Sitting of 1 November 1979

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

    Fish Conservation
    Dr. David Clarkasked the Minister of Agriculture, Fisheries and Food what representations he has received relating to over-fishing in the North Sea.
    The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): We have received representations that in the absence of a properly enforced Community quota system fish stocks in the North Sea and elsewhere are being jeopardised by unregulated fishing.
    Dr. Clark: In view of that, and in view of the Prime Minister's back-down on the financing of the EEC yesterday, what assurance can the Minister give British fishermen that they are not next in line for a sell-out?
    Mr. Buchanan-Smith: There was no back-down by my right hon. Friend yesterday. As it seems to take a long time to sink in to the hon. Gentleman, I repeat that fisheries are not up for trading.
    Mr. Mason: Is it not a fact that last last year the Dutch and German fishing fleets plundered our waters and took 40 per cent. above their quota of table fish? What have the Government done about that? What protestations have the Government made to the Dutch and Germans?
    Mr. Buchanan-Smith: The right hon. Gentleman does not need me to remind him that his party was in government at that time. Perhaps he should tell the
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    House what he was doing. I repeat that of prime importance for the conservation of fish stocks is an effective common policy that takes full account of British fishing interests. Only in that way can we ensure that fishing is properly regulated and stocks not destroyed.
    Mr. Robert Hughes: Repeated reports are being received of the ban on herring being totally disregarded by some vessels. Is there not a great danger that fishermen will get very excited, as indeed they have done in Aberdeen this week? What investigations has the right hon. Gentleman been able to make into the landing of herring in Denmark and France?
    Mr. Buchanan-Smith: I am grateful to the hon. Member for raising that matter, as it is one that causes us real concern. The moment we received the reports we contacted the Danish authorities to ask for information from them and to offer our help in any way that was necessary. Negotiations are still continuing.
    Mr. Speaker: In the spirit of the discussions last night, I hope that right hon. and hon. Members will try to ask one supplementary question when they are called. I hope that they will try hard to do this.

    Common Agricultural Policy
    Mr. Leightonasked the Minister of Agriculture, Fisheries and Food what progress he has made in negotiating a fundamental reform of the common agricultural policy of the EEC.
    The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker): The freeze in the milk support prices for 1979–80 and the very low increase for other products was a start. I will be seeking further improvements.
    Mr. Leighton: The right hon. Gentleman will recall that when he returned in June and increased food prices by 1½ per cent, except for milk, he told us that because of the butter subsidy we were better off. Has he seen Treasury memorandum 8008, which suggests that our increased payment into the budget will be about £150 million? Does he agree that the guarantee section of the CAP this year is estimated to rise by 10 per cent, and that we shall have to pay our share of that burden?
    Mr. Walker: The recent price fixing was the first agreement since we entered the Community in which Britain was a net beneficiary to the extent of £30 million. The increases to which the hon. Gentleman refers relate to decisions taken within the CAP previously. For example, a decision was taken by the previous Government for a £1,300 million structural payment to Italy, Ireland and other countries, which we are paying for partly this year and partly in the years to come.
    Mrs. Kellett-Bowman: If, despite the united efforts of the European Democratic Group in the European Parliament, the European Parliament were to include in the budget for 1980 a highly discriminatory co-responsibility milk levy, may we rely on my right hon. Friend to veto that once again, as he has done on a previous occasion?
    Mr. Walker: I should oppose any discriminatory co-responsibility levy. As we reach the ceiling for expenditure within the CAP, I think that there will be a tendency for countries to suggest that we have general levies to avoid facing that ceiling. At the Council of Ministers meeting on Tuesday I made it clear that the British Government would not support the use of any such levies.
    Mr. Torney: Yesterday I was accused of spreading speculative scare stories. Is the right hon. Gentleman aware that thousands of workers in milk distribution are already scared that, because of the import of French milk, their livelihoods are in danger and that they will be thrown on the dole? What action does the Minister propose to ensure that these jobs will be protected and that the daily delivery milk system is protected against the import of French milk?
    Mr. Walker: I agree that it is vital to retain the doorstep delivery system. The present health regulations prevent French milk from coming to Britain.

    Sheepmeat
    Mr. Maclennanasked the Minister of Agriculture, Fisheries and Food if he will make a statement about the proposed common sheepmeat policy.
    Mr. Peter Walker: As my hon. Friend the Minister of State told the House yesterday,
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    no progress was made at the Council in Luxembourg on Tuesday. I have rejected French suggestions for renegotiating the Community's GATT obligations to New Zealand and other third countries and for intervention measures. I have repeatedly made it clear that any common measures must fully recognise the needs of United Kingdom producers and consumers and the rights of our New Zealand suppliers.
    Mr. Maclennan: In his statement yesterday the Minister of State indicated that Commissioner Gundelach was seeking early French compliance with the ruling of the Court. In the light of the statements that Commissioner Gundelach has made today—that he is seeking early compliance—will the right hon. Gentleman say what compensation he will seek for our lamb exporters, who have lost much money as a result of the illegality which began on 1 January 1978, and which was exacerbated by the subsequent ruling of the Court?
    Mr. Walker: I thank the hon. Gentleman for condemning the illegality. I greatly regret that 37 of his colleagues have congratulated France on pursuing its illegal acts. The latest information that I have is that the Commissioner is seeing the French today and tomorrow morning. I understand that if the French are not complying with article 30 of the treaty he will be taking legal action tomorrow.
    Mr. Wigley: In his statement yesterday the Minister of State referred to action being taken and recommended that action should be taken by the Commission against the French Government. What action have the Government in mind, and what action has been recommended by the British Government?
    Mr. Walker: The Commission will decide tomorrow what legal action to take in the light of whatever assurance it receives from the French Government. In the interests of the Community, I hope that before tomorrow the French Government will decide to comply with the law and will obey the law. If they do not, it will be for the Commission to decide the form of its legal action. I shall be consulting the Commission next week on the speed with which action will take place and on how effective it will be.
    Mr. Peter Mills: Does my right hon. Friend agree that it is an utter disgrace that some Labour Members are seeking to disregard the law, and that their action is far worse than he described? Does he agree that if we want sheepmeat it is necessary for sheepmeat producers to recover their costs in the same way as producers of whisky, television sets, motor cars and everything else?
    Mr. Walker: The motion that has been tabled by certain Labour Members will give great encouragement to the French Government. It is a motion that is very much against our national interests.

    Intervention Stocks
    Mr. Jayasked the Minister of Agriculture, Fisheries and Food what are the present stocks held by the EEC in intervention and aided private storage of skimmed milk powder, wheat, barley, beef, butter and cheese, respectively.
    Mr. Buchanan-Smith: I will, with permission, circulate in the Official Report the statistics that the right hon. Gentleman has asked for.
    Mr. Jay: As we are all anti-marketeers now, will the Government, in face of the figures that apparently they are afraid to give to the House, set a date beyond which Britain will withdraw from the common agricultural policy unless it has been effectively dismantled by that time?
    Mr. Buchanan-Smith: The right hon. Gentleman's use of "all" is entirely and totally wrong. In the light of the present difficulties facing the Common Market, I hope that he recognises that the British Government have the support of the Governments of all the other member States.
    Mr. Pavitt: Will the Minister explain why there has been a colossal increase—about 30 per cent. to 40 per cent.—in the amount of skimmed milk sold at retail distributors while at the same time quite a large amount has been sold in the Common Market to make pig swill?
    Mr. Buchanan-Smith: Under the disposal arrangements, skimmed milk has been returned to producers. It has, therefore, been used within the EEC. I hope that the hon. Gentleman will be encouraged by the fact that there are now
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    about 350,000 tonnes in store compared with 880,000 tonnes a year ago. I hope that he will welcome that fact.
    Mr. Myles: In any renegotiation of the CAP will my hon. Friend be careful not to seek merely short-term public acclamation as Labour Members seem to want? Will he consider the long-term future of British consumers and ensure that we have an adequate supply at reasonable prices for our housewives, which means surpluses?
    Mr. Buchanan-Smith: There is no doubt that there is a real identity of interest between producers and consumers. A strong British agricultural industry is much in the interests of the consumer as it maintains security and continuity of supply.
    Following are the statistics:
    In early October, the most recent dates for which figures are available, there were 353,000 tonnes of skimmed milk powder, 1·3 million tonnes of wheat, 54,000 tonnes of barley, 220,000 tonnes of beef and 319,000 tonnes of butter held in intervention stores throughout the Community. In addition, about 244,000 tonnes of butter and 62,000 tonnes of cheese were held in aided private storage and 49,000 tonnes of beef had been contracted for such storage under the two most recent schemes.

    European Community (Council of Agriculture Ministers)
    Mr. Farrasked the Minister of Agriculture, Fisheries and Food when next he will meet the Council of Agriculture Ministers of the European Economic Community.
    Mr. Lathamasked the Minister of Agriculture, Fisheries and Food when next he expects to attend a meeting of the EEC Council of Agriculture Ministers.
    Mr. Peter Walker: On 12–13 November.
    Mr. Farr: Will my right hon. Friend put into operation the machinery that exists whereby in certain circumstances he may call for a special meeting of the EEC Council of Agriculture Ministers? Many of my colleagues feel that it is not good enough to wait until the next scheduled meeting to discuss the action taken by the French and any retaliatory action that Britain should take. Will he

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    press for the implementation of this special meeting immediately?
    Mr. Walker: I am grateful to my hon. Friend. There were two special meetings of the Council last week. I shall have to consider the decisions of the Commission on Friday and the actions of the French Government. I can assure my hon. Friend that the action that can be taken will be taken by the Commission. I shall be in close contact with it between now and 12 November.
    Mr. Latham: Is it not regrettable that my right hon. Friend will not meet the Common Market with a united House of Commons behind him, and that there are 37 Labour Members who support the French?
    Mr. Walker: That is extremely regrettable.
    Mr. Spearing: Is the right hon. Gentleman aware that the House is not surprised that two of his hon. Friends have not been present to ask questions on the dairy industry? When he next meets the Ministers of Agriculture of the EEC, will he negotiate with them the health restrictions that now apply to milk, which his hon. Friend indicated yesterday he will lift or harmonise? If that occurs will not French milk enter Britain and prejudice our dairy industry?
    Mr. Walker: My hon. Friend assures me that he has no intention of lifting regulations as described by the hon. Gentleman. As far as I know, that is not a topic on the agenda for 12 November.
    Mr. Wm. Ross: When the right hon. Gentleman meets the other EEC Agriculture Ministers, will he make it clear to them that he intends to take such measures as may be necessary to ensure that present milk production levels in the United Kingdom—in all parts of the Kingdom—continue at the present level of profitability, even though that will entail the continuation of schemes such as the one that aids milk producers in Northern Ireland?
    Mr. Walker: As a country that has to import about a third of its dairy products, it is greatly in our national interest to retain the present level of production and the prosperity of the dairy industry.
    Mr. Bowden: When my right hon. Friend next meets his colleagues will he stress to them that the inshore fishermen of Britain see their livelihood being steadily destroyed because no action has been taken to protect them for 10 years? Will he try to ensure that help will come to them in the near future?
    Mr. Walker: The representatives of the inshore fishermen were with us at the recent meeting of the Council of Fisheries Ministers and they were totally in agreement with the attitude that was taken at the meeting.

    Forestry Commission
    Mr. W. Benyonasked the Minister of Agriculture, Fisheries and Food when next he will meet the chairman of the Forestry Commission.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Jerry Wiggin): Ministers responsible for forestry meet the chairman of the Forestry Commission from time to time. The date of the next meeting has not been arranged.
    Mr. Benyon: When my hon. Friend meets the chairman of the Forestry Commission will he seek to determine and publish a target figure for the total forestry acreage to be planted over the next 25 years so that the industry will have the chance to plan ahead?
    Mr. Wiggin: I am sympathetic to my hon. Friend's request. Ministers are awaiting proposals from the Forestry Commission, arising from its consultative document on "The Wood Production Outlook in Britain" and other relevant studies.
    Mr. Cockeram: Does my hon. Friend appreciate the significance of the private forestry sectors in the country? Will he ensure that they and not merely the public sector receive the support of the Forestry Commission?
    Mr. Wiggin: I entirely endorse my hon. Friend's remarks. He will be pleased to know that there is an encouraging increase in applications for basis III dedication schemes.
    Mr. Strang: Will the hon. Gentleman assure the House that this successful example of public enterprise will not be

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    sacrificed as part of the Government's public expenditure cuts?
    Mr. Wiggin: I am happy to give the hon. Gentleman that assurance.

    Farm Workers (Earnings)
    Miss Maynardasked the Minister of Agriculture, Fisheries and Food what are the latest available figures of the average earnings of farm workers.
    Mr. Peter Walker: The latest available information is from the Ministry's wages and employment inquiry covering England and Wales. This shows that in the year ending June 1979 the average gross weekly earnings for all whole-time regular hired men of 20 and over were £66·45 for a 46·6 hour week.
    Miss Maynard: I thank the Minister for his reply. Is he aware that those figures include overtime and that the average overtime each week for farm workers is between 6½and 7 hours, whereas in industry it is only 4 hours? Is he further aware that the gap between the average earnings of farm workers and industrial workers is now running at £20 to £25 per week? Will he accept from me that in the last 12 years the increase in production in agriculture has been twice that achieved in industry? In view of the fact that the Prime Minister is always saying that workers can have an increase only when there has been an increase in production, does the right hon. Gentleman support the farm workers' claim for £100 per week?
    Mr. Walker: The figures that I provided cover both pay and the number of hours worked. The average wage is £66·45 for 46·6 hours' work. It is true that the gap between farm workers' and industrial workers' wages increased in the last year of the Labour Government. I hope that in the negotiations full consideration will be given to the good productivity record of farm workers.
    Mr. Kenneth Lewis: Does my right hon. Friend agree that if the unions representing industrial workers would moderate their wage claims not only would there be more for the agricultural worker but their wages would go further?
    Mr. Walker: As I said to the hon. Member for Sheffield, Brightside (Miss Maynard),
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    it is true that in the last year of the Labour Government the gap between the earnings of industrial and agricultural workers widened.
    Dr. David Clark: Does the right hon. Gentleman agree that those wages are ludicrously low for highly skilled men, especially in view of the Government's proposals vis-a-vis school transport, and so on?
    Mr. Walker: It is an average wage which covers both skilled and unskilled workers. Different skills receive different wages.

    Food Prices
    Mr. Gwilym Robertsasked the Minister of Agriculture, Fisheries and Food what are the latest figures available for the addition to British food prices resulting from membership of the EEC; and if he will make a statement.
    Mr. Buchanan-Smith: A calculation of this kind involves many assumptions about the agricultural support arrangements which would have applied in the United Kingdom if we were outside the EEC and about the way in which world markets for agricultural produce would have moved. Subject to that qualification I estimate that, as a result of the CAP, retail food prices in 1979 have been some 8 per cent, to 10 per cent. higher than they might otherwise have been.
    Mr. Roberts: Does the hon. Gentleman accept that there are enormous assumptions in that calculation and, as every housewife will tell him, the real effect of EEC membership is greater than that? Does he agree that the problem is particularly acute because it is evident that, in spite of the earlier boasts of the Prime Minister, we shall not achieve a substantial reduction to our contribution to the budget at the meeting in Dublin?
    Mr. Buchanan-Smith: If the hon. Gentleman does not care to believe my figures he might reflect that a similar figure was calculated by his right hon. Friend the Member for Deptford (Mr. Silkin) when he was in office and by the hon. Member for Caithness and Sutherland (Mr. Maclennan), who was in the Department of Prices and Consumer Protection at that time. I agree that our budget contribution must be put on a

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    more reasonable basis and that is what my right hon. Friend the Prime Minister is negotiating now.
    Mr. Dykes: Does my hon. Friend agree that if we had kept the old deficiency payments system which ended in 1972, while allowing for real price increases and inflation since then, the total amount of that sort of support would be about twice our net contribution to the CAP as it now stands?
    Mr. Buchanan-Smith: I am grateful to my hon. Friend for his remarks, he is absolutely right. Those who criticise the CAP often forget that, under the deficiency payments system, many hundreds of millions of pounds every year were committed by the taxpayer.
    Mr. John Home Robertson: Is the Minister aware that one commodity which could be far cheaper as a result of our membership of the Common Market is school milk? Will he explain why so many rural local authorities do not take advantage of the subsidies which are available?
    Mr. Buchanan-Smith: The hon. Gentleman has overlooked the fact that a subsidy on milk is paid by the EEC.
    Mr. Colin Shepherd: Does my hon. Friend agree that, in view of the increase of more than 100 per cent. in prices during the period of office of the previous Government, our membership of the Community has afforded us good value? Does he agree that the Socialist Government were very expensive for the country?
    Mr. Buchanan-Smith: It is significant that in the five years under the previous Government food prices rose by just over 120 per cent. Therefore, the recent 10 per cent. rise must be put into the proper perspective.

    Mackerel Stocks (South-West)
    Mr. Hicksasked the Minister of Agriculture, Fisheries and Food if he is satisfied with the effectiveness of the conservation measures designed to protect the South-West mackerel stocks; and if he will make a statement.
    Mr. Buchanan-Smith: I am concerned at the lack of satisfactory EEC measures to protect the Western mackerel and other
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    fish stocks. In the meantime, we will continue our national measures, including our mackerel licensing, in order to avoid overfishing by the United Kingdom fleet.
    Mr. Hicks: Bearing in mind the unfortunate experiences of last winter and the fact that this matter is essentially a United Kingdom problem, will the Minister assure the House and the inshore fishermen of Devon and Cornwall that, in the event of saturation of fishing vessels being reached this year, he will consider extending the present three-mile limit to six miles for smaller vessels?
    Mr. Buchanan-Smith: I am aware of the concern that is felt on the subject, especially in relation to smaller vessels. When the fishing starts next week I shall be spending three days in the South-West. I look forward to meeting those involved in the industry and hearing their problems first hand.
    Mr. Penhaligon: Is the Minister aware of the lunatic proposal to abolish the Cornwall sea fisheries committee which, at least, protects Cornwall for the first three miles? Will he assure the House that he will not allow such a measure to take place and that he will oppose it?
    Mr. Buchanan-Smith: The hon. Gentleman is wrong. There is no proposal to abolish the Cornwall sea fisheries committee. The function and future structure of such committees are being reviewed and discussions are taking place. However, I assure the hon. Gentleman that no decision has been reached yet.

    Common Fisheries Policy
    Mr. Robert Hughesasked the Minister of Agriculture, Fisheries and Food if he will make a statement on the EEC common fisheries policy negotiations.
    Mr. James Johnsonasked the Minister of Agriculture, Fisheries and Food what progress he has made with the EEC regarding finalisation of a common fisheries policy.
    Mr. Peter Walker: I refer the hon. Members to the statement made in the House yesterday by my hon. Friend the Minister of State, concerning the outcome of the meeting of the Council of Fisheries Ministers that was held on 29 October.
    Mr. Robert Hughes: Is the right hon. Gentleman aware that within all sections of the fishing industry there is a great deal of concern that time is slipping past and 1982 is approaching rapidly? Will he assure the House that he will press for an early agreement—one which follows the main principles which my right hon. Friend the Member for Deptford (Mr. Silkin) sought to achieve and which still has the full backing of the fishing industry?
    Mr. Walker: The hon. Gentleman is right. The industry is anxious to reach a settlement because the uncertainty is bad. We stick by the principles that were agreed by both sides of the House. It was agreed at the recent meeting of the Council that a paper should be tabled which will form the basis of new negotiations rather than to link us with the proposals on the table that were totally unacceptable to us.
    Mr. Mark Hughes: Will the right hon. Gentleman confirm that effective regional fishing plans can emerge from these discussions?
    Mr. Walker: Yes.
    Mr. Strang: Will the Minister assure the House that any EEC fisheries settlement will be put to a vote in the House?
    Mr. Walker: I shall give the same assurance as that given by my predecessor, under whom the hon. Gentleman served: that, in terms of any negotiations, I shall endeavour to keep the House totally informed, but if there comes a point in the negotiations when I have to reach an agreement, as the right hon. Gentleman who preceded me said, I shall have to do it and defend my position afterwards.

