the other matters mentioned in the Statement. But again I wish to ask the noble Lord—as I have asked in your Lordships' House on a number of occasions in the last week—what has the TUC said to the Government about the way in which it proposes to deal with breaches in the guidelines? We

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on these Benches, like the noble Lords opposite, would far rather see voluntarily agreed procedures governing our industrial relations, if they will indeed govern them; but voluntarily agreed procedures which are not in any way backed by sanctions used by the TUC, or by the appropriate trade union authorities, are not at all procedures which are worth anything more than the paper on which they are written.
We ask the Government to tell us what is happening, and what action is being taken by the trade unions where there are breaches of these voluntary agreements. If we are not given some understanding that something will be done, then, indeed, reluctantly, one will have to say that it is necessary to resort to the legal procedures which the noble Lord says cannot be made to work but which, after all, in other countries, do on occasion work.
We welcome the reference to modifications of the closed shop. Where it says that conscientious objection will be accepted as a reason for not entering a trade union, may we take it that the very rigid interpretation of religious objection has been abandoned and that a wider interpretation is now to be accepted? It would be a most welcome introduction if this were so. And if there is to be a modification of the attitude towards the closed shop, may I also ask whether, in line with the question asked by my noble friend several times in the last days, this will extend to protection for those people who are breaching the strike regulations of the unions at the moment in order to carry on their duty?
We on these Benches are also glad to hear that there are to be some steps taken towards setting up machinery for establishing relativities, but we would urge that nothing less than the reintroduction of the Prices and Incomes Board, so lamentably abandoned by the Conservative Party, should be considered. We would also say that no agreement which is reached by only one Government, by one Party, can hope to endure. We have seen this again and again during recent years; and one of the few points made by the noble Lord, Lord Strathcona, with which we on these Benches can agree is that there is need for all-Party agreement—all-Party agreement along with the agreement of the trade unions and the CBI, so that we can rely
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on that agreement enduring. Finally, my Lords, let us say that a concordat between the trade unions and the Government is a useful thing, but the final authority must rest with the Houses of Parliament.
4.12 p.m.
Lord PEART: My Lords, the noble Lord, Lord Strathcona, welcomed the Statement in parts. I think he should recognise that this is really a tremendous step forward. After all, the CBI, the employers—and they are important—welcome this, and this is mentioned in the Statement. So I cannot see why we should have this niggardly approach to the Statement. If the noble Lord will forgive me for saying so, I thought he was labouring his questions to me. In fact, what he said became almost a speech. I hope he will carefully read the guidelines. I could quote from this document what the trade unions have accepted in the picketing field. There is a whole section on it, and I hope noble Lords will look at it.
I therefore hope that the Opposition will be really constructive if they desire to improve industrial relations—and I know the noble Lord wants to have good relations. We do not want to have a repetition of the frustration which has occurred because, if we are going to get productivity going, and if we are going to have good management, et cetera, it is important that we should have good industrial relations. We believe that these can be achieved by the voluntary method.
I welcome the remarks of the noble Baroness, Lady Seear. I think she was much more constructive than the official Opposition. I did not quite agree with all that she said, but, nevertheless, she put it courteously and constructively, and welcomed the Statement. She asked about the immediate situation, and talked about the three-year period being, or possibly being, a pious hope. I hope that will not be so. On the guidelines affecting picketing, there is a whole section in the White Paper, as I have said. I shall not read it out now; no doubt noble Lords will return to this question on another occasion. She also mentioned breaches of the voluntary, agreed procedure. Here, again, I hope that, by voluntary methods and by exhortation, and with the CBI,

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the trade unions and the Government involved, this can be successful.
Specifically on the closed shop, I have been responsible, as the noble Baroness knows, for negotiations in the field of the Civil Service unions, both the Civil Service industrials and the Civil Service as we know it. I and the Government want to achieve a liberalisation of the definition, and not just to confine it to one category; in other words, to have other categories. So I do not think there is any difference of opinion between us on that. Generally speaking, I am glad there has been a welcome of most parts of the Statement.
Lord HOUGHTON of SOWERBY: My Lords, may I ask my noble friend two questions? First, in view of the importance of the Statement that he has just made to the House, are we likely now to be given an opportunity to debate it? That is the first question. The second is: Is my noble friend aware that the Statement he has made, important and welcome though it be, appears to have little or no bearing upon the current pay round? Is he aware that his reference to a study of the application to the public sector of the principles of fair comparability was made in the light of the fact that the principles and the methods of applying fair comparability to the Civil Service were agreed under my chairmanship as long ago as 1955, and remained unbroken and unsuspended until they were put into cold storage by the present Government? Is he aware that there is a threatened Civil Service strike due to begin 10 days from now, and will the promised consultation on the application of fair comparability be finished in time to avert that tragic occurrence?
Lord PEART: My Lords, my noble friend is quite right: he played a leading part in this, and we had a debate on it in this Chamber. But we restored the Pay Research Unit, and the structure is there now. It has been assessing, for the Civil Service, analogues in sections of industry. I, being responsible for it, met the unions only recently. Some of them wished to strike before negotiations had begun. I deplore that, and I hope my noble friend does. It is absurd that civil servants, who have an agreed procedure, should
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decide to take industrial action, or threaten it, before talks, or before the information has been assessed.
I hope my noble friend, with his great experience and the great work that he has done for the Civil Service unions over many years, will use his very powerful influence to make them see the light of day. On the question of a debate, all I can say is that I do not want a debate now, but I believe we should have discussions on this matter through the usual channels. I agree that it is a very important subject.
Lord HARMAR-NICHOLLS: My Lords, is the noble Lord aware that the Statement he has just made has no relevance to the immediate problems which are hitting the country, and ought not to be taken as the Government's answer? They ought to be dealing with the immediate problems. On the Statement, which is a long-term one, can the noble Lord guarantee that the spirit behind the Statement will still stand up and remain intact when there is a Government other than a Labour Government in power? Further, in order to ensure that that is so, can he guarantee that, out of office, the Labour Party will not try to sway the unions away from the spirit of this Statement for purely tactical reasons, as indeed they have done in the past?
Lord PEART: My Lords, in reply to the noble Lord I would say that I do not indulge in hypothesis. I am thinking in terms of his views on which Party will form the next Administration. I believe that this Statement, bringing in the attitude of the Trades Union Congress, will be of vital importance, so I hope the noble Lord will not use extravagant language when he criticises.
Lord JACOBSON: My Lords, will my noble friend assure us that, if the Statement he has just read has the importance to the nation which I think it has, he will urge his colleagues in the Government to launch a campaign to make the public aware of what is actually being proposed and what is in fact said in the Statement? I think the public are very confused at the moment, and the confusion arises on two topics: the immediate topic of the current industrial disputes and the long-term topic of how we avoid falling back into the same

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chasm. Will he urge his colleagues to make a great effort to make this known to the public?
Lord PEART: My Lords, I agree. This is why we are making this Statement today in both Houses. No doubt noble Lords will study this carefully and, even if they are critical at this stage, I hope that they will come to accept that this relationship is something worth achieving, and that the guidelines that they will read in the White Paper are important—and important because we wish to increase productivity, which is one of our main targets, and to reduce inflation. So far as I can, I will persuade my colleagues to conduct a campaign on the two issues that the noble Lord mentioned.
Lord BOYD-CARPENTER: My Lords, the Statement says that the Government assess the possibility of a 5 per cent. rate of inflation being reached in 1982. Is the noble Lord aware that that assessment must be based on some assumptions as to the level of wage increases during the three years between now and 1982? Can he at least tell us what is now the Government's target for the level of wage increases in lieu of the past 5 per cent. for the current year?
Lord PEART: My Lords, as the Statement says, within three years we must reduce this. Our aim this year must be to have the level as low as possible, as I have said, in relation to the target put forward. Unfortunately, certain unions have talked of 20 per cent., 30 per cent. and even higher. We stick to the figure that I mentioned.
Lord BOYD-CARPENTER: My Lords, what figure?
Lord LEE of NEWTON: My Lords, is my noble friend aware that, for long, power has gone from the centre, from the TUC and the Executive of the unions, into the localities, and that collective bargaining under those conditions is bound to lead to the kind of anarchy that we have seen, and that those who have been campaigning to break down the incomes policy and to return to collective bargaining must not run away now from the responsibilities that they have incurred? Is my noble friend further aware that the kind of so-called collective
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bargaining that we now see is quite anomalous? The "going rate" for the whole of industry is not collective bargaining. Collective bargaining means that within each firm or industry one negotiates a rate which can still leave those firms or industries in a solvent position. A position in which we wait for one powerful employer to concede a very large increase and then demand that everyone else should get that is the very negation of collective bargaining.
Lord PEART: My Lords, most noble Lords will agree with my noble friend who has long experience in these matters. I reiterate that within three years we must reduce our annual rate of inflation to 5 per cent. or below; and, as was said in the Statement, we are agreed that the concept of successive groups escalating the rate by building on the basis of earlier settlements is an obstacle to reducing inflation.
Lord GLENDEVON: My Lords, may we take it—and I am sure that we may—that the Prime Minister has a unified Cabinet behind him on this occasion?
Lord PEART: My Lords, if the Cabinet was not united then inevitably there would be some resignations.
Several noble Lords: Oh?
Lord PEART: My Lords, it is not unknown in a Conservative Administration. I can remember the dismissal of Cabinet colleagues by one very ruthless Prime Minister. It is an agreed document by the Cabinet.
Lord WIGODER: My Lords, does the noble Lord the Leader of the House recollect that in recent days there have been repeated requests from all parts of the House that all political Parties should join together in attempting to solve the problems that are dealt with in this Statement? Does the noble Lord recollect that on each occasion what we have been told is that the suggestion will be conveyed to the noble Lord's right honourable colleagues in another place? Can the noble Lord now tell us what is the response?
Lord PEART: My Lords, I hope that the response will be that if we have an

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agreed discussion at a later period the Opposition will be responsible in their opposition to these proposals. I cannot go beyond that. The Government as a Cabinet must be responsible for the governing of this country. That is right. You cannot farm out a responsibility of that kind to Parties in the sense that I think the noble Lord is thinking. But if the Cabinet goes wrong, then another Party will seek to criticise the Government—and they have that right—with the desire to overthrow the Government by constitutional means in General Election. That remains the policy of the Government.
Lord WIGG: My Lords, is my noble friend not aware that what has happened is that the Government, in pursuit of policies to get rid of inflation, have got caught up in the drive for dependence upon market forces and that we have slipped into what we now may call free collective bargaining, leaving the political forces represented by the Labour Party to pay the price for it; while those who have generated the forces which created it tend to slide away from it? In his Statement my noble friend will be aware that he made reference to the fact that we cannot depend upon market forces exclusively.
That being so, will my noble friend be good enough to tell us whether the Government intend to tackle the alternative—which is, at least, some degree of planning—in order that inflation shall not only be defeated but that there should be a rising standard of life? Is he not aware that if, by 1982, we have got inflation down to 5 per cent. without creating comparable productive forces, there will be massive unemployment in this country which will threaten the roots of our democracy; and that that must be faced up to? Therefore, would my noble friend urge his right honourable friends not to listen to the siren voices from the other side who talk glibly about unity but who are never prepared to stand up for their corner when the barricades are reached?
Lord PEART: My Lords, my noble friend appreciates that I stressed that industrial regeneration cannot be related to market forces alone. He asked what we were seeking to do. We want the development of industries. Here the employers
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have a leading part to play. The CBI have a responsible part, and are playing it. I am thinking in terms of planning agreements and other matters which we have discussed previously. In view of the fact that I am going to have discussions about the possibility of raising this again with another debate and the fact that we have interrupted a very important debate which I do not want to spoil, I would hope that I could leave it at that for the time being and that I could have discussions through the usual channels.

RURAL DEPRIVATION
4.27 p.m.
Debate resumed.
Lord MACKIE of BENSHIE: My Lords, the debate that we are now resuming is very relevant to the subject that we have just been discussing; because we are discussing the threat to society in our country which has always been united in its attitude to its work, to production and to agriculture because those concerned live in one society. They understand what each other is doing and that is the reason why it is so important that we discuss this subject of rural deprivation raised by the noble Lord, Lord Walston. I must say I was a little puzzled as to what was meant by "rural deprivation". The one thing that I was sure of was that neither the noble Lord, Lord Walston, nor I were the results of rural deprivation. Having said that, I thought (and it turned that I was right) that I understood what the noble Lord wanted to talk about. It is something from which perhaps we have suffered more in Scotland, and particularly in the Highlands, than has been the case in England. It is something one can see very clearly in one's own lifetime, and in one's own work in farming. When I came to my farm at Benshie after the war it was the same size as now and we did much the same agricultural work. On the evening before Hogmanay my men and I assembled to lower a little whisky before going home to our wives. We used to have 12 people in the little office—and I shall not tell your Lordships how many bottles! Now we have only seven people, and that is a very big drop in population.

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The other aspect of the matter that brought this home to me was when I was at my father's funeral only three years ago. A lot of his old retired men were present. We were talking about the old days and of course describing funny incidents that had happened about the farm. One man said: "There is no other fun on the farms nowadays". Another very shrewd man said: "There is no other folk on the farm nowadays". This is what is happening in agriculture and it has gone to an extent that a lot of people cannot get the good men to carry out essential jobs, particularly hill farming, because of the social conditions.
In hill farming, for example, one will get a man who loves his work and will happily stay in the hills all day, living a full and satisfying life. However, it is seldom that one will get a wife who really enjoys being tucked away in a remote cottage up a glen three or four miles from the nearest neighbour. This is repeated throughout agriculture even in the more developed areas. Not only are the wives lonely, but the cost of living is more expensive. The noble Lord, Lord Walston, mentioned this. Some things are supposed to be cheaper in the country, but that is so only if one does a lot of work preparing food, catching the rabbits, digging the potatoes, and everything else which housewives have got out of the way of doing. They do not see why they should do these things when so many prepared foods are available.
Only yesterday the Scotsman published its table of prices, the cost of a shopping basket in different areas. They take Edinburgh, Glasgow, Berwick-on-Tweed, Cowdenbeath, Hawick, a Highland village and Aberdeen. It is extremely interesting that the cost of the basket of food in the Highland village was the highest. It cost £4·71. The lowest basket cost £3·43 in Aberdeen. Aberdeen is probably the most prosperous town in Britain—certainly in Scotland—but the Highland village is enormously more expensive to live in. A very large part of this comes from a fact that has already been mentioned. It is not so much that transport is more expensive—though it is more expensive—as that, if a village shopkeeper has to live by selling a small amount of stock, he has to charge a bigger margin of profit. As the noble Lord, Lord Elton, pointed out, he is not living high, he is working
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80 hours a week and has to charge the customers more.
The other factor which, again, was mentioned by the noble Lord, Lord Walston, is education. In the remote areas in the Highlands—for example, in Sutherland—the schools have been closed down one by one or have been operated at great expense for the benefit of just one or two pupils. The attitude to education has been one of: "For goodness sake let us get the children into a big school"—I mean by that, taking Sutherland as an example, a school at Golspie—"as quickly as possible". A man might become a shepherd in a remote area, but as soon as his children reach the age of 11 he has to look for a job elsewhere because his children would be taken away and put in a school at Golspie where they would board, something for which they would not care, although many English pay large sums to be deprived of their children at an even earlier age.
These factors in education are very important because the small school has been proven in a large number of parts of the world to be very effective if it is properly run. It is perfectly right that peripatetic specialist teachers are an excellent adjunct, but the main thing is in the excellence of the village school teacher. There is not enough scope for paying people more for a very valuable job. Every now and again one gets a perfect example of what can be done. There is a small school next door to us, Padanaram School, and we have a teacher who is brilliant. She never has more than about 12 pupils. New pupils improve enormously beyond their performance in a previous school. I do not think that you need specialists to bring children up to primary level. An enthusiastic teacher can keep ahead just by reading the work, if nothing else. His or her enthusiasm and personal attention to the children can make up for it. There is a suburban attitude among directors of education and they look upon the village school and the small school as a perfect nuisance. They think that as soon as children go to a large school any faults can be corrected there. That is untrue. It is an attitude which one can understand because it is one of administrative ease, but it has done a lot of harm to village and country life, and a lot of harm to children.

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The other great snag is transport. After the war, we used to have buses running between Kirriemuir and Forfar. They were always bung full and I am sure made a profit. These are two quite populous areas and the buses now run nearly empty the whole time. This is enormously expensive. I do not agree that one should always try to maintain regular bus services. Three years ago my right honourable friend the Leader of the Liberal Party, who represents the Borders, carried out a calculation of the cost of the bus service in his area. He found that it cost 50p per passenger mile, which was something like three times the price of flying in Concorde. I do not think that we can keep that up; in many cases it would be cheaper to give people cars and teach people to drive them than to try to provide a bus service.
There are a great many admirable services being provided right now. The Post Office deserve enormous credit for the running of the Post Office van plus bus. That has been an enormous help in a great many areas. Many speakers have already put their finger on the problem and this issue should be put in the hands of the local authority. They are the people who should license the vans, set out the routes and deal with the consultation. I do not see how the Traffic Commissioners can understand what goes on, particularly in these rural areas. This is one of the things that would help a very great deal.
On housing, there are a lot of good houses in the country. Certainly, the Rent Act and rent protection have done a great deal of harm in Scotland. Farmers have a tremendous interest in their own community and they may let a house to somebody who will develop a grudge against them. In a farming area, a lot of damage can be done by people who have a grudge against the farmer. They can leave gates open and so on. So the farmer, rightly, feels he must keep some control over his cottages. The result is that a great many houses are going to rack and ruin. This is because of the Rent Act.
I think it is having very much a counter productive effect in our area. I do not think one can stop people buying holiday houses by law, but I think we could encourage far more by grants to the local
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man who wants to build up his house and to improve it. I think that would do a great deal of good. I personally think that housing will have a lot to do with keeping up the fabric of life in the country. Again, in this village I am talking about, Padanuram, the council built a number of old people's houses and also a number of houses to let. There has been a large increase in the village and it has had a very good effect. The hall committee is now a very lively body; the school is now safe and the people who live there commute to Forfar or Dundee. So far as I can see, they take a full part in the life of the village; and, try as we will, we cannot force factories into the country. I think that the commuter will live in the country and can do a great deal of good in the countryside simply by providing a sufficient number of people to keep essential services going. Certainly this is very true in Caithness and along the A.9 are a lot of croft houses where people could live and commute to Wick and other places to work.
We come now to the question which I suppose is the core of the business: work in the countryside. It is not easy. Sutherland is a case in point. In the Aberdeen Press and Journal yesterday I saw a big survey of work going on in the Highlands. There was the story of a success here and a success there, with new factories in various places. In another part of the same paper was an account of Sutherland District Council's shock and dismay when they found that Sutherland in the last five years had lost 5 per cent. of their 13,000 population—and that in spite of the efforts of the Highlands and Islands Development Board. They have done a lot of good work and have tried very hard. It is not easy and I think that a whole number of factors need to be taken into account.
I know quite a lot about it because I am chairman of Caithness Glass, which is one of the most successful of the native industries which have been built up in the Highlands. We have had a tremendous amount of trouble in getting the right people to give us the skills to build up a modern industrial or craft enterprise which employs 170 people. It is a small industry, but very important, in the town of Wick. The important thing, as I say, is getting the right people and I think we

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need to look at a whole range of aspects if rural life is not to go to pot altogether.
We certainly need to look at taxation, because if you are going to develop an industry you have really to rely on finding the people to build it up from small beginnings, since you are not going to be immensely successful if you keep on bringing in branch factories. You have to get someone on the spot to develop it, and he has got to be able, quite apart from getting grants, help and everything else, to build up that enterprise and keep some of the money.
We have got to look at what is happening in agriculture as well. The landlord-tenant system is going to pot at the present time. It was a very useful system, and taxation at the present moment encourages landlords to take large tracts of land into their own hands and farm them; with the result that you lose tenant farmers, who were the centre of social life in a parish, and you simply get a large parish farmed by a company with a manager and an owner who very often is too busy counting up his taxes to pay much attention to other matters. This takes away the individual and I think it is something we have to look at very closely.
Another thing we have to do is to look at the development of natural resources. I have tried quite a lot of things in the Highlands, some of them successful and others not. The successful ones, the easy ones, are those which are tied up with something the Highlands have to offer, such as the hotel and tourist business, which is still capable of great development. That is a natural enterprise, where the customer comes to you. I know it has snags; I know it is seasonal; but still, if that is what is there, we should develop it. My Lords, I have spoken too long but I should like to say in conclusion that for many reasons this is a very important debate. I think that the answers are many and varied but we must all be grateful to the noble Lord, Lord Walston, for bringing it up, because we must understand its great importance.
4.46 p.m.
The Lord Bishop of NORWICH: My Lords, I should like to echo what the noble Lord, Lord Mackie of Benshie said, about being indebted to the noble Lord, Lord Walston, because this is a matter of
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major importance. I must apologise to the House, in that I am due to preach a sermon—not now, but in about three-quarters of an hour—and therefore I may have to leave after making my speech. However, I hope to return to hear another six or seven speeches later on. I promise your Lordships that the notes of my sermon are on a different bit of paper from the notes of my speech!
It seems to me rural deprivation nearly always means rural isolation, and most of us who live and work in the country, like the noble Lord, Lord Mackie, up in Scotland, like the noble Lord, Lord Walston, in East Anglia and like myself in Norfolk, felt perhaps rather claustrophobic sitting on these crowded Benches during the first part of the afternoon. We were so glad when some of your Lordships went away and left us feeling more at home—and now of course they are all coming back again—because, of course, we are used to isolation in our part of the world and this deprivation is linked, as I say, to isolation.
Try as we will, it is not easy to overcome this. Two of our parishes were asked if they would share a clergyman. They said that they would not, because these two villages were on different sides in the war. We asked for an explanation and it turned out that it was the Civil War—but we have long memories in Norfolk! Another parish would not have somebody linked with their next-door parish, because that parish had not told them when the Danes came; so one is used to this sort of isolation, which is a true deprivation. At the same time we must recognise the fact that we cannot "cotton wool" the nation today. It is good for us to face the living issues which the noble Lord, Lord Walston, places before us and then find, in fairly rugged and determined ways, how we can turn the deprivations in the rural areas, without being defeatist, into a new quality of life.
I was interested to see that Canon Tony Russell was speaking yesterday at the conference which I gather the noble Lord, Lord Elton, had initiated. He had learnt the hard way by being right out in the Breckland as a young clergyman in one of the more isolated areas of Norfolk; and he made two points. The first is that people who want to live in the country may in many cases have to

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go without local medical or social services, schools or shops, simply because that is the way in which the country is at the moment. It has to be overcome, but it is a fact. However, Canon Russell also suggested that, like the monasteries, in religious terms, the villages were, in special terms, the repository of values of significance and importance in the wider society. It may not be possible for us to deal tidily with deprivation, but it is well worth our taking a determined stand on seeking to maintain and increase the quality of village life.
I know the employment situation makes this very difficult. As an example, the noble Lord, Lord Mackie, has spoken of his lovely Scotland, so let me therefore quote from Norfolk, with the approval of the Front Bench opposite to me, whom I see are present at this point. In 1932, 45·5 per cent. of Norfolk's school leavers went into agriculture, but in 1972 only 8·2 per cent. were able to be absorbed into agriculture. So we face a straight forward problem of the need to find a diversified form of employment for those who live in rural areas. We know about the rural bus services; we know about the cost of running cars which has risen so steeply. But it means, therefore, that a massive shift of allowable money within the country ought to be moved towards the countryside, because there are qualities and areas there that we must not allow to wither.
This is perhaps such a vivid illustration that it could hardly happen here. I was talking to one of our leaders in education over last weekend, when we were having a special education service in our cathedral, and he told me how he had been working 20 years ago in Turkey. He said:
"I worked in Turkey 20 years ago, and then the road from Izmir to Ephasus was largely bordered by farmland, with hamlets every few miles. I revisited the area three years ago and found that the city fringes have grown enormously, and practically the whole of the road is now lined with shanties—occupied by peasants who have been displaced from the land, because the tractor has taken over from the adze".
Obviously, nothing as terrible as that—I hope—could even happen in our fair land, but, unless we do something fairly dramatic and determined about rural deprivation, the balance between country and urban will tip alarmingly in the wrong direction. But those of us who also worked for years
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in the inner city area—I myself had 10 years in that area—know that parallel problems of a different kind develop alarmingly, if the balance between town and country is not maintained.
Education is, of course, the obvious situation that we look at and, again, I know that the question of money arises all the time. In Norfolk, we have 115 schools with fewer than 51 pupils in them, and, as one-third of all the schools in Norfolk are Church schools, we who seek to represent Church life in Norfolk know that this situation must be dealt with. I am very glad that two or three of your Lordships have made the point about peripatetic teachers. I believe that teachers with specialist skills must go to the small schools, rather than that children in need of special skills must always be driven off to the big schools.
I was talking to a chartered surveyor who was concerned about the countryside. He said to me:
"Once the Church and the school are taken out of a village, the heart goes out of the village".
We have to make sure that Church and school have a living presence in as many of the rural areas as possible. I know that it is difficult to do this, but, without those, we are in difficulties, because once we take away Church and school we have buildings without living people. We know something of this problem, because we have 637 glorious churches in Norfolk and about 270 clergy to service them, from the clerical point of view. Therefore we must be mobile. We cannot provide a schoolmaster and a parson for every village.
I have a suggestion which, I hope, might be of some use here, because in talking to the headmaster of one of my village schools, and his wife, who is a determined supporter of village schools, they made this point. The villages have never been idyllic. Nevertheless, village communities have provided, and do provide, the individual with a framework for living which is clearly acceptable to the human spirit. Time in the country is for living, not just for existing. The great danger is that villages will continue, but become geriatric ghettoes, not balanced caring communities where young and old can work together for the good of all.