    National Farmers' Union
    Mr. Michael Brownasked the Minister of Agriculture, Fisheries and Food when he intends to meet the president of the National Farmers' Union.
    Mr. Peter Walker: This afternoon, Sir.
    Mr. Brown: When my right hon. Friend meets the president of the NFU later this afternoon, will he give him some indication of what encouragement may be given to the British livestock farmer who has undoubtedly suffered in recent
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    months as a result of unacceptable imports of meat from Common Market countries, particularly Denmark?
    Mr. Walker: Regarding imports from Denmark, particularly pig meat, the British industry has responded well and prices have improved tolerably well in the last few months. I hope that situation will continue.
    In other spheres of the livestock market, hill farmers had a particularly bad time during the past winter. That situation is being reviewed and I shall make an announcement on it later in November.
    Mr. Allen McKay: When the right hon. Gentleman next meets the president of the NFU, will he discuss with him the problem of green top milk; and will he make a statement about its future?
    Mr. Walker: I have already discussed this matter with the president of the NFU and with other members. We shall be making a statement on this matter in the near future.
    Mr. John Wells: When my right hon. Friend meets the president of the NFU, will he speak to him about the importance of the problems of English apple growers? Will he ensure that the NFU takes on board the need for greater expenditure on publicity to promote British apples to combat the seemingly unfair competition that we are suffering?
    Mr. Walker: Yes. I am anxious that we should improve the marketing and expansion of the British apple industry. The people I have appointed to look into marketing have given this area priority and are dealing with it now. I hope that, as a result, we shall improve not only our production methods in certain areas, but, perhaps more important, our marketing.
    Mr. Crowther: Will the right hon. Gentleman be discussing the possible damage to the dairy farming industry which may result from the proposal in the Education Bill to relieve education authorities of the duty to provide school milk—a relief which will no doubt be grasped eagerly by those tight-fisted authorities which want to save money rather than protect the health of children? Therefore, will he suggest to his right hon. and learned Friend the Secretary of State for

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    Education and Science that that proposal should be dropped?
    Mr. Walker: No, Sir.
    Mr. John Carlisle: When my right hon. Friend meets the president of the NFU, will he confirm or deny recent newspaper reports that he is about to seek a devaluation of the green pound?
    Mr. Walker: I assure the House that I shall never mention that I am about to consider devaluing the green pound. All that happens in such circumstances is that a substantial volume of foreign butter comes into this country to the detriment of British butter producers.

    Commissioner Gundelach
    Mr. Stoddartasked the Minister of Agriculture, Fisheries and Food when he expects next to meet Commissioner Gundelach.
    Mr. Peter Walker: When I next attend a meeting of the Agriculture Council on 12 and 13 November.
    Mr. Stoddart: Yes. When the right hon. Gentleman meets Mr. Gundelach, will he impress upon him that the expensive, disreputable and damaging agricultural policy is not suitable to this country and is bleeding it white? Will he also tell Mr. Gundelach that the Government intend to achieve a fundamental reform of the system, failing which he will recommend Parliament to withdraw?
    Mr. Walker: I agree with the hon. Gentleman that I certainly inherited a substantial problem. During the last five years, the agriculture budget went up from £1,900 million to over £7,000 million. I regret that there was so much agreement by the then British Government to a whole range of increases in goods which were in surplus and to a whole range of other schemes for which this country will have to pay. I have made it perfectly clear that, now that we are very close to the ceiling on CAP expenditure, the Government will do nothing to raise that ceiling. What is now needed is a fundamental look at the future of the CAP.
    Mr. Latham: If Mr. Gundelach takes the French Government back to the European Court over sheepmeat and they again ignore its dictates, what do we do?
    Mr. Walker: First, I think that the Commission and all the member States recognise that, if the French Government continue in this way, they will be threatening the whole future of the Community. As regards other actions that can be undertaken, the Commission has to put forward a range of proposals which I should first have to discuss with the Commission.
    Secondly, a whole range of decisions needs to be taken within the CAP which are of considerable importance to the French Government and French farm producers. Obviously if the French Government are acting illegally, there will be a considerable impact on the Council's attitude to those decisions.
    Mr. Dalyell: What is happening about the report commissioned by Mr. Gundelach in March 1968 on seal culling in the North Sea?
    Mr. Walker: He has not so far disclosed it to me.

    Meat and Livestock Commission
    Mr. Iain Millsasked the Minister of Agriculture, Fisheries and Food what plans he has to meet the chairman of the Meat and Livestock Commission.
    Mr. Buchanan-Smith: I met the chairman on 19 September and I will be meeting him again on 15 November.
    Mr. Mills: Will my hon. Friend discuss with the chairman when he meets him the possibility of achieving long-term stability measures on the availability and price of quality livestock for United Kingdom buyers?
    Mr. Buchanan-Smith: Yes; I shall discuss that with him.

    European Community (Council of Fisheries Ministers)
    Mr. Peter Millsasked the Minister of Agriculture, Fisheries and Food when next he will meet the Council of Fisheries Ministers of the European Economic Community.
    Mr. Peter Walker: On 3 and 4 December 1979.
    Mr. Mills: I fully support the stand that my right hon. Friend is taking on these matters which are absolutely crucial

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    to this country. But will he bear in mind that it is important that time is taken to get it right and that, however long it takes, we must get it right? Will he tell the House what progress has been made concerning fish stocks? Can we see any progress in this matter through the measures which have been taken?
    Mr. Walker: My hon. Friend is right on the first matter. It will not be a quick negotiation, because complicated national interests are at stake. I assure him that the divers sections of our industry are working closely with us on this matter and will be with us in either Brussels or Luxembourg when the negotiations take place.
    As regards conservation of stocks, the action taken by the Labour Government and continued by this Government is the main contribution towards the conservation of stocks in Europe.
    Mr. Robert Hughes: When the right hon. Gentleman next meets the Council of Fisheries Ministers, will he discuss the issue which has arisen in Aberdeen this week where there was severe disruption to the fish market because of the importation of Faroes fish? Is he aware that there is great concern that we are allowed to take only 5,000 tons from Faroese waters compared with their 120,000 tons from our waters and the right to land the fish? Will he look into that matter?
    Mr. Walker: I assure the hon. Gentleman that I will look into that matter.
    Mr. Myles: In any discussions on EEC fisheries policy, will my right hon. Friend ensure that due regard is taken of the real conservation measures that we have taken and that policy is not formulated on historic catches?
    Mr. Walker: Yes, Sir.

    Food Manufacturers Federation
    Mr. Nicholas Wintertonasked the Minister of Agriculture, Fisheries and Food what plans he has to meet the president of the Food Manufacturers Federation.
    Mr. Wiggin: My right hon. Friend last saw the president of the Food Manufacturers Federation on 23 October. No firm date has been set for their next meeting.
    Mr. Winterton: Does my hon. Friend agree that the United Kingdom's food manufacturing inustry is the most efficient in Europe and that it provides the best value within Europe? Does he further agree that the interests of our producers—the farmers of the United Kingdom—and of the food manufacturers are now more in agreement than they have ever been? What proposals does he have to put before the House for a reform of the common agricultural policy which will ensure that the best interests of both the farmers and the food manufacturers continue to be met by a Conservative Government who are pledged to serve the best interests of the United Kingdom?
    Mr. Wiggin: My hon. Friend will be well aware of the many statements made by my right hon. Friend dealing with the last part of his question. I hope that the House appreciates the absolute necessity of seeing that all parts of the food chain work together for the good of the farmer, the manufacturer and the customer.
    Mr. Cryer: Will the Minister answer his hon. Friend's question, which concerned what would be achieved in the reform of the common agricultural policy? Is it not true that no reform can be achieved without the unanimous support of all the member States? Does he agree that he will not get that support and that, therefore, talk of reform of the CAP is just so much hot air and nonsense?
    Mr. Wiggin: I am surprised to hear the hon. Gentleman say that, in the light of the best price settlement that has been achieved since Britain has been in the Common Market. Although Opposition Members are reluctant to accept that, it is a great achievement.

    Hill Livestock Compensatory Allowance
    Mr. John Mackayasked the Minister of Agriculture, Fisheries and Food if he will make a statement on the levels of hill livestock compensatory allowance for payment on 1 January 1980.
    Mr. Peter Walker: The review of hill livestock compensatory allowances is in progress and I intend to announce the Government's decision before the end of November.
    Mr. Mackay: Does my right hon. Friend realise that, if we do not substantially increase the level of hill livestock compensatory allowances, there is a grave danger that sheep and cattle will be removed from our hills and that the long-term consequences to the British housewife will be scarce and expensive meat?
    Mr. Walker: My hon. Friend will know that the previous Government decided, in view of the exceptional weather last winter, that they would pay and additional 50p. We have done that as well. We also said that, because of the uncertainty in the market in the autumn, we would wait until that time to make a judgment. Most hill farmers are pleased that the Government made that decision. Obviously we will now examine the facts on their merits and make an announcement in November.
    Mr. Geraint Howells: Can the Minister give an assurance to the House, and to the hill farmers of this country, that the maximum allowances will be paid to hill farmers?
    Mr. Walker: I am sure the hon. Gentleman understands that I first of all need to discuss this matter with the National Farmers' Union, which I will do this afternoon. We are examining the facts of the increase in costs and the decrease in price, and I can assure the hon. Gentleman that we will base our decision on the facts.
    Mr. Maclennan: Does the Minister recognise that, since the previous Government made their decision on the additional 50p, the situation has deteriorated rapidly in the hills, where appalling climatic conditions were experienced during the summer, particularly in the North of Scotland? Does he realise that the markets have been badly disrupted by the French decision? The Minister's concern for the future, in relation to the French, must be matched by a concern for the damage already done. What steps will he take to ensure that our farmers are properly compensated for that damage?
    Mr. Walker: I hope that the hon. Gentleman will explain to his constituents exactly why 37 of his hon. Friends have
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    supported the French at the expense of the farmers in his constituency.
    Mr. Wm. Ross: Can the Minister tell us what is the estimated profit for suckling calves this year, and how does it compare with two years ago?
    Mr. Walker: I will discuss this in detail with the farmers' representatives this afternoon.

    Bacon Industry
    Mr. Torneyasked the Minister of Agriculture, Fisheries and Food what proposals he has to assist the bacon industry in marketing its products in order to make the industry more competitive with the European bacon industry; and if he will make a statement.
    Mr. Buchanan-Smith: Monetary compensatory amounts are now much reduced so that the bacon industry is now competing with imports on fairer terms. It is primarily a matter for the industry itself to improve the marketing of its products, but the marketing advisers my right hon. Friend appointed in July are also examining this.
    Mr. Torney: I thank the Minister for those remarks, but may I ask if he is aware that the bacon industry has gone through an extremely trying time over the last few years? There has been a shrinkage in the industry, and considerable unemployment. Will he take steps to change the common agricultural policy so that the situation is improved? Will he also take steps to take up the allowances from the EEC which will help to modernise our bacon industry?
    Mr. Buchanan-Smith: I hope that the hon. Gentleman will reflect on which party was in power over the last five years when the industry went through the distress that he has described. Monetary compensatory amounts, a subsidy enjoyed by European bacon coming into Britain, were at a level of £231 a tonne in March. They are £77 a tonne today. As a result of the policy of the present Government, the bacon industry is in a very much stronger position than it has been over the last five years.

    European Community Budget
    Mrs. Renée Shortasked the Minister of Agriculture, Fisheries and Food

    1443
    what progress he has made in reducing Great Britain's contribution to the common agricultural policy element of the EEC budget.
    Mr. Peter Walker: I estimate that the decisions taken by the Agriculture Council in June reduced our net contribution to the budget by about £30 million in the farm year 1979–80, compared with what it would otherwise have been.
    Mrs. Short: The right hon. Gentleman's answer gives a certain amount of satisfaction, but is he aware that he really is expected to do very much better for Britain as a whole and for the housewife in particular?
    Mr. Walker: I agree. We have only just started to do somewhat better than the last Government. We hope to do much better.

  EUROPEAN COMMUNITY (HEADS OF GOVERNMENT)
  Mr. Lathamasked the Prime Minister when next she intends to meet other EEC heads of government.
  The Prime Minister (Mrs. Margaret Thatcher): I shall meet President Giscard of France in London on 19 and 20 November and all my colleagues at the European Council in Dublin on 29 and 30 November.
  Mr. Latham: Will my right hon. Friend insist, between now and the Dublin meeting, that we do not mind paying our own subscription to this club but we do not want to pay everyone else's subscription as well? Is it not the case that there are plenty of legal ways of being awkward in the Common Market if our just claim is not met?
  The Prime Minister: As my hon. Friend knows, we are asking for a broad balance between our contributions and our receipts. He will also recognise that this is not a new problem. Indeed, during the British accession negotiations in 1970, the Community recognised that, if unacceptable situations arose in our Budget contribution—
  "The very survival of the Community would demand that the institutions find equitable solutions".
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  The situation is unacceptable, and we are asking for very substantial relief.
  Mr. James Callaghan: I am glad to hear what the right hon. Lady has just said, but, in view of the contradictory reports that are emerging, can she put the position quite clearly? She told us earlier that she seeks a decision in Dublin not later than this month. Is that still the position? Is she still seeking a decision that there should be a broad correspondence between our payments and our receipts and, if so, over what time scale?
  The Prime Minister: Of course we seek a decision in Dublin; a decision which will take effect in 1980–81. The right hon. Gentleman is the first to appreciate that our net contribution to the European budget has risen over the last five years from £16 million to £1,000 million. That is totally intolerable and we seek relief from it.
  Mr. Ian Lloyd: When the Prime Minister meets the President of France later this month, will she resist the temptation to spend too much time on the "Field of Mutton Cloth" and elicit from the President of France the reasons why he organised a national conference in France on information technology which was opened by his Prime Minister and closed by himself? Will the Prime Minister ascertain from the President of France what effect this has had on the level of awareness of the importance of information technology throughout France?
  The Prime Minister: I take it that my hon. Friend is urging me to take an even greater interest in science and technology than I already do. He knows that I am very keen on all these subjects and will do everything I can to help to get new technology into British industry.
  Mr. Bidwell: Will the right hon. Lady reflect on her activity in trying to stir up trouble between the Chinese Marxists and the Russian Marxists? Will she not reflect upon the fact that in a major war between those two great nations Great Britain would not escape?
  The Prime Minister: With due respect, that situation does not need anyone to stir it. What I am trying to do is increase trade between Britain and China including the possible sale of the Harrier.

  PRIME MINISTER (ENGAGEMENTS)
  Mr. John Townendasked the Prime Minister if she will list her engagements for 1 November.
  The Prime Minister: This morning I presided at a meeting of the Cabinet and held meetings with ministerial colleagues and others. In addition to my duties in this House, I shall be having further talks with Premier Hua at 4 p.m. and this evening I shall be holding a reception to mark the departure of the England cricket team for their Australian tour.
  Mr. Townend: Since the Irish Government continue to refuse to make the changes necessary to enable terrorists to be extradited, will the Prime Minister take time today to discuss with her colleagues the possibility of changing the electoral law so that citizens of the Irish Republic who are resident in the United Kingdom have the same voting rights as citizens of the United Kingdom who are resident in the Irish Republic?
  The Prime Minister: Irish citizens have a unique position in this country. They are not British citizens, except through history. They have a unique privilege in that they can vote in our elections. We have no proposals to change that.
  Miss Joan Lestor: Will the Prime Minister find time today to meet representatives of parents who have adopted girl children born in other parts of the world—for example, Bangladesh and Vietnam? Will she explain to those parents the status of their girls in relation to the immigration legislation which we hear will prohibit them from bringing in foreign husbands?
  The Prime Minister: I explained the proposal many times during the election campaign. We are carrying out that plan as we promised. Many Asian girls here will be very pleased indeed when we introduce this new legislation.
  Mr. Robert Atkinsasked the Prime Minister if she will list her engagements for Thursday 1 November.
  The Prime Minister: I refer my hon. Friend to the reply which I have just given.
  Mr. Atkins: In the course of the Prime Minister's busy day, will she take time to read early-day motion 149 in the name of my hon. Friend the Member for Huntingdonshire (Mr. Major)? Does my right hon. Friend recognise that the 160 of her right hon. and hon. Friends who signed that motion express a strong sentiment in support of her strong and constructive stand during the negotiations in Bonn with her EEC colleagues?
  The Prime Minister: I am grateful for the support from both sides of the House on this issue. Such support strengthens one's hand in the negotiations. The right way to go about the negotiations is to expect that we shall receive a just and reasonable reply to a just and reasonable case.
  Mr. Winnick: Will the Prime Minister explain how she can bring hope instead of despair to the poor and elderly this winter, because they will not receive the benefits of the electricity discount scheme or the Government's pittance of a scheme? Why is it that only the rich and prosperous can benefit from this Government? Was it not rather cheeky of the Prime Minister to quote, of all people, St. Francis on 4 May?
  The Prime Minister: We shall achieve increasing prosperity, a better standard of living and better social services not by protest but by more work, better output and better productivity.
  Sir Paul Bryan: When the Prime Minister meets Premier Hua at four o'clock, will she ask him what steps he intends to take to curb the growing flow of illegal immigrants into Hong Kong?
  The Prime Minister: I plan to raise that matter with Premier Hua. It is a source of great embarrassment that so many people are coming across the border from China into Hong Kong. We strengthened the garrison there, but the flow is still increasing. I shall speak to him about it.
  Mr. Douglas-Mann: Will the Prime Minister consider the early-day motion on Cambodia which has been signed by 130 hon. Members calling for a reconsideration of the continued recognition of the Pol Pot regime because it is handicapping the aid programme? Will the right hon. Lady take the opportunity of