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Therefore, I have a practical suggestion which stems from the question; can we do something about this? Yes, I think we can. Is it impossible to consider that, using an area such as Devon, the Highlands or Norfolk, as a pilot scheme, we might have a modern Domesday Book, in which we look and see whether the following factors are present in any given village: a church building, a small village school, a village shop, a post office, a pub and a village hall—about five or six centres. In addition to that, three out of those five centres should have key personnel—perhaps the post office, the church and the pub—who are part of the village community.
Having made that simple survey, we could put the details on to a grid of about 10 square miles, to see whether we could, at least, pinpoint across a given area growth points rather than deprivation points, and to see that no one lived further than 10 or 12 miles from a growing area of rural life. We should then be taking the positive rather than the negative view. It would, of course, need a proper Government study, because it would be too difficult for any voluntary organisation to carry out such a wide-ranging exercise as this, but we could then, at least, make sure that no one lived more than 10 or 12 miles from a living rural area with key people in it, where there was a sense of community, of church life, of village life, a balanced group of young and old, and where the qualities of life in the country—which are very precious and which, I believe, we have to work hard and energetically to maintain in our country—can be increased. So this debate, which I again thank the noble Lord, Lord Walston, for initiating, could be a stepping-stone to a whole new and developing view of life in the rural areas.
5.8 p.m.
Lord COLLISON: My Lords, it is a privilege to follow the right reverend Prelate, and I was very glad to hear him talk about the quality of rural life. As I have said earlier, there is a quality, particularly in respect of those who work on the land, farmers and farm workers, which is of great importance, because the fact that you have to work and co operate with nature imposes a discipline which is very salutary. While I believe
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that towns have a lot to offer which the country cannot offer, in this respect the country has a great deal to offer which it is difficult to find in towns. But, like many other noble Lords, I want to thank my noble friend Lord Walston for introducing this debate, which gives us an opportunity of discussing the problem of rural deprivation.
I sat down to consider what I might say, and found that I had two questions to ask myself. The first was: how do you define a rural area? I do not think it is easy. To many people living in towns, going out into the fringe area is enough. That, they feel, is the countryside. Again, to find the most convenient river for fishing satisfies them. For them, that is the rural countryside. But, of course, it is not. Therefore, for the purposes of what I have to say, I have in my own mind defined rural areas as those places where one finds isolated farmsteads and homes, and places which are 10 miles or so from the nearest large town. The definition is purely subjective, but it is one which gives me a basis upon which to work.
The other question is this: How does one define "deprivation"? It is a fact, is it not, that we hear about so many deprived people in the world today?—people who are suffering extreme hardship, oppression and subjugation. The noble Lord, Lord Elton, has put down an Unstarred Question on this subject, which is to follow this debate. My experience as chairman of the Supplementary Benefits Commission enabled me to know that in some of our large conurbations there is dire poverty and distress, but thank goodness! we in this country do not suffer deprivation of the kind which involves people being subjected to oppression, torture, the denial of their human rights and so on. It seems to me, therefore, that for the purposes of what we are dealing with one can define deprivation only by comparing what happens in certain sectors of a given community—first, what happens in towns and then what happens in the countryside—and seeing whether there is deprivation because people happen to live in a certain place.
The fact that deprivation occurs does not excuse it. I welcome this debate, because it is important that we should air the subject this afternoon. I have not

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attempted to find any answers. There is no doubt, however, that many people—in particular, the poor who live and work in rural areas—find that restrictions and hardships are imposed upon them which are not experienced by the majority of people who live in towns: people who quite rightly expect to get what a relatively affluent society can provide for all its citizens. I say again, it is not right that the advantages of modern civilisation should not be enjoyed by everybody.
I do not suppose that these deprivations are consciously or deliberately imposed upon country people. They are the consequences of isolation. I believe that they have grown like Topsy and that they are becoming more acute because of the continuing development of processes, services and so on which are directed mainly at townsfolk. Just because the services are there does not make it easy for country people to enjoy them; and in many cases, of course, they are simply not there.
The absence of transport facilities has already been mentioned by other speakers. I am afraid that some repetition in this debate is inevitable, and I apologise if I appear to be repeating points which have already been made. However, I agree with those noble Lords who have pointed out that perhaps the most difficult problem for rural people arises from the lack of adequate transport facilities. Since Beeching, we have seen the closure of railway branch lines. We have also seen a reduction in other transport services. Many villages now have an infrequent bus service—perhaps only one or two buses a week, perhaps none at all. And if there is a bus service, people still have to get to the nearest picking up point in the village. It may be that they have to travel a few miles. If you are a low paid worker and cannot afford a car, but if you are young and can ride a bike, it is not too bad. But what about the old, and what about all those people who, for one reason or another, are physically incapacitated?
Some of the problems which have to be faced have been generated by the rundown of village communities. This has been caused by the movement of people from the country to the town, due to the lack of employment in the countryside. It is perfectly true that employment is often difficult to obtain in the countryside,
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certainly in agriculture. So the demand for buses has declined, resulting in a reduced frequency of services and sometimes in the total withdrawal of some services. As a consequence of the decline in the number of passengers, the additional cost of providing buses and the staff to run these buses has meant that fares have risen quite steeply. Thus, the ability to use buses is now beyond the pocket of a great many poor people.
One other aspect relating to the depopulation of the countryside which has often been debated is its effect upon village communities. Many village communities are virtually dying of inanition. I need say no more about that, and I do not intend to do so because it has already been said by noble Lords who have preceded me in the debate. In other directions, too, country people suffer deprivation, perhaps due to the natural tendency to concentrate resources on the conurbations. A survey was carried out recently by the National Federation of Women's Institutes. It revealed that 54 per cent. of villages are without a doctor's surgery, that 75 per cent. are without a chemist and that 84 per cent. are without a dentist. The survey also revealed that 89 per cent. of villages are without an optician. If, therefore, country people need such services they must travel to obtain them.
The same report also mentions that 43 per cent. of country people have to travel over four miles to collect medicine, while more than 50 per cent. have to travel more than four miles to find a dentist. These statistics have been quoted by the Child Poverty Action Group. They say in their summary:
"The main conclusion which has been reached is, indeed, an understatement when it is said that country dwellers experience difficulty in gaining access to health care facilities".
I believe that probably it is an understatement.
Planners concentrate on housing problems in urban areas—again, perhaps, understandably. However, the housing condition survey of 1971 reported that one in every five homes in rural areas was substandard. I am not forgetting the welcome improvement which many farmers have sought to bring about in the cottages which they provide for their workers. But there is still a great deal of

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country accommodation which is inadequate and very substandard. We have spoken about the lavatories down the garden.
I could go on. I could speak about education and the distance which children have to travel to school because of the closure of so many village schools. One can understand the argument for the concentration of children's education in secondary modern schools, but the loss of the village school has been quite sincerely questioned by many people who are concerned with education, and also by many rural families.
I am sure that other noble Lords will tell us about other deprivations which country people suffer, but I must reiterate that it is a complete fallacy to believe, as many people do, that it is cheaper to live in the country than in the town. This point was emphasised by the noble Lord, Lord Mackie of Benshie, and by the noble Lord, Lord Elton, and it is of course a fact. While countrymen produce a high proportion of the food we consume, yet it is dear for them to take into their own households and to consume within their own families. The village shop is more expensive than the town store. Again, I think it was the noble Lord, Lord Elton, who mentioned the fact that this was because the turnover was small in relation to the capital which had to be invested in the small village shop. So if the housewife wants to go to town to purchase her goods more cheaply in the big store there, she has to find the bus fare and, as I have already said, it has become perhaps too much for many country housewives.
I am not seeking to suggest that living or working in the country is all bad, all gloom and despondency. There are real pleasures which accrue from country life and living and working in the country, as indeed the townsman knows and hankers after. This is evidenced by the interest that the townsman is showing in getting out into the countryside, it may be only into a fringe area; and by the growing number of people who, being comparatively well off, are able to buy week-end I cottages or retirement cottages where they retire, someone said, to die.
The question that one asks oneself is whether they can really integrate—"gel"
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—with the village community that is left, dwindling though it is. I agree with those who hope that integration will come about to the advantage of everybody; but in any case, good luck to them. The point I am making here is that really to enjoy the undoubted advantages and pleasures, both physical and spiritual, which one can derive from living on or near the land demands a high income. It is all very well to talk in glowing terms about the wonderful countryside in all its glory if you have sufficient income to have a good house, a good car so that you can get into town and go to see the things that you want to see in terms of the arts—the art galleries, the opera, the ballet, Shakespeare and all the rest of it. If you can afford to do this and you have the time to do it, so well and good; but it is clear that if you are a worker, you are excluded from these things.
As your Lordships know, I speak for farm workers. I know. I have had the experience of living in both town and country. I was born in the country but I grew up in Poplar, at a time when there was dire poverty and deprivation. Children were running about without shoes and stockings, and there was evidence of malnutrition, rickets and all the rest of it. I was more fortunate, but saw those things. Despite all that, as a town boy living in Poplar I was able to join the Boy Scouts—I did that and sought to get my arm covered with efficiency badges. I joined the Church Lads' Brigade. There was a swimming bath, where I learnt to swim. At that time Poplar was very much a centre of boxing, with the lower class professional, although we had our Teddy Baldock when I was a boy, and Jimmy Wilde.
As I have told your Lordships before, at the church hall I had the great privilege of growing up with Father John Groser who was a great Christian socialist and who taught the sort of socialism that I believe in. It must be realised that people like myself feel a great deal of distress at some of the things that are happening today. I do not want to thrash that particular donkey; it has been thrashed perhaps too much, and there are evils on both sides. I wonder why people are provoked to that extent. What I am saying is that, living in Poplar, those facilities were there if I wanted to use them. Then I left London and went to

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a very good grammar school. I did not experience any difficulty there, because everything was provided—the baths, the gym and all the rest.
Having left school I then came back to London at the age of 17 and was employed as a very junior office boy on a very low salary. Once again, everything was there. I had the privilege of being able to go to the old Queens Hall, which was bombed in the War, to hear the great orchestra under Sir Henry Wood. I was able to go to Sadler's Wells and the Old Vic. I saw and knew such people as the members of the Vic-Wells Society, including Peggy Ashcroft and Charles Laughton, who played Henry VIII there. He also played Prospero. Not many people ever knew that Charles Laughton could make a Prospero, but he was a fine one. I saw Alicia Markova when she was young, Anton Dolin; I heard Joan Cross and many more. These were cultural advantages which one does not and cannot find in the countryside. I went back to the country to work on a farm and although, as I am sure your Lordships appreciate, I made the choice deliberately to go back and work in the countryside and I enjoyed it and all the work that I did, I had had that opportunity before and it was very satisfying and helpful.
My Lords, I must stop because there is no time for more. The farmworkers are typical of other workers in the country. They do not preponderate now, as has been said, but in relation to the incomes earned by other people, I return to my point that really to enjoy the country and what it can offer one has to have a higher income than in town. But indeed the opposite is the situation; you just do not have it. All the time that I was General Secretary of the National Union of Agricultural Workers, from 1953 to 1969, the average wage of the farm worker was in the region of 1 per cent. above or 1 per cent. below 70 per cent. I am told that today it is 73 per cent. as a result of the increase which has just been gained for agricultural workers—from 11 to 13 per cent. But that is the figure before the other large gains which are being made elsewhere percolate into the system. It is quite probable—and indeed I am sure it is a fact—that they still remain at that particular level and what happens to them is symptomatic: it is what happens
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to workers in the country areas in the various different types of jobs they do.
I have made no proposals for amelioration. I agree with much that the noble Lord, Lord Walston, has said about the need to find employment opportunities in the country. I do not think that one can really make proposals this afternoon which can be considered viable. One needs to know and to study a great deal more, and that is the virtue of this debate. This is why I am so grateful to the noble Lord, Lord Walston, and indeed to others who have spoken, because clearly this is not a Party political matter; it is a matter of social interest and concern. I am grateful to him for giving us the opportunity of airing this most important and, in my view, too much neglected subject.
5.20 p.m.
Baroness VICKERS: My Lords, first may I make an apology to your Lordships' House for the fact that I shall have to leave in three-quarters of an hour to attend a very important committee; I have been commanded to go to it because we have to vote on selection of a secretary for the CPA. I would like to thank the noble Lord, Lord Walston, for the excellent way he opened the debate. I had the privilege just by chance last weekend of being at Cockfield, which he will know well, and so I saw many of the villages in the area he was speaking about. I am also very pleased to follow the noble Lord who has just spoken because I realise what a lot he has done for agricultural workers, and his great knowledge, and for another reason. I stood for Poplar for Parliament and for the LCC, and in the war we had children from Poplar evacuated to the village I now live in. So we have something in common.
Like the noble Lord who has just spoken, I have lived in both town and country and I consider the privations are less in the country than in the town. There is a very interesting pamphlet called New Deal for Rural Britain by Alan Butt-Philip and others. One passage reads:
"Whole communities are threatened by decay and collapse. The rural predicament is intractable and also often unrecognised".
I hope this afternoon to be able to prove that this is not the case, anyway at the

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present time. I always think that individuals as a whole are happier in the country. There is a very much better social mix, there is less crime, and also there is no need for loneliness. The main problems have been mentioned, but I want to mention them again and go into detailed suggestions I have to make in order to help.
There are the shops, the post offices, the buses, schools, and medicines; medicines are one of the most difficult things to get in a local area. But shops are coming back into their own again, and the reason is difficulty with the buses and the expense of the buses. We have a shop in the next village to mine, not far away, just over a mile. The shop is flourishing and it had everything except drink; so I suggested to the chap that he should apply for a licence and last week he got it. So we shall be able to get everything we need. The main butcher in the area is delivering to his shop. There will be no need for people to go elsewhere for anything. He is putting up a list; if people want anything in particular they let him know and he will try to make arrangements to get it. I think this is going to help the small shops tremendously if they have the initiative. We also have a mobile shop. We have milk delivered, and I must say that all during the snow the milkman delivered the milk. There is a mobile food van which brings the vegetables; there is a mobile library; there is a mobile chiropodist; there is a meals-on-wheels, if necessary. There is an over-sixties club. There is an oculist in the next village, and there is an excellent pub, which is just like the Archers and gives everybody a great deal of fun.
This village consists of 500 voters. It is divided into the parish and the hamlet, and I live in the hamlet. Recently we had a by-election and I suggested that we should run a candidate. A friend of mine agreed to stand and I acted as his agent. This had an electrifying effect. Two others put up, and we got beaten by the local postmaster. Obviously for him it was easy, because he knew everybody and my candidate did not. Of course, he could say to Mrs. Smith "I am not going to pay your pension next week if you do not vote for me". We have a Women's Institute, a play group and a nursery school. There is still, I am glad to say, a primary school, and a club for the
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over-sixties, who I think today, weather permitting, are in a bus on the way to Salisbury to go to a theatre.
One of the things I really think need considering is planning. This is what worries me with the villages. So often the council comes along and builds a whole section of council houses away from the village proper. There is also private building. One village near me has a council estate about half a mile away from the actual village, and a private estate which is also not in the village proper. This, of course, does make a difference in integrating the newer people. Also, there is another problem; the Ministry of Defence has a great many empty houses, because this is on Salisbury Plain, and I have time and again asked them to sell them off because I think it is very essential that we do get them occupied.
The noble Lord, Lord Walston, talked about the peripatetic teacher. I would like to say to him that in West Lavington there is a school run by the Merchant Tailors and also a comprehensive school. They have had exchange of teachers and other things, but it has been said in the local paper—perhaps the noble Lord could find out by asking his right honourable friend Mrs. Williams—that she is going to request that this amicable arrangement should cease next year or perhaps this year. I think this would be a very great pity. I think also it would be a pity if the smaller children had to be bused, because I think one of the great things is to have co-operation between the parents and teachers and that is not possible if the young children have to be taken off considerable distances. I would like to suggest in regard to these schools that when they are not wanted they should be handed over to the parish council, especially where there is no village hall. Living in the hamlet part of the village, I let the local people use my house when I am not there. I have formed a committee; I am not on it and I would not be, because it is much better that people should run things themselves. As the noble Lord, Lord Elton, will know, because his sister lives in the village, we have open air summer fetes, fruit and vegetable shows and so on, cricket matches, a quarterly dance and we have managed to get a licence for a bar. So everybody comes along. They have to have tickets because it is not all that big.

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There has never been any trouble and the place is always extremely well cleaned up.
I was very interested in Lord North-field's Land Inquiry, but I did not like his suggestion that there should be control of rural land in public ownership. Perhaps he will say something about this to enlighten me if I have got it wrong. I would like any land like this to be managed by the local authority. Mr. Christopher Hall who is the director and expert of the Council for the Protection of Rural England said that with fewer demands on the social services than in the town the place is healthier, the police have less trouble and there are fewer broken marriages and broken homes and fewer children delinquent. I think this says a lot for the countryside. I think people are taking a great deal more interest now. In Wiltshire the other day a farmer refused to turn his barn into a tractor centre when it had been a blacksmith's forge. He suggested that this was rather rare these days and it should be kept, and of course it can still work, not necessarily on shoes for horses but on other useful work.
I would like to discuss village schools. I am delighted that Lady Plowden has recognised the need for the village school and the smaller classes. I would like to quote from Lord Young of Dartington, his letter from the Mutual Aid Centre Limited published on 9th September. He said:
"…rather than accept complete closure there is no reason why a parent-teacher co-operative should not be formed to keep the school open through a charitable trust which does not charge fees. Parents can keep costs down by doing much of the work themselves and raise money to pay teachers who would be otherwise unemployed. This Centre—(this is the Mutual Aid Centre) has given its full support to the co-operative at Medingley in Cambridgeshire which is trying to do just that".
I think that that is a point which should be put forward.
Moreover, the telephone system should be made easier. It is extremely difficult for people who live in distant parts. Indeed, one farm is five miles away from the road and so it cannot have a telephone. I suggest that the local authority or the Social Security Department should be able to install a telephone. The initial expense is great, but people must pay for their telephone calls. As regards the
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places which are far distant and the people who cannot get to a post office, I suggest that they should have a little box on their front door where they can place their letters and the postman can collect them when he delivers the mail. It is extremely simple. I do it myself from time to time and there is never any trouble. In fact, we have a most delightful postman and he had a good Christmas box for that reason.
There is also the question of churches, which is extremely difficult. There are no buses at all on Sunday and our vicar has to deal with three churches. Moreover, it means that regrettably at present there is no Sunday school. I should like to see a parish bus run by the council or, if they wish, contracted out to a private operator. Of course, in the olden days one had carriers which were very advantageous. We have good doctors, but the difficulty is getting medicines made up. One of us usually takes prescriptions to the nearest town which is about seven and a half miles away. I am glad to say that the cottage hospital, which is not very near us but near many of the surrounding villages, is still intact and working well.
I hope that the few remarks I have made, which are perhaps not altogether practical, will prove that the villages are not dying on their feet and as a whole are very happy communities. Most of them now have electric light and television. They may not have main sewerage but we can do without that. I remember that when I was young a man with a wooden leg used to pump the water for our baths. We have gone a long way since those days. Jubilee Year was a great help to the villages. If one read the local newspapers one knew that most villages decided that they would have some fun—and they did. I hope that that spirit which brought people together in Jubilee Year will continue. It is certainly present in the village in which I now live.
Viscount SIMON: My Lords, before the noble Baroness sits down, I should like to ask her a question. Early in her speech she told us a story about her local post master. I wonder whether she will reflect that that story will appear in cold print in Hansard, although I am sure that she was telling the story as a joke. If it appears in cold print it will be rather hurtful, if not libellous, to the postmaster.
Baroness VICKERS: My Lords, I do not think that it could be hurtful or libellous. The postmaster already knows what I have said; therefore your Lordships need not worry. Indeed, I have pulled his leg about the matter. Moreover, he is an extremely nice man even though he beat us. I have had a word with him and one of his colleagues about what we need in our part of the parish, and we got on very well.
5.35 p.m.
Lord DAVIES of LEEK: My Lords, this has been an interesting debate and I should think that nearly everything possible has been said. Consequently I shall try not to reiterate what has been said. I have a great advantage. I was brought up in all kinds of villages—rural villages in Cardigan where we were small hill farmers and then mining villages in the Rhondda and Rhymney Valleys. We had marvellous villages with highly intelligent miners running small wheelbarrow farms—which might interest the noble Lord, Lord Mackie of Benshie. Incidentally, I apologise for the fact that I left the Chamber during the middle of his interesting speech. My absence was not meant as an insult to his ability to interest me, but my secretary was outside with an important letter for the bank and I want to avoid being a bankrupt, because if I were a bankrupt I would not be allowed to stand here.
Coming to these marvellous villages, I partly agree with what the noble Baroness, Lady Vickers, has said. I do not think they are dying. The sophisticates and the philistines talk about rural life. For God's sake! let us keep out of our villages the planners who build the mega-high line, high rise towers that we see all around London. We destroy the soul of mankind by knocking up those steel matchboxes. I think that the social life of the village is marvellous. If there is any noble Lord who wants to take me on in dominoes, tip-it, or even a game of darts, and if there is good beer—we still have good beer in the Bishops' bar—I am willing to play. I was brought up in villages. Do not think that the villagers do not enjoy themselves. Do not think that their IQs are low because they speak slowly and deliberately—every farmer, as the right reverend Prelate will know, believes in God because things grow.
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They have a fund of common sense. Do not let us talk in a high falutin' manner. The yeomen of Britain—and I use the word "Britain", bringing in even the Scots—helped to make this country great. That is no exaggeration.
I have decided that I shall speak for only 10 minutes, which should please your Lordships. However, I should like to bring out a few points worthy of note. I must also in passing pay a tribute to my noble friend Lord Northfield and the work that his organisation does. The noble Lord, Lord Winstanley, is chairman of the Countryside Commission, but there are many organisations about which I should like some information. Do those organisations co-ordinate their approach to our rural problems, especially as regards the point made by my noble friend Lord Walston about deprivation in those areas? I think that perhaps they do meet, but I do not know. I do not even know whether I have made a constructive suggestion, because they may already do so. Do they get together to see whether their work overlaps? For example, the organisation of the noble Lord, Lord Winstanley, carried out an investigation into the villages. I had better give an accurate figure, so I must look it up.
There is a massive movement of the urban population into the countryside which is roughly estimated at 82 million visits in an average summer. I have seen the mountain paths in Wales; I have even seen them in Scotland and I have certainly seen them in the Peak District because I had the honour of representing a beautiful constituency for many years in North Staffordshire in the moorland area where there are wonderful villages. However, the Peak District is beaten up by millions of feet and millions of motor cars rolling through it. I do not want to be pompous about the problem but it is an extremely difficult problem as regards the deprivation of villages.
How does one solve the problem? Should we, in some cases, come to the fringe of the countryside areas. For God's sake! if we do keep people out, let us keep out the funny machines that play violent pop music while nightingales and skylarks may be singing. One hears these damn machines blowing away like the bellows in a Vulcan's blacksmith's

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shop and shaking the whole valley. I cannot understand it. I do not think that we have the right to pass laws in this respect, but in this regard we must do something about education.
I should like to raise another matter as regards an ex-town clerk. He was retired at barely 60. He did not want to be retired, but he had to be under the daft reorganisation of local government. That reorganisation has ruined the real drive of local government. Anyway, he said to me: "Do you know"—I must not name the village because I was asking about a cottage—"how much that cottage sold for?" It sold for £22,000. It was probably built in about 1860 for £100, if that. I say that because my grandfather was offered a farmhouse for £50 during the Boer War. It was great talk in the family. The cottage sold for £22,000 and that of course is sheer idiocy. This is the sheer apotheosis of materialism. We are making the village a dump where neurotic city dwellers, who cannot sleep without shoving tons of valium down themselves, can unwind. Rural Britain is not a dormitory for the over-rich or for those who are too tired to talk properly.
Lord GLADWYN: My Lords, would not the villagers make a great deal of money out of the neurotic city dwellers?
Lord DAVIES of LEEK: My Lords, thank God that is not the driving force of the villages of Britain! The noble Lord has exposed the very point that I am trying to make. The materialistic drive and the measure of happiness does not depend on one's health. When I was a boy in February it was always which of us could swim first in the River Teifi by breaking the ice. We used to say "Who has been first in the river?" and that person swanked about it. I am talking about kids. They did it because they breathed deeply and they lived fully. Without the materialistic objective there was a kind of faith, and a fullness and richness in life.
Without being didactic—and by no means do I want a theocratic State—I wish that we could recapture a little of that spiritual drive, a little of that non-materialistic drive, that has made rural England and rural Britain what it has been in the past, and stop the worry.
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The word "worry" is a wonderful word and comes from the Anglo-Saxon. It means "to choke". That is what is happening to our cities. Noble Lords should have driven with me this morning in a motor car around Hampstead. For the first time for years everybody was being polite, because they were frightened to death on the ice. Fear makes human beings cling together. I want understanding to make human beings co-operate.
I have spoken for only eight minutes and I shall take about three more. As its objective, the Countryside Commission has the conservation of the countryside and the promotion of public access. Those are two diametrically opposed objectives. Do not get me wrong; I am not suggesting that we should stop access to the countryside, but how can we conserve the countryside when millions of tons of tin, called automobiles or cars, roll around and are dumped anywhere. I think that in the main people should be made to walk through national parks, except, of course, the elderly and the sick who should have the privilege of travelling through to picnic sites on a local bus. However, I believe that cars should not be admitted to great rural parks, especially if they are driven by the young and the fit.
I turn to schools. The Department of Education and Science should have someone on its staff who knows about the value of country schools. The moorland district of Staffordshire in which I nearly had 3,000 farms, is not now represented by me but by an excellent Member of Parliament who, as I did, does a job of work. He has been trying to keep open the rural schools. However, the county council in the South of the county is so far away and so remote that it does not know what a 14 ft. drift is, and children of seven and eight years of age who are taken home by cars are sometimes stranded for the night in the moorland town of Leek. These people have marched to the Ministry, have tried to contact Ministers and have certainly tried to contact the pompous Staffordshire County Council. But they failed. I do not think that anyone there knows the real joy of a well-knit country school. I have forgotten my teaching days, but I guarantee to get an intelligent boy through his matriculation in maths, or some such

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subject—certainly in geography—in a little country school with a top class of about six or seven. Thirty or forty years ago those small classes were doing nature study and study in depth, which many people have forgotten. Today children may be taught binary mathematics—which I understand up to a point—but that is not that much use to those children compared with an understanding of nature and agriculture.
How time flies; I have been speaking for 12 minutes. I want to support the Association of District Councils, bless them; I speak partly on their behalf. I have been invited to a meal tonight, but I cannot get to it. They say that they aim unequivocally—I like that word—for the maintenance of a strong and prosperous rural economy. I wish that Mr. Beeching had remembered that when he bundled up all the country railways. If we had subsidised the rural railways in the Buxton area, the Welsh area, Devon and some of the holiday areas, the country would have made money from it. I believe that we made a fundamental mistake in closing so many of our country railways. The right reverend Prelate the Bishop of Norwich mentioned Norfolk. I remember the local stationmaster on one country railway there saying "We used to carry hundreds of tons of sugar beet to the market but the contract all went to the roads". So we clutter up the roads unnecessarily with tens of thousands of tons of sugar beet which, quite happily, could even have been carried on a canal or on the old railways. We should have examined that possibility. Does it not sound wonderful to say that one is an economist, but not one economist can provide us with the answer to the economic problems which England faces tonight, because they all disagree.
I come to my last point, as much as I would love to continue. This noble House needs waking up a little. The district councils have suggested that existing authorities should have more power. I enjoyed the speech of the noble Lord, Lord Elton, who—along with a number of noble Lords—said that more power should be given to the parish councils. They are on the spot and know what they are talking about, despite the fact that they may speak with a Welsh intonation. The existing local authorities
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are limited and the local district councils think that their powers should be extended, because the Local Authorities Land Act 1963 permits district councils to make advances towards costs of building by industrialists and other small enterprises. I would not grumble at subsidising private enterprise to set up small electronic or other concerns in the village. Nearly everything has been covered. However, I could think of another dozen aspects. The night is short. I have enjoyed speaking and I am waiting with absolute enthusiasm for the speech of my noble friend Lady David, who I congratulate because she will be answering us for the first time from the Dispatch Box.
5.49 p.m.
Lord SANDFORD: My Lords, I can assure the noble Lord, Lord Davies of Leek, that we have immensely enjoyed listening to him. There is no need for him to set these time limits; nor is there any point in setting them because, to our great enjoyment, he always exceeds them. We are supposed to be having a sombre debate about rural deprivation, but in fact the theme which constantly breaks through is one of rural richess and rural wellbeing. This is because the rural deprivation is, fortunately, only there in small pockets. But it is a phenomenon that we have to recognise. It is nothing to do with personal deprivation, or the absence of a bus service, or a school, or one or two features of rural life.
What we are concerned about is the exact opposite of what my noble friend Lady Vickers was talking about: the situation when the population of an area, a dale, a village, declines to the point that the whole community collapses and loses coherence. Instead of a single coherent community we are left with a group of isolated householders who have no centre at which to shop, worship, or do anything else. That exists in pockets because of two factors. One is an exodus of farming folk at the rate of anything up to perhaps 14,000 a year 10 years ago, now fortunately down to something like 2,000 a year. But that is not the only trend; it is compensated by a positive invasion. I am not talking now about these millions of visitors, but something like 80,000 or 90,000 people moving from the towns into the country to live; commuters, pensioners, weekenders,

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and what I have heard described as neo-peasants going into the country to seek alternative forms of life style. It is a tremendous mixture and a very large invasion.
In the areas within the urban shadow—the urban shadow which gets longer and longer as people are prepared to drive further and further to commute—this invasion completely swamps and masks the exodus which produces deprivation. I think that the invasion causes considerable stress and strain because it imposes a violent change in the villages where it occurs. I dealt with this pastorally when I was on the staff of the Bishop of St. Albans, a diocese which I think contains more new towns than any other diocese in the country, and where all around each of those new towns you get a tremendous influx of these four groups into the surrounding previously agricultural villages.
One by one the natives cede their institutions, such as the Women's Institute, the football club and the pub, to these more numerous incomers, and there is a tremendous conflict and fragmentation. It is here that the churches have an important role to play in integrating these disparate elements into a single healthy whole. Although I agree with the noble Lord, Lord Walston, that the role of the rural parson is a satisfying one, his job in that situation is no light one.
The integration of villages under invasion from the towns is not primarily the problem we are dealing with. Where there is no invasion there is no hope of any continuing long life; no viability left now on a base which is purely agricultural. As my noble friend Lord Elton said, villages do not now live on farms alone. They cannot live on farms alone. If the decline through the moving out of farming people in the remote rural areas is unchecked, then at some point the trend becomes irreversible, the village community collapses and cannot then be recovered. In that decay something priceless is lost to the nation as a whole, so that our efforts to stop this occurring really deserve considerable attention.
The process involves diversification from agriculture by the infusion of new jobs, and new income is what is needed to get the economic base right. Here we come
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straight away to the role of the Development Commission. I need not go into this at any length because the noble Lord, Lord Northfield, can be relied on to do it. However, I should like to take this opportunity of congratulating him on his drive and that of his colleagues in the three things that they are doing to put things right, and I shall say no more about that aspect.
The Association of District Councils also have an important role, which I must mention because I am one of their vice-presidents. Like the noble Lord, Lord Davies of Leek, I am anxious to get there before the party is over. They are having their reception tonight. They have an important job to do in focusing the various policies—not all of them always successfully integrated—that emanate from Whitehall, and bringing them to bear with their various grants and aids, and so on, in a tailor-made fashion in their own particular area. As the Association of District Councils say in the useful book they have recently published called Strategy for Survival this task can really be summed up as harnessing the tradition of the rural communities to sustain the way of life by various forms of self-help. I am sure that the noble Lord, Lord Northfield, is going to say that that is where they are going to put their main emphasis—and quite rightly.
It is true to say, as my noble friend Lady Vickers was just saying, that most rural areas have now their basic services—electricity, water, sewerage, posts, telephones, buses, et cetera, albeit in many of them at a heavy subsidy, which I think most of us will gladly shoulder on their behalf. But many equally basic but more general rural services are extremely vulnerable in these remote rural areas. By that I mean the shop, the pub, the village hall, the school bus, the school, and the church. Many feel that these are virtually indispensible too, and I think quite rightly.
The only way to safeguard and secure those vulnerable services is to build up the rural economy, and to do it in the remotest and most deprived areas—fortunately, not too many. What can be done is to make more use of the rural areas' main and finest resources; that is, the countryside itself. Farmers know well enough how to exploit the countryside for the production of food

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to meet the strong demand for food. That is going on well, and there are few industries in our country as efficient as our agriculture. But the demand on the countryside is not only a demand for food from it. There are strong demands for tourism, leisure and recreation, as the noble Lord, Lord Davies of Leek, has just mentioned. That demand is very strong too.
The question we have to ask ourselves is whether the farmers and the landowners are as expert and as well advised in that field as in exploiting the countryside for food production. I believe that the farmer might do worse than harness the demand for food and the demand for tourism together, and meet them both together on his own farm. What is needed is the means to translate that theory, which is expressed over and over again and is constantly being preached, into practice. I am afraid here we come across some serious shortcomings at both central and local government level.
The Development Commission does a good job, and Lord Northfield can be relied on to tell us all about it. But I think he would agree that his Commission does not engage to any great extent in tourism, because an English Tourist Board is there, specifically set up for that purpose, with no less than 12 regional tourist boards. But the fact of the matter is that those regional tourist boards are not empowered to give grants save in the assisted areas defined, not for these purposes—the purposes of overcoming rural deprivation—but for the purposes of regional, industrial policy. It really is quite made that in a sector where tourism is so important the regional tourist boards and the English Tourist Board are not empowered to give grants for farm tourism unless it happens to fall in a development area.
The second weakness is that the regional tourist boards as a whole—and I am generalising; there are plenty of admirable exceptions—have little contact with the farmers and the farmers have no great confidence in the regional tourist boards. The farmers' confidence lies in the staff of the Agricultural Development Advisory Service. They are the people to whom a farmer turns when he wants to embark on some new venture. He has their confidence and they have his, but that
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service has at the moment no remit to go into the field of farm tourism. However, there are a number of important developments here which I wish to report to your Lordships.
First, on this question of tourism, it is I clear that the Association of District Councils now see that they should embark on a fuller role. They have included four important paragraphs—at this late hour I will not read them at length—in which they record their recognition of the importance of tourism in this area and the necessity for them to take a more active role in that field. But, more specifically, the so-called Strutt Committee, the body which advises the Ministry of Agriculture and which reported recently, said specifically that they recommended their Minister, the Minister of Agriculture, to:
"…ask the Secretaries of State for the Environment and Trade to consider extending the financial aid provided by CoSIRA and the National Tourist Boards to farmers for tourist projects and facilities, to areas of the countryside outside the Development Areas".
That is the very thing I was arguing for, and there is a specific recommendation about it. The report goes on to recommend the Minister of Agriculture:
"…with the Secretary of State for the Environment to encourage the integration of farming and tourism through the establishment of permanent management services…".
So as long as that is acted on, and acted on quickly, we can look forward to some progress there.
But the integration of agriculture and tourism on a farm base is not the only possibility. Also, it is desirable and beneficial for the farmer to bring together agriculture and conservation and the improvement of the landscape; and we get another clear recommendation from the Strutt Report when they urge the Minister of Agriculture to:
"…urge the Secretary of State for the Environment to increase financial assistance towards the improvement of footpaths through better maintenance, signposting and waymarking, especially in areas of intense visitor pressure",
and for permanent management services, on lines similar to the Upland Management Advisory Service in the Lake District, throughout all other national parks. Thus, that is also recognised within Ministry of Agriculture circles at any rate as being a right, feasible and valuable thing to do.

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All of that calls for changes in policy and attitude in Whitehall, in local government and in the agriculture industry. Meanwhile, the technique of management agreements lies to hand to help to achieve this greater coherence in rural policy on the ground and, through it, revival in the rural economy in remoter villages. The legislative basis for management agreements is now provided in a couple of clauses in the Countryside Bill which is in the Commons, and we must make sure that that Bill gets through to us before anything else supervenes.
The technique of a management agreement is described in detail in a new study written by a Mr. Michael Feast and published recently by the Countryside Commission; an extensive study into the whole art. There are a number of models already in existence of very informa management agreements, which are typified by the Upland Management Advisory Service in the Lake District; and there is the model, much more elaborate and formal, which is incorporated in the Bill I introduced to your Lordships on Monday dealing with the management of the commons on Dartmoor.
With management agreements we can, I believe, at last achieve the trinitarian goal, as I might describe it, of reconciling three rural objectives in one coherent policy on each piece of countryside or farm, and we can show that it is pratcical and profitable for the farmer to manage one piece of land for three purposes simultaneously. I do not agree with Lord Davies that these things are diametrically opposed to each other; it is possible with good management to reconcile production of food, conservation of the landscape and enjoyment by the public. It takes some skill to do it, but it can be done. Some farmers do it already, but it is by striving to get many more to do it better that I believe we can do most to lift our remoter rural villages from the deprivation by which they are threatened, and by doing that I believe we can do much else for the benefit of the whole nation.
6.6 p.m.
Lord ORAM: My Lords, as others have done, I wish to thank my noble friend Lord Walston for introducing this debate,
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and I am sure he is gratified with the standard of debate that has resulted from his initiative. In doing so, I am conscious that he and I have two interests in common which have some relevance to this discussion. For some time he and I served together on the board of the Commonwealth Development Corporation, which was one aspect of our common interest in the Third World problems, and as any noble Lord who is acquainted with the problems of the Third World will readily know, this question of rural deprivation is by no means a British problem but a world-wide one.
Indeed, the shanty town and the poverty stricken village is all too commonly the fate of people in the Southern Continent. It occurs to me, therefore, that we have in the subject we are debating today yet another example of how the problems of the developed world, the world in which we live, and the problems of the Third World are proving to be basically the same. We at one time thought we were worlds apart, but increasingly we are realising that the problems are the same world-wide.
The second thing I have in common with my noble friend, more directly related to what we are discussing, is our common interest in the Plunkett Foundation for Co-operative Studies. He has given distinguished service to that organisation. I cannot claim the same direct association, but I have a long-standing interest in the work of that body, and the work of the Plunkett Foundation in relation to co operative societies, particularly in rural areas, is very relevant to what we are discussing today.
Indeed, the name Horace Plunkett has much relevance to this debate. He was the father of the Irish agricultural co operative movement. He taught that the same co-operative principles which have over the century proved so successful in urban shop-keeping could be applied with equal effect for the benefit of rural communities, and it is to me, at any rate, a most satisfactory development in the post-war world that farmers are coming more and more to realise the importance of their own co-operative movement, and that I suggest has a great deal to offer in seeking to overcome the problems to which noble Lords have called attention today.