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  explaining to President Hua that the withdrawal of recognition would accord with the normal practice of Great Britain of recognising those in de facto control and that such a step is urgent for humanitarian reasons?
  The Prime Minister: I do not believe that recognition hinders the aid programme in any way. My hon. Friend the Minister of State, Foreign and Commonwealth Office answered a question on this subject a short time ago. He pointed out that, certainly, our present criteria for recognition assume that the person whom we recognise is in charge of the whole country. Pol Pot certainly is not and we condemn his previous callous and cruel policies. My hon. Friend also pointed out that one could not possibly recognise Heng Samrin, who seems to be there as a puppet of the Vietnamese.
  Mr. Shore: May I lead the right hon. Lady into a somewhat different position from that which the Government have adopted? If she has reached the conclusion that neither Pol Pot nor the present authorities in Vietnam are effectively and lawfully in charge of the country, why does she persist in recognising Pol Pot? Why does she not withdraw recognition?
  The Prime Minister: As the right hon. Gentleman knows, we try to act in concert with the five Association of South-East Asian countries which still recognise Pol Pot. It is advisable for us to try to act together on these matters.
  Mr. Adleyasked the Prime Minister if she will list her official engagements for 1 November.
  The Prime Minister: I refer my hon. Friend to the reply which I gave earlier.
  Mr. Adley: Does my right hon. Friend agree that the ballot at British Leyland is a great encouragement to those who hope that the health of British industry will improve? Does she agree that the sooner the work force at BL has a chance to be consulted about issues such as industrial disputes the more likely it is that the British taxpayer will receive value for money should the company come to the Government for further funds?
  The Prime Minister: The ballot at British Leyland showed the great merit of
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  a system under which the work force can be consulted and their views properly ascertained about matters which intimately affect their future. When it comes to deciding, should we receive an application for further funds, then we shall examine performance.
  Mr. Maxton: Has the Prime Minister had an opportunity this morning to read the welcome crime figures for Scotland for 1978, which show that there has been an 8 per cent. cut in the overall crime figures and a 30 per cent. cut in the murder rate? Does she agree that the figures show that the divisive proposals that her Government are to make for increasing police powers in Scotland are now unnecessary? Will she instruct that they be withdrawn?
  The Prime Minister: Of course I welcome the reduction in crime figures. But I believe that we are absolutely right to give increasing priority to law and order. In doing so we shall be able to reduce those figures further.
  Mr. Churchill: Is my right hon. Friend aware that, in view of the dramatic escalation in the Soviet military build-up, which has added more than 20,000 Hiroshima bombs in megatonnage to the weapons targeted against Western Europe, she will have the strongest support from these Benches for any serious measures that she takes to strengthen Britain's defences and to safeguard peace and freedom?
  The Prime Minister: I am grateful to my hon. Friend for his support. We have honoured our pledge to increase the defence budget by 3 per cent. over the expected outturn for this year.
  Mr. William Hamiltonasked the Prime Minister if she will list her official engagements for 1 November.
  The Prime Minister: I refer the hon. Member to the reply which I gave earlier.
  Mr. Hamilton: Will the Prime Minister take time this afternoon to re-read the manifesto on which she was elected? Does she recall that it stated that it was not a Tory Government's intention to reduce expenditure on the National Health Service? Will the right hon. Lady also take time to read the recent debate on the National Health Service when her

  1449
  party was in opposition and the present Minister for Health said that nurses deserved the same treatment as the police and the Armed Forces? Will the Prime Minister seek to implement those two promises?
  The Prime Minister: When the public expenditure White Paper comes out later the hon. Gentleman will discover that we have not reduced expenditure on the National Health Service. However, a problem is emerging. Many people are bargaining for wages and taking out a higher proportion of the available budget for wages and leaving less for equipment and other things that are needed.
  Mr. Stanbrook: Will my right hon. Friend find time this afternoon to discover ways to speed up the preparation of the Housing Bill? Is she aware that thousands of council tenants living in Labour-controlled areas wish to take advantage of the promise to give them the statutory right to purchase?
  The Prime Minister: I am very much aware of the many people who wish to exercise the right to purchase council houses, a right they would never have got from the former Labour Government. I expect that the Bill will be introduced here before Christmas.
  Mr. Jay: As this Government have been in office for six months and as, according to the CBI, business confidence is falling, industrial production is falling, investment is falling and the pound is falling, does the Prime Minister feel that her policies are yielding results?
  The Prime Minister: I was pleased to see what the CBI actually said after its survey came out and that it fully recorded its support for the Government.
  Mr. Kershaw: Was not the announcement yesterday about the million or so home owners and tenants who will be able to receive improvement grants a typical example of help where it is needed? It will help the housing situation very much.
  The Prime Minister: I entirely agree with my hon. Friend. This is a valuable way of improving the circumstances in which people live.

PUBLIC EXPENDITURE (WHITE PAPER)
The Chief Secretary to the Treasury (Mr. John Biffen): With permission, Mr. Speaker, I will make a statement about the White Paper, published today, on the Government's expenditure plans for 1980–81. Copies are available in the Vote Office.
The Government's strategy is to stabilise total public spending in volume terms. The outturn for last year, 1978–79, is now put at £69¾ billion at 1979 survey prices. Estimates for the current year, 1979–80, are still speculative, but the outturn is not expected significantly to exceed last year's expenditure. We plan to hold the total for next year, 1980–81, at the same level.
Within the total planned for 1980–81, provision is made for growth in some programmes, offset by reductions in others. Provision for defence increases by 3 per cent. in 1980–81 over the expected outturn in the current year, and provision for law and order increases by 3½ per cent. Expenditure on the National Health Service is maintained, whilst a rise in spending on social security partly reflects the recent pension uprating.
For local authorities, the plans provide for a reduction of 3 per cent, in their capital and current expenditure over the two-year period 1978–79 to 1980–81. The reduction in their current expenditure is rather less and in line with the figures on which they have been consulted. The allocation between services shown in the White Paper is tentative. It will be for the authorities themselves to decide the pattern of their current expenditure in the light of local needs and conditions.
The plans also provide for a further programme of public sector asset sales aimed at a figure of some £½ billion in 1980–81 compared with £1 billion in 1979–80.
The Government consider that the plans in the White Paper take realistic account of the poor prospects for growth in the domestic and world economies, and of the need to bring Government borrowing and the money supply under firm control without unacceptable consequences for taxation and interest rates. They will

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form the basis for setting the cash limits for 1980–81.
The Government's general intention is to publish the cash limits in time for spending authorities to take account of them in making major decisions affecting their costs in 1980–81, including the costs of pay settlements. We intend to exert a firm control on spending through the cash limits. Spending authorities must expect that, if they incur higher costs than provided for in the cash limits, it will not be possible to implement the full volume plans in this White Paper.
We aim to publish the cash limits on the rate support grants and the limits on the external financing requirements of the individual nationalised industries later this month. Other public service cash limits will be published nearer the start of the financial year.
The Government are also preparing provisional expenditure plans for the years up to 1983–84. These will be published in a subsequent White Paper.
Mr. Healey: If I did not know the right hon. Gentleman better, I would suspect that he was rather ashamed of what he had to tell us. His statement was even thinner than the White Paper, which is the most uninformative to come before the House for many years. Is it not the case that he is planning a cut of £3,500 million on previous plans and that this is the price that the people of this country are having to pay for the fact that the Government's economic policy has given Britain the highest inflation and the lowest growth in the whole of the Western world? It has led to a total collapse in business confidence since the Budget.
Even so, why does not the right hon. Gentleman accept the view of his newly appointed economic adviser that the Government should allow the public sector borrowing requirement to rise when unemployment rises and activity falls? Is he aware that these cuts will make the recession deeper? The way in which they are composed means that their main effect will fall on activity and cash flow in the private sector of the economy.
On the distribution of the cuts, how can the right hon. Gentleman, against this background, justify increasing defence expenditure, in real terms, by 3 per cent.
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when he is expecting a fall in output in this country? In the same year, Germany is planning an increase of only 1½ per cent. and expecting a substantial increase in her growth rate. Why is the right hon. Gentleman planning next year, 1980–81, to make a net payment to the European Community of £1,000 million when the right hon. Lady the Leader of the Opposition has just promised again to eliminate this payment next month? Is his confidence in his leader as low as ours is in her?
Will the right hon. Gentleman say what he thinks will be the effect of the 9 per cent. cut in local authority capital expenditure? How will that be achieved in a single year and at what cost in housing, old people's homes and in the replacement of derelict nineteenth century facilities? What will be the effect on the construction industry on top of the cuts he is planning in the road programme?
The major question to which we want an answer is the effect of the White Paper on inflation. Inflation next year is already going to be 2 per cent. higher than it would have been because of the recent fall in the value of the pound sterling which the Government have engineered. On top of that, the public expenditure White Paper foreshadows massive increases in rates, massive increases in local authority rents and increases in fares, electricity and gas prices. It plans to take £240 million exclusively from the parents of young children by increased charges on school meals, milk and transport. It also plans to increase prescription charges to 70p
What will be the effect on unemployment? Will the effect be to add 250,000, 500,000 or 750,000 to the total next year? The right hon. Gentleman must have made an estimate. He must at least be able to tell the House how much of the proposed increase in social security spending is expected to result from an increase in unemployment and where offsetting cuts in social benefits will be found.
The White Paper means a massive increase in the cost of living, which has already risen by 6 per cent. since the Government took office, a massive increase in unemployment—
Mr. Grieve: On a point of order, Mr. Speaker. Is not the question somewhat longer than the statement?
Mr. Speaker: That happens from time to time, but the right hon. Gentleman—I, too, can see his notes—was just coming to a conclusion.
Mr. Healey: Thank you, Mr. Speaker. You will realise that I am inviting the Chief Secretary to give us vital information which he withheld from us in his statement.
The White Paper means a massive increase in unemployment after the level has been steadily falling for two years. It means the overturning of the social priorities of a compassionate society as they have been upheld by successive Governments since the Second World War.
Mr. Biffen: The right hon. Member for Leeds, East (Mr. Healey) opened his reply by referring to the difference between this White Paper for 1980–1981 and the consequences for public spending if it had remained faithful to the projections of the public spending White Paper that he published last year. Of course, the gap is £3,500 million. However, what the right hon. Gentleman did not go on to say was that would have represented 8p on the basic rate of tax. Of course, the history of this country post-war has been of political expectations which were wildly unreal when measured against the underlying economic performance of the country.
I turn to the point the right hon. Gentleman made about the recession and levels of unemployment. We believe that the only sure way in which this country can recover from a recession which covers the whole of the Western world is through a successful revival in profitable industry. We do not believe that one can spend one's way out of a recession, and we were advised that our view was a true course by none other than the Leader of the Opposition.
The right hon. Gentleman specifically asked about the unemployment figure contained in the social security assumption. The broad working assumption used in the social security programme was that the unemployed, excluding school leavers, would average in Great Britain 1·35 million in 1979–80 and 1·65 million in 1980–81.
I turn now to three specific points that the right hon. Gentleman raised. The first
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concerns spending on defence. The level of spending predicted in the White Paper, to which the right hon. Gentleman objected, is an index of our concern about our national defence and our lack of preparedness, a concern which I am told by my right hon. Friend the Prime Minister is unique to the Conservative Party. I must tell the Opposition that the defence White Paper produced by the right hon. Member for Sheffield, Park (Mr. Mulley), when he was Secretary of State, stated
"As seen by Western eyes, the growth in quantity of the Soviet forces, together with continued qualitative improvements, has extended their capability well beyond what can be considered necessary for purely defensive purposes."
If that was Labour's judgment, this is certainly our response.
The second item concerned the £1,000 million net contribution to the European Community's budget. I will not trade blows across the Dispatch Box about the shortcomings of the renegotiations which took place a few years ago, but it would be thoroughly unrealistic to put into this White Paper a figure which assumed negotiating success. That practice may have recommended itself to our opponents, but it is one that we shall not adopt.
I was asked about the fall in capital expenditure in respect of local authorities. Of course, it largely turns upon housing. Once again, we have to recognise that one of the major factors in solving the housing problem is a more effective use of our existing stock of housing resources. That lies at the heart of our philosophy and it helps explain those figures.
The right hon. Gentleman referred to the difficulties of the construction industry. The projected expenditure for this sector will be the same next year as this year as last year, namely, £7,000 million.
Finally, the right hon. Gentleman asked what all this would mean for inflation. We believe that there can be no successful strategy or tactic against inflation which does not have as its precondition stabilised public spending. Around that one can then fashion one's economic policy.
Mr. Higgins: Will my right hon. Friend give an absolute assurance that when the figures in the White Paper are embodied in cash limits there will then

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be no subsequent adjustment to accommodate increases in salaries and wages which exceed the levels assumed when the White Paper and the cash limits were planned?
Mr. Biffen: I think that when my right hon. Friend re-reads my statement he will find his point answered.
Mr. Richard Wainwright: As to the nature of the cuts which the Chief Secretary has announced, can he deny that, however skilful and humane the local authorities, the universities, the transport undertakings and the other bodies may try to be, there are bound to be a great many false economies as a result of the demands which he is putting on those bodies? As to lasting and genuine economies, are the Government prepared to launch upon a massive simplification of the whole over-elaborate structure of government at all levels?
Mr. Biffen: I am sure that that last point has been the aspiration of succeeding Governments. I think that it will certainly remain one for this Government. There is to be a retrenchment in local authority services of 4·5 per cent. in real terms for 1980–81 over the current year, and of 3·8 per cent. over last year. However, it must be taken against the background of falling numbers in the schools, and, although it is a tough programme it is, none the less, a realistic one.
Mr. Joel Barnett: Will the right hon. Gentleman confirm that his assumption about the likely effect of the Chancellor's tax cuts is of a fall in the growth of GDP in the next two years? Against that background, may we take it that what my right hon. Friend the former Chancellor said—namely, that this increase in defence expenditure means an inevitable massive boost to inflation through increases in nationalised industry charges and prices—is correct? Since the right hon. Gentleman must have made assumptions on that, is he prepared to give them to the House as soon as possible?
Mr. Biffen: The White Paper contains no assumptions on the rate of growth in the economy over the course of the next year. I cannot confirm when announcements will be made about increases in the prices of nationalised industries. However, I know that the right
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hon. Member for Heywood and Royton (Mr. Barnett) will be the first to agree that there should be economic pricing in those industries. However, essentially that is not a matter purely for the Government. It is also one for the managements of the industries concerned.
Mr. Paul Dean: Is my right hon. Friend aware that there will be a widespread welcome for his announcement of increased expenditure on social service benefits in order to protect the growing number of elderly in our community, and that expenditure on the National Health Service will be maintained? Does that not expose the hollowness of the campaign by Labour Members? Do I deduce from my right hon. Friend's statement that extravagant wage claims in the National Health Service would inevitably mean reduced services to patients?
Mr. Biffen: The reply to the first part of the question is "Yes". My hon. Friend is absolutely right on the second. In the course of the last few weeks there has been an extraordinarily well-orchestrated campaign designed to represent the White Paper as some outline of a savage primeval attack upon the Welfare State. It is absolutely nothing of the kind.
Mr. Donald Stewart: Is the right hon. Gentleman aware that the Conservative election manifesto policy of guns before butter was decisively rejected in Scotland? Since it is clear from his own document that the oil from the Scottish sector of the North Sea is the only lifeline on which the country's economy depends, will he give us any guarantee that these measures will he operated less rigorously in Scotland?
Mr. Biffen: There is no doubt that the right hon. Gentleman is almost a unique authority on rejection in Scotland. It is our judgment that the public spending programme is extremely well balanced as between the component nations of the United Kingdom and the regions of England.
Mr. Bruce-Gardyne: I congratulate my right hon. Friend on a most courageous White Paper. Will he tell the House whether the reference to the need to control the PSBR next year means that it remains the intention of Her Majesty's Government that it will be lower next year than it is in the current year?

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Will he also confirm that it is his intention, in the words of the Leader of the Opposition three years ago, to see that the pre-emption of resources by public expenditure is reduced, and that this public expenditure White Paper will enable that to happen in the next financial year?
Mr. Biffen: My hon. Friend's first question is a pertinent and tantalising one. I am in no position to answer it this afternoon. None the less, it is a major issue of policy to which we shall return.
The answer to my hon. Friend's second point is that we have projected stabilised public spending. Whether public spending rises or falls as a share of the domestic product must turn on the behaviour of the economy. I say quite bluntly that although many believe that they can foresee this situation, I cannot.
Mr. Ashley: What would be the Minister's reaction if I gave him shocking evidence of the effect of his expenditure policies on the lives of physically and mentally disabled people? Would he say "Hard luck", or would he provide hard cash to help them?
Mr. Skinner: He would say "Hard luck".
Mr. Biffen: It is really well below the level of debate in this Chamber—MoN. MEMBERS: "Answer the question."]—to suppose that one side rather than the other possesses some hold on compassion.
We believe that the proposals in respect of the Health Service and the personal social services will secure a reasonable provision. Clearly, if difficulties arise, we shall be prepared to look at them. I totally reject the proposition that this is a public expenditure White Paper designed to fall harshly upon the social services.
Mr. Cockeram: Does my right hon. Friend realise that his proposal to stabilise public expenditure at £70 billion over a three-year period will have the effect of not reducing the percentage of the gross national product spent by the State? Can he give us an assurance that over the coming five years he hopes to seek that objective?
Mr. Biffen: Most certainly I can.
Mr. Orme: The right hon. Gentleman has said that these charges will not fall
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upon ordinary people. Is it not a fact that prescription charges are to be increased to 70p? How does he reconcile that with the Tory promise that prescription charges would not be increased by his Government?
Mr. Biffen: Given the very wide categories of exemption from prescription charges, I regard a charge of 70p as wholly defensible.
Mr. Burden: The present circumstances are made difficult by the enormous borrowings of the last Government. Will my right hon. Friend tell us exactly how much the Labour Government borrowed from overseas countries in their five years, and what that is costing today in interest charges?
Mr. Biffen: I cannot answer my hon. Friend's question without notice.
Mr. Skinner: After his reference to the increase in unemployment, is the Minister aware that there are at least 300,000 reasons why this disastrous policy should be rejected and will be rejected by the people outside?
As for the Common Market contribution of £1,000 million that is included in the tables, on the assumption that the Government stumble into some kind of reduction in the course of the forthcoming year, will the additional money be spent on schools, hospitals and houses, and in the reduction of prescription charges, or will it go to the rich taxpayers, as in the last Budget?
Mr. Biffen: Should the Government be advantaged by a successful negotiation in Dublin—[Interruption.] There is no harm in being realistic, even from the Front Bench. It will be a collective decision as to how that money will be spent, but I will say here and now that I have a strong preference that it should be used to reduce borrowing.
Mr. Ian Lloyd: While congratulating my right hon. Friend most warmly on the refreshing sense of rigour and economic realism, may I put one point of doubt to him? In view of the massive increase in the funding of fundamental science in West Germany, France, Japan and the United States, do the Government think that it is wise to reduce the expenditure on science from £300 million to the lower