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In this respect, we have a great deal to learn from Ireland, where Horace Plunkett did so much of his work, and I am glad we are still learning from Irish co-operators. I would cite particularly the work done in County Donegal under the leadership of Father James McDyer. It has been said of him that he simply applied his Christian ethics and came up with the co-operative answer. Under his leadership derelict rural communities have been restored to health by the application of co-operative business principles.
I am now glad to read that his message, and the message of the rural co-operative, has been delivered in an area which has already been referred to several times in the debate (the Highlands and Islands of Scotland) and that the Highlands and Islands Development Board is now encouraging the establishment of community co-operatives, as they are called, the first one having been established in the Isle of Lewis. The Highlands and Islands Development Board is now employing two full time co-operative development officers to carry out this work.
The community co-operative has, as its name implies, many purposes within a village community. It can provide houses, craft workshops, shops, community amenities, and marketing facilities. It can do all that within one organisation. I personally have seen examples of what in other countries are called multipurpose co-operatives which are doing magnificent work in tackling the kind of problems to which we are turning our attention this evening. I saw one in as remote a place as the Island of Borneo, in a fishing village where there had been developed co-operatives in housing, marketing, fishing, and in many other respects. Perhaps the most sophisticated and successful example of a rural community thriving on the basis of co operative organisation is the moshav in Israel. I have seen splendid examples in Israel of a thriving village life on the basis of full co-operation.
Therefore I am suggesting that in tackling our village problems we shall have much to learn if we look abroad to the examples of successful co-operative development in the rural community. I am glad to note that nowadays many people other than merely those like myself who come from the established
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co-operative movement, are giving much thought to the possibilities of co-operative organisation to meet the problems which we have been discussing.
I wish to give just two examples of how the National Consumer Council is thinking in co-operative terms when it faces the problems of the consumer in the village community. When my noble friend Lord Young of Dartington was chairman of the National Consumer Council he gave the lead in the establishment of so-called bulk-buy groups, where-by on a community arrangement, in what might be called miniature co-operative societies, people went on behalf of the group to the supermarket and brought back goods in quantity, and then divided them among the members of their bulk- buy groups, thereby overcoming the problem to which my noble friend Lord Walston referred, of prices in the village being disadvantageous compared with the supermarkets. These bulk-buy groups on the co-operative principle enable the discounts of the supermarkets available in the town to be shared with those in the remoter parts of the country—
Lord MACKIE of BENSHIE: My Lords, what does the noble Lord think the bulk-buy groups did to the village store?
Lord ORAM: I am thinking, my Lords, of the advantage to the people living in the village, and I see nothing wrong with giving them the benefit of joint action mutual aid. I believe also that given proper discussion, it would be quite possible for the village store to join in such arrangements. There is no need for the village store to be antagonistic.
Only this week the National Consumer Council has come out with another report that is very relevant to our debate. This is its admirable study of rural transport, and the Council has done a valuable service in bringing together information about unconventional ways of providing transport for the rural communities, including such matters as car sharing which also embodies essentially the co-operative principle. As I have said, the Council has done us a very good service, because a great number of experiments are going on, and so far as I know, this is the first time that information about them has been collected and

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an analysis made. I have not yet been able to study the report as I hope to be able to do, but I have seen sufficient of it to know its value. I regret however that it seems to me to have reached rather too categorical a conclusion about the value of the unconventional transport schemes which it analyses. I say this because one of its major conclusions is that it is strongly opposed to the replacement of conventional with unconventional transport schemes. I consider that it is premature for the Council to have reached such a firm conclusion because it may be, especially if co-operative business principles are incorporated in a number of the schemes, that a new conventional transport system could be organised appropriate for the rural communities. So I think that we ought—unlike the Consumer Council—to reserve judgment about the possibilities of these kinds of arrangements.
I would point to the fact that in both the bulk-buy schemes and the experimental transport scheme to which I have referred the question of volunteer labour arises, and it is a problem which must be faced with both imagination and care. I was glad to see that in the Press this week the Volunteer Centre came out with a statement which called attention to guidelines which its organisation has drawn up for the regulation of volunteer work, which is very important in providing facilities in villages, and it seems to me that the approach of the guidelines is a very responsible one to the question of volunteer work being acceptable as against paid employment. Obviously it is a delicate area that needs to be carefully negotiated, and I was glad to see that the director of the Volunteer Centre, Mr. Ian Bruce, said that they have successfully fought long and hard to achieve recognition of their guidelines by trade unions and professional associations.
It may be useful if I sum up the kind of approach that I am seeking to put before your Lordships in relation to the co operative possibilities in the rural area by referring to a Press cutting which I came across a few months ago. It summarised a report by the Hereford and Worcester County Council on the rural dilemma as they see it in their area, and a series of proposals which they make to overcome the problems which they analysed. It seems to me that in the case of all but one
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of the proposals in the list which they put forward it is possible for there to be a co-operative approach to the provision of the service that they have in mind. First, the establishment of new, small, craft industries. Small co-operative workshops are possible in relation to that proposal. Then, the turning of abandoned barns into small workshops. They could be turned into co-operative workshops. Next, the setting up of a rural radio service. In other countries there are radio services provided on a consumer basis, a co-operative basis. Then, community newspapers. In other countries there are newspapers run on a co-operative basis by the readers, the journalists and the printers. Then, new housing co-operatives. It goes without saying that the co-operative input is there. Then there is a point I have already dealt with, mini-bus and car-sharing services.
I could go through all this list of practical proposals that the Hereford and Worcester County Council are putting forward, and I believe it would be seen that in each case there is a co-operative input which can be of great value. I have simply quoted this list, and made my suggestions as to how these matters could be approached, in order to illustrate to your Lordships the great potential, the widespread possibilities that there are, in the application of the co-operative method of running industries and services in this field. As I said earlier, I am glad to see that more and more people and more and more organisations are coming to realise the significance of these principles, and I only hope that, as the Consumer Council and other organisations are doing, more and more bodies, both official and unofficial, will give increasing attention to the possibilities of co-operative organisation.
6.22 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I have listened with tremendous interest to the speech of the noble Lord, Lord Oram, much of which I agree with and much of which is already being practised in a great many of the rural areas today. I do not know so much about the city areas. I should like to thank the noble Lord, Lord Walston, very much indeed for inaugurating this debate, which I think has been quite fascinating. I particularly enjoyed the speech of my noble friend Lady Vickers, whose descrip-

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tion of her own village community I thought extremely encouraging. As always, I enjoyed the speech of the noble Lord, Lord Davies of Leek, with whom I nearly always agree in everything he says. On this occasion, however, I agreed with him more than on most occasions in his condemnation of railway closures. If ever there was a short-sighted and altogether unfortunate action, it was taking all the railways from the rural areas. All I can say is that I fought like a tiger, and went to every possible headquarters of the Ministry of Transport—in London, in Glasgow, in Edinburgh; anywhere—in order to try to stop them taking the railways away from the Border area, where I live. But they had made up their minds, nothing would induce them to do anything different, and they would not believe a word I said.
What is coming home to them now is that in this particular area, where we have colossal forests and they are just now beginning to cut the trees, the roads are narrow, twisty and dotted with little bridges which will not carry these huge lorries. They are going to have to spend millions on roads—putting in new bridges, taking out the corners and all the rest of it—in order to be able to take the trees which are beginning to be cut (and it will go on for 30 or 40 years) to the areas where they are going to be used in manufacture. All that could have been put on the railways and done by the railways and it would have saved them millions. However, it is no good having hindsight; but I agree with the noble Lord, Lord Davies of Leek, very much indeed. As to the noble Lord, Lord Collison, whose views on these matters I always agree with, I think he has a real understanding of the needs of the rural community.
I think I am the only other Scot to put their name down for this debate, and I follow my noble friend Lord Mackie, who speaks with great authority and who cannot be gainsaid, not even by me—which is quite formidable. However, I agree with all that he has said today. I do not always agree with him, but on this occasion I certainly do. I should like, just shortly, to say a few words about a very rural area in Scotland where I have lived now for more than 40 years and where, for some 30 years, I was a member of the county council. In order not to discourage anyone in this debate, I have
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listed the improvements which have taken place in those 30 years—improvements which have made our rural centre very much nicer to live in and very much more agreeable for everyone concerned. These improvements are quite simple. When I started off there was no electricity, the water supplies were extremely indifferent, there was very little drainage and the houses in the rural areas were not modernised. Today there is electricity everywhere, water supplies which are first-class and drainage and sewage systems everywhere. In fact, our county council will not allow people to live in a rural house, even if it is a long way away, which has not got modern conveniences. They may not always be attached to the main drainage system, but they have a septic tank and a water supply, and you can live there perfectly happily with just as good amenities as anywhere else. Telephones, too, I think, have been a tremendous help, and nearly everyone is on the telephone.
Transport is more difficult. In the old days there were buses; today, there are practically no buses. On the other hand, there is hardly an agricultural worker—in fact, there is not an agricultural worker, but there is hardly a village person who has not got access to a motor car. Every agricultural worker has a motor car, and a tremendous number of people living in villages have motor cars. But some have not. Old people and people who are retired have not got them, and, for them, transport is much more difficult. We have been successful—I think many people have spoken about this here—in getting help from the Post Office buses, and they are a great success; but, on the whole, I would say that transport is less good than it was unless you have a motor car. The number of people with motor cars in any area must be something like, I would say, 90 per cent., so one has that problem of the 10 or 15 per cent. for whom we have to find transport. But the percentage is very much smaller than it was 40 years ago, when the average agricultural worker had a bicycle and no motor car at all.
The question of shopping—and I was very interested in what the noble Lord, Lord Oram, had to say about co-operation—is to some extent helped by mobile shops. We still have Co-operative vans

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which deliver milk and all sorts of groceries, and we still have vans which come round to the rural areas. I do not say that it makes the food very cheap—it does not—but if you do not want to go into the local store (the Fine Fare, the Tesco or whatever it is) 10 miles away, and are prepared to put the amount of money which you would have used on petrol into buying food on your doorstep, it is available. I think that all those things are important, and village life has been improved in these ways.
I should like to support all those who have spoken in terms of the responsibility of local authorities and the responsibility of the parish councils. I think that is most important. We have not got parish councils in Scotland. We used to have a small committee, which was the advisory committee to the local county councillor, which in my case was myself, but those committees have now been replaced by community councils. I am no longer on the county council but I understand that the community councils work well and bring the community into local government in every sphere. I am extremely keen about the village hall. I think that that has been a tremendous asset to village life. It is a centre where various activities can go on. They may be playgroups, nursery schools, old people's meetings, dancing or carpet bowls. It is vital. I spent many years of my life raising money to enlarge our village hall and I do not regret a single hour of that work. It made it one of the best in the area. It is the centre of all the village community life, and I am sure that that is extremely important.
Perhaps noble Lords in the villages they spoke about do not have this sort of thing, but we have a forestry village. These villages have come about since the war because forestry is now one of the biggest industries in the Borders. I fought hard to prevent the Commission from putting their forestry village away from existing villages in order that it should be near the forest. Well, it does not matter a scrap about trees; nobody is going to knock them down or do them an injury simply because people are not living next door to the trees; but it is very important that the forestry village should be integrated with the existing village community. We have now got
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that. I do not know how many years it has taken: they began in 1946–47. The Forestry Commission have been of great help and have been a great asset.
The people who come in integrate with the existing villagers, partly because of the village school and the village pub, of course, and partly because we have still got a village church. That is also a great centre. I have always fought hard to make a community that comprises all sorts of interests—but in one area and not separated by a mile or two. You can take people by bus for a mile or two to work, but if they have to live there and are away from all the village amenities, you have a different proposition and you have two villages. That is fatal; for neither really co-operates. That, I think, is something that I should like to recommend in any development in rural areas.
One or two noble Lords mentioned education. I think that I agree with all that was said about it. But there is one great problem about rural education. I was for eight or 10 years chairman of the education committee and I did my best to try to preserve as many rural village schools as I could. But when it came down to eight children with a teacher, someone bringing meals, someone cleaning the school, and so on, then there was an enormous bill. I once made a calculation that it would cost as much to educate the eight children in the village school as it would to send them to a public school. I felt that I could not justify that to the ratepayers. So we put the children into a taxicab and drove them to a larger school—which, I admit, was a pity but it was the only way to do it. It has worked out fairly well. We keep as many as we can of the schools, but only those two-teacher schools with between 30 or 40 pupils. That has made a great difference. I agree that shutting rural schools is a most unfortunate thing to have to do.
One development which has been a great success in our rural area is that of outdoor centres, which are run by the county council, where children can go for a week or a fortnight at a time. There they are given opportunities to study all sorts of rural life. They go for long walks, they are taken to farms and so on. It happens that one of these rural centres is very close to where I farm. It is run by the Northumberland Education Com-

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mittee. It was an ex-Forestry Commission place and the Forestry Commission when it built the village did not want all the equipment, mostly wooden huts but they were very nice. This was bought by the Northumberland Education Committee and they turned it into one of these centres for outdoor studies and the children go for a fortnight at a time and have a splendid time.
I think it was the noble Lord, Lord Sandford, who said something about integrating the in-comers with the existing arrangements. These children have the complete run of my farm, which is a very large farm with sheep and cattle; that is, provided they shut the gates and provided they do not bring dogs. As noble Lords know, that is fatal with sheep. It has been a huge success. The children walk across this lovely land and it is a tremendous success. We have also started three others in the county. They are not quite so large as this one; but they, too, started partly in connection with the Forestry Commission. One of them is in the middle of a forest keilder and another quite near the forest. Again, these are for rural studies. We began with one of these. It was a voluntary effort, a speculation, and I managed to get the Carnegie United Kingdom Trust to give me some money to start it. It was such a success that the local authorities have taken them over, and we now have three. Developments of this kind in rural areas create tremendous interest and I should like to see those developments furthered if possible.
I should like to pick up one point of the noble Lord, Lord Mackie of Benshie, about the breakdown of the landlord and tenant system. I am sure that that is a great mistake. In the area in the Borders where I live we have three great estates which have been going for hundreds of years. The tenancy of those farms goes on from father to son also for anything from 50 years to 100 years or 200 years. This has worked well. If that land gets sold to an insurance company or to some faceless landlord, that interest between tenant and landlord will go; and that will be a disaster. I know that the word "landlord" in the mouths of many people is a horrid word, but it is nothing of the kind in the rural area where I live. The landlords are all extremely good. There are extremely well-run farms and
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the tenancy goes on from father to son. They have been an enormous success. I am not keen about the great amorphous, non-rural companies buying land for investment and letting it at as high a rent as possible in order to make money for their companies. I am against that, and I hope that it will not go as far as that.
My Lords, I must not go on. I am like the noble Lord, Lord Davies of Leek, in that this is a subject I have a great love for and great experience of. There is one thing that I should like to mention, but it is not on quite the same subject as the one we have been talking about. We are not really talking about agriculture but as a farmer I am always worried about the amount of land that gets taken up by building round our urban centres. We must not discuss this; it is another subject. But what is happening, as I have been told and as I had experience of, is that because so many cities and largish towns are decanting their population to the peripheries of their towns, taking agricultural land to do so, in many cities we have really deprived centres, centres which are almost dead. What is ironical is this. I have been involved, to some extent as an experiment, in what are called city farms—as a farmer I may say that they have nothing to do with farming. You take some derelict land in the middle of a city and turn it into what is called a city farm where a small group of children may be taught. There may be a cow or a few sheep there or someone growing something, all on a tiny scale because the land in the middle of the town is derelict. How much better not to take the agricultural land which is good, which is outside the towns, for decanting people from the middle of the cities, and develop the middle of the cities into what they should be, urban housing, without, as the noble Lord, Lord Davies of Leek, said, these ghastly great high-rise flats, but ordinary developments of housing which we have been used to all our lives and which could still be preserved.
I have noticed while going through some of our small towns that whole streets have been boarded up. The houses are going to be knocked down. Many of them are rather good late nineteenth century houses. If they were to be reconstructed inside they would be rather interesting and nice houses for people to live in right in the middle of the cities.

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Carlisle is a good example. It is an old, interesting industrial city, and they have saved many of their old houses, not knocking them down but reconstructing behind their attractive early nineteenth century façades. Many areas could be dealt with in that way instead of just being an empty space in the middle of the town. These places could be used for the best purpose: for people to live in, without so much encroachment into rural areas.
That point is perhaps wide of this particular debate but it is something we can look out for. It is vital that this rural life, the community life, and so on, should be encouraged and preserved. It should not be allowed to collapse. Above all, do not let us have it revived by people, as somebody said, buying expensive houses and only staying in them one weekend a month and not being part of the community at all. That is just as bad. We must have the real community life in which we all take part. That is what makes for happy village life, and that is what I stand for and should like to see developed as much as possible all over the country.
6.43 p.m.
Lord NORTHFIELD: My Lords, I should like to refer in a moment to some of the points that the noble Baroness has been talking about and I hope to be able to give some good news on some of them. May I start by saying that I must resist the temptation under the conventions of the House—the Addison Rules as they are called—to talk directly about the body I chair; namely, the Development Commission. I am very grateful for the kind remarks made by your Lordships about the Commission. I was particularly pleased that yesterday a Minister of the Government—at last—finally said in public that the Development Commission is virtually now the English rural development agency. To have achieved our final recognition in this sense is very pleasing.
Secondly, I should not like to try to match the eloquence of my noble friend Lord Walston or that of the noble Lord, Lord Elton, in defining the problem. My noble friend talked about the contrast between the standards of the countryside and the urban uncaring impersonal society.
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I took down his words. He had many other penetrating remarks of that kind in his diagnosis. I took down one phrase of Lord Elton's which particularly entranced me. He said that we must see that the countryside is a place in which to earn a living and not just a place in which to live. I think I took down his words exactly. If the noble Lord could put that into a short Latin tag we might make it the motto of the Development Commission. It is a very useful phrase.
I do not want to talk too closely about the problems or be too eloquent in the diagnosis; I want to talk about solutions, practical ideas for how we can solve some of the issues that have been raised today and are being raised in every one of these debates. The first thing is to be fairly clear on what we mean by deprivation in the countryside. We are talking about a whole lot of things that are summarised in a study to which my noble friend Lord Oram referred carried out by the Herefordshire County Council. They talked about the following factors as being the important ones: the adequate accessibility of of water; the adequate accessibility of food; of shelter and warmth; housing to acceptable standards; relationships and communications, making sure that we provide facilities and means of adequate contact with other people in the society of the rural areas; making sure that proper health services and medical care are available; tackling education near to the people; making sure that there are recreation and leisure facilities; above all, making sure that there is a variety and a choice of work and that it is acceptable to people living in the rural areas.
That is a good catalogue of what we are talking about. When those are missing, we have rural deprivation and the decline starts. The good news that I want to bring concerns a number of these issues. First, let me say to the noble Lord, Lord Elton, that happily it is now the case that the Housing Corporation has been persuaded to operate in the more distressed parts of the rural areas. This is a programme which has now been mounted in small beginnings. Where local authorities want it to come in, the Housing Corporation makes sure that housing associations are made available to build 12 or 20 houses in suitable localities in suffering rural areas. That is a good move. Secondly, the noble

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Lord, Lord Sandford, raised the matter of tourism. The Government have now relented and are allowing tourism loans in areas of rural decline, and not just in the developing areas.
Lord SANDFORD: And grants, my Lords?
Lord NORTHFIELD: No, I do not know about that. Certainly we are getting tourist loans, and that is a good start along the way. I should not like to offer an answer to the other point as I do not know the answer. My Lords, those are two pieces of good news on matters which have been raised today. Let me go on with my list of good news. In the case of the provision of alternative employment, small factory programmes—mainly workshops—which do not disfigure the countryside now number the fantastic total of 622 which have been approved by Government. That is 1¾ million square feet of factory space now going up in the countryside in the form of small workshops. Approximately 120 are built and occupied. Another three dozen are ready and most have been finished in the past three months. They are being let as fast as they are built. Another 280 will go up in the next financial year alone. This is an enormous impact. I will refer to one village in a moment and explain how this operates.
More money has been made available for the Development Commission nad COSIRA, and at last the Government, under pressure, have guaranteed a period of five years. This is the first time that we have been able to plan ahead on a firm basis on a substantial amount of money. It is never as much as we want, but we have made great progress. If we take one county alone and look at the loans given out to small enterprises by the Development Commission's subsidiary, COSIRA from some of this money—and I pick one figure, but I could take many—since 1977 in Cornwall alone 412 jobs have been provided in the rural areas, simply on loans by COSIRA. That is a sort of mushroom figure going on all round the country, and I have taken only one example.
Again, to reassure the noble Lord, Lord Elton, resistance is breaking down. It is no longer true, on any scale, that local authorities resist the building of small
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factories and workshops in the country side. They are now more co-operative than they have ever been. Nor do local people any longer resist them on any scale. Of course there are some who resist, but call a village meeting and say that jobs are at stake and you know what the answer will be at that village meeting. It is that that counts in the end and gets the programmes under way. Again, the transport experiments in unconventional forms of co-operation and individual provision in the rural areas are going ahead very well indeed, and now we have to look at how we should begin more effectively to organise them and subsidise them, if that becomes necessary.
Going further, the loans we are able to give now attract advantageous rates of interest in the areas most suffering, so that they are on all-fours with the loans given in urban areas. The local authorities are accepting their responsibilities in the whole revival of the rural areas, and I agree very strongly with those speakers today who have pointed to the great breakthrough in the booklet mentioned by the noble Lord, Lord Sandford: Strategy for Survival, published by the Association of District Councils. It means that these new bodies—and they are very young, after all—have accepted the necessity to take a firm hold on economic development in their areas rather than be just a passive service of local government.
Looking further afield, many bodies are sustaining extra work beoynd what Government agencies are doing. The noble Lord, Lord Sandford, is eminent in helping bodies like Task-Force North. All kinds of such bodies are helping to underpin the efforts of Government or neo-government agencies. The Dartington Trust is thinking of putting half a million pounds into one area of Devon alone, just for small businesses. Discussions are taking place with the Post Office on how exactly the bus service of the Post Office may need to be subsidised in some reas. Above all, the rural community councils are flourishing on minute budgets—£10 harnesses £1,000 worth of voluntary effort through those councils. No costs ever become exorbitant in their work, and it is extraordinary what their achievements amount to in the end in providing local societies, help for the aged and all those things that

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matter so much in making rural life tolerable.
I think we tend now to go on for too long about the problems without always recognising that we are solving many of them now, increasingly, and that we are making substantial progress. I should like to take, as an example, the village of Bishop's Castle in Shropshire. That village was in decline; but first of all the Development Commission built a couple of small factories, which were immediately tenanted. Then money was found in order to give £10,000 towards reviving the cattle market which had been disused for some years. In addition, the council put in money and opened the cattle market. That market in its first few months had a turnover of £1 million, and the village is now thronged with buyers on one and two days a week. The village pub is making money again; the village shops are brightening themselves up. The village garage is getting money, not just from the people who come to the sales but from the factories, in transporting their products. Two more factories are going up and, because of the cattle market, a private enterprise has now built an abattoir. And so the whole multiplier effect is taking shape and the face of that village has been changed in a couple of years—all for a very modest investment indeed, and with small workshop units taken up as quickly as they are built. There are problems, as there are in any area: some go bankrupt, but never very many of them. It is a risky business in rural areas, and I might say that the loss on loans in rural areas to small enterprises amounts to 0·16 per cent. of the total money lent: it is a negligible figure. So this is how small enterprise is now flourishing and helping to revive the rural areas.
I should like now to talk about the social problems, because it is these that we are not yet solving. We ought to be thinking how it could be done, and I should like to make some suggestions. What am I really talking about, for a start? We have to find a way of making sure that all the amenities, the facilities and the self-help can be organised in any area to make sure that people will want to live there or to continue living there. What are we talking about? We are talking about how we get commun-
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ity transport schemes organised—buses, social car schemes and so on. How do we make sure that playgroups are formed, recreational facilities are attracted or organised locally, particularly for young people?
How do we make sure that luncheon clubs spring up and are then run by voluntary effort? How do we make sure that the welfare services do not suddenly close down, with no early-warning system? How do we make sure that the shops and the post office survive? How do we make sure that bulk-buy clubs are introduced, where appropriate? How do we make sure that the information is made available about what the district and county councils offer in the way of services? Can we help to dig local councils into making better housing available and having more housing co-operatives and more housing associations? How can we enliven parish councils and make sure there is a two-way flow of information between statutory authorities of various kinds and remote residents? How do we establish contact points at which people can contact their local authority or a Government Department?
I could go on with the list, but this is where we are not yet succeeding in local areas of the deep rural districts. I can only think aloud about this. The Development Commission has just had six pilot studies made on how to tackle these problems in areas in various counties. These are pilot studies done not just by our own staff but by county councils and outside research bodies; in other words, we have had an input of other people in addition to our own thoughts inside the headquarters.
What is coming through quite clearly from the results of these studies is that we may, in the end, somehow need to find just one more body to add to the rural community council staff, or to be in some sort of liaison situation with the district and county councils. This man's jot)—he will be the equivalent to a person sometimes found in the urban areas—will be to make sure that the wheels are oiled and to organise the voluntary effort, to make sure that the local community newspaper gets published, that local authorities are encouraged to set up contact points and to make sure that the community bus system does not just

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collapse because the buses do not regularly run and are not regularly serviced. It may need just one more person—not a bureaucrat, but a man on the ground, a field organiser, drawing all the threads together and making sure that activity really takes place over these problems involving social amenities and facilities and local self-help. This is an area to which the thoughts of bodies such as my own, and, I hope, of the Government as well, and of voluntary bodies, such as those with which the noble Lord, Lord Sandford, is associated, will increasingly turn in the coming months and years. If I may end on this note—
Lord SANDFORD: My Lords, may I interrupt the noble Lord before he leaves that point? I have been following him with very great interest, because I was concerned with the establishment of the countryside officers under the Development Commission, working in the rural community councils. How does the person whom he has been envisaging differ from these countryside officers who are already in post?
Lord NORTHFIELD: That is a very good question, my Lords. They were established for different purposes, in order to give people access through the countryside officer to local authorities and statutory bodies on subjects such as planning matters. They are really environmentalists, making sure that local people's voices are heard on environmental and planning matters. But the noble Lord is quite right, and it is a very acute question. What is the future role of these, in conjunction with any new ones that I was talking about? All this is to be thought out very carefully now in a new stage, a new surge, of rural development.
I would conclude in this way. My own belief is that we are well on the way to solving the economic problems. They are not solved; we are on the way. We know how to do it. The important point is that we have harnessed the local authorities into that process. It is their action plans on the basis of which factories and workshops are built, on which houses arc built, and so on. But the next stage, having got the economic bandwagon rolling very well in the rural areas is; how do we now do an equivalent set of action plans in the social field for these suffering rural areas? I think it is the task of
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another two or three years of hard slog in all the organisations concerned. I believe that, at the end of that time, we shall be able to look around and say that in, perhaps, a decade at most we shall have made an enormous impact on the suffering rural areas. I hope that after that time debates here in your Lordships' House will have a rather more optimistic note than they have had in recent years about the face and the survival of the rural areas.
7.3 p.m.
Lord O'HAGAN: My Lords, if I were now awarding prizes in what might have been a village school in a village that was formerly near where I live called Knighton Sutton, I should, of course, award the prize for initiative to the noble Lord, Lord Walston, and the prize for persistent good work to my noble friend Lord Sandford and the noble Lord, Lord Northfield. But the most important prize for cheerfulness and encouragement for the future would have to be split between my noble friend Lady Elliot and the noble Lord, Lord Davies of Leek, because a special commendation which the noble Lord, Lord Northfield, himself mentioned needs to be added for optimism about the future, not based on a romantic and rose petal vision of the past, but based on a fair understanding of what can be done, because so much has already been achieved, despite the statistic that I have in front of me—500 village schools closed in the past 10 years. There is gloom, but there is more cheerfulness and I was very glad that the noble Lord, Lord Davies of Leek, contributed to this cheerfulness. I, too, plan, in honouring my pledge to the noble Lord, Lord Mackie, to take 10 minutes, but I am afraid that they may be a Davies of Leek 10 minutes.
I mentioned the name of a village which used to be near where I live. My house is now in the middle of a field, because hundreds of years ago the village of Knighton Sutton disappeared. Knighton Sutton is a farmhouse, and Bishop Sutton—I do not know whether divine intervention had any part to play in this—has grown enormously and its population has quintupled since the war, with overflow from Bristol. I am talking about a part of the country which is 10 miles from a major conurbation in a Green Belt. Between the two is the very ancient village of Stowey, which was already there

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in the 12th century, whose population is now less than it was at the time of the 1826 tithe map. So that, however enthusiastic and optimistic we are, we must accept that villages shrink and grow, and some decline; and whether it was the Black Death or my ancestors that caused Knighton Sutton not to persist into the 20th century, I am not certain.
But when we are cheerful, we must not think that we can plan everything. However good the great work that the noble Lord, Lord Northfield, and his colleagues are doing—and it is good because it builds on energy, local initiative, enterprise and confidence that is already there within the local community, gives it encouragement and is not implanted by some alien and remote body against the wishes of local inhabitants—each noble Lord will have his own private horror of what 1984 and a wholly unpalatable society might bring. I must confess to your Lordships that I am far more frightened by the mandarins of Marsham Street than by the bureaucrats of Brussels.
The monolithic mentality of some planners must not do to the rural areas what has already been achieved in the heart of Liverpool, or even in the city of Bristol, where, by appointing as planning officer a road engineer after the war, we have a marvellous city for the motorist, but a city whose historic beauty and past have been made subservient to the ring road. That type of mentality must not start, in this mood of optimism, to weave a scourge of destruction through the countryside. We must make sure that developments always go in the way that the noble Lord, Lord Northfield, was indicating—building on local enthusiasm and local enterprise, and welding the new together with the old. I wholly deplore isolated rows of council houses and isolated private developments, that set one type of employee against another and make a rigid hierarchy within what should be not a homogeneous community, but a varied community of people of every kind.
What, in the minutes remaining to me, should we avoid? I think that we should avoid the grand design, the over confident forecast and the instant solution. I read in this excellent book, published by Child Poverty Action and called
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Rural Poverty, a phrase that made things I vivid to me. It was this, and I quote from their conclusions:
"Most deprived people do not live in deprived areas. The vast majority of the poor live outside of the decaying inner city areas and any other small geographical area".
I do not know whether or not that is correct. I am not a social scientist. But when we are thinking of rural deprivation, we have to get away from the mentality which says "You can zone this area blue, that green and the other red. We have got it all tidy. There it is. This one is good and this one is bad". Just as zoning within the inner city has destroyed the back-street shop, the back-street craftsman and the back-street factory, that give a feeling of variety and local employment, so the problems of rural deprivation are scattered and very different.
I should like to continue with the theme of encouraging local initiative by asking the noble Baroness, Lady David, whether what I am told is true, about the attitude of the present Government to grants for village halls. As other noble Lords have said during the debate, village halls can play a very great part—especially when the village is expanding or a new type of employment has come to it—in keeping people in the village and providing a place for young people to hold their own functions: to encourage youth clubs and so on. Is it correct that the grant for backing village halls has been cut by 55 per cent? If that is so, I think that we ought to get rid of a few more of Tony Benn's co-operatives and shove the money back into village halls, because they would be far more productive and would last much longer so far as the welfare of the community is concerned.
I want to turn to a whole variety of small matters. Where a demand has been shown for them, I have been informed that in some areas—in Devon, for example—banks have begun to open for one day a week in village halls. Obviously one cannot expect the noble Lord, Lord Northfield, or anybody else, to give them a huge grant to do this. Such a scheme must pay its way. However, any form of imaginative use of existing facilities, where there is co-operation between the private and the public, between the charitable trust and the local authority, between the

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Post Office and other profit-making organisations in the private sector, is something which we need to look at. It is very much the kind of task which the new Mr.X, whom the noble Lord, Lord Northfield, was trying to define at the end of his speech, will be looking at, if his job ever comes into being.
When we look at the subject we must do so with realism, but with confidence. If those in local and central Government will bolster up the great wealth of initiative and enterprise that in every village and hamlet is to be found waiting to be set alight, then the initiative will grow locally, with a little bit of fertilisation and a little bit of assistance from outside. It will remain local. It will not be an alien implant—as I am afraid so many new towns are—and will, perhaps, remain forever.
When we are looking at policies—this is a suggestion which I make in a purely personal capacity and it comes to me as a result of reading this book on rural poverty—many of the policies that we are thinking of for the vast majority of the working population and for the vast majority of families in Britain will have a dramatic and perhaps unexpected effect on those who are furthest away from towns, jobs and centres of population. What you do may be fine for 98 per cent. of the population, but it may have a totally unexpected effect by the time that it feeds its way through.
For example, we must think of the action that is planned regarding the road fund licence as opposed to increasing or lowering the cost of petrol. This will have a very marked effect. I should like the Central Policy Review Staff to co ordinate from a long term point of view, some form of planning and forecasting—very often wrong, probably, but at least attempting to do the job and publishing, in a Green Paper or some other form of discussion document, what the effects of a transport policy, or a policy for any other form of activity, might be upon those living within the rural community. By thinking ahead, we shall prevent the kind of rural deprivation of which we are speaking. That form of planning is far more useful, taking into account the side effects of what you are doing for other purposes, before it is too late. This, as I say, is far more useful than the imposition
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of blueprints upon little organisations and communities which do not want or need them because they can probably deal with the matter much better, provided they are given some encouragement.
May I conclude on a different note. Noble Lords might feel they have not had their 10 minutes' worth if I do not mention something to do with the European Community. I believe that the side effects of the Common Agricultural Policy on rural deprivation throughout the EEC, but particularly in this country, have not yet been fully examined. What we are speaking about in the Community is whether we are to go on reducing the the rural workforce. It has been slashed by 50 per cent. since 1958. That is fine if you have another job to go to. But if you come off a mountain in the Pyrenees and go on to the dole queue in Paris, what have you done? You have not saved public expenditure. You have helped to destroy a village community, where perhaps you lived at below starvation level, but where at least you continued a form of life which had existed for generations and which provided a landscape for the tourist to look at; otherwise it would have been submerged by brambles and bracken.
These are the problems of North Wales and the South-West. They are the same problems as those which are encountered over the relationship between tourism, agriculture and rural depopulation. I believe that those who are planning the Common Agricultural Policy and thinking only in terms of its next stage—that is, whether or not there should be co-responsibility levies—are missing some of the key points. It is the social aspects of the Common Agricultural Policy which have a very important bearing on today's debate. I hope that one message which will go to Marsham Street and to the bureaucrats in this country and which will also travel across the Channel to Brussels is that when we reform the Common Agricultural Policy—which must be done before it is submerged under an over-expensive wine lake or milk powder mountain—we must look at the social consequences for the rural communities and make sure that we get this right.
Even by the standards set by the noble Lord, Lord Davies of Leek, I think that

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I should sit down now and be quiet. When I fill in forms and am asked for my place of education, very often I feel, in my most honest moments, that I should put "educated by my step-children" or, if I am not feeling quite so bold as that, that I should put "education still continuing in the House of Lords". Today has been one of those occasions when I have enjoyed myself immensely. I look forward very much to hearing what the noble Baroness, Lady David, has to say.
7.19 p.m.
Baroness DAVID: My Lords, this has been an interesting, important and, I think on the whole, very encouraging debate. The subject of rural affairs is one which has rightly claimed a good deal of attention in this House in the past, and I am sure that it will continue to do so in the future. But the term "rural deprivation" is comparatively new and it represents a concept which I find particularly worrying, coming as I do from East Anglia, where some of our best farming land lies. This area of the country is, of course, very well known to the noble Lord, Lord Walston, who put down the Motion today and to whom I should like to pay tribute, not only for the quality of his helpful and delightful speech but also for his untiring work as the chairman of the Eastern Region Economic Planning Council. He has brought out very well the complexities of our rural problems.
Although rural deprivation may be a new term, it stems from the age-old problem of rural depopulation, which has been of concern to successive Governments since, and even before, World War II. These areas of rural depopulation contain less than 5 per cent. of our population, yet they cover about half the land surface of Great Britain, and there is a genuine doubt about the future of their communities. A conference has been held at the Café Royal in London on this subject over the past two days. Although I was unable to attend personally, I believe the noble Lord, Lord Elton, had a hand in its organisation. Delegates were invited from all walks of rural life, including agriculture, local government, police, the unions, social workers, teachers, parents, the catering and retail industries,
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planners and environmentalists, health services, transport and the Church, and the debates ranged over the whole field of countryside activities. The chair was taken by the right reverend Prelate the Bishop of Truro, and two other members of this House, the noble Baroness, Lady White, and the noble Lord, Lord Sandford, both of whom have a wealth of experience in matters of rural policy, contributed to the discussion. So it is most apposite that we should have this debate today to discuss the problems facing rural communities.
In the past few months there have been several notable initiatives in this field. Last August the Standing Conference of Rural Community Councils published a report on The Decline of Rural Services which provided a useful insight into the extent, and nature, of that decline. Based on a comprehensive survey, backed up by case studies, of villages in seven counties of South-West England, the report pointed out the special hardships faced by the elderly, and less affluent, in rural areas where services have closed or curtailed. It cited the fact mentioned by the noble Lord, Lord Elton, that only 4 per cent. of villages in Wiltshire, and 8 per cent. in Somerset, now have their own dispensing chemist; and that in Cornwall 10 per cent. of villages lost their post office in the nine years to 1976.
The Association of District Councils have also recently completed a major study and published a memorandum entitled Rural Recovery—Strategy for Survival. Working from a survey of member councils, this set down a number of proposals for action which are now being discussed between the Association and those concerned in relevant Departments. There have been other studies too: and today this debate has provided a further contribution to fuller understand ing of these problems, I have listened with great interest to the views expressed by noble Lords and I shall ensure that their comments and suggestions are passed to the appropriate quarter.
We have had a full debate and I will not go over the details of the problems faced by those who live in rural areas; limited employment opportunities, declining public transport, the reduction in the numbers of schools and poor accessibility to services, entertainment and basic facilities have all been highlighted. Most of

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us would, I think, agree that by and large these problems are not of Government making. They stem basically from the growing efficiency of British agriculture. Fewer people are employed for a given output and there is a movement of labour out of agriculture. New types of employment have to some extent filled the gap and people have been drawn away from the countryside by the attraction of better incomes and services generally available in our towns. Thus economic and social changes occur and some rural communities have disintegrated, which in turn results in more emigration. Those that remain find that the reduced size of the community cannot support the services and amenities that they want. This causes more people to move away and the downward spiral of rural deprivation continues.
Of course, it would be wrong to overlook the benefits and attractions of life in the country. Sufficient evidence of this is provided by the number of people who live there by choice. But, at the same time, we must acknowledge that those with limited mobility may be as deprived—in terms of access to jobs, services and facilities—as people in some areas of urban deprivation. That is why Government policies generally must take account of the special circumstances and difficulties of people living in rural areas and should seek, so far as this can be done, to alleviate the adverse effects.
The key to maintaining a balanced social and economic pattern in our rural areas—and I believe that it is from this that all else flows—is new employment, as the noble Lord, Lord Walston, stressed. For, important as farming and forestry are in the countryside, the position today is that even in the more remote areas only a very small proportion of the population are employed in these primary industries. The main thrust of the Government's attack has been through the Development Commission, charged with promoting the economic and social welfare of rural areas. Through its agents, COSIRA (the Council for Small Industries in Rural Areas), and with the help of the English Industrial Estates Corporation, the Commission has in hand an impressive and effective programme of factory building from "nursery" units of 1500 sq. ft. to factories up to 10,000 sq. ft. The Commission works, of course, in the closest co-operation
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with local authorities, and in accordance with Action Plans prepared by the authorities, for the regeneration of their areas of depopulation. CoSIRA also provides credit, advisory and training services for small firms in rural areas. And in the rural parts of Development Areas CoSIRA assistance is also available for tourist accommodation projects. Some indication of the importance of such assistance is given by the fact that, at the end of the last financial year, more than £11 million was in the hands of borrowers.
The noble Lord, Lord Northfield, in his generally very encouraging speech, spoke of the work of the Development Commission and its plans for an expanded role in community and social development. The Government have already recognised the need for the Commission to look beyond the economic needs of rural communities, to do more than simply build advance factories and promote local employment. The long history and experience of the Commission over 70 years makes them a highly suitable organisation to perform this role. It is certain that they have the confidence of the voluntary bodies that are concerned with countryside activities. But any proposals which would result in a requirement for additional Exchequer funds naturally have to be carefully considered and we shall examine the Commission's proposals in depth when they are formally submitted.
The key role which the Government see for the work of the Commission is, I think, clearly demonstrated by the major increase in its fundings: from a programme of £6·1 million in 1976–77, the Commission has £15·5 million at its disposal in the present financial year. But jobs are only a first step. Many local authorities are also concerned about rural housing problems, and I know that to some it seems that the Government's policy of paying particular attention to the very serious problems of urban deprivation in our inner cities is causing us to neglect the rural situation. This is not the case; it was in order to allocate resources effectively in response to local needs that the Government introduced the housing investment programmes (HIP) system. Under this system, each local housing authority, both urban and rural, formulates a rolling programme of capital expenditure based on a comprehensive assessment of housing need in their area.

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Local authorities are encouraged to set out their priorities and solutions for meeting housing need in a statement of their housing strategy.
Housing needs concern us wherever they occur. But there are, of course, questions of scale to be taken into account. The scale of difficulties of our inner cities calls for a concentration of activity by Government. The dimension of the problem in rural areas is not quite the same but we nevertheless believe that, in the system of housing investment programmes, we have provided rural authorities with an effective means of indicating their needs in order that the Government can respond to them.
Rural authorities will also be helped by a change in the procedures made by the Department of the Environment last month, in line with one of the conclusions of the Association of District Councils paper on rural recovery. Since 29th January the Department has been dealing with proposals for small housing building schemes—schemes of 25 dwellings or less—in a new way. Except for certain difficult cases authorities are now able to submit proposals for small schemes to the Department with a reduced documentation and the Department approves a yardstick after a rapid processing with a minimum of checking and delay. The Government have of course recognised that the time-consuming detail of the normal yardstick procedures needs revision, and they are looking at new general approaches with the local authority associations; but the acceleration of processing of the smaller schemes which I have mentioned has been taken in advance of these longer-term decisions.
Transport, of course, is another major problem area identified by several speakers in this debate, and in many people's view it is the key problem. Unfortunately, it is the case that rural depopulation, the large rise in car ownership, and increased operating costs have combined to make the provision of public transport in the countryside increasingly unattractive. The closures of unremunerative railway branch lines in the 1960s and withdrawal of many loss-making bus routes have restricted rural mobility; and, however high the proportion of car owners, there will always be a
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substantial minority without easy access to transport facilities of any kind, such as the young, some housewives, the handicapped and the elderly. The Government naturally share the feelings of the House that it is socially desirable that such people should be provided with transport, but it would be wrong to disguise the high costs that can be involved.
There is no panacea for rural transport problems, but the Government are taking action. This action is of two types, strategic—through public transport planning—and tactical, by easing the way to local solutions of local problems. First, the strategic action. The shire county councils play a prominent role in the Government's rural transport policy. The Transport Act 1978 emphasises their transport responsibilities, and they are now required to produce public transport plans which cover 5-year periods. The first plans must be produced by March 1979, and I understand all but one county will get plans in by then, and thereafter annual revision is to be carried out. In preparing these plans, counties must consult with other local authorities, transport operators, trade unions and consumer organisations. Most county councils have shown a lively interest in their enhanced transport planning role. This is most encouraging, and is an indication that the basis may have been laid for the provision of a more efficient and better co-ordinated rural transport system in the future.
Plans are, of course, no use without money, and so financial support has been made available in the form of transport supplementary grant. This is a block grant paid to county councils, assessed on the basis of their transport plan and 70 per cent. of their "eligible" planned expenditure above a certain threshold is paid by the Exchequer. The amount nationally available for bus revenue support is currently £150 million per annum, and an increase of £15 million is planned by 1980–81.
The Government's policy on rural rail services remains that there should be no more major cuts. At the same time, an element of flexiblity is obviously required, and the 1977 Transport Policy White Paper proposed that local authorities be given greater power to assess the cost-effectiveness of rail services against other

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possible options. Once the public transport plan system is established, discussions on this proposal are due to take place. The Transport Act 1978 requires county councils to take account of rail services in their plans, and they are empowered to enter into agreements with British Rail to support local services or provide new facilities.
Lord O'HAGAN: My Lords, if the noble Baroness has finished with transport—
Baroness DAVID: Not yet, my Lords. As for tactical action, where it is financially impossible to provide a conventional bus service, and public transport is inadequate or non-existent, the Government have opened the way for local initiative to fill the gaps. The noble Lord, Lord Mackie, asked for local authorities to use their initiative and this I think the Government are making easier in this way.
I should like to mention here the Norfolk community bus. The right reverend Prelate the Bishop of Norwich mentioned some rather extraordinary attitudes perhaps on the part of some Norfolk villagers. They are the first county to set up a community bus and I think they deserve a lot of credit for that. It certainly can fill a gap in rural areas, but there is no doubt that it does take a lot of organising. I was very glad that the gentleman who set it up (I do not seem to have his name here) was granted an MBE just recently.
I had a further question from the noble Lord, Lord Elton, on the railways. He referred to the costing principles applied by British Rail to branch lines. I under stand that the Association of County Councils is pursuing this question with the British Railways Board, and in addition my right honourable friend has received a number of representations from Members of Parliament which he is considering. I have now finished with transport.
Lord O'HAGAN: My Lords, if the noble Baroness will permit me, she has spoken with pride of the Transport Act 1978 which laid down duties for county councils in preparing transport plans, and they have to be ready by March this year. Would she take the opportunity to convey to her right honourable friend that this
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House laid on the Government an obligation, which they accepted, to frame a policy for inland waterways. I understand that nothing has been started, and in reply to letters and written Questions I am given the information that nothing is being contemplated. If the Government lay duties on county councils and chase them up to do them, could they not set a better example by starting a policy on inland waterways, in regard to which they accepted an Amendment from this House?
Baroness DAVID: My Lords, I will convey what the noble Lord has said to my right honourable friend. I am sorry, I have not quite finished with transport.
Lord O'HAGAN: Inland waterways?
Baroness DAVID: No, my Lords, unfortunately not. I shall continue on transport; this is rural transport experiments. In 1977 we launched a programme known as RUTEX to assess the potential role of various non-conventional modes of transport acting as supplements to the ordinary bus network. Early results from RUTEX influenced the shape of the Transport Act 1978 which relaxed the public service vehicle licensing requirements so that social car schemes and community buses could operate.
May I commend to noble Lords and to any other interested persons the Guide to Community Transport recently published by the Department of Transport and available from HMSO for £1·95. I should also like to commend Rural Rides which is a very nicely got up document which has come out only in the last few days and is produced by the National Consumer Council. The Guide to Community Transport draws on the practical experience gained from RUTEX and offers invaluable advice for local authorities who wish to tackle their transport problems themselves. Other services which are central to the viability of rural communities are health and education. There is, I know, concern about the closure of hospitals in rural areas, although nothing has been said about that today.
As for education, the particular bone of contention is undoubtedly the closure of village schools. This has been mentioned by many noble Lords, and it is, of course, an emotive subject. But noble