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figure proposed in paragraph 35 of the White Paper?
Mr. Biffen: Obviously, it was a difficult decision, but that was the balance of judgment.
Mr. Wigley: Will the Chief Secretary explain how he intends to limit the effects of these cuts on areas such as Wales, which are more dependent than other areas on public expenditure for industrial and non-industrial employment? Will he ensure that the effects on Wales will be shown when the full tables are published in due course?
Mr. Biffen: I should like to consider the hon. Gentleman's latter point. I cannot answer it immediately.
It is quite clear that the economies involving the local authorities, relating to the environment, education and transport, will be applicable to all parts of the United Kingdom. The hon. Gentleman does his party, and to some extent the Principality, a disservice by supposing that it is at a disadvantage relative to the rest of the United Kingdom in this matter.
Mr. Nicholas Winterton: Is my right hon. Friend aware that despite the utterances of a vocal minority in this country, the vast majority of people will welcome the expenditure White Paper? Is he further aware that the good sense that he has uttered this afternoon will ensure that all those who need the assistance of the State will, from a reinvigorated economy in this country, be able to obtain the assistance that they require?
Mr. Flannery: Hans Christian Winterton.
Mr. Winterton: After five years of calamity under Socialism, I should have thought that Labour Members would have learned their lesson. Will my right hon. Friend give an assurance to the House that the Government will, as far as possible, ensure that the cuts, which are vitally necessary for the restoration of a sound economy, will be carried out selectively rather than across the board?
Mr. Biffen: The answer to the second part of my hon. Friend's question is "Yes". Clearly, we are determined to maintain basic standards in health and education.
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I do not know what would be the popular reaction to the White Paper, but I know that the public, which has been conditioned to expect cuts, will be surprised to discover that it will get stability.
Mr. Robert Sheldon: Is the Chief Secretary not concealing some important figures from the House? Will not an increase of 350,000 in unemployment mean that there will be substantial increases in social security payments? Does it not also mean that if the total of social security expenditure is not to rise very much there must be considerable cuts in the pipeline about which the House does not yet know? Will the Chief Secretary tell us what he has in mind?
Mr. Biffen: The figures to which the right hon. Gentleman refers take account of the increased assumption in respect of unemployment.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call four more hon. Members from each side. We have a Business Statement to follow and a major Bill after that.
Mr. Costain: Does my right hon. Friend not find it rather nauseating that a former Chancellor of the Exchequer who brought this country to a state of financial disaster should have the cheek to criticise this realistic White Paper? Does my right hon. Friend agree that the previous Government's failure was set out in table 1 of the White Paper, which shows that debt interest increased from £1,250 million to £2,300 million while they were in office? Is that not a barometer of the previous Government's failure?
Mr. Biffen: Absolutely.
Mr. Marks: What action will the Government take against local authorities that fail to carry out their statutory duties in making excessive cuts in education and social services?
Mr. Biffen: As I understand the question, the hon. Gentleman is asking what action would be taken against a local authority that failed to carry out its statutory duty. It would be much more appropriate for the hon. Gentleman to direct that question to my right hon. Friend the Secretary of State for the Environment.
Mr. Michael Morris: Is my right hon. Friend aware that the only disappointment in his statement is the low level of asset disposal in 1980–81? Will he undertake to have another look at the ownership of the New Towns Commission, the new towns themselves and the nationalised industries in order to increase that figure?
Mr. Biffen: I assure my hon. Friend that the figure was arrived at after careful consideration of the prospective candidates, but I am prepared to consider the point that my hon. Friend has raised and to have another look at the matter.
Mr. Ioan Evans: Does the right hon. Gentleman realise that since the Beveridge report there has been a consensus in the House that we should have a Welfare State? Does he appreciate that the cuts that he has announced, slashing health, education, and so on, mean that the Welfare State has been undermined? Is it not scandalous that while the Government are increasing defence expenditure by 3 per cent. to more than £8,062 million the disabled and those needing homes and education will suffer as a result of the cuts?
Mr. Biffen: The hon. Gentleman is right in saying that there is a consensus on welfare matters. That is why great care was taken to see that the Health Service was excluded from the cuts. The hon. Gentleman talks about the destruction of the Welfare State, but he and his political allies are prepared to divide the nation in order to unite the Labour Party.
Mr. Dykes: What are the adjusted targets for the British Steel Corporation deficit over the next two years?
Mr. Biffen: Those figures are not explicit in the White Paper, but if my hon. Friend tables a question or writes to me I shall see what can be done to help him.
Mr. Charles Morris: Is the right hon. Gentleman aware that his dismissive reference to pay limits is just not good enough? Will he not take the House into his confidence and indicate what level of pay increases is envisaged in the period covered by the White Paper? Will he also indicate whether the Civil Service unions will have access to pay settlements based on the principle of fair comparison enshrined
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in the reports of the Civil Service pay research unit?
Mr. Biffen: As regards cash limits in the rate support grant, it is our intention to publish the basis of provision for future cost increases in central Government and local authority cash limits where that has been done in previous years. As to the point concerning Civil Service pay, which comes more at the end of the financial year, there will be concern to see that pay research has an enhanced role.
Mr. Emery: Does my right hon. Friend accept that if the level of inflation inherited by the Government had been allowed to continue into the mid-1980s without the sort of cuts that the Government have introduced, the real value of spending in the social services would have been even less than it will be after the cuts have been made?
Mr. Biffen: My hon. Friend makes a fair point, to which the House must address itself. If it had wanted public spending at the levels indicated in the White Paper of the previous Government, where would the £3,500 million have fallen—on taxes or on borrowing?
Mr. Harry Ewing: Why does the right hon. Gentleman continue to repeat the myth that local authorities have flexibility in operating the cuts that he has imposed? The financial and explanatory memorandum to the Education (No. 2) Bill makes clear that education authorities in Scotland must save £21 million at the expense of our children's meals, transport and milk. Is the contribution of the Scottish Education Department and our children to these savings over or under £100 million?
Mr. Biffen: I am sure that the hon. Gentleman will concede that although it is proposed that there should be a reduction in the provision for school meals, milk and transport, local authorities will have greater freedom in this matter after the passing of the Education (No. 2) Bill.
Mr. Healey: Can the right hon. Gentleman enlighten us on the extraordinary variety of his views on the future? He told us that he had not the slightest idea what output would be next year, yet in the White Paper he says that he expects it to be poor. If he does not know what output will be, how is he able to be

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precise in saying that there will be a short-fall in public expenditure of £1,000 million next year? Was that figure simply cooked up in order to enable the right hon. Gentleman to achieve his financial target? What will be the pay assumption in fixing the cash limits, and will that not become the norm?
Mr. Biffen: There is no question of cooking figures. If I show a mild degree of humility about trying to foresee the future it is only to enable the House to draw a contrast between the right hon. Gentleman and myself. He makes a fair point about the hazards in publishing figures. I did not say that a wages figure, an earnings figure or an incomes figure would be published; I referred to a cost figure.

BUSINESS OF THE HOUSE
Mr. Speaker: Business Statement—Mr. Chancellor of the Duchy of Lancaster.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The business for next week will be as follows:
MONDAY 5 NOVEMBER—Second Reading of the Education (No. 2) Bill.
TUESDAY 6 NOVEMBER—Second Reading of the Industry Bill.
WEDNESDAY 7 NOVEMBER—Supply [4th Allotted Day]. The title of the debate is "The disastrous consequences of the Government's financial policy in relation to the steel industry."
Motion on Members' interests.
THURSDAY 8 NOVEMBER—Proceedings on the Isle of Man Bill.
Remaining stages of the European Communities (Greek Accession) Bill.
FRIDAY 9 NOVEMBER—Private Members' Bills.
MONDAY 12 NovEMBER—Second Reading of the Protection of Trading Interests Bill.
Mr. James Callaghan: Is the right hon. Gentleman aware that there will be strenuous opposition to the continued rake's progress of the Education (No. 2) Bill, the Industry Bill and the dismantling of the steel industry? We shall offer the strongest opposition on each of those three days.
As for the business for the following week, will the Leader of the House arrange for a debate on the Government's policy on the external broadcasting services of the BBC, in view of the contradictory statements that have been made, so that we can have a statement and know that this proposal—a proposal which, if carried through, will be totally against the national interest—will be dropped from the Government's policy?
Mr. St. John-Stevas: I am grateful for the early warning of the attack that is to be launched next week, and I trust that it will materialise.
With the second point I have rather more sympathy. I understand that an

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Adjournment debate will take place in the House tomrrrow, which will give an opportunity for a Government Minister to reply. I also understand that there will be a statement later today from my right hon. and noble Friend the Foreign Secretary.
Mr. Stokes: Will my right hon. Friend allow time for a general debate on immigration before the Government's specific proposals are put forward?
Mr. St. John-Stevas: The Government intend to put their proposals forward in the form of a White Paper, but after a reasonable time there will be opportunity for debate on that.
Mr. Palmer: Will the right hon. Gentleman consider devoting a day to a debate on the outstanding reports of the Select Committee on science and technology, which has been so brutally slaughtered by recent procedural reforms?
Mr. St. John-Stevas: I shall certainly consider that point. We have a reasonable record in this matter, as we disposed of 10 outstanding reports yesterday.
Mr. Latham: Will my right hon. Friend tell us when he will introduce his National Heritage Bill? Will it be before Christmas?
Mr. St. John-Stevas: Yes, I can give my hon. Friend an undertaking that the National Heritage Bill will be introduced in the House before Christmas.
Mr. Kilroy-Silk: Does the Leader of the House realise that the Prime Minister and the Chief Secretary have today misled the House and the country by clearly affirming that the Health Service will be exempted from all Government cuts, whereas in practice the Health Service has already experienced a cut of £40 million as a direct result of the Government's decision to increase VAT? Will the right hon. Gentleman ask those two Ministers to start telling the truth, for a change?
Mr. St. John-Stevas: I shall certainly pass on the substance of the hon. Gentleman's question, but perhaps it would be more tactful if I were to do it in my own language.
Mr. Henderson: In view of the fact that the steel industry in Scotland is suffering
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more from inter-union dispute than any action of Government, will my right hon. Friend arrange for a more sensible topic for discussion next Wednesday than that chosen by the Opposition?
Mr. St. John-Stevas: I hope that the subject of the Scottish steel industry will fit within the terms of the motion, so that there will be an opporunity in that debate to raise matters of interest to Scotland as well as to other parts of the United Kingdom.
Mr. Wrigglesworth: In view of the deep anxiety felt in the Northern region about the impact of Government policies on regional policy, dispersal and other matters, will the Leader of the House consider giving some time for Members who represent northern constituencies to debate the bad effect of those policies on the region?
Mr. St. John-Stevas: I shall certainly bear that important fact in mind.
Mr. Nicholas Winterton: Is my right hon. Friend aware that the Prime Minister has one of the finest reputations in the history of this country for standing up for the best interests of the United Kingdom? Will he arrange, at an early opportunity, for a debate on the United Kingdom textile industry, which is at present in serious difficulties, particularly because of the duality of oil pricing by the United States? Does he agree that the Government should take action to defend this important and strategic industry?
Mr. St. John-Stevas: I shall certainly give consideration to that idea. I am well aware of the qualities of my right hon. Friend. I am slightly nearer to her than is my hon. Friend the Member for Macclesfield (Mr. Winterton).
Mr. Heffer: In view of the great concern shown by the National Federation of Building Trades Employers earlier this year about the construction industry, and the fact that it has been announced today that another 300,000 workers will be unemployed next year, many of whom will be construction workers, will the right hon. Gentleman announce today an early debate on the future of the construction industry and the effects of Government cuts on it?
Mr. St. John-Stevas: I appreciate the point that the hon. Gentleman has raised. However, I am afraid that it will not be possible for me to fit in such a debate next week.
Mr. Buchan: Has the Leader of the House seen early-day motion No. 159 in the name of myself and of many of my hon. Friends, asking that he move a motion in the House that the Scottish sections of the Education Bill be sent to a Scottish Standing Committee?
[That this House, noting that there have been ample precedents for remitting sections of Bills relating solely to Scotland to the Scottish Standing Committee, for example the whole of Part 2 of the Local Government Bill of 1947 by a Labour Government, the whole of Part 2 of the Teachers Superannuation Bill of 1956 by a Conservative Government, sections of The Police Bill of 1964 by a Conservative Government; recognising that the crucial questions of school meals, milk and transport in Clauses 24 and 25, and aspects of Schedule 7 in the Education (2) Bill refer exclusively to Scotland, calls upon the Government to move that these sections he remitted to the Scottish Standing Committee for consideration in accordance with these precedents.]
The right hon. Gentleman will be aware that there is not only ample precedent for this but that it is almost unprecedented that such a Scottish aspect should be taken in a United Kingdom Bill. Is the right hon. Gentleman merely trying to limit the response of Scottish Members by cutting down their membership on such a Committee, or will he agree to the proposal?
Mr. St. John-Stevas: I have seen the early-day motion on the Order Paper and have noted the precedents that the hon. Gentleman quoted. However, over a decade has elapsed since a precedent of that nature was set. It is not unusual for Bills with Scottish implications to go through the House and nevertheless be considered in one Standing Committee. I do not think that a case has been made in this instance from departing from what is normal practice.
Mr. Emery: If he has not already done so, will my right hon. Friend visit the Private Bill Office early next week
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to read the minutes of the Committee of Selection, with particular reference to the appointment of the special Select Committees that the House has been awaiting since the summer? If it appears impossible for the present Select Committee to come to a decision, or, as may be assumed, the Labour Party Members on that Committee are unable to submit names, will he take some positive action to ensure that either we have another Committee or that the present Committee comes to a decision?
Mr. St. John-Stevas: I have no power to order the Committee to come to a decision. I regret, as much as does my hon. Friend, the delay in setting up these very important Committees, which are vital for the functioning of the House. It is the will of the House that those Committees should be set up, and it is my devout hope and wish that this can be done next week, without further delay.
Mr. Merlyn Rees: I hope that what the right hon. Gentleman said in reply to the question about the Education Bill and Scottish Members did not indicate that he had closed his mind on this matter. He seemed to be saying that a precedent became weaker over the years, to the point at which it did not have to he used again. However, I put it to him that there are to be discussions about Scotland and the way in which Scottish business is to be dealt with in the House and with the referendum behind us I ask him to leave this matter open. Surely there is a way, given its different nature, to deal with Scottish business through a Scottish Committee, where there is plenty of time, I understand.
Mr. St. John-Stevas: My mind is never closed. It is sometimes blank, but it is always open to sensible suggestions, and I think that that was a particularly constructive suggestion from the right hon. Gentleman. That is precisely one of the things that could be discussed in the Scottish Committee.
Mr. Lawrence: Is my right hon. Friend aware that neither a statement later today in the other House nor a ministerial answer to an Adjournment debate tomorrow will wholly satisfy those of us who feel very strongly about the proposed reduction of the BBC Overseas Service? Will he find time to enable the House to consider the matter further?
Mr. St. John-Stevas: I am sorry; I did not say that there would be a statement in the other House. I indicated that there would be a statement from the Foreign Office. I fully appreciate the anxiety of hon. Members. When the content of the statement is seen the anxieties of my hon. Friend may be ameliorated.
Mr. Christopher Price: Does the right hon. Gentleman's persistence in putting down the Education Bill for debate next Monday mean that he has now abandoned the principle that there should be two clear weekends between the publication of a Bill and its Second Reading? Does his subsequent announcement—which is curious, coming from someone so close to the traditions of this House—that precedents run out if they have not been used over a period of 10 years, mean that any precedent in "Erskine May" that has lain dormant for 10 years is no longer operative?
Mr. St. John-Stevas: No, I do not think that I would draw that conclusion on the precedent point. The point is that in that intervening 15 years—to be quite exact about it—a number of other precedents have been set of Bills with Scottish matters in them being discussed by a general Committee, so there is a conflict of precedents there.
On the point about the two weekends, my position is exactly as I stated it last week to the Leader of the Opposition, namely, that it is the custom of this House to allow two weekends to elapse between publication and Second Reading. As the Solicitor-General in the previous Government said in November 1975, it is not always practical to follow that course. In this case, in fact, it was followed—
Mr. Price indicated dissent.
Mr. St. John-Stevas: Yes it was but owing to a hold-up in the printing, which was nothing to do with the Government, the Bill arrived here a few hours late. I then took immediate action, doing everything that I could to see that hon. Members got the Bill. I consider that we have behaved perfectly reasonably in this matter.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call six hon. Members on the Opposition side of the House.
Mr. Torney: Is the Leader of the House aware of the very dire state of the British textile industry and the fact that thousands of workers in my constituency and others are facing mass unemployment, due to unfair foreign competition? Will he take immediate action to ensure that the House debates this terribly serious situation?
Mr. St. John-Stevas: Because the business has already been announced for next week, I am afraid that I cannot accede to the hon. Member's request. However, I shall certainly draw the attention of my right hon. Friend the Secretary of State for Industry to the hon. Member's remarks about the textile industry and his particular constituency situation.
Mr. Stoddart: Is the right hon. Gentleman aware that there is growing concern in this country about the effects of fluoridating water? What is more, there is considerable concern about the Government's intention to bring forward legislation to make the fluoridation of water supplies compulsory. Will the right hon. Gentleman arrange for a full-scale debate in the House about this matter? Such a debate is long overdue.
Mr. St. John-Stevas: The matter is one of concern. I know of no plans to bring forward legislation in this Session along the lines that the hon. Member suggested. If such plans exist, they have escaped me, as Leader of the House. I believe that this is the sort of subject that is best debated in private Members' time.
Mr. Maclennan: Further to the right hon. Gentleman's reply to my right hon. Friend the Member for Leeds, South (Mr. Rees) about the Scottish aspects of the Education (No. 2) Bill, may I ask him to look at this matter with the greatest urgency and to send it not, as he said, to a Select Committee but to a Standing Committee? Will he undertake to do this prior to the setting up of a Standing Committee following the Second Reading of the Bill next week?
Mr. St. John-Stevas: I think that I have made plain my position on that matter.
Mr. George: Will the right hon. Gentleman announce very soon a date when the House will be allowed to debate defence? Not only is it important that we debate the very precarious nature of the SALT II negotiations; it is even more important that we discuss and allow the House some input into the apparent decision—according to reports, already taken—to replace Polaris, at a cost of between £3 billion and £4 billion? Whether the decision is right or wrong, surely the House has the right to have some input into this decision, which is so vital and which will affect Britain over the next 50 years.
Mr. St. John-Stevas: I certainly believe that defence is a subject that should be debated in the House, and I shall bear the hon. Gentleman's question in mind.
Mr. Mike Thomas: Has the right hon. Gentleman seen early-day motion No. 122, in the name of my hon. Friend the Member for Kirkcaldy (Mr. Gourlay) and the names of myself and others, relating to Members' accommodation?
[That this House considers the policy of the previous Services Committee in allocating rooms presently occupied by Members, in areas of reasonable access to the Chamber for the use of Library staff, is contrary to the best interests of Members of this House, and requests that further attempts should be made to find alternative accommodation for the staff concerned.]
Will he undertake to meet hon. Members who are concerned about this matter and, perhaps, to raise this matter with the Services Committee? In the interim, will he undertake to ensure that no room in the precincts of this building that is currently used by a Member of Parliament is handed over to a member of the staff?
Mr. St. John-Stevas: I have seen the early-day motion. I have considerable sympathy with it, but of course, I am not an entirely free agent in this matter. There is the Services Committee, whose responsibility it is. Admittedly, I preside over it, but I am only the Chairman. Secondly, one inherits a situation in which rooms are occupied by people who perhaps one would not have put in them in the first place, but possession is nine points of the law. However, my policy on accommodation
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in the House is certainly that Members of Parliament must come first.
Mr. Woolmer: Is the right hon. Gentleman aware that the concern about the state of the wool textile industry is shared by both sides of the House, by the employers and the trade unions, by the local authorities, and by many others, who are extremely concerned to see in a state of deep despair an industry based in West Yorkshire, in the old wool and textile towns? Is there any possibility, in the very near future, of time being given on the Floor of the House to enable all sides of the industry to see that the House is willing to find some way of stopping the final demise of one of the historic industries of this nation?
Mr. St. John-Stevas: I am certainly sympathetic to what the hon. Member has said and I shall bear it in mind, as I said to another hon. Member earlier. However, I do not know that a debate alone is sufficient to bring that industry to a state of prosperity. In the main one must rely on the economic policies being pursued by the Government.