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Lords will be aware that the persistent decline in the school population is a dominating concern in current educational policy. By the end of the next decade the size of the school population will have fallen by a quarter. Changes on this scale present wholly new challenges and opportunities and it was against this backcloth that this Government took the initiative and issued Circular 5/77, Falling Numbers and School Closures, in June 1977. This asks local education authorities to make the most realistic assessment possible of future school population trends in their own areas, and then, in consultation with the managers or governors of voluntary schools, to examine systematically the educational opportunities offered to children in their schools and to consider how the premises might best be used. The Circular underlines the fact that the curriculum may become restricted in small schools and it is doubtful whether small schools can attract or retain the quality of staff, or command the quantity of material resources, necessary to compensate for the restriction imposed by size. The noble Baroness, Lady Elliot, I am glad recognised the necessity sometimes to close small schools.
In addition, a recent survey by Her Majesty's Inspectorate of primary education in England concluded, on the basis of a very wide-ranging investigation, that there was clear evidence that the performance of children suffered when, because of falling rolls, classes of mixed age ranges had to be introduced. On the other hand, the survey also led to the conclusion that differences in class size of between about 25 and 35 children made no difference to the children's scores on the NFER—National Foundation for Educational Research—objective tests of performance. Small may be beautiful, but the oft-quoted arguments in favour of small schools are open to question.
It is, of course, only the local education authority who can propose the closure of a state school and they are rightly responsive to local views. Generally, they are well aware of the special place that village schools have in the affections of local people and the role they can play in village life. Before deciding whether to approve a proposal to cease to maintain a school, the Secretary of State takes into consideration all the relevant factors,
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including the social and geographical ones. But in the end that which weighs most heavily is the need to decide what is in the best educational interests of the children concerned.
There are many other forms of action by Government directed against rural deprivation, which I have no time to do more than mention. For instance, in the farming sector, there are special grants for those who farm in the "less favoured areas": in this context, the uplands. Then there is the range of support which Government give to promoting tourism—including the initiative to develop tourist projects in certain parts of the countryside with weak economies. And there is the community development programme of the Development Commissioners: for example, the pilot studies they have carried out to indicate how the economic work of the Commission can be complemented by social initiatives; and their aid to Rural Community Councils. It is important also to remind ourselves that some services to rural areas have, in fact, been substantially improved: for instance some 97 per cent. of properties in rural areas now have piped water compared with a pre-war situation in which at least a million people in the countryside lacked this basic service. I want to say something about the longer-term future.
Lord SANDFORD: My Lords, I am sorry to interrupt the noble Baroness, but before she leaves the miscellaneous items I point out that I mentioned in my speech that one of the shortcomings in the tourist area is that the tourist boards cannot make grants in remote rural areas unless they happen to correspond to industrial development areas. The noble Lord, Lord Northfield, led me to think that there was perhaps some movement in that connection and said that there had been a relaxation in respect of loans, which is helpful. Can the noble Baroness say whether there has or has not been a change in respect of grants from the regional tourist boards?
Baroness DAVID: My Lords, I have a little more information about that. I intended to give it at the end of my remarks, but as the noble Lord has intervened I shall tell him now. In November 1978 the Government extended the availability of assistance under Section 4 of the Development of Tourism Act 1969

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to intermediate areas as well as development and special development areas, to which it was previously confined. To have extended the scheme to the whole country would have required a very large increase in the staff of the board. Available finance would have had to be spread very thinly and many applications rejected. Two-fifths of England are now covered, but we shall review the eligible areas again in two or three years time. I have a Press notice which I can give the noble Lord later.
Lord SANDFORD: My Lords, I thank the noble Baroness.
Baroness DAVID: My Lords, I shall now move on to the longer-term future. Here, I think, the pattern must be shaped by efforts to reach a better understanding of the problems which face rural communities. Some may say that we know these all too well; and in one sense, of course, that is true. But what we see are symptoms of a deeper, more complex imbalance of factors, not all of which are, as yet, fully understood. If, therefore, we are to make a lasting and informed attack on these problems we need to explore their basic causes—and act on those, at source.
As part of this learning process the Department of the Environment has put in hand a programme of research. One project is concerned directly with rural deprivation, and will investigate its form and causes in the context of access to services and facilities, looking, too, at the effects on different groups of people in the communities concerned and variations between different types of community. Another project centres on the process of decision making by public authorities: its nature, the extent to which decision-makers take account of rural requirements and the implications and effects for specific rural communities. A third will look at planning policies, as they are applied to rural settlements. In particular it will examine the effects of "key settlement" policies which have tended to concentrate services on selected villages as a focus for the surrounding communities.
I am sorry that the right reverend Prelate is not present, because I think that the question of the key settlements is very much what he had in mind when he suggested his pilot scheme. I do not
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think there is any great merit in setting up his modern Domesday Book. It is not so much a catalogue that is required, as an analysis of the effect of the key settlement policies and I think that this research project will do just that. I should also mention two other studies, the first concerned with the role of the rural primary school in the wider social context of the village community; the second with the economies of rural communities in our national parks.
Finally, I come to the work of the Countryside Review Committee—an interdepartmental group of officials set up to look at the countryside at strategic level; to assess the pressures it faces and how far present policies can cope with them. Economic and social aspects have been crucial to CRC's exploration of this issue—though, of course, its remit goes wider, to cover all factors which make up the countryside equation.
CRC has pursued its work through the issue of a series of discussion papers. One of these, Rural Communities, dealt with the kinds of problems which we have debated today, and invited the submission of views and comments from the public in order to try to establish an agreed approach to these matters. That response—including the memorandum, to which I referred earlier, from the Association of District Councils—is at present under study and CRC will be drawing up, during the course of this year, recommendations for action. I cannot, of course, anticipate the Committee's conclusion. But one aspect on which they have previously placed much emphasis is the need to treat the problems of rural areas on a comprehensive, "across the board" basis: what, of course, we have termed a "total approach" in tackling the problems of our inner cities.
It is too early to indicate how this might be achieved. But we shall clearly need some means of co-ordinating policies to ensure that life continues in our rural communities. We do not want fossilisation. There is no evidence to suggest that depopulation will be halted in the foreseeable future and some aspects of the old rural society and the old cultures will continue to disappear. But we cannot contemplate with equanimity further emigration on a wholesale scale from the countryside to our congested towns.

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We have had a full debate; the problems of our rural communities will not disappear overnight. But I do think that, in the past few years, we have taken steps to stem the slide and that the future now holds growing promise for efforts to maintain the distinctive lifestyle of our rural areas. We owe much, in this respect, to the great interest displayed in this subject by a wide range of people, an interest which this present debate has served to stress and, I hope, to amplify. One or two other questions have been raised by noble Lords and I shall be happy to answer them in writing.
7.49 p.m.
Lord WALSTON: My Lords, it is quite clear that the whole House will agree with me when I offer congratulations to the noble Baroness, Lady David, on the masterly way in which she has summed up this debate, answered so very many of the questions raised and, on top of that and far more important, given us a very encouraging rundown of what the Government have done and are doing. For all those who are interested in this problem, and that is a great many people, it is very valuable to have all these activities put together so clearly and so concisely. I know that we are all very grateful to the noble Baroness for doing this. It is hard to believe that it is the first time she has made a speech from the Dispatch Box. I am, of course, also grateful to all noble Lords who have taken part, as well as to all noble Baronesses. Today, the House has shown, by those who have spoken, how very well equipped it is to deal with a wide range of subjects and how many noble Lords there are in your Lordships' House who, from their personal experience over a very long time, understand what these problems of the countryside are.
As I understand it, the general tenor of the debate has been an agreement that there is some form of deprivation in large parts of the countryside. Possibly the only exception to that was the speech by the noble Baroness, Lady Vickers, who seems to live in an idyllic village which, if she allowed us to, I am sure we should all dearly enjoy visiting. With that possible exception, I believe there is agreement that some form of deprivation exists.
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Some noble Lords have laid greater stress on one aspect than on others. Some have been rather more optimistic; some have been rather less optimistic. I must confess that to my mind some have shown undue optimism; but even those who have been the most optimistic all agree that more must be done. We are happy to know how much is being done, how much thought is being given to this and what good results are being achieved. I hope that this debate will encourage those who are doing these things, will stimulate those who, perhaps, are not doing quite all they might be doing and will lead to still further research work of the kind which the noble Baroness mentioned is being carried out, and then action. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

INDO-CHINA: REFUGEE PROBLEM
7.52 p.m.
Lord ELTON Lord ELTON rose to ask Her Majesty's Government whether they will take note of the tragic predicament of over 200,000 refugees from Indo-China still in search of permanent refuge, of the causes of this pathetic and still continuing exodus and of the implications which these have for British foreign policy. The noble Lord said: My Lords, my Question concerns the refugees from Indo-China. Fourteen months ago I asked your Lordships to consider the same matter. The situation then was tragic and now it is worse, and worse by a great deal. In South East Asia there are at present about 205,000 refugees from Indo-China alone, of whom incidentally over 100,000 are children. It is as though the entire population of Hounslow, or the whole population of Aberdeen and a tenth of the population of Dundee had been stripped of every possession and scattered along the coastline of Europe from Denmark to Portugal. Two hundred and five thousand is a very large number, but it does not include the 13,000 refugees in the tiny colony of Hong Kong. It does not include the 150,000 who fled from Cambodia into Vietnam before that country invaded their homeland. Of course, the terms of my Question exclude the huge numbers who fled from Burmah into Bangladesh.
In sizing up the scale of this tragedy, we must remember that the figures I have given are for the numbers of people who have succeeded in escaping from Indo-China since 1975 and who have as yet failed to find a permanent home. I have left out two other groups: first, those who have already been taken in by third countries. It does not include 130,000 taken in by the United States immediately after their retreat from Indo-China; nor the 142, 314, I think, who escaped later and who, by last December, had found permanent places of refuge.
If we add up all the people who have succeeded in getting out of Indo-China since 1975, we get a figure of roughly 490,000; that is more than the population of the cities of Edinburgh, Bradford or Bristol. If we add to those the number who have actually made it to Indonesia, Japan, Macau, the Philippines and even, incredibly, to Australia as their first call, as well as the 16 other countries their own small boats have taken them to, the total rises to over half a million—503,000. That is more than the population of the City of Manchester, and is a very formidable vote indeed by the people living in the lands now occupied by the Vietnamese or controlled by their politicians against the régime under which they have had to live.
Yet even that is not the whole story. I have not counted—and no one ever will count—how many thousands have perished in little boats unfit for sea and swamped by the monsoons; how many have been deliberately drowned—and I regret that that happens because I have eyewitness accounts of it—by robbers posing as friends until they overturn their boats in midstream of the River Mekong; how many have died at the bestial hands of pirates in the Gulf of Siam; and how many were shot down by patrols of the Khmer Rouge army or blown to pieces in the minefields and boobytraps with which they scattered their path to freedom. They would fill the cemeteries of Leeds over and over again.
But today we must concern ourselves with the living. The number of refugees in temporary camps is now greater than it was when I visited them in 1970 and told your Lordships of what I found. In Thailand alone there are over 140,000. I wonder whether that figure seems real,
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or is it merely a vague idea? I can tell your Lordships how to make it real. I shall tell you how to grasp the threat and the burden that this is for Thailand. Imagine such numbers arriving here. Imagine over 200,000 refugees pouring into this country in the space of under four years, and only 60,000 of them getting moved on. The outcry that it would cause is unimaginable.
However, the population of Thailand is smaller than ours and it is infinitely poorer. About 12 million of them have an average income of less than £50 per year, yet they bear more than half the cost of maintaining this crowd of refugees—some £4·5 million in the period 1st March to 31st December last year alone. In some ways the Thai people shame us with their generosity. By the end of last year over 70,000 boat people had landed in Malaysia. Despite a successful resettlement programme abroad, over 49,500 were still in camps, and still they came.
The Malays are a kindly people. Despite having an often unreferred to 90,000 refugees from elsewhere temporarily, they were foremost in taking in, educating and settling, the Moslems among those who first escaped Thailand by land. They actually went out and collected 1,400 of them, but they now have 60,000 refugees of their own. Their coastline is saturated and their despairing villagers pelt the pathetic arrivals with ineffectual showers of stones as they wade through the surf.
I should like to quote Tan Sri Ghazali bin Shafie, the Home Affairs Minister of the Government of Malaysia recently in Geneva. He said:
"As you may know Malaysia today is busily engaged in a programme of social engineering aimed at the twin objectives of the eradication of poverty and the restructuring of society. It is difficult enough already as it is, when with the world economic situation we have to sell cheaper and buy dearer than before, when we have to struggle with the problem of unemployment, when we have to uplift the living standard of our people whose expectations are high, when we have to maintain law and order, when we have to preserve our security and stability, when we have to integrate the various communities into a single Malaysian nation"—
and he did not say, of course, that the population of Malysia is part-Malay and part-Chinese—
"with a common and shared valuation system out of diverse cultures and creeds, these…by

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themselves are challenges of immense magnitude if they are to be actualised within the time frame of one generation which we promised ourselves. If the problem of the boat people is added to this then our vision of a united, democratic and a just society that will be Malaysia will become an impossible dream".
Next door, in Singapore, the problem is minimised by strict regulation. There is an arbitrary ceiling of 1,000 refugees in camp at any one time, and the thousand and first has his boat repaired and is asked to move on. I shall not comment further on that because I am not familiar with the situation—I did not see it.
We then come to another small State, Hong Kong, about which the noble Lord, Lord Geddes, will be speaking later. I will tell your Lordships by way of preamble that 6,460 refugees had arrived before the "Huey Fong" and the "Tung An" had dropped anchor. There were 8,000 awaiting settlement when "Skyluck" arrived with perhaps 3,000 on board. We do not yet know. There were over 5,000 arrivals in 1978, and there have been as many again this year. If you know Hong Kong you will realise that 13,000 unheralded arrivals in addition to the normal influx is a serious matter. The city is already as full of people as a hive of bees, and into that hive moves a continuous stream. Hong Kong had absorbed 100,000 arrivals from mainland China last year alone. That flood alone places a huge strain on the education, health, housing, and other social services of the Colony. Many other communities would regard that alone as an intolerable situation, but they bear it without complaint. To add a new source of immigration, and one with no very obvious limit, causes alarm even among that stoic people. They have done well to accept it. They are right to look for assistance.
In a forceful leader last Friday the South China Morning Post expressed a point of view which may come as a surprise to many in this country. The writer is referring to a belief that we here expect that, thanks to British representations, the Vietnamese may limit the exodus from their country to 1,000 a month. I dare say that the noble Lord will have something to say about this when he replies. I quote:
"while officially the Hanoi Government may invent some purchasable exit permit for such a number, the unofficial exodus is likely to continue
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indefinitely, as it has done with China. For in neither country are officials capable of controlling the exodus. Nor do they show much interest in doing so".
I think this is what your Lordships need to take on board:
"As for the woeful record of overseas countries in receiving refugees from Vietnam for resettlement, it must be strongly doubted that the Skyluck's arrival or indeed that of any other vessel, will make any appreciable difference.
"For there is no reason to doubt that Hong Kong's benevolent attitude will be as cynically exploited by the prosperous Western (and Asian) countries who could relieve us of a large part of this problem as by those who have saddled us and other parts of Southeast Asia with it".
I shall return to this view and what I think our reply should be at the end of my speech.
If, my Lords, that is still a little distant pray be patient. It is a very heavy tale I must tell, and I cannot hurry with it. Let us look at the origins of this astonishing phenomenon. What possible reason can there be for half a million people to flee from one pleasant, beautiful, and fertile corner of the world? Why should 100,000 families abandon their homes and the whole of their property and fling themselves on the mercy of total strangers? In Cambodia we saw a kind of madness in which one part of the nation gained the upper hand and was caught up in killing the other, and freely admitting to one million corpses as the price their fellow countrymen had to pay for not sharing their political views. A grim total, amounting to one in every six people who had survived the war in that country. In Vietnam I believe the disease to be the same, but it takes a colder and more calculating form and I think it takes longer to work itself out.
Last Saturday I visited some refugees who arrived three weeks ago from Vietnam. They were boat people. One of the minority of this vast tide who are boat people. Let me tell your Lordships a typical story. A tailor and his wife had eight children and a shop in Saigon. When Saigon fell and the Communists took power the police came and they boarded up the shop and removed the stock, and the next day they put the family, the tailor and his wife and his eight children, on a lorry and they drove 96 miles into the forest. When they let the tailboard down they said, "This is a new economic zone". It looked like

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any other part of the forest. They were given spades, and they were told to get on with it. They had to build themselves shelters out of bamboos and leaves. They had to clear the forest, and they had to grow their own food. They had been allowed to take some luggage with them, and therefore they had some wealth. With this they had to purchase their food to sustain them until the crop came to maturity and could be gathered.
It was at the point as she remembered the next thing that the mother of the children began to weep as she told the story. It was 21 kilometres on foot to the nearest place they could buy food, and they had to till the ground as well. Eventually, and it was something of a triumph—even for a farmer it would have been a triumph—the crop matured and they gathered it. For this they were thankful. Then they did the arithmetic and saw that it was not enough to sustain them until the next crop, and the money would not hold out. At that point they began to look for a way out; they found others and they went to the coast and bought a boat. One hundred and twenty of them bought a boat, some 12 ft. longer and 4 ft. wider than a boat on which I took six children on a rather crowded trip down the Avon River two years ago in the summer. One hundred and twenty of them boarded that vessel in the dark giving the equivalent of £100 per head bribe to the coastguards to let them go, and they went off into the night in confusion and haste. The full horror dawned on this poor woman as the dawn rose and she realised that her husband was not on the boat. She is now in a hostel in this country in a state of understandable shock.
What had happened to that family? The truth of the matter is that the Communist Government of Vietnam had turned it out deliberately into the wilderness to starve. Why? They had committed the two sins of having been capitalists in a very small way in a Communist country and, please note, of being Chinese in the country of Vietnam. There is in that country a desperate shortage of food and a grave economic crisis, and of course it is convenient to a Government to reduce the population and to focus discontent on a readily defined sector of the population. The
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business sector is easily identified as it is primarily Chinese in origin.
This therefore is in fact a racist decision. Whether somebody had read Mein Kampf I do not know, but the Communist answer is extraordinarily like an answer we saw put into effect in Europe in the 1930s. These people are being sent out of the country, and it is now I believe almost certain that the going rate for a safe conduct on to a ship as opposed to a boat is somewhere around 2,000 dollars US currency, or the equivalent. That is the product of the Communist philosophy in that corner of the world, and by its fruits shall we know it.
Let us not forget the role that Vietnam has in the balance of power in the area. Let us not forget the similarities there are between that and the role of Cuba in Africa. It is a grave and dangerous precedent, the African precedent. If it is followed to the letter and without hindrance it will go badly indeed with the Free World. It will open the door to tyranny so wide that we shall feel the draught in Europe. We must not think—to return to the refugees—that once a refugee reaches a camp his problem is solved. A camp is a temporary structure with inadequate amenities, dangerous to health, and corrosive to morale. Above all, it is a place one wants to get out of. The burden of refugees on most countries of first asylum is intolerable. The problem therefore is to settle them somewhere else. We have seen that since 1975 142,000 have been settled. Different countries have different standards of admission. I would refer you to the Press releases from Geneva rather than detain you with the differences, because it is taking too long, except to say that I notice that the Swiss, to their eternal credit, accept as a priority those with least claim to go anywhere else.
Those who are left behind are very often the least skilled and the least acceptable to other countries. Therefore, the present unwilling host countries rightly fear that they will be left with the unfit and unadaptable, and they urge a pool system whereby countries will state their quotas in advance and take whoever is next in the queue regardless of qualifications. There must obviously be limitations. There must be modifications to that as to at least language

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and relatives already settled, but preferences should be minimal. I was glad to see that this was favoured at Geneva. It will not in any way alter our policy. I understand that we have already accepted disadvantaged people.
In the camps there is a crisis of morale and it gives a great sense of security and purpose to a refugee if he is able to embark on the process of qualifying himself in some way to be a more acceptable person in a new country. In last week's debate on children, the noble Lord, Lord Ritchie-Calder, made it clear that in these circumstances self-help is best for self-respect and security. In one case it is done by the refugees themselves; they become more effective as these volunteers gain experience. However, this puts an extraordinary strain on their loyalty to their fellow-sufferers, for if they have spent a year or more in training their fellows to qualify and they see their fellows going and they themselves have an opportunity to go to another country, obviously to give up that opportunity is asking a great deal of their charity and courage.
I have in mind two outstanding men, both of whom I have met, at present at work in Thailand; Mr. Tith Sarun and Mr. Hay Peng Sy. They both come from Cambodia and it seems to me that, where there are people of their calibre willing to do this work, means should be found of guaranteeing them entry to this country and residence here without their having to come to the United Kingdom to claim it. They can then continue work of very great value secure in the knowledge that their own eventual settlement is guaranteed, and I hope Her Majesty's Government can arrange for this to be done. It would give a real help at no cost whatever to ourselves.
The work of the voluntary agencies in the field is very valuable indeed and too varied for me to list tonight. I pause only to applaud the decision of Her Majesty's Government to support with their own funds on a pound-for-pound basis the work of those agencies where it is approved in the field. But there is an aspect of the problem that is beyond the voluntary agencies and which may be beyond ourselves on our own. I have already spoken of the acute poverty of some of the Thai people. Your Lordships
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can see that, where there are, I think, 11 million people living on the equivalent of less than £50 a year on one side of the camp wire toiling every day that God sends to produce a square meal most days of most weeks for their families, for them to see other people on the other side of the wire getting a handout which keeps them in health without doing a hand's turn is a politically and socially dangerous situation. In my view, that situation should be changed.
I note that our financial aid to Thailand in 1977—the last year for which we have figures—was £741,000, not a large figure, and it was devoted to replanting rubber trees. I would like to see a feasibility study of a plan to open out new areas for the cultivation of food crops; to connect them to existing areas by road and to market centres as well; to make additional allocations of land to the existing population as well as new allocations on a smaller scale to such refugees as may become semi-permanent members of that community, but that number should be kept to the absolute minimum.
Assistance with the provision of water and irrigation and the introduction of a basic medical service would enable a more prosperous community to grow up exactly where, in political terms, it is most needed; that is, where there exists both extreme poverty and a neighbouring Communist State bent on subversion. In this respect our overseas development policy seems to me to be the most effective arm of our foreign policy and the one that can be most positively strengthened by co-operation with our partners in Europe.
Let us beware of the alternative and popular method of development. Have we not just seen in Persia, in the most dramatic way, what happens when a rural and agricultural population is transferred by artificial pressures into an urban and industrial way of life? Is that not the strongest possible evidence that agricultural rather than industrial development should be the prime target of our aid? The world needs food urgently. What the peasant population needs most urgently is enough land to occupy their labour and a decent harvest year by year. Roads and water will supply both needs at once when the soil is located; the problem then is to see that any sizeable increase in the yield of the