ABORTION (AMENDMENT) BILL
Mr. William Hamilton: On a point of order, Mr. Speaker. I wish to raise a matter which I think will be of concern not only to the whole House but to the entire country.
Yesterday morning the Committee that is dealing with the Abortion (Amendment) Bill was sitting in Committee Room 10. Whatever one's views about that Bill might be, there is widespread and growing public concern about it throughout the country. The consequence is that in that Committee Room the accommodation for the press and the public is completely inadequate, so much so that yesterday morning the Press Association representative and a large number of other press representatives were unable to get access. Several members of the Committee, on both sides, raised the matter with the Chairman. He sought to give an undertaking that he would do something about the problem. However, looking at all of the Committee Rooms, one finds that there is simply not enough accommodation for all of the people who want to get access to hear the debates on this Bill.

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I think that it would be generally agreed that we all want to encourage maximum public access to our proceedings upstairs and downstairs. If there are any physical difficulties to prevent that, the House authorities should take every possible step open to them to ensure that this problem does not occur.
The Chairman of the Committee has given undertakings to us that he will do what he can for the next sitting, next Wednesday. However, I should like to ask you, Mr. Speaker, to use your good offices through the Leader of the House. The Leader of the House is listening now. He has a view on the Bill, but he also has a view on the need to democratise our proceedings and expose them to public scrutiny. In those circumstances, I hope that you, Mr. Speaker, will use your good offices to ensure that the undesirable occurrence of yesterday is not repeated.
Mr. Speaker: First, I am deeply grateful to the hon. Member for Fife, Central (Mr. Hamilton), who gave me 48 hours' notice that he would be raising this point of order this afternoon. As the House is aware, I have no jurisdiction over the proceedings of the Committee, but the hon. Gentleman raises the question of accommodation. I have asked the authorities who manage our affairs on our behalf to examine it to see whether there is any way in which they can help. Of course, it could well be that even if we had the Central Hall there would not be room for everyone who would want to attend for that particular subject. However, I can assure the hon. Gentleman that I am taking an interest in this mattter, and I know that the responsible authorities are having discussions to try to find a way to help.
Mr. Hamilton: Further to the point or order, Mr. Speaker. May I ask for a little clarification? In Committee we asked whether it would be possible in this particular instance, without necessarily creating a precedent, to allow the press into the seats that are normally used by hon. Members. It is a very small Committee, comprising 17 Members in a fairly large room. Therefore, the accommodation that is available to Members is far in excess of what they need. If the press were allowed to use Members' accommodation—again without creating a precedent—that
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would satisfy Opposition Members serving on the Committee.
Mr. Speaker: I am grateful to the hon. Gentleman. I am afraid that it would create a precedent. Whatever we said, someone on a future occasion would advance the argument that for the first time in our history we allowed Strangers into Members' seats.
We are very particular not to allow simply anyone into the Chamber. When I was Chairman of a Standing Committee, I always firmly observed the rule that that part of the Committee Room allocated to Members was allocated to them only. I am afraid that I cannot offer much hope to the hon. Gentleman in that regard. However, I can tell him that there is no objection to the press taking notes in the public part of the Committee Room. Perhaps members of the press will get up early and form a queue.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): Further to that point of order, Mr. Speaker. Since my name was mentioned by the hon. Gentleman, may I say that I shall be very glad to assist in any way that I can in solving this problem or finding some other accommodation? But you, Mr. Speaker, with your usual dispatch, have set the whole operation in motion and I can only be a rather minor accomplice.
Mr. Speaker: Before we leave this matter, let me put it back on the shoulders of the Leader of the House. I want him to take responsibility, not me.
Several Hon. Members rose—
Mr. Speaker: Order. I have had notice of a point of order from the hon. Member for Tiverton (Mr. Maxwell-Hyslop).

COMMITTEE OF SELECTION (CHAIRMAN)
Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. I rise to ask whether it is possible for you to help the House make arrangements for questions to be asked at Question Time of the Chairman of the Committee of Selection in circumstances similar to the matter in which the Chairman of the Services Committee can be questioned about matters

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that are pertinent to the functions which that Committee performs for the House. We have an ambivalent situation here. We have the general rule that we may not refer on the Floor of the House to proceedings in a Committee which has not yet reported to the House.
On the other hand, we also have a custom that because the Services Committee performs not legislative or inquiry functions but functions intimately connected with the functioning of the House, the Chairman of that Committee answers questions. Although in form questions to the Chairman of the Committee may appear to be to a Minister, because of the accident that a Minister is Chairman of that Committee, the House has for many years accepted the convention that it wishes to be able to ask questions at Question Time about the functioning of that Committee.
The House has charged the Committee of Selection specifically with performing a most important function, namely, that of nominating the members of the Select Committees set up by this House. However, since that Committee has not carried out the task, this is a matter of grave concern on both sides of the House. In fact, it has resulted in a suspension of a function of the House, namely, the functioning of those Select Committees. This is not a matter which can rest as it is, because without any report from the Committee it is, as it were, sub judice, and it appears that nothing is happening. In truth, it is not the case that nothing is happening. The reason for this situation is that the Opposition Whips' Office is preventing the Members of one side of the Committee from doing the job which the House charged it with doing—
Mr. Speaker: Order. I am sorry to interrupt the hon. Gentleman. I have given him a fair run to make his point, but he and the House will know that I do not decide who answers questions. He will have to raise this matter with his right hon. Friend the Leader of the House.
Mr. Maxwell-Hyslop: May I continue, Mr. Speaker, not on the point of responsibility for this situation—
Mr. Speaker: Order. This is not my responsibility. But I am quite prepared to see the hon. Gentleman, although not
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this afternoon, to discuss this matter. I hope that that will help. The matter is not urgent, and even if it were there is nothing that I can do about it.

BUSINESS QUESTIONS
Mr. Cryer: On a point of order, Mr. Speaker. When hon. Members have risen throughout questions on the Business Statement, would it be possible for them to be called to put their questions, as has usually been the case? Unfortunately, this afternoon you said that you would call five or six hon. Members, although only three other hon. Members rose throughout the whole period. Will you try to exercise that judgment so that all hon. Members who have risen from the beginning are called? You will appreciate that today we have had two important statements, one on public expenditure and the other on business, on which many of us would have liked to ask questions.
When Back Benchers rise frequently but are not called, and when Front Bench spokesmen are called repeatedly, there is a certain amount of frustration, because, as you are acutely aware, Mr. Speaker, we are all elected on the basis of equality.
Mr. Speaker: I am not at all unsympathetic with regard to the question of Front Benchers. I do not like it when Front Benchers keep rising, because there is one spokesman on a given subject. However, I have called—I did it this afternoon—several Opposition spokesmen at different times to ask questions on their particular subject. At the same time, I discourage Front Bench spokesmen from rising too often, even at Question Time, because it means that I cannot call other Back Benchers.
Secondly, I do not think I do the hon. Member for Keighley (Mr. Cryer) an injustice when I say that on the last two occasions when he was not called he also raised a point of order. My memory is that each time I have not called the hon. Gentleman he raises a point of order. I can understand the frustration. All I ask the House to remember is that I have suffered that experience myself, fortunately in times past. It is impossible for me to guarantee that every day I shall call all hon. Members who

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rise, because I must exercise my discretion in the interests of the House.
Mr. English: On a point of order, Mr. Speaker. At a certain point in the proceedings on the Business Statement you said that you would call six hon. Members from the Opposition Benches. Do I take it that we will now revert to questioning the Leader of the House?
Mr. Speaker: Perhaps I am not as bright as I should be. I cannot follow the hon. Member's point because I know that I called six hon. Members.
Mr. Sever: On a point of order, Mr. Speaker. I certainly do not challenge your undoubted ability to count. However, there was some doubt in the House, when my hon. Friend the Member for Fife, Central (Mr. Hamilton) raised his point of order, as to whether you had concluded questions to the Leader of the House. I am saying not that you were not aware of the situation but that many right hon. and hon. Members were not. Because of that, and in view of the fact that a second point of order was called from the hon. Member for Tiverton (Mr. Maxwell-Hyslop), I wonder whether you had noted that a number of hon. Members had sought to catch your eye in relation to the point of order raised by my hon. Friend the Member for Fife, Central. It seemed as though discussions on this point of order were ignored to some extent by virtue of your calling immediately a point of order on a different subject.
Mr. Speaker: The hon. Member probably heard me ask the hon. Member for Nottingham, West (Mr. English) whether his was a point of order on the same question. Before I turned to the hon. Member for Tiverton (Mr. Maxwell-Hyslop), I thought I had satisfied myself that there were no further points in relation to the point of order raised by the hon. Member for Fife, Central (Mr. Hamilton). If I was under a misapprehension, I apologise.
Miss Richardson: Further to the point of order raised by my hon. Friend the Member for Fife, Central (Mr. Hamilton),
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Mr. Speaker. The question of the provision of seats for the press in Committees, and particularly in the Committee on the Abortion (Amendment) Bill in which there is widespread public interest, should not be taken as a sign that the public should be excluded. There was a reference either from you, Mr. Speaker, or from the Lord President that there might be seats for the press in the public part of the Gallery. Yesterday there were also members of the public who were excluded from the Committee because there were not enough seats. It would be a great pity if people who have taken the trouble to follow this Bill, and who have come, in many cases, all the way to London, should be denied a seat because the press are being given public seats.
Mr. Speaker: I am much obliged to the hon. Lady. Of course, people come to this House every day hoping to get in but are unable to do so. We must work within the limitations of the building. I assure her that those responsible are doing their utmost to try to help in this obviously difficult situation.
Mr. George Cunningham: Further to that point of order, Mr. Speaker. I wonder whether, in your further consideration of the matter, you would bear in mind this suggestion. If we were talking about a Select Committee instead of a Standing Committee, the rigid distinction between the space available for the public and the press, and the space available for hon. Members, would not occur. They sit in the same sort of seats but some are in one place and some in another. The distinction between the space available in Standing Committee for public and press, on the one hand, and Members, on the other, is a barrier. It is there to divide the amount of room that is normally thought to be needed by each group. I do not see any difficulty in principle in simply altering the line between the space available for the two groups.
Mr. Speaker: I am obliged to the hon. Member. I am sure that his suggestion will be borne in mind by those who are trying to solve this problem.

ORDERS OF THE DAY

  SHIPBUILDING BILL
  Order for Second Reading read.
  Mr. Bill Homewood: On a point of order, Mr. Speaker. I did make an application for a Standing Order No. 9 debate—
  Mr. Speaker: Order. I must explain to the House, because this is an untidy procedure. The hon. Member for Kettering (Mr. Homewood) contacted me and said that he might seek the Adjournment of the House under Standing Order No. 9. I think that we must adapt when there are special circumstances. Although the Orders of the Day have been read—and this, to quote the hon. Member for Fife, Central (Mr. Hamilton), must not be taken as a precedent—I do not want the hon. Member for Kettering to feel that he has been unfairly treated. He thought that he would be able to make an application under Standing Order No. 9. By leave of the House—and only by leave of the House—I shall put the Orders of the Day a second time a little later on.

  CORBY STEELWORKS
  Mr. Homewood: 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 announcement by the British Steel Corporation today that it will begin a speedy rundown of the iron and steel works in Corby."
  I seek a debate because 5,500 jobs will disappear from the steelworks in my constituency. This will have a multiplier effect in a one-industry town, and could raise the number of jobs lost to more than 7,000. In fact, a 25–27 per cent.
  1480
  unemployment level will prevail in constituency, and 90 per cent of the unemployed will be males.
  This will occur in a town which was created by politicians. It is a town in which people are being positively induced to walk towards the dole queue in place of the one that they left many years ago. This House does not understand what the decision will do to the town of Corby, nor does it recognise its social responsibility. As important as the national steel situation is, I contend that responsibility for Corby's plight lies fairly and squarely at the feet of this House.
  The denial of my request would mean that Corby would feel neglected. This morning a total of 20,000 people, out of a population of 53,000 in Corby, marched in protest against this iniquitous proposition, which entails the devastation of a town.
  Mr. Speaker: The hon. Member gave me notice before midday 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 announcement by the British Steel Corporation today that it will begin a speedy rundown of the iron and steel works in Corby."
  As the House knows, under Standing Order No. 9 I am directed to take account of the several factors set out in the order, but to give no reasons for my decision. I understand the hon. Member's feelings, especially as he has come to the House straight from a demonstration. I listened very carefully to what he had to say. I must point out in passing that there is to be a debate on steel next Wednesday.
  I have to rule that the hon. Member's submission does not fall within the provisions of the Standing Order and therefore I cannot submit his application to the House.

ORDERS OF THE DAY

  SHIPBUILDING BILL
  Order for Second Reading read.
  4.49 p.m.
  The Minister of State, Department of industry (Mr. Adam Butler): I beg to move, That the Bill be now read a Second time.
  This short Bill raises British Shipbuilders' borrowing powers from the present statutory limit of £300 million to £500 million, with provision for a further increase to £600 million. It also provides that the home credit scheme under section 10 of the Industry Act 1972 should be extended to conversions and alterations of ships in United Kingdom yards.
  The Bill is urgent for two reasons. First, British Shipbuilders is holding to its forecast that it may reach the present statutory borrowing limit in January. Secondly, our ship repair industry, like the shipbuilding industry, is seriously affected by the recession, and the proposed extension of the home credit scheme will make it more competitive for orders by United Kingdom owners.
  The House will wish to consider these measures in the wider context of the shipbuilding industry as a whole, and we must do so within the rules of order. The Government have been glad to make more time available for debate than might have appeared necessary for a short and, I hope, non-contentious Bill.
  It may be convenient if I say a little more about the detail of the proposals. There has been some confusion as to whether the proposals involve Government expenditure over and above the substantial support that we are already making available to the industry and that I announced to the House in July. Some of my hon. Friends have rightly expressed concern, and before going on to describe the proposals, I make it clear that both proposals are part of our existing policy. That situation is unchanged and will continue.
  We spent the first two or three months in office assessing the position and needs of the industry. In the light of that assessment, we took the decision to enable British Shipbuilders to survive the immediate
  1482
  recession and put the corporation in a competitive position for the future. I believe that the assessment and our decisions were sound.
  On the new borrowing limits, at the time when the British Shipbuilders Borrowing Powers (Increase of Limit) Order 1979 was debated in the House on 25 July, I advised the House that £300 million would not be sufficient to last through this financial year. That conclusion followed from the cash limit of £250 million which was set by the previous Administration and which we left unchanged. So far £135 million has been advanced from the National Loans Fund by way of interim finance. In the light of my recent announcement about the permanent funding of British Shipbuilders, that has been replaced by public dividend capital, but that is only a book entry on the account.
  British Shipbuilders has also borrowed £33 million in connection with the Polish order and it has a temporary borrowing facility of £30 million. The House will be aware that these external borrowings are with the consent of the Treasury. They fall within the limit imposed by previous legislation and by present legislation in regard to overall borrowing powers.
  Mr. Michael Grylls: My hon. Friend has given us the figures that are central to the debate, but could he give us the total borrowing requirement of British Shipbuilders as of now? That figure would be the National Loans Fund and private borrowing added together.
  Mr. Butler: I do not have the exact total. I have explained that the National Loans Fund figure has been replaced by public dividend capital, and with that figure, the outstanding borrowing against the Polish order and the extra £30 million limit, my hon. Friend will more or less be able to calculate the total. The important point is that the forecast still holds good. British Shipbuilders has looked closely at that forecast recently. It expects to exceed the present £300 million in about January. That is why it is necessary to put the Bill before the House now in order to cope with that situation.
  During the passage of the Aircraft and Shipbuilding Industries Act. the present

  1483
  limit of £300 million was based on a realistic assessment of the likely requirement of the new corporation during the first five years of its existence. I hope that hon. Members will not press me on how long I believe that the present limits will last.
  I should like to make three points that are relevant. First, the increase in the borrowing limits does not mean support additional to that outlined in my July statement. As I indicated a moment ago, British Shipbuilders has assured me that, with the first six months of the financial year behind it, its present estimates are that it will be within its cash and loss limits for this year, albeit reaching the £300 million borrowing limit in January.
  Secondly, British Shipbuilders has been asked to make substantial progress towards viability. We firmly believe that if one industry does not in the long run earn a real return on capital employed, support for it will represent a misallocation of resources at the expense of the rest of the economy and employment in other industries. Management and unions are well aware that the future lies primarily in their hands. I would therefore hope that in any event the new limits will last substantially longer than the old.
  Thirdly, as I have never hesitated to make clear, the Government remain committed to their policy of inroducing private sector finance to the nationalised shipbuilding industry at the appropriate time. Because of that, it is not possible to estimate the effect that that will have on the borrowing limits.
  Mr. Robert Hughes: Will the hon. Gentleman tell the House what he means by "private sector finance", and state how it is to be taken into the industry?
  Mr. Butler: If we were ready to come forward with a policy statement, I should be delighted to do so.
  Mr. Robert Hughes: The hon. Gentleman has just made a policy statement.
  Mr. Butler: I have made a general policy statement to the House which is an almost word-for-word reiteration of the policy statement of my right hon. Friend the Secretary of State for Industry in July. Because of the fluid state of the industry as we found it when we came into
  1484
  office, we decided that it would not be appropriate to introduce private sector finance at that stage. We remain committed to that general policy. I wish to make that quite clear to the House, as I have to the industry on a number of occasions.
  Mrs. Elaine Kellett-Bowman: Will the introduction of private capital involve returning any particular yards to private ownership?
  Mr. Butler: My statement is wide enough to allow for a number of eventualities on the introduction of private finance.
  Turning to the second point in the Bill—the extension of the home credit scheme for conversions by United Kingdom owners in United Kingdom yards—I believe that that is welcomed by the shipping and shipbuilding industries and particularly by those companies concentrating on ship repairing. They have been as hard hit as anyone by the recession in merchant shipbuilding activity, and I was pleased to be able to announce that change in legislation in my July statement.
  Loans guaranteed under the provisions of the Bill will be normally up to 80 per cent. of contract value over a period of five years from delivery for ships over 5,000 gross registered tons and mobile offshore installations. The interest rate will be the same as for the home credit scheme, which is currently 7½ per cent. These will be the normal terms, but for very large orders which the Government consider to be of special importance credit might be extended up to eight and a half years, the maximum period permissible under our EEC and OECD obligations.
  In addition, it may be possible to reduce the qualifying tonnage for ships to 1,000 gross registered tons where there is evidence of officially supported credit overseas. To qualify for the credit the Department will need to be satisfied that radical alterations to the cargo space or hull, or propulsion system, are involved. One action which might be encouraged by this move is the change of engine in a ship for a more modern fuel-saving design overall. I believe that the provision will be of small but significant help to the industry.
  In July I detailed to the House a number of measures and ways in which the

  1485
  Government propose to help shipbuilding. I shall review progress in the main areas. The most important area is the progress that we have made with the intervention fund.
  Since my statement, we have completed successfully our negotiations with the EEC on our proposals for an intervention fund of £120 million over two years. I remind the House that when we came into office the intervention fund had lapsed for nearly two months. That was a serious obstacle to British Shipbuilders winning the orders that it so desperately needed. The arrangements for an interim intervention fund which I agreed with the EEC unblocked several orders which were in the pipeline.
  Moreover, we have achieved an important gain. One of the difficulties has been the time that it has taken to process orders through the Commission. Admittedly, there are complexities with all these orders, but I have shared the industry's frustration at the time that it has taken to put orders through the Commission.
  Under our new agreement, orders involving intervention fund assistance below 25 per cent., where EEC competition is not involved, do not have to be submitted to the EEC for approval. I have given that priority within my Department and I have asked that all orders be expedited. That will undoubtedly help to reduce delays in processing orders, which in some instances have put at risk the winning of vital orders. There has been an encouraging and welcome development.
  A new intervention fund has been negotiated by the Northern Ireland Office in respect of Harland and Wolff. The same terms apply but with a reduced figure of £25 million.
  Since my statement there has been considerable press mention of and interest in the industry. That has been the position since I referred to the possibility of a scrap and build scheme. In principle, the Government have declared their support.
  Mr. Bruce Millan: Before the hon. Gentleman leaves the subject of the intervention fund, will he deal with the most serious matter of all, namely, the reduction from 30 per cent. to 25 per cent. of the maximum assistance that may be made available?
  Mr. Butler: I am sure that the right hon. Gentleman will be aware that under the fourth directive it was agreed by the member States of the Community that there should be a gradual and progressive reduction in the rate of subsidy available. That is much to be welcomed. Unless there is an agreed reduction we shall tend to get an increase in subsidies offered with no benefit in terms of orders and considerable harm to the taxpayer. In the circumstances, a reduction of the rate within the intervention fund, which will apply to other member States, is to be welcomed in principle.
  There is the great advantage of having the fund in the hands of Ministers. As I said in my statement, the Commission will consider extending aid beyond 25 per cent. for exceptional orders.
  Mr. Robert Hughes rose—
  Mr. Gordon Wilson: Has the Minister managed to negotiate similar reductions in subsidies that may be provided by Brazil, Korea or Japan, for instance, whose yards will be in competition with our yards?
  Mr. Butler: First, I have no power to negotiate within the Common Market with those countries. I must try to impress upon the House that no country wishes to indulge in unnecessary subsidies. That is probably the answer to the hon. Gentleman's question.
  Mr. David Price: My hon. Friend has mentioned intervention, which is a subsidy. Is he aware that it is a total package that can be offered? If I am able to catch the eye of Mr. Speaker, I shall endeavour to put to the House certain figures that I have obtained. Various factors, such as credit terms and moratoriums, produce the total package that British Shipbuilders can or cannot offer to meet competition. Will my hon. Friend carry his discussions further?
  Mr. Butler: That is right. My hon. Friend has made an extremely good point. Intervention is only one part of the package, although a major part. It is not easy to establish exactly what different countries are offering. Tables are printed from time to time, but I can assure my hon. Friend that that is not the end of the day. Tax treatment of certain

  1487
  aspects of a company's finances are important. There are a number of constituents that comprise the package, some of which are available to us.
  Within the Community we try to ensure that the overall package is fair and as equal as it can be between shipbuilders. If hon. Members have examples of apparent unfairness, I am ready to take them up with the Commission.
  Progress on scrap and build has been less rapid than on the intervention fund. We declared our support in principle for a Community scrap and build scheme provided that it was cost-effective and funded according to the benefits received. The Commission has prepared a communication to the Council that sets out the general principles and characteristics of a scrap and build scheme. That has been laid before Parliament with an explanatory memorandum by Ministers. The Commission hopes that from discussion there will emerge a policy on the choice of solutions for implementing such a scheme. However, some member States have expressed doubts, and no one looks to such a scheme as a panacea for our troubles.
  It is clear that there is still a considerable way to go before a cost-effective scheme can emerge that commands the support of EEC members. However, I shall continue to press forward.
  One of the factors affecting the placing of orders is the cash position of shipowners. That has led to demands for better credit facilities. I repeat the warning that I gave a few moments ago. There are considerable dangers of a credit race taking over from the earlier direct-price subsidy race. As I explained, the intervention fund helped to control that danger. In the circumstances, we have been ready to agree to the new extended OECD limits of credit. However, extended credit is subsidy by another name and it can be costly to the Exchequer.
  In July, I spoke of the need for contraction in the industry, in the light of the world-wide recession in shipbuilding. The previous Government recognised that need. Without being rude, it is more relevant to say that it was recognised by those who work in the industry because that recognition brought about the agreement between the management and unions of British Shipbuilders on the proposals for
  1488
  restructuring the industry. I appreciate fully that they were hard and difficult decisions which required a hefty application of good sense. The realistic way in which they were approached and resolved was a real credit to all who were concerned.
  There can be little doubt that the restructuring is still essential. It would be wrong and dangerous to be misled by the present small size of recovery in the market. World-wide demand appears to be picking up and orders for the first six months of the year are well ahead on those of last year. However, the position in the United Kingdom is patchy. Demand is still weak and nobody could claim that recovery has extended to the United Kingdom shipbuilding industry as a whole. Many shipyards are still desperately short of work, despite one or two recent and welcome orders. British Shipbuilders will be hard pressed to reach its annual target of about 400,000 tonnes or over.
  It is worth examining the figures of the past years, particularly if they are related to the preferred target of British Shipbuilders, bearing in mind the long lead times in British shipbuilding. Let us look at the orders that were placed in the last four years and compare them with the present position. The crisis year for orders was 1975 when the total orders placed in our shipyards reached only 72,000 tonnes. The position improved over the next three years, but the figures are all below 400,000 tonnes. In 1976, there were 393,000 tonnes, in 1977 356,000 tonnes and in 1978 246,000 tonnes. The last figure is the most relevant because it is little better than half the target capacity of British Shipbuilders at this time.
  The total orders placed in the first 10 months of this year are already up on those placed in the whole of last year. We have reached a figure of 280,000 tonnes in that 10 months. These are compensated tonnes. If one adds that fact to the general mood of the shipping market, which appears to remain cautious, it can be seen that there is no ground for real optimism.
  There is a further risk in the United Kingdom that unless the industry improves its productivity substantially it may catch only the tail of any recovery,

  1489
  provided that the recovery is prolonged enough to take some of the edge off our competitors' appetite for and ability to win orders. That is a reflection on our present general competitive position.
  There is little sign of a sustained recovery in the market. My conclusion remains that, on present evidence, British Shipbuilders will continue to find it difficult to sustain its preferred strategy. Action must be taken in the yards. The key essential is the improvement in productivity and the cutting of costs so that further orders can be won. The management and unions of British Shipbuilders are making a joint systematic effort. However, in the end it depends on the individual workers and managers in the local yards. To try to raise productivity in an industry that is chiefly concerned about future orders is an uphill task. Some people say that increases in productivity cannot be achieved unless there are full order books—perhaps it is a case of the chicken and the egg.
  If we do not increase productivity, we shall not get the orders. That is where the secret lies. Taking British Shipbuilders as a whole, part of the increase in productivity will come from the restructuring of the industry that has been put in hand by British Shipbuilders and agreed with the unions. Much of the rest of the increase would come if the standard of the industry as a whole were improved to that of the best yards. At the same time, the best yards must improve on their performance.
  The first target must be to bring performance up to the world average. I admit that there is a long way to go. The Government have provided a two-year framework of support for the industry, which I announced in July. The purpose of the Bill, which I commend to the House, is the further implementation of that support and not, as I have explained, its increase. The Government share with the management and work force of British Shipbuilders the wish to have a thriving industry that is as good as any in the world and able to compete and make profits. Public money has been put into the industry to help to bring that about. With the public, we now look to those who work in the industry to ensure their own future.
  5.17 p.m.
  Mr. John Silkin: We are grateful to the Minister for his explanation of the Bill. As he said, it is a self-evident Bill in the sense that it is the necessary financial framework for what we are discussing. He rightly and generously offered what we would undoubtedly have done anyway in our own time—the time to discuss the whole of the shipbuilding industry. That is vital.
  First, I should like to ask a question so that the Minister of State can deal with it. Of course, he will have prepared his speech before today's statement by the Chief Secretary. The House should know in what context it will be debating the Bill. Perhaps the hon. Gentleman will tell us whether there is anything new in the Government's thinking as a result of the Chief Secretary's statement that affects what he had to say in July and what he has said now.
  Mr. Adam Butler: One of the advantages of having produced a two-year programme for the industry is that it was agreed by the Government. What has been said today in support of the White Paper on expenditure, revealing the Government's plans on that account, does not affect the position as outlined in my statement, as I confirmed again today.
  Mr. Silkin: I am grateful to the hon. Gentleman. That is a firm undertaking from the Government, and we can pro-reed on that basis.
  Those of us who were interested in this matter at the time of the general election assiduously read the Conservative Party manifesto. The words are worth repeating:
  "We will offer to sell back to private ownership the recently nationalised aerospace and shipbuilding concerns".
  I do not often find myself in agreement with either the tone or the words of the hon. Member for Lancaster (Mrs. Kellett-Bowman), but on this occasion, without being patronising, I thought that she was extremely shrewd. The hon. Lady asked a very apposite question which got a rather evasive answer. I do not complain about that evasion. I understand it.
  What we witnessed last July was a kind of half U-turn. Naturally, I shall not advise my right hon. and hon. Friends to oppose the Bill today. As the late lain Macleod said on a fairly similar

  1491
  occasion "Nobody wants to shoot a one-legged Father Christmas". But what is demonstrated by the July statement and by the Minister's rather thin speech—it perhaps had to be—is that there is a U-turn or the beginnings of a U-turn. My complaint, and the complaint no doubt of some of my hon. Friends, might be that the U-turn is not fully developed. Perhaps I may explain why I believe that to be so.
  The Minister very carefully and well went through the points that he made in his July statement as a kind of report to the House on how that statement had developed in the intervening months. I find myself in total agreement with his marshalling of the facts with one slight exception, to which I shall come later. I had done it in exactly the same way in my own notes, so the hon. Gentleman has obviously saved us a great deal of time. He started, as I would have started, with the intervention fund.
  The hon. Gentleman seemed to be giving the impression that the result of his negotiations with the Commission on the intervention fund were an example of what I might call the new Europeanism of this Government compared with the rather curmudgeonly approach that some of us—my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) and I in particular—in our respective functions earlier this year adopted with the Commission. The Minister seemed to take the view that the result was a matter of some congratulation to him.
  The hon. Gentleman is pleasant and agreeable and it is sad to have to quarrel with him, but I am afraid that I do. I think that this is an illustration of the new Europeanism. We saw an example of it by the Prime Minister earlier today when my right hon. Friend the Leader of the Opposition asked whether November still held good for a total balance of payment and receipt on the budget. He was told "Well, perhaps it did not after all."
  The basis of the Government's policy towards the Commission and the Community may be summed up by saying "If at first you cannot concede, try, try, try again." In this instance I have to admit that it was not necessary for the Government to concede. The Government and the Commission were thinking in
  1492
  much the same way. There was no deal to be obtained from the Commission. What was agreed between them as a basic principle was the contraction of the British shipbuilding industry, and that was the basis on which it was done. That is why we had the two-year time limit. Incidentally, the hon. Gentleman and I had better get used to avoiding calling it a two-year time limit. Six months have already gone by. We are talking now of only 18 months. Therefore, when we hear that there has been agreement with the Commission on a target reduction, I repeat, both the Government and the Commission intended to do that, and the two just happened to come together.
  Then we come to the really important point—the rate of assistance. When my right hon. Friend the Member for Ardwick was in charge of shipbuilding, he would not have tolerated that for one moment. He knows that in the vast majority of cases—he is nodding his head wisely as he always does on these occasions when I am right, but he sometimes though not always, shakes it when I am wrong—even a 30 per cent. subsidy of assistance on the intervention fund presents great difficulties to British shipbuilders. Now 25 per cent. will reduce the number enormously. It will be interesting to know—we did not hear this from the Minister—the number of cases of intervention assistance at 25 per cent. as against what the level would have been as 30 per cent.
  The Minister made much about the concession on what might be termed non-individual vetting. He said that would save a lot of time. If we concede to the Commission in the first place that we will have a limit of 25 per cent., it is hardly surprising that we are not really getting anything at all. I repeat, it would be interesting to know what the Minister and his right hon. and hon. Friends believe will be the effect of that cut. We shall certainly be examining the hon. Gentleman and his colleagues every month to find out the actual effect, and we shall want to know the answers.
  Mr. Adam Butler: I do not want to intervene too often in the right hon. Gentleman's speech and therefore I have already let one or two nonsenses go by. I suggest that there is little difference in the

  1493
  rate of ordering. That is already partially evidenced by the tonnage which has been taken in recent weeks when the 25 per cent. has been operating. That is proof of the pudding as far as I am concerned. I think that the Labour Government were all too ready to give away subsidy whenever they could. We are taking a more realistic attitude. I believe that we shall be proved right and will save money for the taxpayer.
  Mr. Silkin: That pudding will have to be digested fully for a little while before I can be accused of talking nonsense. It is always better to have the facts before us. With intervention assistance at 30 per cent., we must be able to make better quotes than if it is at 25 per cent. We shall see.
  The hon. Member for Eastleigh (Mr. Price) made a very good point in his intervention. He suggested that we should look at the whole thing as a package. That is what I propose to do. By the time I have finished looking at it as a package, perhaps the Minister will see that there is some point in what I am saying.
  Mr. Grylls: The right hon. Gentleman, by his words, is encouraging the bidding up of these subsidies, in whatever form they may be—intervention fund or anything else—and that is not in our interest. What is in our interest is a sensible, phased reduction of the kind described by my hon. Friend the Minister of State. That is what we should be after. Surely that is what the national interest is about.
  Mr. Silkin: I suggest that the hon. Gentleman—it would be a very agreeable thing for him to do—should perhaps make a world trip at this stage. Indeed, perhaps he might take advantage of the suggestion that he look at what goes on in Brazil and Japan. The fact is that there are no market forces left in shipbuilding any where in the world. Therefore, how we get the orders depends to a great degree on what assistance the Government are prepared to give. That is the basic point that I am making.
  Perhaps I may follow again the course taken by the Minister. The Government have now recognised that it is impossible or undesirable to hive off or to sell off part of the shipbuilding industry at this
  1494
  time. Certainly there are very profitable parts of it at any time on anybody's reckoning. But if we sell off the profitable parts, we shall destroy the rest of the industry. The Government know that very well, and that is the reason for the U-turn.
  On the other hand, the Secretary of State for Industry has not only himself to consider. There breathing hard over his shoulder is his right hon. Friend the Prime Minister—and a very tough cookie she can be. Therefore, he has to pretend that it is not a total U-turn. That is why we get this rather muddled and dubious explanation of the Government's policies.
  The hon. Gentleman mentioned the scrap and build system. I have much sympathy with him. Scrap and build is one of those issues which will be argued about for a long time and I have much sympathy with it. Having spent some time in Brussels negotiations, I know that however much one country may wish to have an issue discussed along the way, it is not always as easy as that. I should like the hon. Gentleman to say which countries, in particular, object to scrap and build. My information is that they are the Federal Republic of Germany and the Netherlands. That may be so or not. From their point of view it would be understandable. The reason for their objection, as I understand it, is that they are slightly more optimistic than the Minister of State.
  They believe that there will be a shipbuilding upturn in 1982. Therefore, they ask what is the point of a scrap and build policy when there will be an upturn. They say that the signs of an upturn are apparent now. I do not take that hearsay point of view, but it would be an advantage to the House if it were aware that that was the reason. It might be to the advantage of the House if we knew for sure that those were the two countries concerned.
  There is a point which seems to me to relate very much to the scrap and build policy, whether there is an upturn or not or whether there is a prosperous shipbuilding industry throughout the world or not. It is often made by the unions and our shipping owners. It concerns the use of the flag of convenience. The trouble with the flag of convenience is that, while it allows the running of one's

  1495
  own shipping line extremely cheaply, it also allows the use of ships which are not in a seaworthy and navigable state. They are the ships that ought to be scrapped. I hope that at the time that he is considering the scrap and build system—I am not being criticial—the Minister will consider that fact. If we could get agreement on flags of convenience and on improved standards of shipping, it would affect the numbers of orders for new ships.
  In July the hon. Gentleman mentioned the question of credits for conversion and he has touched on the issue today. It is dealt with in clause 2 of the Bill. My right hon. Friend was pledged to introduce such credits anyway and I am very glad that the Government have introduced them. Related to the question of credit is the question of improved credit terms. Here I find myself very much at variance with the hon. Gentleman. I quote what he said in July and what, in other words, he said today:
  "Substantial over-capacity exists worldwide".—[Official Report. 23 July 1979; Vol. 971, c. 41.]
  That is true, but the capacity of the United Kingdom has remained the same over those years. For many years it has neither declined nor increased. There was a great expansion in shipbuilding, largely in Japan and Korea, in the early 1970s. Such expansion did not take place here, though we did get an increase of orders in 1975. What happened in the world generally was that in 1974–75 the bottom dropped out of the shipbuilding market.
  There are those who say—and it is a logical and understandable view—that those who made that unnecessary expansion should be the first to contract. It is the good trade union principle of "last in, first out." However, I do not quite see how it could be achieved. I fear that it is impossible. Nevertheless, some things can be done. I was interested in the shrewd and apposite speech made by Mr. John Parker to the Royal Institution of Naval Architects on 17 October. He said:
  "The importance of providing improved credit, particularly to United Kingdom owners, in line with the terms provided by other EEC countries to their domestic ship owners, ordering at home, cannot be underestimated."
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  I agree with that. We give credit terms to United Kingdom owners of up to 70 per cent. of new vessels at an interest rate of 7½ per cent. When we compare that with Belgium, as Mr. Parker did, we find that their credit terms are 90 per cent. over 15 years with 1 per cent. interest on the first 80 per cent. and 6 per cent. on the balance.
  If the hon. Gentleman wants to congratulate himself on his dealings with Europe, perhaps he will take those figures into consideration. As a result of my experience in Brussels, I suggest that he goes unilateral on this one. He should increase the amount of credit and lower the interest terms. In that way we will begin to get something of a package. I do not believe that what the hon. Gentleman achieved on the intervention fund was worth very much. Coupled with this, however, one would begin to see some changes and it is ludicrous to pretend that we are living in a market forces world. I do not believe that that is desirable anyway, but it is not true. We are living in a world in which all shipbuilding nations subsidise the building of ships. For goodness sake, let us do it efficiently.
  The Minister made a point in his July statement to which he did not refer today. I am surprised that he did not, unless there is nothing to report. I said at the start of this debate, and the Minister agreed with me, that this was a kind of report-back to the House on that July statement. What he mentioned then, and has not discussed at all today, is the question of public sector orders. We still have the fourth largest merchant marine line in the world. That is something worth preserving. So why does not the Minister mention what is happening to public sector orders? On that subject he said, speaking of the Government,
  "they will advance public sector orders where practicable."—[Official Report, 23 July 1979; Vol. 971, c. 42.]
  Did such orders not turn out to be practicable? What happened?
  My hon. Friend the Member for Birkenhead (Mr. Field) asked whether the intervention fund would be used in the case of public sector orders. The Minister replied, fairly and honestly, that the fund would be used where appropriate and practicable. At 25 per cent. it must be appropriate in every single case