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crops does not bring about a sizeable fall in the prices at which it is sold, in which case they will be running faster and faster to stay in the same place.
Here we touch on the whole question of single commodity agreements versus a common fund. In view of the fact that the whole of the Third World unanimously wants a common fund, I think we should satisfy ourselves as to its management and application again, and then seriously reconsider whether we cannot agree to do it in some form or another. As to the increase in productive capacity in rural employment, I do not think we have sufficiently considered the link between agricultural advance, rural stability and earning power in the ASEAN group and our own industrial and commercial interests.
There are, I believe, 250 million people in ASEAN. Their incomes are rising by, I think, over 4 per cent. GNP per annum. This is a huge market and one which we and Europe cannot afford to neglect. Thailand is threatened and, if we do not look out, that threat will threaten the whole of ASEAN. I do not want to prolong or broaden the debate; we have had a long day already, but I cannot resist pointing out one point in that context. I understand from the Press that we have recently lost an outlet for a good deal of our armaments manufacture. If the Thais make a reasonable proposition to us, I would remind the Government that a man carrying a sword is less likely to be attacked than a man carrying a stick, and I do not think we should be unreasonable in replying to any request they make.
This is an urgent matter; the economic matter is urgent, too. I will truncate what I have to say further but not to the exclusion of a plea that we may now consider again the numbers of refugees who may come into this country. One of the voluntary agencies at least have said off the record that they think they could place 5,000 themselves if they had the financial resources to do it, to support their reception centres. I would remind your Lordships that when the first publicity came to us about the boat people and their crisis, one of the first offers of housing came from Birmingham. If anything was calculated to scotch the fear that there may be a racial problem here,
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that was it. A policy which settles small groups large enough to give them security together, small enough to avoid a ghetto mentality, seems to be the least we can do.
There is another aspect of this to which I think the noble Lord, Lord Geddes, may refer. But, in case he does not, I would refer to the suggestion now widely applauded in the Far East that, since the pressure on the countries of first asylum is becoming intolerable and dangerous and there is no prospect of catching up with the backlog of refugees for a number of years, the United Nations or an agency acting for it should obtain an island of its own and that the present refugee camps could become staging posts to that camp.
That has obvious dangers. If the journey out is made too comfortable and attractive, the problem is enormously increased. Your Lordships may not quite have grasped the implications of what I said about the ethnic factor in Vietnam. There are between 1½ million and 2½ million Chinese in Vietnam and they are now poised, like the tidal wave which broke over Portland yesterday, over the tiny economies of Hong Kong, Singapore and Malaysia. There is a real chance that this may come and we must use diplomatic pressures to resist that, and they must balance the attractions of the island to which I referred. However, whereas a week ago I was against the idea, I now believe the alternative may be worse.
Noble Lords have been very patient and have listened to a long and sad story. There is so much sorrow in the world, let us do a little to reduce it. Our foreign policy in South-East Asia should be founded on economic good sense and informed by compassion. That means that we must recognise and favour the growing economic ties between Europe and ASEAN. We must contribute to raising the standard of living of ASEAN's poorest people, and to some of the destitute and dispossessed we must offer our friendship and a home at the time of the greatest crisis of their lives.
8.20 p.m.
The Lord Bishop of ROCHESTER: My Lords, I know that it would be the wish of many noble Lords that I should begin my speech by thanking the noble Lord, Lord Elton, for having raised this

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urgent and tragic subject in your Lordships' House tonight. We are extremely grateful to him for his very well-informed and deeply moving speech, as we were for his contribution to the debate last week on the International Year of the Child. Few of us can rival his knowledge or his recent experience of visiting the countries concerned, but none of us can fail to be moved by the desperate situation which he has described to us so vividly tonight. As the noble Lord has made clear, the magnitude of the problem is now such that it is quite beyond the best efforts of the voluntary agencies to deal with it unaided, but it is about their contribution that I shall speak briefly.
In the last 40 years refugee service has been a major commitment of all branches of the Christian Church, not least of those Churches associated together in the World Council of Churches, which in turn work very closely with the United Nations High Commissioner for Regufees, as does the Roman Catholic relief organisation. In this country Christian Aid, which is the Churches' own agency for relief work, has recently made an emergency grant to support the Malaysian Red Crescent's work among Vietnamese refugees in that country. This grant, made in response to an appeal by the League of Red Cross Societies, will, it is hoped, assist the recruitment of technical personnel for the medical and general welfare programme.
It will also help to finance a tracing programme in Malaysia set up by the International Committee of the Red Cross, which is aimed at reuniting families who have become separated in the course of leaving Vietnam and arriving on the East Coast of Malaysia. This may seem a very small thing to set against the whole horrific situation, but it is by such personal ministry to individuals, deprived not only of their home but of their family ties as well, that some small measure of self-confidence can be restored to desperately unhappy people.
In Thailand the Church of Christ in Thailand, a presbyterian body, has been grappling for several years with a steadily escalating refugee problem. It has received help through the United Nations High Commissioner for Refugees, especially in the supply of food for seriously under-
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nourished people. But it remains the task of the voluntary agencies to organise and to pay for a substantial proportion of other commodities, such as clothing, tent mats, blankets, and medical facilities. Refugee service, undertaken in the name of the Christian churches, also aims at providing elementary education for children, as well as some rudimentary vocational training for young people.
In Hong Kong the Christian Council, of which the Anglican Bishop is the chairman this year, has a long history of service to refugees. It is at the moment looking after more than 8,000 Indo-China refugees in transit camps at the same time as it is helping to care for the thousands of refugees who enter Hong Kong every year from China itself. Again, the services offered include training in languages and vocational skills to prepare refugees for resettlement elsewhere. On the occasion of the Chinese New Year at the end of January the Churches in Hong Kong gave family gift packets of fruit and sweets to Indo-Chinese refugees in the Kai Tak camp as a gesture of sharing in the joy of the New Year celebrations. That is a tiny symbolic act, but one which transcends all differences of nationality, language, and belief.
As I have said, the role of the voluntary agencies cannot but be a limited one now that the number of people involved has assumed such huge proportions. However, I am sure that your Lordships will agree that the maintenance of the kind of personal ministry, of pastoral care, and, where possible, of practical help to adjust to a new life should be the special responsibility of the voluntry agencies in the areas concerned, and that it is the duty of those in other parts of the world, however hard pressed they may feel themselves to be, to continue to assist this work, so much of which is done in their name.
But we must face the fact, my Lords, that the crying need is not for relief, but for resettlement, as the noble Lord has made so clear to us tonight. A letter just received from the Bishop of Hong Kong says:
"Our concern is that the nations which can should take concerted action as soon as possible so as to prevent a 'running sore' appearing in South East Asia".
We all hope that Her Majesty's Government will continue to play their part in promoting such concerted action.
8.26 p.m.
Lord MONSON: My Lords, if I may echo the right reverend Prelate, I would say that I am sure that the entire House is grateful to the noble Lord, Lord Elton, for drawing our attention so powerfully, so comprehensively, and indeed so passionately, to this important and tragic problem, the full magnitude of which has been far too little appreciated in the West generally, and in this country in particular. The noble Lord's Question draws attention to the predicament of the 200,000 refugees and asks about the causes of the exodus and its implications for British foreign policy.
I shall take the causes first. I am sorely tempted to run through the history of the past 30 to 35 years in order to demonstrate how very wrong the "fun revolutionaries" were; how wrong the ill-informed students of Berkeley, of Nanterre, of the LSE, and of West Berlin (of all unlikely places) were to cast aspersions upon American motives. They were perfectly entitled to criticise American strategy and American tactics, as did many of us who, in broad terms, supported America. (What a tragedy it was that the Americans had nobody of the calibre of General Templar, with his sensitivity to local conditions.) But they were not right to criticise and impugn American motives, inspired as they were by the highest ideals of the Kennedy era.
However, your Lordships will hardly welcome a lengthy analysis at this late hour. Therefore, suffice to say that over a generation ago, when Ho Chi Minh came to power in the North, over 2 million Vietnamese—most of them Roman Catholics, but not entirely so—fled South. In contrast, virtually none fled in the other direction. Whatever one's assessment of the merits of both contending sides, the proof of the pudding is surely in the eating. To cut a long story short, I should say that the uneasy truce evolved into a war, initiated not by the Americans, but by the North Vietnamese Communist Party, as a Labour Member of Parliament then representing an Essex constituency, and now a junior Minister, made clear to the House of Commons at the time.
When Russian-built tanks rumbled into Saigon in April 1975 it was perfectly obvious to me (and to many others) that history was going to repeat itself, the
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only questions being: when would the exodus take place, and exactly what form would it take? Of course, there were a great many naive optimists in this country and elsewhere who thought that a new era of peace and concord was about to begin. To be fair, they were in good company. What was known as the Third Force in South Vietnam, mainly but not entirely Buddhist, who disliked the Thieu Government and the Communists equally, thought that they would be able to reach a modus vivendi with the conquerors. But, alas!, my Lords, Stalinists do not change their spots, and the members of the Third Force became sadly disillusioned people, and have joined the exodus in large numbers.
The predicament of these peoples, referred to in the first part of the noble Lord's Question, or of a small segment of them, was something I was able to see almost exactly two years ago, when my wife and I visited, on two occasions, the refugee camp in Songkhla, Southern Thailand, on the Eastern part of the isthmus, fairly near the Malaysian border. The camp consisted almost entirely of boat people who had made the perilous journey across the Gulf of Siam. I use the word "made" in both senses of the word, because many of them had made it, many of them had not. I have also used the description "refugee camp", but I think one really ought to call a spade a spade and refer to it as an internment camp, because that is in fact what it is. I suppose most refugee camps fall into this category, with the possible exception of those in the Near East.
I imply no criticism of the Thais at all in this matter. I agree entirely with what the noble Lord, Lord Elton, mentioned about the poverty of Thailand. I think it is all too easy to forget that the quadrupling of the oil price at the end of 1973 hit the poor countries of Asia, of Africa and of Latin America almost as badly as, if not worse than, it hit the industrialised West. In addition, the Thais have to cope, with not only the influx from Vietnam and from Cambodia, which is fairly recognisable and to some extent can be contained, but the influx from Laos. The people of Laos are ethnically and linguistically not very different from the peoples of North-Eastern Thailand, and in consequence they can slip across the border very easily without being

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spotted and merge into the population. The North-Eastern part of Thailand is an arid, infertile and consequently very poor part of that country, and therefore the problems of their entry are quite considerable.
My Lords, to revert to the internment camp or refugee camp (call it what you will) at Songkhla, at the time I arrived there were just over 1,000 people crammed into a space about three-quarters of the size of this Chamber. It was what was laughingly called the dry season. There never really is a dry season in that part of Thailand, the rubber-producing and tin-mining area, so it was only relatively dry. Accordingly, it was reasonably dry underfoot, but I hate to think what it would have been like in the really rainy season. The huts were constructed of corrugated iron, bamboo and woven reeds, and would have been quite inadequate to keep out a really heavy rainfall. It was good to see that the inhabitants were adequately fed—in quantity if not necessarily in quality—and were adequately clothed. The older people, the adults, had worn but clean clothing; the younger children were decked out in bright new T-shirts emblazoned with the sort of slogans that one sees in the Kings Road or in Kensington High Street. The UN, I think, had provided the food; and magnificent work was being done by a Scandinavian couple. I later heard that they were Swedish missionaries, and if indeed they were Swedish that certainly partly atones for the "radical chic" support of Sweden for the Viet Cong and the North Vietnamese, and its disgraceful refusal to admit any of the victims of Communism within the last few years.
But the real problem, apart from the despair and the worry of the people about the safety of their relations—whether they had drowned or whether they were suffering in Vietnam in re-education camps, or whatever—was the question of space. It was not so bad for the babes in arms, of whom there were a few, or the older people, who possessed that valuable Buddhist stoicism, whether or not they were in fact Buddhists: many of them were in fact Roman Catholic. Many of the older people, some of whom spoke French or English, said to us, "It is worth undergoing any hardships because we are free; that is the important thing". The really poignant thing was seeing the plight of
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the children of school age and of the teenagers, who had no space whatsoever—healthy young people—in which to kick a football, to roll a hoop or even fly a kite, which is a popular pastime in that part of the world. It was really tragic to see young lives being wasted away like this month after month, year after year, with nowhere for them to expend their energies.
In addition, there was the problem of the locals gawking at the refugees. The locals were not totally hostile, but they were certainly not friendly, either. I am not sure that it was a question of envy, as the noble Lord, Lord Elton, implied was the case in the camp that he visited, because Songkhla is a fishing port and there is enough to eat; but ethnically and culturally the Southern Thais are very different from the Vietnamese. They are very much darker and their form of Buddhism is quite different from the Vietnamese form of Buddhism; and, as I said earlier, many of the Vietnamese are Roman Catholics, anyway. They would stand round the wire all day, gazing and pointing at the people inside, staring at them like monkeys in a zoo, and for a dignified people this must have been a most upsetting experience. I had of course read about refugee camps in various parts of the world, and had seen them on television, but until one actually visits one in person one cannot conceive of the atmosphere of despair that pervades them.
My Lords, what about the implications for our foreign policy?
Lord ELTON: My Lords, if the noble Lord would be kind enough to allow me to interrupt, I wanted to put a gloss on what he said about conditions at Songkhla, which I have not visited. I wish to do nothing to detract from the impression he has given, but it is the case that since I was in Aranya Prathet just over a year ago the Thai Government have undertaken the education of children inside the camps; and, in fact, the policy which was introduced on 2nd November 1977, of not allowing anybody outside the camp for any purpose, has been relaxed. I think we should not underestimate what the Thais are doing; and they do in fact pay for just over half the cost of every refugee every day, every year they are there.
Lord MONSON: My Lords, I am extremely grateful to the noble Lord for that intervention. I am very glad to hear what he has said, which was, of course, complete news to me. While I was there the children were being educated by their own parents or relations, but, of course, I did not know about their being allowed out, which makes all the difference in the world. I was quite ignorant, too, I am afraid to say, of the fact that the Thais are paying half the cost of the food themselves, which is extremely commendable. The whole world owes a great debt of gratitude to Thailand for this, I think.
My Lords, what about the implications for our foreign policy? I think I should deal with our home policy first. Almost two years ago I asked whether this country would admit a few more Thai refugees, at least to match the Latin American refugees in number. I regret to say that I was met with almost deafening silence from all quarters. However, the position has now been relaxed, and to his great credit the Home Secretary has agreed to let in a considerable number (by our standards) of these people. Naturally, we are an overcrowded island; and it is vital, I think, not to make the mistake that Governments did in the 'fifties and' sixties of contemptuously ignoring public opinion, as they did over the mass New Commonwealth immigration. We must keep in step with public opinion, and I am sure the Home Secretary is playing his cards extremely well here. I think he is going along hand-in-hand with public opinion on this. I think that if the numbers are kept to reasonable proportions, there will be no difficulty in that respect. Apart from this, the admission of a few thousand of these people will set an example, I hope, to other countries which are less overcrowded than our own—and now, of course, we come into the realms of foreign policy. France is doing extremely well in this respect. It is true that they have long-standing connections with Indo-China; nonetheless, this does not detract from their admirable record: I think that some 50,000 or more refugees have settled in France.
What about our other EEC partners? Is it not possible that they could be doing more? Australia is doing well, I think, despite combined opposition from the Communists and the National Front in
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Australia. It is not the first time that the extreme Right and the extreme Left have joined together for nefarious purposes; but Australia is doing extremely well in relation to her population—as is the United States, for fairly obvious reasons. What about South America? Very few refugees have settled there, as far as I know; and one would hope there might possibly be an outlet there. Israel has accepted a few; there is possibly an element of public relations in this, but none the less the gesture is to be welcomed. It might be expected that Taiwan would accept a substantial number of the ethnic Chinese refugees. But if Taiwan is to be treated as an international outcast—and I touched on this yesterday—I fear that we can hardly expect co-operation from this quarter. However many countries step up their quotas, this could only scratch the surface of the problem. The vital thing is to stop this continuing exodus.
My Lords, the omens are not good. The Daily Telegraph, in a report by Denis Warner on 27th December last—a report quoting from a Communist Party newspaper—reported that there were plans to take over the property of seven million farmers in the Mekong Delta who would lose their homes and the title to their lands. Such people will either fight or flee. They will probably flee because the Mekong Delta is not good guerrilla territory. I believe that every form of financial and other pressure must be brought to bear on Vietnam to relax their relentless pressure on their own people—including the withholding of the merchant ships which are financed with taxpayers' money and which still are going to be delivered to Vietnam according to an announcement yesterday in the other place—because, given the most conservative estimate, one out of every two of the boat people drown or die of hunger, thirst or exposure, are attacked by pirates or eaten by sharks before they reach land; so that we are not just talking about people driven from their land of birth (which is bad enough) but about mass murder, in effect about genocide. We must subordinate all other considerations, and certainly commercial ones, to the necessity, in conjunction with all other friendly nations, of putting a stop to it.
8.42 p.m.
Baroness VICKERS: My Lords, I feel diffident in speaking in this debate for we have had such experts when I myself have not been there recently. The idea was that, having dealt with refugees both in Europe and Indonesia, perhaps it might be helpful if I were to give a little of my experience. I should like to congratulate the noble Lord, Lord Elton, on his most moving speech and on the great deal of trouble that he has taken in visiting these camps—when he has a very busy life in this country—and showing his compassion for these people.
We have a great many voluntary organisations in this country which are doing the best they can. There is the Standing Conference of British Organisations for Aid to Refugees. I should like to speak briefly on the question of Save the Children. They have been working there since 1976 and are still there. They are doing a valuable job with their medical work in connection with mother-and-child health. They already have five camps there. One camp has 38,000 people in it, mostly children. I thought that when I had to deal with a camp of 10,000 people in Indonesia that that was a great task, but the task there must be beyond anybody's abilities to do much. It must be very upsetting for them. However, they have medical teams and are training Thai doctors to help. There are quite a lot of expatriates working there. Unfortunately, the numbers are coming in even more quickly, I understand, at the present time. I have no breakdown by nationality of the inmates, but mostly they are from either Laos or Cambodia, although some are from Vietnam. In August 1978 there were 114,887 people in these camps. Now the figure has risen to over 140,000.
I should like to thank the Government, through the noble Lord, Lord Goronwy-Roberts, for the grant that they make. I gather that the organisation, themselves, are spending about £75,000 per annum on the work, but the Government are also granting about £37,000. For this they are grateful. The problem of these camps is that more are coming in than are going out. This is a great problem for the Thai Government who are doing a magnificent job at the present time in helping where they can.
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The Disasters Emergency Committee which met on 5th February last to discuss the problem sent a cable to the United Nations High Commissioner for Refugees in which they expressed great concern in regard to this matter and asked for immediate action. I wonder what contact the Government have with the Governments concerned to see whether there is a possibility of allowing the British Red Cross or, better still, the International Red Cross, to go in to see what the conditions are. I understand (and I may not be right) that they cannot go in unless the Governments concerned invite them. I was very pleased that the Government of Indonesia invited me and the International Red Cross to visit the camps. With the permission of the Government we went round the various camps—and, of course, the people are in camps and are kept there. They were mostly Asians, but there was quite a number of Dutch, also.
The Government said, in effect: "If you can get them to sign an agreement that they will be faithful to our Government we will let them out gradually. If they will not sign, we will see that they will get out in an orderly way". Some 75,000 opted to leave. We did not bring them out too quickly; we wanted to plan the thing; and this was allowed. Is there any chance that, in talking to the Governments concerned, we might get some action taken on these lines. It would be beneficial to everybody. First, they would get rid of the people who were not keen to stay, and, secondly, they would be able to get supplies for those who do want to stay there and to look after them better in the future. I tried to persuade most of them to stay. I felt and still feel that for these people the climate in many countries to which they go now is not suitable for them and probably will not be beneficial to their health. Tuberculosis, we know, is rife in some of these countries. I should have thought that the thing to do would be to try to get some agreement—this may be quite impossible; I am merely putting the suggestion forward—with the Governments concerned.
There are a number of countries that we know of like Guyana which are very under-populated and which already have a mixed population. What approach has been made to some of these countries? I merely give that one as an example. Mr. Jones went there with all his "crew".