  1497
  now. There is not much dispute about that. I put a point to the hon. Gentleman which has some bearing on today's earlier statement and on the reply that he made a moment ago. Where these public sector orders, which he promised would be advanced and of which he gave no details today, take place, the intervention fund will apply. What about the cash limits of the industry concerned? Are they to be cut so that the public sector orders will not be made? The House would like to know the answer.
  It is no good the Minister saying that everything was cut and dried after his July statement. Is it so cut and dried? The House was promised in July that public sector orders would be advanced. I hope that we are not to be told that cash limits are to be cut. This is an important matter not only in terms of achieving orders for shipbuilding. It is important that those orders go to British shipyards. There is a curiously proliferating and repercussive effect involved.
  On 27 October 1979 a report in the Financial Times stated:
  "The British Rail Board has turned down a request for a new £15 million to £20 million passenger ferry from Sealink UK. The order would probably have gone to Harland and Wolff of Belfast."
  That is one reason why that article is not particularly appropriate to our debate, but I use it as an illustration. The article continues:
  "But the BR Board has turned down a request for a new ferry because of current fixed investment costings for British Rail."
  If that is so, the Minister of State and the Secretary of State should exert a little pressure on the Minister of Transport because Sealink clearly regards this as important. It would provide work and help trade, but for some reason British Rail could not comply with the request. Even if the story is not true—and I do not know whether it matters that it is—it serves as an illustration of how one industry can help another and how, between them, they can help the country.
  I apologise once again for referring to the correspondence between the Minister of State and my hon. Friend the Member for Birkenhead. I shall not steal all his points. The correspondence also deals with overseas aid. In the past we have supplied ships to countries which needed
  1498
  them and to countries in the Third world. The Minister of State appeared to be taking a passive line. I expected that this new dynamic Minister of State, in this new dynamic Department, would be falling over himself collecting orders and putting British shipbuilding back on its feet. Not a bit of it.
  In July, the hon. Gentleman said he was going to act. I hope that he had a good vacation. Evidently it was quiet. I know that he visited a few yards. He might have been better employed visiting a few other countries or persuading the Minister for Overseas Development to do that for him. It is not enough for us to say to a country that if it makes a proposal for overseas aid related to ships we shall consider it favourably. That is not the way to get orders. One must go out and get them. It is important that we do that. Merely sunning oneself in the shipyards of Britain in the summer is not the way to get orders.
  When they were in opposition, Tory Members made a song and dance about the Polish order. They said that it was a terrible decision. They laughed, jeered and insulted. However, the first report of the Public Accounts Committee vindicates the Polish order. Perhaps that is because the election is over and the Government see no electional advantage in that issue. To those who make British ships that issue was important. It kept the industry going at a difficult time.
  I wish to make some positive and constructive suggestions about public sector orders. I shall resist with difficulty trying to give advice to the Minister of Agriculture, Fisheries and Food about what he should tell the Brussels Eight about the common fisheries policy. Whether or not he surrenders to the common fisheries policy there will be a reconstruction of the British fisheries fleet. There is no doubt about that. Our experience has shown that the possibilities exist.
  One of the actions of the Labour Government was to forbid our North Sea waters to Soviet fishing vessels. However, we said that the Russians could bring their ships into our waters and buy the fish caught by our fishermen. That is a useful trade. There is no reason why we should not send our fishing vessels as factory or storage ships to the waters off Iceland and Canada to buy the cod and herring

  1499
  which has been caught by the fishermen of other countries.
  We need a new type of fishing fleet which will meet the needs of the middle water rather than the deep water fleet. We need a fleet which is up to date in the sense that it can be used to buy fish and bring it back. These requirements should be considered now.
  My positive suggestion is that the Minister should ask the Minister of Agriculture to call a meeting of the fisheries' owners, the unions and the processors to see whether a reconstruction can be set in motion immediately. A reconstruction will occur whether or not the Minister sells out.
  Mr. Adam Butler: I am interested in what the right hon. Gentleman says because of the experience that he gained in the important post that he held in the last Administration. If he had been with me yesterday at the Scott Lithgow Kingston yard, standing in the rain, he would have heard me say that I thought that there would be an increased demand for fisheries protection vessels. I am glad to have that view confirmed.
  Mr. Silkin: I am glad that the Minister intervened, but he has stolen my next topic—fisheries protection. I do not expect undertakings today, but I hope that the Minister of State will take what I have said on board and see what can be done. It is important.
  Other actions can be taken in the public sector. I refer to offshore oil-related work. I am no technician in this regard. My hon. Friend the Member for White-haven (Dr. Cunningham) probably knows more about this subject than I shall ever know. There is room for advancement of orders in that sphere.
  There is a demand for British marine engines. There are essential to maintain our capability in slow-speed diesel engines. The industry should be encouraged with every effort that the Government can make. There is a symbiotic relationship between one industry and another. One cannot compartmentalise them and say that because shipbuilding is in the doldrums it should be contracted further, hoping that in two years' time the manifesto difficulties will have been overcome and it can be expanded again. The tragedy is that, if an industry is
  1500
  contracted, it is not easy to expand it again. It is much better for the industry to be kept going. One industry assists another. If both industries help one another, the natural result is that the country benefits.
  It does not matter whether the worst of the recession will be over by 1982. It does not matter whether the Minister is optimistic or, as I think is the case, pessimistic, and that the Germans are optimistic. This is not the time to be cutting. Two years, or 18 months, is far too short a period. We are dealing with a traditional and vital British industry. One journalist, commenting on my remarks in July, wrote that it was strange that we should be boasting about traditional industries. I do not apologise. That traditional industry, like our own long and splendid Labour tradition, has a traditional work force. It contains people who know and love their job.
  It is all very well for the Minister to talk about low productivity, as though it is all the fault of the work force. If we examine what the work force has done, it can be seen that it has accepted a drastic cut in manpower with greater good will than one could expect. The number of separate wage negotiations has been cut. But the Minister made no reference to that. The workers worked over their holidays. To assume that 12,300 families will accept, with great joy, being told that they are worthless is an approach without any degree of imagination or compassion.
  We are seeing an individually disastrous policy. I believe that, nationally, it is counter-reproductive. It does not arise from anything that has occurred in British shipyards or British Shipbuilders. It arises from the policy of the Government. The Tory manifesto said:
  "Too much emphasis has been placed on attempts to preserve existing jobs. We need to concentrate more on the creation of conditions in which new, more modern, more secure, better paid jobs come into existence. This is the best way of helping the unemployed and those threatened with the loss of their jobs in the future."
  What on earth does one do with shipyard workers? Where do they go? There is nowhere to go. Nearly half of the workers are over 45. Where do they go? One in five is over 55. Where do they go? They are concentrated in regions where male unemployment is, in

  1501
  some cases, double the average figure. In Tyne and Wear, there is 10·5 unemployment. It is the same in Strathclyde. In the shipyard areas, the unemployment rate is higher. Is this really such a sensible policy, even viewed with the balance sheet mentality of Conservative Members?
  The cost of keeping a man out of employment in the shipyards is £5,000 a year more than keeping him in employment. We have not seen much sign of great new job creation. In the North-East, the cost of creating alternative jobs is £13,000 per worker. The truth is that the usual, smooth Tory arguments which are always put forward in discussions on industry do not apply. There is no competition from imported materials. There are no new models, no research and development, and not even an enormous capital structure to worry about. I do not believe, after the slimming that has already taken place, that there is over-manning to maintain capacity.
  I have remarked that this is a traditional British industry and that we should be proud of that fact. The men who work in the industry are proud. They know perfectly well, as the Government do not know, that a recovery will come. It may not come by 1982. But it will come. Those men are proud to work in the British shipbuilding industry. They are proud to provide ships for what is one of the great merchant shipping fleets of the world. This is no time for the Government to be considering the destruction by half-hearted measures of such an important industry. The Minister has done half a U-turn, although he dare not admit it to the hon. Member for Lancaster and others. I say to him, "Complete the job, and do a full U-turn".
  5.56 p.m.
  Mr. Michael Grylls: I am glad to speak after the Opposition spokesman for industry. In his relatively new role, he allowed his excitement to run away with him and hyperbole to feature throughout his speech. I enjoy hyperbole, but it bore no relation to practically anything that my hon. Friend the Minister had said.
  I want to mention redundancy. The right hon. Gentleman accused my hon. Friend, with whom I have had the odd
  1502
  disagreement, of a lack of compassion. His speech, in fact, was full of compassion and concern about redundancies and inevitable retractions in the shipbuilding yards. The right hon. Gentleman tended to destroy his speech by making those comments.
  Mr. John Silkin: I promise not to intervene again. I was not referring to a lack of compassion. I spoke of lack of imagination or compassion. The Minister is clearly a compassionate man, as I think I said. The inference is, therefore, that he has not much imagination.
  Mr. Grylls: I can only say that the right hon. Gentleman's speech conveyed the impression that I have described. Both sides of the House would agree that with one or two exceptions, our shipyards, geographically, are situated in very difficult parts of the country, where unemployment is high. Everyone would agree that the question does not merely consist of handing the work force its redundancy pay to leave shipbuilding and get another job tomorrow, but the House has agreed that when shipbuilding workers and those in the steel industry are made redundant they are given substantial redundancy payments.
  That happened under the last Labour Government. It was not opposed by the then Conservative Opposition. In the shipbuilding and steel industries, these payments are added on top of the national scheme. The effect of the workers losing their jobs is cushioned for a time to enable them to find new jobs. I hope that some will start up a small business, such as a shop or an engineering business.
  I want to refer to what I call the new sickness. I am not referring to appendicitis or meningitis, or any similar disease. I am speaking of a new disease called nationalised industry-itis. It seems to have become prevalent in Britain in recent years. In considering this Bill, which concerns the newest of the nationalised industries, it might be worth while to see how this disease is caught. First, one finds the industry and then threatens to nationalise it, as happened with the aircraft and shipbuilding industry.
  While the House argues in its debates on nationalisation the industry inevitably runs down. It is then nationalised. Then, inevitably, losses build up and the borrowing requirement increases, time after

  1503
  time. People claim, perhaps rightly, that we must have such-and-such an industry—be it steel or shipbuilding—and maintain that, regardless of losses or the problems involved, the taxpayer must foot the Bill. Borrowing limits increase and redundancies occur.
  These are some of the symptoms of nationalised industry-itis. They are followed by an increase in the bureaucracy of the industry. We have seen it with the British Steel Corporation and, recently, with British Shipbuilders. There is a plurality of offices—new offices for this, and directors for that. There are offices in different parts of London, Newcastle and Hong Kong. As the losses pile up, the House of Commons becomes more confused. Perhaps the House is thinly attended tonight because hon. Members accept that this disease is so acute that they can do nothing about it and cannot contribute to its cure.
  I can give the example of one of the corporation's subsidiaries. Last year Robb Caledon Shipbuilders Limited had a loss of £11·7 million on a turnover of £12·4 million. What sort of Fred Karno's navy is that?
  Mr. Ernie Ross: Does the hon. Gentleman accept that Robb Caledon can build ships to the very limit of existing technology—a fact that was accepted by the owners of the New Zealand ship that has just been completed? In a public statement they said that the technology involved in that ship clearly demonstrated the skills that existed within the yard. Does the hon. Gentleman also accept that the yard has had no investment whatsoever, yet it can still produce ships to a level of technology that so impressed the owners that they suggested that they would place further orders in that yard?
  Mr. Grylls: No doubt that is true, but during the four years of debate on the question whether nationalisation would go ahead no owner would invest in Robb Caledon. However, it is not true to say that Robb Caledon has had no investment. Investment was made in the past, but with the threat of nationalisation for so many years the yard was inevitably starved, because of the doubt and uncertainty. If the hon. Member had been in the House at that time he would have seen that that is what happened. That, in
  1504
  general terms, is part of the disease that takes hold during the build-up towards nationalisation.
  Mr. Gordon Wilson: Will the hon. Member accept that the Robb Caledon yard did not make the loss that he has claimed? If he looks at the accounts of British Shipbuilders he will see that a large proportion of the loss made by the Robb Caledon group, which encompasses three different commercial enterprises, was made in connection with an enterprise at Burntisland, which closed down with substantial losses.
  Mr. Grylls: I gave those figures as an example. I certainly wish Robb Caledon no ill—I wish it great success. I hope that it will turn that very bad 1978 result into a much better result for 1979–80. However, that is the sort of thing that can happen when industries are paralysed as a result of threats of nationalisation.
  My hon. Friend the Minister of State is now the doctor in charge of seeking to cure the disease. If I may mix metaphors, he is confronted with a bed of nails. I congratulate him on getting to grips with the disease. It may have been a little ungracious of the right hon. Member for Deptford (Mr. Silkin) to suggest that my hon. Friend spent the summer sunning himself, because I know that my hon. Friend spent most of his time visiting shipyards and getting to grips with the problems. He faces great difficulty, and his review this afternoon was helpful and right.
  I do not think, however, that the House of Commons is in a position to tell any industry how it should run its affairs. My hon. Friend made that clear in his dealings with British shipbuilders. He does not want to breathe down the corporation's neck. What, then, are we to do? Are we to discuss the intricacies of the position on world orders for shipbuilding, what the yards should do, and whether Robb Caledon, for example, should or could diversify into different businesses? That is something in which I am most interested. However, whether or not it happens, I do not believe that it is our role to tell the company what to do.
  Our role in this debate, which is concerned with taxpayers' money, should be to ask the Minister why the immense

  1505
  sums specified in the Bill are now necessary. Of course, we accept that there are losses and that they have to be met during the difficult period when we must get British Shipbuilders on to its feet. But the House should be fully aware that it is being asked to sign a cheque of up to £600 million. The Bill is an expensive piece of paper. It was with that in mind that I asked my hon. Friend the Minister of State for the current total borrowing of the corporation. It is important to try to determine the position of British Shipbuilders today and why it needs this large sum of money.
  To that end, perhaps I may give a few figures. At 31 March, in the last accounts, drawings by British Shipbuilders on the National Loans Fund totalled £55 million. Its private sector loans at that time brought the total borrowing level to £101 million. In a recent parliamentary answer I was told by my hon. Friend that the National Loans Fund money had risen from £55 million to £135 million since the end of March and that it was to be converted into public dividend capital.
  The House should be aware, therefore, that under the change British Shipbuilders, while it paid interest on the National Loans Fund money—I calculate at about £20 million a year—will not pay interest on the public dividend capital until it can afford to do so. That is the strange way in which nationalised industries are operated, and it is an aspect that many of us on the Conservative Benches do not like. Therefore, the corporation, in not paying the interest, will be enjoying a subsidy, paid by the taxpayers, of about £20 million a year.
  If the corporation's borrowing requirement is, according to my hon. Friend's calculation, £185 million, is it necessary, bearing in mind the taxpayers' interest in the matter, to increase that amount to £600 million, as proposed in the Bill? My hon. Friend the Minister of State will have no difficulty in getting the Bill through the House. No one will go to the stake about it on the Conservative side, and the Opposition will approve it. We support my hon. Friend in his very difficult job, but we are entitled to ask whether it is necessary to provide for such an enormous increase in one jump.
  1506
  Perhaps more important, is that a good discipline for British Shipbuilders? I hope that my hon. Friend will have second thoughts on that score.
  We are currently restricting and restraining public expenditure—a course of action that I support 100 per cent. However, it seems a little unnecessary to provide for such a huge cushion for British Shipbuilders to have at its disposal while it is trying to get on its feet. If the borrowing limit were to be raised by, say, £300 million, British Shipbuilders would be bumping into the present limit of £300 million by January 1980. Why not raise the borrowing limit by £400 million? We know that the loss in the current year will be around £100 million. That would provide the corporation with a reasonable ceiling. If necessary, I would prefer to have a series of Bills such as this. The Minister could then say that he had raised the limit by £400 million and then say, in June 1980, he would have to tell the House that another £100 million was needed. If he makes a compelling case—and I think that he has made a compelling case—for giving British Shipbuilders the benefit of the doubt and as much support as possible, I do not think that the House will be ungenerous. It will understand that a little more leeway is needed to keep the corporation on its feet. But I believe that to give such a huge blank cheque of taxpayers' money in one fell swoop is a mistake.
  Mr. Adam Butler: I am delighted that my hon. Friend has put his finger on the central point of the debate—taxpayers' money. As for his phrase "a blank cheque", I remind the House that of course it is not a blank cheque. British Shipbuilders is now, and will continue to remain, subject to loss limits and cash limits laid down by Ministers.
  Mr. Grylls: I understand that, but this is the last that hon. Members will see of the matter. Once we have increased the borrowing power to £600 million, our control goes out of the window. I am merely suggesting to the Minister that he might find it more convenient to have the support of the House in a more modest raising of the borrowing power. I ask him to give careful thought to the matter. I do not expect him to give an answer now, but I ask him to

  1507
  think again about the total amounts during the passage of the Bill through Parliament.
  We have talked about the intervention fund of £120 million over two years. I hope that the Minister or another member of the Government can give us some idea of the way in which this sum will be tapered in the future. This amount covers two years, but what will happen in 198182? Is it expected that the sum of £60 million per year will be halved from 1981–82 onwards? In an exchange with the Minister on this subject I pointed out that it must be in Britain's interest to secure a general decrease in these subsidies—whatever their form—throughout the world. It will be difficult. Within the EEC context, my hon. Friend has tried hard to do that. But it is important that we should go outside the EEC and the OECD forum. We should try to get the Third world countries, Japan, and Brazil, to reduce their subsidies. That is much more likely to be a constructive way of dealing with the matter than the way suggested by the Shadow Spokesman—bidding up and paying more and more. That would be a road to ruin.
  The House should be concerned with the losses of the industry, because, again, that is part of the support that the taxpayer has to give. During its first year, British Shipbuilders lost £108 million. In its second year, to March 1979, it lost £56 million. During the current year it is expected to lose £100 million. I am sure that the House wants to know what steps are to be taken to reduce this loss. Are we to be talking here in five years' time of another £100 million for British Shipbuilders?
  When my right hon. Friend the Secretary of State for Industry came into office he quite rightly told the British Steel Corporation that it had two years in which to get on its feet. It is a very good thing in life to have a target. It concentrates the mind. People know what they have to do. It may be that support has to be given, but I believe that a much tougher target should be put before British Shipbuilders, so that it will come to profitability in a shorter time than has been suggested.
  Through Parliament we have provided for a fair cushion for people who are made redundant. There is evidence that
  1508
  when the Haverton Hill yard, on Teesside, was closed down last April and voluntary redundancies were asked for, there was immediately a queue of people wanting to accept redundancies on the terms offered. Clearly, the people on Teesside did not think that it was like being lined up by the Ayatollah and shot at dawn. The prospect of getting a large sum of money was attractive to them. I believe that we should be generous in these matters.
  A plan has been put to the unions by British Shipbuilders and the unions have broadly accepted it. After a go-slow during the summer British Shipbuilders said that redundancies would not be enforced and would take place only by negotiation. I do not quibble with that. I suggest to the Minister, however, that the approach of British Shipbuilders seems to be somewhat casual, wishy-washy and nebulous. If this were a private sector company asking a bank for a loan of £600 million, it would be very unlikely to get it. Banks will help people when they are in difficulties if a convincing case is presented and people are prepared to economise and be sensible. I appreciate the Minister's difficulty, but I am not convinced that the plan put forward by British Shipbuilders up to now is sufficiently firm. I believe that this view is shared by many people.
  I suppose that the expenses of the British Shipbuilders' headquarters represent only a relatively small amount of the total expenditure, but it is very important to set a good example. If British Shipbuilders is in a very bad position, with a bad market, and so on, and has to tell people that they are to be made redundant, is it not fair to expect that those in the headquarters should also economise, try to manage with fewer offices and staff, and perhaps have fewer Jaguars lined up outside the building in Newcastle? It would be good example to set to the industry as a whole.
  Why does British Shipbuilders need such a big bureaucratic layer on top of the yards? We have some marvellous yards. I refer again to Robb Caledon, which has had such a long and distinguished history. Never in the past did it require a bureaucratic layer on top of it in Newcastle, London or Hong Kong. It managed with its offices in Dundee. Other companies also had their offices where their shipyards were. The Minister might