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They are under-populated and they need more people in their country. These refugees are hard-working and I am sure that they would fit in well. In Trinidad and Tobago—and I am not suggesting they take any—the Chinese, the Indians and the African stock all get on very well together. I should like to know from the Minister concerned whether anything has been thought of in this way.
Lord MONSON: My Lords, I do not think that these people would like to go from one Marxist frying pan into another Marxist fire.
Baroness VICKERS: My Lords, they will probably get on very well together. I do not think it is fair to say that Guyana is a Marxist country. They have quite a stable Government. The noble Lord, Lord Goronwy-Roberts, may correct me if I am wrong, but I would not say that it is a Marxist country. Neither would I say Belize or these others were Marxist. After all, these people will be so grateful that I do not think they are going to start political trouble when they go to other countries. They will be grateful for their chance to earn their living and live, I hope, happily and peacefully, creating a new life for themselves. I do not think this is a political matter in any way and I am very sorry that the noble Lord raised that point.
There are other organisations, like the Ockenden Venture, who would be perfectly willing to set up children's homes in the countries concerned, if they could get permission. This is something else that I should like the noble Lord to think about. I am anxious that as many people as possible should settle in their own country; it is much the happiest way for them. Perhaps we could do something and have Government-to-Government talks if this is possible or, through the International Red Cross, find some way in which these people can live happily among their relations rather than in the dreadful conditions to which the noble Lord, Lord Elton, referred, with the tragic loss of lives particularly among the boat people when they are trying to escape. I am putting this forward as an idea. It works in Indonesia. People have said very rude things and unfortunate things about Indonesia, too. I do not know whether the noble
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Lord is interested in Indonesia; it also has been criticised. It works very well; things have settled down happily. I hope this point may be given consideration.
8.52 p.m.
Lord SEGAL: My Lords, I feel that we are all very grateful indeed to the noble Lord, Lord Elton, for having initiated this debate, one which is long overdue. In my view, it is far more important than the debate which preceded it. We are discussing this evening not merely a matter of deprivation but the sheer saving of human lives, and very valuable human lives at that. The noble Lord, Lord Elton, speaks from a direct involvement with this terrible problem, having seen at first hand the sufferings of the refugees. I can only speak from my personal impressions of having visited South Vietnam on three occasions prior to its fall into the hands of the Viet Cong.
The tragedy that has followed in the wake of this so-called "liberation" is painfully known to all of us: the battered old hulks, laden with their grizzly cargoes of desperate refugees, seeking asylum anywhere on dry land so long as it is not in Vietnam. It is a bitter tribute to the agonies that these people have had to endure. What is not known to us and may never be known, as the noble Lord, Lord Elton, pointed out, is the number of the countless thousands of refugees who have been drowned in the desperate efforts to escape from their former homeland, now converted into a living hell, or the fate of even more countless thousands uprooted from their urban homes and dumped into bare, rural areas without adequate subsistence and little hope of survival. It is a degree of rural deprivation and sheer inhumanity that is almost beyond the power of words to describe.
I remember very vividly seeing a propaganda film by the Viet Cong shown in Vienna two years ago when they showed with a sense of triumph and achievement lorries rounding the streets of Saigon with people being forced into them: the old, the young, the crippled and the maimed. They were dumped in open bare land, given spades in their hands and expected to survive. The same film showed a classroom in a primary school where the desks were occupied by former

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Vietnam staff generals being indoctrinated in the ideals of communism: another so called triumph for this liberation of the land by the Viet Cong.
Perhaps it is not widely known—and it ought to be more widely known—that Saigon, the capital of South Vietnam, was formerly a city of more than 2 million inhabitants, one of the finest, most beautiful cities in the Far East, even after the ravages of more than 20 years of war had left their scars. The most industrious part of this vast city of 2 million inhabitants was its Chinese quarter. These Chinese were not communists, rather the reverse. They were mostly small traders or honest labourers wishing only to be left with their families to run their small businesses or pursue their occupations in peace. South Vietnam in those days, despite the war, was a beautiful, fertile country, one of the great rice growing areas of the world.
The Vietnamese had a great culture of their own, with an art and literature dating back for centuries, a culture of which any country might be proud. Now millions of inhabitants long to escape, seeking a refuge anywhere beyond its shores. Here I must pay tribute to what has been done in this country to give refuge to these unfortunate people. But in admitting something like 3,000 of these refugees—double the number that we have accepted only recently—I feel that we have not done nearly enough. Will my noble friend, when he comes to reply, inform the House how many refugees from Indo-China have been received by France? I recall vividly stopping at Charles de Gaulle Airport outside Paris when planeloads of these refugees had already arrived: the look of relief on their faces, some of them having had to wait between 12 and 14 hours until the voluntary services came to take them away to reception centres, the women and children huddled together but with a happy expression on their faces at having left Vietnam.
How many of these refugees from Indo-China have been received by Australia, and even by Hong Kong with its total population of only 4 million people crowded into a tiny, over-populated area? Of course, I cannot expect my noble
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friend to give us all these figures right now off the cuff; but perhaps later it may be of interest to others than myself to know what figures of refugees from Indo-China have been received into other countries. Why I am so desperately anxious for far more refugees from Indo-China being admitted into this country is not only on urgent, humanitarian grounds, but because they are a most diligent, honest, hard working people who will more than repay any helping hand that we can hold out to them.
I have often wondered why so many people from the Philippines are employed in this country on domestic work, especially in our hard-pressed hospitals. Their plight is not so urgent or so desperate as that of the Vietnamese. They are refugees from poverty, not from physical or political persecution. Surely we have our priorities of compassion a little out of context. Can my noble friend quote the number of Philippine nationals who have been granted permits to work in this country? How many are in the hotel and catering trades, in domestic work or working as hospital ancillaries? On every hand we see advertisements for Filipino staff seeking domestic work in this country. There are even employment agencies catering specifically for Filipino immigrants. Their work varies a great deal in efficiency, and many have proved to be indifferent workers, who may have found it difficult to adjust themselves to working conditions in this country.
The situation is totally different with the refugees from Indo-China. They are desperate to find work in this country, as in any other country. They will prove themselves a steady, hard-working labour force, especially if recruited to work in our hospitals, where I am sure they would never go on strike. Can we not admit into our population of over 50 million at least 10,000 of these unfortunate people? It would be a bold, merciful, humanitarian gesture, even if it only touched the tip of the iceberg. Especially, it would be a gesture on the part of our Labour Government, and one which would pay handsome dividends. It would be a gesture that I am sure we would never regret. On the contrary, they would return our confidence by loyal, diligent and hardworking service and they would prove a great asset to our community.

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Therefore, I would appeal to my noble friend, whose heart is as warm as his head is cool—and no greater tribute could possibly be paid to him—to respond whole heartedly to the pleas we are making to him today from all sides of the House. If we cannot admit these refugees from Indo-China into six figures, which is rather too much to expect perhaps, can we not hold out a helping hand to numbers of them running at least into five figures?
9.3 p.m.
Lord GEDDES: My Lords, I had not originally intended to speak in this extremely important and topical debate, not because of any lack of interest in the subject but rather because of a fear, which others have been kind enough to tell me is illfounded, that in instancing the position of Hong Kong in this context I was in danger of over-exposure on one particular subject. On the other hand, as previously advised, I have lived in Hong Kong and in relative terms, therefore, I have a certain firsthand knowledge of Hong Kong and its problems, not the least of which is its constant one of attempting to get not so much a quart, but rather a gallon, of population into a pint pot. Then this morning I was given the final push over the brink of participation on receiving information that the noble Lord, Lord Rhodes, was not able to speak today, being snowed up in the depths of Lancashire. In no way would, or could, I presume to substitute for the noble Lord, but I did speak with him this morning and he has asked me to say how disappointed he is that he cannot be here today and is therefore unable to illustrate, inter alia, Hong Kong's position in the context of this very important debate, on which I, too, would like to add my thanks and congratulations to the noble Lord, Lord Elton, for bringing it to our attention.
A comment that was made in another place on 15th December last, compared the density of population of Earls Court to that of Hong Kong, as being in the ratio of 7 to 1. I am aware that the honourable Member concerned has been advised that, comparing like with like, his statistics were perhaps miseading. My purpose in raising this point is not at all to draw attention to that honourable Member's slip of the tongue, put rather to advise your Lordships that he ratio should have been not 7 to 1 but
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at least 1 to 8: in other words, Hong Kong has substantial areas where the population is over 800 to the acre, and in many parts of the older urban areas the density is as high as 2,000 to the acre. Hong Kong, as has been said by other noble Lords, is close to bursting at the seams and certainly, in this context, the United Kingdom Parliament in its broadest sense has, at the very least, a moral obligation to mitigate any exaggeration of that problem.
The problem of refugees is far from new. Even Moses had his problems with Pharaoh, but at least he had somewhere to go and he had control, directly or indirectly, of marine energy to help him get there! Today's refugees have no less need of both, but I suggest that the world has got complacent, perhaps to an extent through over-exposure of the always pitiful trails of people carrying all that they have, or all that they can, across the face of our television screens. The problem of refugees is surely now an international one, and if this debate achieves nothing else it will continue to bring that problem to people's attention.
Today, the Indo-Chinese refugees are a focus of attention, and here I would mention two particular facets. The first is the question of numbers. Just under a year ago, twin moves—the one physical and the other financial—by the Vietnamese authorities started an exodus wave, particularly of ethnic Chinese, from that country. In the period April 1978 to January 1979, it is very roughly estimated that at least 400,000 ethnic Chinese and Vietnamese have fled from Vietnam. Noble Lords will, I am sure, appreciate the difficulties of obtaining accurate statistics, but to reinforce the comments made by the noble Lord, Lord Elton, the breakdown of that 400,000 is perhaps 150,000 to China; 140,000 to Thailand; 60,000 to Malaysia; 20,000 to Hong Kong; and in excess of 30,000 to the other South-East Asian countries. Four hundred thousand is already a very large number but, as I think the noble Lord, Lord Elton, said, it is but the tip of a vast iceberg.
In an article in the Far Eastern Economic Review of 22nd December last year, it was reported that:
"Few of the Chinese who have fled so far come with more than one or two members of their immediate families, and almost all who were interviewed indicated that they expected their family members still in Vietnam to try to join them".

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As we have heard, it is estimated that there are between 1½ million and 2½ million ethnic Chinese in Vietnam. Add to that the many ethnic Vietnamese who also wish to leave, and the potential numbers of refugees from Vietnam could be on a scale that almost defies today's imagination.
I mentioned two facets. The first was sheer numbers. The second, which, if true, is disgraceful in the extreme, is the alleged connivance, and perhaps even active involvement, of the Vietnamese authorities in accepting—that is, charging—between 2,000 and 3,000 United States dollars payable in gold per head to allow refugees to leave Vietnam. I would emphasise that such allegations, although widely reported by authoritative journalists, have yet to be proved and should therefore be treated with corresponding caution. The noble Lord, Lord Goronwy-Roberts, in reply to a supplementary question on 31st January from the noble Lord, Lord Harris of Greenwich, referred to,
"the enormity of the guilt of those who are responsible for this massive enforced exodus".—[Official Report, col. 134.]
If the Press reports to which I have refered are proven, how much greater is the enormity of that guilt?
On the same occasion, the noble Lord, Lord Goronwy-Roberts, referred to the excellent, but increasingly difficult, task being performed in this context by the Hong Kong Government. I should like to re-emphasise the praise given to Hong Kong for both its approach and its action. The appalling dilemma, certainly for Hong Kong, is that it just cannot continue. As well as the arrival in Hong Kong in the last six weeks of some 10,000 refugees from Vietnam, a further 13,000 refugees from China have arrived over the same period. If that kind of rate continues Hong Kong will, by the end of this year, have taken in, whether permanently or temporarily, an extra 200,000 refugees in 12 months.
To put that figure into certainly one kind of perspective, the United Kingdom, with a population rather more than 10 times Hong Kong's, would be faced with a refugee influx of 2 million in 12 months. I am not suggesting that the United Kingdom has any such obligation. I am
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suggesting that the United Kingdom Government have a very strong obligation, both to emphasise the problem of Vietnamese refugees on the international stage, not least by continued representations in the strongest terms to the Vietnamese Government, and, more particularly, to honour their obligations to Hong Kong in doing their utmost, in discussions with other Governments and the United Nations, in relieving Hong Kong of its increasing burden.
The noble Lord, Lord Elton, mentioned the possibility of what might be called an interim island. Such an island would certainly be a precedent—and I, too, have the same or very similar doubts to those expressed by the noble Lord—and it would be a risky precedent. But, it must be asked, would it be any more risky than an escalation of the present ad hoc situation? I can really do no better than end by quoting from the same editorial as that instanced by the noble Lord, Lord Elton, that of the South China Morning Post of 9th February, which read in part:
"Unless we"—
that is, Hong Kong—
"are careful, humanitarianism for these new comers can breed social problems in the future. The Vietnamese influx, in time, will only exacerbate the problems created by the current Chinese influx. So while expressing our utmost sympathy, let us not allow such sympathy to blind us to the reality of the consequences of accepting increasing numbers of people, quite apart from the more obvious fact that by opening up our territory with its very limited resources we can only progressively dilute the quality of life that our people have struggled so hard to achieve in recent years".
9.14 p.m.
Lord GORONWY-ROBERTS: My Lords, the House will indeed be grateful to the noble Lord, Lord Elton, for giving it the opportunity to debate this important and poignant Question and for the powerful and informed speech with which he opened the discussion. Hundreds of thousands of refugees have fled various countries in South-East Asia since the events of 1975, suffering great hardship, losing their possessions and, indeed, losing life itself in many cases. The British Government, the British people and Parliament have expressed in practical terms, as well as otherwise, their profound sympathy for these refugees, and tonight we have again emphasised our profound concern about the continuation of this terrible situation in that part ot the world.

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We also deeply sympathise with those territories in South-East Asia which are having to shoulder immense burdens in coping with the influx of these refugees. The rapid and increasing exodus from Vietnam in particular has placed an intolerable strain upon some countries in this region. The Government fully support the action being taken by the United Nations High Commissioner for Refugees to try to find solutions to this most difficult and complex problem, and we warmly applaud the success he has already achieved in resettling tens of thousands of refugees from Indo-China.
Unfortunately, however, as the noble Lord quite rightly pointed out, the number of those still requiring resettlement grows larger every day. I believe that this was a point which was emphasised by the noble Baroness, Lady Vickers. It is, indeed, estimated that nearly 70,000 boat people, as they are called, still require to be resettled. Most are in Malaysia, but large numbers are also in Hong Kong and other territories in the region. Apart from these, there are nearly 140,000 refugees in camps in Thailand. The High Commissioner needs the assistance of the whole international community, not just the assistance of a few countries, in trying to help these unfortunate people. I shall, of course, respond to the request of my noble friend Lord Segal for figures as to the contribution made to resettlement by various countries. My noble friend asked some detailed questions and, as he suggested, these are for reply, perhaps in the next few days.
The British Government are playing their part and have encouraged other countries to do likewise. Since 1975, some 1,400 refugees from Indo-China have been accepted for settlement in the United Kingdom. My right honourable friend the Home Secretary announced in another place on 17th January his decision—to which the noble Lord, Lord Monson, I was glad to hear, paid tribute—to admit to the United Kingdom a further 1,500 Vietnamese refugees over the next 12 to 15 months. I am urged to do better. We shall certainly continue to study the matter to see how much more we can do.
I would remind the House, of course, that we have certain obligations of entrance to others in various parts of the world who live in the former Empire
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and who have claims upon us. They number something like 70,000 a year. These are not refugees, but they have claims upon this country and upon our resources. I believe that more than one noble Lord has emphasised that in extending the hand of humanity to the refugees we must be careful to do so in such a way that we do not neglect to meet other rightful claims upon our hospitality from other quarters.
Lord ELTON: My Lords, I wonder whether the noble Lord would allow me to ask him a question on this point? May I ask him whether the refugee quota is subtracted from the overall quota of people coming to this country for settlement? Secondly, may I ask him whether he would respond to the request of countries of first asylum that we might announce rather longer ahead the quotas which we would accept? I regret that I omitted from my speech a whole passage of thanks to the Government for what they have done in various spheres. I join with the noble Lord in this. Would it not be possible, by extending forwards the programme and having a steady flow, to assist the unwilling hosts that these people are staying with now to plan the eventual exodus?
Lord GORONWY-ROBERTS: My Lords, on the second point, I certainly think that can be studied with sympathy. It seems to be a point of practical interest to us all. On the first point of whether the so-called quota is subtracted from the total entry I have not the information to hand at the moment but it is a point of importance and I will see that the noble Lord and the House are given the right information on that.
The noble Baroness, Lady Vickers, and my noble friend Lord Segal, made a number of other suggestions which I have noted very carefully. It would perhaps take too much time this evening for me to discuss them at any length, but I will certainly ask my right honourable friends to consider what has been suggested. One aspect of the problem which is sometimes overlooked is the immense cost of maintaining and caring for the refugees while they are awaiting durable solutions to their problems. Britain is a leading financial contributor to international refugee programmes. During 1978 we

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pledged nearly £7 million to the High Commissioner for Refugees for various refugee programmes throughout the world. Of this, over £2 million was earmarked for his programmes in South-East Asia. Most of the High Commissioner's funds for the South-East Asia programme have been expended on Thailand, which is at present coping with a greater number of refugees than most other countries in the region.
Funds have also been made available by the Government, as we have heard, to British voluntary agencies working among refugees in Thailand. The Government recognise that many voluntary agencies, international and British, secular and Christian—or should I say secular and religious? I do not know whether there is an appropriate distinction in this matter—will recognise that all these are active in supplementing the work in Thailand of the High Commission itself. This year grants, usually up to 50 per cent. of project cost, have been made, or are likely to be made, for projects promoted in that part of the world by the National Council of the YMCA, the YWCA, Project Vietnam Orphans, Save the Children Fund and the British Red Cross. The noble Baroness raised the question of access by voluntary organisations, agencies, to refugee camps. I have no record of complaints received from voluntary agencies on this score but in the light of the remarks made by the noble Baroness I will certainly look into the matter.
Most of the projects to which I have referred are direct supplements to the basic help given to refugees by the High Commissioner and they provide primary and secondary education, vocational training and health care. It is outside the mandate of the High Commissioner to assist the local population where these voluntary agencies operate, but I am sure that in helping the refugees as such, the voluntary agencies certainly do not pass by on the other side of the road if there are cases among the indigenous population in which they can help. It is sometimes a real problem, which we must recognise, that refugees in camps of this kind, though by no means living in comfort, nevertheless can be better off than the local population in their vicinity. So there is this virtue in voluntary agencies, that they are resilient, they are flexible
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in their operation as well as their approach. Their humanity is not over-bound by strict rule.
The noble Lord, Lord Geddes, I was glad to hear, drew particular attention to the position of Hong Kong. Hong Kong, which is already overcrowded, is bearing a particularly heavy burden in coping not only with the steady stream of Vietnamese who arrive in their own junks, or even rescued at sea and brought there by merchant vessels, but also with the daily flow of immigrants from China, all told about 100,000 last year.
The Colony's population has grown from about half a million in 1945 to nearly 5 million today, a tenfold increase. It is greatly to the credit of the Government of Hong Kong, and perhaps particularly to the credit of the present Governor of Hong Kong, that the tremendous task of providing for this rapidly increasing indigenous population has proceeded so successfully while at the same time coping with this massive influx of refugees of opportunity as well as others who have come into the Colony over the past 20 or 30 years. Since 1975 the Hong Kong Government have arranged for 4,800 former residents of Vietnam to come to Hong Kong to join close relatives there. A further 5,700, who have made their own way to the Colony, have been allowed to settle even though they had no special claim on Hong Kong. In addition, there are now over 10,000 people who have been granted temporary shelter in the Colony and who are awaiting resettlement elsewhere.
The Hong Kong Government's policy towards such refugees has been to allow all those who make their way to Hong Kong in their own boats to land temporarily until they can be resettled in other countries. Hong Kong has also provided temporary shelter for any refugees picked up at sea by vessels whose first scheduled port of call is Hong Kong. The arrival of the "Huey Fong" just before Christmas created a very serious problem for the Hong Kong Government. Hong Kong was not the ship's first port of call, and while still 1,000 miles away from Hong Kong and about the same distance from Taiwan the master was warned that he would not be allowed to enter Hong Kong and should proceed to his original destination, which was in Taiwan. He

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ignored this message and efforts to persuade him to sail for Taiwan failed. This is the background to the "Huey Fong" incident. The Hong Kong Government's decision to allow the passengers of the "Huey Fong" to disembark in the Colony was taken, therefore, for humanitarian reasons.
There is, however, a limit to the numbers Hong Kong can absorb, and there is real and very understandable concern among the people of Hong Kong that other vessels might be encouraged to adopt the same action as the "Huey Fong". Indeed, their fears have been borne out, and another vessel, the "Skyluck", with some 3,000 people aboard, has now entered Hong Kong waters. I agree with my noble friend Lord Segal when he said that the exodus of refugees from Vietnam, Laos and Cambodia is a grim testament to the conditions in those three countries since Communist and totalitarian regimes seized power in Indo-China in 1975. In South Vietnam, in Laos and in Cambodia we have seen not only a drastic fall in the standards of living for many people but also the imposition of systems which violate basic human rights. I do not need to recount the terrible violations which have occurred in Cambodia. I am glad to say that this Government took the lead in bringing those events in Cambodia to the attention of the United Nations by raising them at the Human Rights Commission in Geneva. Since then the Vietnamese invasion of Cambodia has imposed yet more burdens on the long-suffering Cambodian people—one dictatorship imposed upon another. Noble Lords will have seen the international condemnation that the Vietnamese action has caused.
The situation in Vietnam and Laos continues to give profound cause for concern. Many Vietnamese and Laotians are still detained without trial in so-called "re-education" camps. There have been reports of the forced movement of people in Vietnam to new economic zones and of many restrictions on personal, political, religious and other freedoms. The awful risks to life which many thousands of boat refugees who flee from Vietnam are prepared to run show clearly that it is not poverty alone from which they are fleeing. Moreover, it is most disturbing that there are credible reports—I must say this in response to my noble friend Lord Geddes
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—that Vietnamese agencies have been organising and profiting from the departure of these refugees. These reports relate that refugees, on payment of gold, board large ships or small boats and, deprived of all their possessions, leave on hazardous voyages to neighbouring countries which have no wish to receive them. It is appalling that any Government or country could permit, let alone encourage, such a traffic in human lives.
The Government are particularly concerned at the reports of an organised scheme whereby large ships are chartered, through the connivance of Vietnamese officials and unscrupulous entrepreneurs, to pick up thousands of refugees directly from Vietnam and then sail unbidden to neighbouring countries. Noble Lords will have read the articles in the Observer of 11th February and the Daily Telegraph of 10th February about this cynical arrangement. I believe that those articles give a good and true impression of what is going on. It is scarcely possible to believe that organised departures on such a scale could be taking place without the full knowledge of the Governments concerned.
My right honourable friend the Secretary of State for Foreign and Commonwealth Affairs recently summoned the Vietnamese Ambassador to express his concern about such reports and to say that these practices should be stopped. The Government's concern was reiterated by a senior official of my office to the Ambassador again, on 13th February. Indeed, my right honourable friend had previously told the Ambassador of the concern felt by the Government and the British people as a whole—including many who were not unsympathetic to the Vietnamese during the Indo-China war—about the overall human rights situation in Vietnam. I regret to say that there is no evidence that the Vietnamese Government have significantly altered their policies. As I have said, a further vessel, the "Skyluck" has now arrived in Hong Kong with another 3,000 refugees. Other vessels may be on the way. The consequences of this are under consideration, and they must inevitably affect a wider relationship with Vietnam. Obviously there has to be some order in dealing with this massive flow of refugees from Vietnam. The Vietnamese Government have said that they will co-operate

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with the High Commissioner for Refugees in taking measures to allow those Vietnamese who wish to do so to leave Vietnam in an orderly fashion. It remains to be seen whether that statement represents a genuine change of heart and, if so, how it will work out in practice.
We in this House tonight, in this debate, and myself, speaking on behalf of Her Majesty's Government, have once more made absolutely clear how we regard this situation, which is not new but which has evolved in terrifying proportions in the last year or so in South-East Asia. I emphasise that it is not susceptible of solution by one country alone. It is an international problem which must be tackled internationally. Conscience is indivisible, and it is the conscience of the world which is gradually being aroused by these practices of mass persecution and mass expulsion, because that is what they amount to.
I am grateful to noble Lords for their contributions to this important debate, and I greatly hope that this debate will help to persuade those who are responsible and those who can make the biggest contribution to a solution of this problem to listen to the voice of humanity and reason, as it has been so clearly raised in this House tonight.
Lord ELTON: My Lords, before the noble Lord sits down I should like to ask him whether he has taken on board what I regard as an important proposal; that is, that the Government should look at the means of economic aid to rural development in Thailand as a means of supporting that country, as a strategic as well as an economic concept.
Lord GORONWY-ROBERTS: My Lords, yes, indeed. When the Thai Prime Minister called on our Prime Minister a week ago last Saturday—and I was privileged to be present at the meeting—he raised this matter. We undertook to look into it to see how much more we could do. My right honourable friend the Minister for Overseas Development is in fact actively examining the possibilities. I think I may say that the upshot may well be favourable.

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