  1509
  well look at that aspect and ask for an example to be set.
  Mr. Don Dixon: The hon. Member has spoken of the intervention fund and of his concern that the basic industries of this country should be protected. We seem to give a blank cheque in support of the common agricultural policy but will he agree that the CAP should be given the same sort of period in which to put its house in order as he is suggesting should be given to the shipbuilding industry?
  Mr. Grylls: The hon. Gentleman and I are agreed on that. You would not allow me to speak on agriculture in a shipbuilding debate, Mr. Deputy Speaker, and I do not know much about agriculture, but I know that there are things wrong with the CAP and that the Government are actively trying to get them put right. My right hon. Friends the Prime Minister and the Minister of Agriculture have made robust statements, and I agree that we should take a firm line on the CAP.
  There is concern among the remaining private ship repairing companies that the nationalised ship repairing yards are undercutting the private sector by up to 30 per cent. That is damaging to an important part of our industry and it will do no good for the nationalised industry, either. Ship repairing in British Shipbuilders accounts for 6 per cent, of the work force, but for 36 per cent, of the total loss. There is obviously something wrong there. I hope that the Government will be firm in ensuring that there is no excessive price cutting by the nationalised yards.
  The Minister of State was involved in a fracas over denationalisation. Here I declare a personal interest, but I do not speak from a personal point of view, because a national interest is involved. It is important that the Government should declare where they stand on denationalisation. Our position was made clear in our manifesto.
  Presumably we cannot offer yards back to the original owners until we have paid them for the yards. The yards have been nationalised for two and a half years and only the most minuscule payments have been made to the former owners. That is
  1510
  industrial highway robbery. There is nowhere in the world, except perhaps in Communist countries, where one can take an asset away from someone, hold it for two and a half years and say that it will be paid for when a decision has been made about how much the asset was worth.
  When he was the Conservative spokesman on industry my right hon. Friend the Member for Bridgwater (Mr. King) said, about the parent companies:
  "What they must have in order to make good their loss, is what I have just described; namely, the total cost of the physical assets, the stocks and so on, plus the goodwill element, in other words, the asset value of the Company to be nationalised."
  Lord Carr said, in another place:
  "There is no other way in which the parent company can replace that which is being lost, and to replace what is being lost is, according to Lord Melchett, the purpose of the Bill."—[Official Report, House of Lords, 25 October 1976; Vol. 376, c. 204.]
  That has not happened. Payments have been limited.
  There are strong arguments, in the national interest, for warship yards to be returned to their former owners. As far as I know, those owners want them back. In an interview in British Shipbuilding News, my hon. Friend the Minister of State said, in response to a trade unionist who asked about denationalisation that he felt that the arguments were very much in favour of denationalising the yards and that it was in the interests of the workers concerned that denationalisation should take place.
  This is not a doctrinaire question; is an industrial question. The warship yards are being neglected. If a yard is one of only two or three profitable yards in an organisation that is generally unprofitable it will be neglected, because the investment will go not to profitable yards but to keep the whole organisation afloat. The British Shipbuilders' report for last year shows that the amount of investment in new plant and technology was small, because the organisation could not afford any more.
  If the yards were returned to their former owners they would not be neglected. They would have the continuing investment that they had before. It is a reasonable rule of industrial policy

  1511
  that one should invest in success, and that is not happening with the warship yards.
  Since nationalisation, the warship yards have had no orders of consequence from foreign navies. They get orders from the Royal Navy, which is fine, but it is important that they should also get foreign orders.
  I hope that the Government will bear in mind that there is an element of national interest here. Of course there is a business interest for the previous owners, but that is perfectly reasonable. They had an asset and they would like it returned to them. They have nothing for which to apologise.
  My right hon. Friend the Secretary of State has said that the Government do not intend to carry out any denationalisation at present. For the reasons that I have given, we must not leave it too late, because the yards may be neglected so much that the former owners may not want them back. The yards will then remain nationalised and will become progressively weaker until we cease to be a world warship builder.
  I accept that the shipbuilding industry needs to be supported in the short term, but I believe that we need to set a time scale for a return to profitability. I am not convinced that the Government need to ask for such an enormous sum as £600 million. Despite what my hon. Friend the Minister of State said, the House and the public will regard that sum as a blank cheque.
  I hope that the Government will look at that aspect again and will tell British Shipbuilders that sharper discipline, tighter control and more restraint are likely to bring the organisation back into profitability much quicker, which is presumably what we all want to see.
  6.28 p.m.
  Dr. David Clark: It will come as no surprise to the House when I say that I am able to agree with hardly a single word of the speech of the hon. Member for Surrey, North-West (Mr. Grylls). It is hard to imagine a greater gulf in politics than exists between the point of view of the hon. Gentleman and that of my hon. Friends.
  The hon. Gentleman sees the problems in shipbuilding—as he sees so many other problems—in relation to the balance
  1512
  sheet. Throughout his speech he referred to pounds and pence, and profit and loss. My hon. Friends and I accept that those considerations are important, but we believe that there are many more important aspects. I know that my colleagues from other shipbuilding constituencies think of their constituents—men, women and families who have worked in the yards, often for generations. We, as a nation, owe a great deal to the shipbuilders of those shipbuilding areas.
  I want to take up a few of the points that were raised by the hon. Member for Surrey, North-West, because at one stage I thought that he was perpetrating a myth. I believe that the phrase he used—I apologise if I am slightly wrong—was "the generous redundancy payments which were provided for redundant shipyard workers." I want to nail that lie.
  I served on the Committee, as did the hon. Member for Surrey, North-West, and he will recall that there was much press publicity about redundant shipyard workers receiving £10,000. When we pressed the Government on this matter we discovered that only one worker had ever achieved that sort of sum. That needs to be spelt out, because the popular press is too glib in its use of the cheap adjunct. I disagree fundamentally with the hon. Member about that, and I urge the Minister not to follow his advice.
  With respect, I believe that the viewpoint that the hon. Member for Surrey, North-West represents is the reason why this country suffers from the present industrial troubles. From my own experience on what I might call the worker side, management of the ilk of the hon. Member merely exacerbated the problems.
  We welcome the Bill. It is basically the type of Bill that we would have had to bring forward had the results been different last May. We welcome the increased borrowing powers, and especially the second clause, which puts right an annually over credit for the ship-repairing industry.
  In discussing the Bill we must also look at the Government's overall shipbuilding strategy. If I appear to the Minister to be carping and aggressive, I do not wish to be so. But he must understand that we who represent areas of high unemployment are concerned. I do not know

  1513
  whether the Minister understands that male unemployment in my constituency, as of this month, is 16·2 per cent. We rely heavily on shipbuilding and ship repairing. Therefore, if we seem extremely critical of the Government's actions it is because we are concerned. We shall welcome the Minister's initiatives when they are right, but we shall watch him very closely. If at times we appear to be passive and quiet in our approach, the Minister should not underestimate our resolve and determination on this point.
  When I look at the Government's strategy I find that there are certain matters that greatly concern me. The Minister made great play of the fact that he had obtained £120 million. He presented it as a triumph. There are those of us who hope that it is a triumph but who also have grave doubts. We are very conscious that the Labour Government put in a bid for £85 million. What did we get? In 1979–80, with inflation of, say, 17–20 per cent, we will get £65 million, and for the following year, when inflation will be greater because of the cumulative effect, we will get not £65 million but £55 million. Clearly, the level of finance available from the intervention fund in two years' time, when the upturn may come, will be much less than it was in the past year.
  However, that is not the key point of the Government's strategy. The key point is the maximum subsidy of 25 per cent. I can see the Minister's argument, and the logic of trying to obtain mutual agreement to bring down the maximum subsidy level. I would go along with it if it were agreed with the GATT or the OECD, and included Japan, Korea and Finland, but it does not. All that it does is tie our hands and, perhaps—I use the word "perhaps" advisedly—the hands of some of our Common Market competitors.
  We have not taken up all the leeway that we could have done within the EEC rules to help the British shipbuilding industry. My right hon. Friend the Member for Deptford (Mr. Silkin) mentioned the speech of John Parker on 17 October, in which Mr. Parker published a table of the level of aid given to the shipbuilding industry. The aid given by our country is less in every way than in any other
  1514
  country within the EEC. That is some thing that we must look at very closely.
  I understand that the maximum subsidy is not 25 per cent., but 23 per cent., be cause of the 2 per cent, shipbuilders' be lief that has traditionally been allowed—certainly since 1972. Is the Minister aware that there is extreme concern among the shipbuilding unions about the marginal effect of this? We are talking about a marginal effect. One ship a year, as the Minister knows, means earnings for a man for two or three years. I fear that the Minister's triumph will not be a triumph in fact. It is an added difficulty to the Herculean efforts of British Shipbuilders in trying to attract orders. I hope that I am wrong.
  The Minister referred to the EEC scrap-and-build programme. I am very happy that that has been agreed. The unions in the shipbuilding industries throughout Europe have pressed for this, and welcome it. Will the Minister, who says that he is in favour of this in principle, answer two categoric questions? He may not be in a position to answer them immediately, but perhaps he will do so at some time in the future.
  Will he give me a categoric assurance that he is not only in favour of the scrap-and-build programme in principle but is prepared to put his money where his mouth is? Will he give an absolute commitment that the Government will put up some money if it is agreed within the Community to have a European scrap-and-build programme? I hope the Minister will be able to take that upon himself. Will he also seek the opportunity, either at the next meeting of the Council of Ministers later this month or at the following meeting, to try to ensure that the Commission's proposals for scrap-and-build are on the agenda for discussion by the various Ministers? If we are to sustain and retain the capabilities of the industry over the next few years—which we all agree are criticial—it is absolutely vital that we get that scrap-and-build programme off the stocks as soon as possible.
  As the Minister has implied, all our shipbuilding industrial strategy is interlinked with the EEC. On 17 October the EEC announced a special facility of non-quota regional finance for shipbuilding areas covered by the right hon.

  1515
  Gentleman's own Department. That announcement states that
  "£11 million would go to the improvement of the physical environment, encouragement of small and medium-sized enterprises and industrial innovation in those areas affected particularly by the difficulties of the shipbuilding industry."
  That is very important for areas such as South Tyneside, in my constituency.
  My authority is very poor. We are the smallest metropolitan district anywhere in England. As the Minister knows, we have a very high level of unemployment and a very low rateable value. We are often not able to take advantage of Government schemes because of the additionality factor. As my hon. Friend the Member for Jarrow (Mr. Dixon) knows—he served for many years on the council—we simply cannot meet, pound for pound, the cost of our rate contributions. Will the Minister look into this matter and give us an assurance that the additionality factor will not apply?
  I give the Minister just a small example. Early this summer I had a rather tragic experience. I was called to a meeting of parents of young people in my constituency, at a firm called Peter Johnson, which was connected with shipbuilding, outfitting, plumbing, copperwork and that sort of thing. A number of young people had been offered formal apprenticeships with this firm last May. In August the firm wrote to these 12 youngsters, most of whom were very bright and had turned down other apprenticeships, saying "We are sorry. We are not able to take you on." The firm terminated the apprenticeships before they started, only a week before they were due to attend a technical college. I am sure that all hon. Members would deplore that. Worse was to come three weeks later, when the firm announced that it would be closing.
  Not only must we try to find jobs for about 300 people; we have a number of potential apprentices for whom we must try to find alternative employment. With commendable speed and spirit, the local council is doing what it can to try to acquire the land upon which that firm was based. It already has a taker for part of the building. That is the sort of scheme, of which I hope the Minister will approve, which would benefit from EEC financial aid. We would very much welcome the Minister's help in that area.
  1516
  I venture along two more avenues. My right hon. Friend the Member for Deptford has made the point about public service orders. The Minister mentioned this matter in July. I ask him specifically how many orders have been advanced. This matter is absolutely crucial. The Minister has the spirit. Let us see how good the Government have been in advancing the orders.
  Secondly, I draw the Minister's attention to the position in the nationalised industries. In the summer I was again disturbed to read that a nationalised industry, British Steel, had chartered a ship that had been built in Scandinavia and had been bought by Ladbroke, the betting firm. When we have a national steel corporation, the National Coal Board and a nationalised shipbuilding industry, there ought to be much greater co-ordination between these bodies. Will the Minister take that matter on board to see whether there is any way of improving the relationships and the conduct of the nationalised industries at top level in this sort of sphere?
  Finally, I touch on ship repairing. The Minister has been urged to de-nationalise and to sell back to private enterprise. I remind him that the repair yards in my constituency were under private enterprise. They went bust under private enterprise, and they were nationalised by his Conservative Government in 1972—if my memory serves me aright—because they had failed under private enterprise. Therefore, Labour put them under public enterprise. The men appreciated that and have had a very good agreement with the employers, to which they have kept. There has been a no-strike agreement, which has been adhered to. I think that everyone will pay the unions credit on that point.
  I raise another point in relation to that matter. Has the Minister any thoughts about the building of modules? This might be a forward-looking approach. For example, I gather that the Redhead yard, in my constituency, was to be used for this purpose, but it seems to have been on a care and maintenance basis for the past two or three years. We would welcome some information on that point.
  In conclusion, we welcome the Bill. It is a step forward. We are suspicious of

  1517
  the Government. The Minister would be surprised were we not suspicious. At times the Government have given notice of good intent, but we want a bit more than that. I return to the point that I made about the scrap-and-build programme. We want more than just a verbal assurance that the Government are in favour of it in principle. We want a categorical statement that they will put some money there.
  Shipbuilding is not like an exhausted mine or a worked-out quarry. We shall need the yards again at some time in the future. This country will always need ships. I urge the Minister to stand up for the British shipyards in his dealings with the Community in the same way as the French stand up for their traditional industry of agriculture.
  6.45 p.m.
  Mr. Neville Trotter: I too, welcome the debate today on the broader subject of shipbuilding in general and not just on the terms of the rather short Bill before us.
  I pay tribute to the attention given to this subject by my hon. Friend the Minister of State, the Member for Bosworth (Mr. Butler), since he took over office. He is on record as saying in an interview that he has spent half of his total time on this industry. That is an indication not only of his dedication to sorting out its problems but the gravity of the problems that he inherited.
  One hardly needs to rehearse before this audience the problems facing our industry. However, it is right that we should give aid to an industry that is in trouble throughout the world. The three factors which now decide the future of the shipbuilding industry are world demand, the efficiency of the industry and the amount of Government aid. The third factor is a new one, which we have seen only in recent years. The other two factors, of course, have existed from the start of the building of ships.
  All over the world we see ridiculous prices being quoted by our competitors. It is astonishing that prices of ships in general are no higher now than they were in 1974. Indeed, there are cases of prices having been quoted abroad that are actually less than those for similar ships quoted five years ago.
  1518
  I was interested in the comments of my hon. Friend the Member for Surrey, North-West (Mr. Grylls) about the amount of aid to the industry. It is certainly massive. I believe that it is necessary. However, as an accountant, I should like to see the cash flow forecast for British Shipbuilders published, so that we would know just exactly what it is and where all the cash will be going. As an accountant, I believe that there are indications that there will be considerable losses on top of the intervention fund payments. However, we must face the situation that all around the world there is massive Government aid to the industry.
  What worries me most are the long-term problems facing this industry. Drewrys, the well-known forecasters and commentators on the shipbuilding and shipping scene, recently produced some very worrying figures. They show that in 1974 West Europe produced 40 per cent, of the world's output, but by 1988 they see West Europe producing only 22 per cent. They see Japan holding its own with about 40 per cent., and they see the Third world coming up from the 3 per cent, that it produced in 1974 to 24 per cent, in 1988.
  That is a serious prospect not only for our industry but for all Western European shipbuilding industries. We shall have a very hard fight indeed in Western Europe to compete with the Japanese, and with the emerging countries in the Third world, which do not have our safety regulations, our health regulations, our holidays or our standard of living and the wages that go with it.
  This is a serious problem which will not go away when the demand for ships returns. I believe that it is a problem that must be met by Europe as a whole. If that is not as practical as one would wish, it must be met at least by the EEC countries acting together. For part of the time that he is giving to the affairs of this industry, I hope that the Minister will be working very closely with the other countries of Western Europe on that long-term problem, because it is not a problem that can be solved by Britain on its own. It requires co-operation with the similarly placed industries in Western Europe.
  The main message to British Shipbuilders from this House must be about

  1519
  the need to improve productivity. Productivity is a sore subject. British Shipbuilders says that it lives in a glasshouse and that stones are thrown at it. It says that its competitors do not live in glasshouses, and that whatever may go wrong in foreign yards does not attract the publicity that is given to things that go wrong here.
  One of the problems of State ownership is that people are naturally interested in what goes on. After all, the public are ultimately paying the bills. This situation is enhanced by the fact that London, as well as being the centre of the shipping industry, is to a large extent the centre of the world's media because of Britain's historic position, and the use of English around the world. Reporters for papers around the world read the London editions of local papers and send back reports based on what they read in London. That has a result which adversely affects Britain's reputation around the world, because things happening in our country get taken out of perspective compared with what is happening elsewhere.
  There is a productivity problem in British Shipbuilders. I believe that it has courageously recognised that. It has produced a blue book on what needs to be done, and I understand that it is being distributed throughout the corporation. There are plans for the message to be brought home right from the top to the bottom in every part of British Shipbuilders that productivity improvements are essential.
  The size of the productivity improvements that are called for has been spelt out by Dr. Milne, the managing director of shipbuilding operations, who talks about a 15 per cent, improvement across the industry. He drew attention to an interesting statistic showing that there are enormous variations between one yard and another in the time taken to build the same type of ship. The man hours on steel work range from 312,000 hours in one yard to 765,000 hours on an identical ship in another. That is obviously something that requires a great deal of investigation within British Shipbuilders. If the productivity plans in this blue book are implemented, I trust that we shall see a substantial improvement. It is to the credit of British Shipbuilders
  1520
  that it recognises the need for this, and is giving great attention to it.
  I should like to refer to the effect of the changed laws under which British Shipbuilders operate compared with a few years ago. I referred to the advantages possessed by the Third world countries. It is interesting that managements in this country reckon that more than 3 per cent, additional cost has been added in the last few years as a result of the wholly desirable changes in health and safety legislation. Again, another 3 per cent, has arisen as a result of extra holidays in the industry. That has meant an additional 6½ per cent, to our costs when we submit tenders.
  From the yards that I visit in the North-East, I know that there are good yards in British Shipbuilders. The Navy has always told me that it is very satisfied with the work at Swan Hunter. I recently had the pleasure of visiting both the yards in Sunderland. Had I visited such yards in a foreign country, I would have come away very impressed. There are some very good British yards that can look any other in the face if the competition is fair. That is not the picture throughout the industry, and we must ensure that British Shipbuilders concentrates its future production in the most efficient yards. The Government are right to say that the problem of running the industry is one for British Shipbuilders and not one for the Minister, with all due respect. He has spent half his time on this industry so far. I hope that that will not be necessary in the future.
  I should like to say a few words about the shipping scene. It is easy to say that the problems of the British shipbuilding industry can be solved if only British shipowners would co-operate. That is an attractive argument to those outside who are not involved in the industries concerned, because the British shipping industry is still the largest of the Western European fleets. Unfortunately, the British shipping industry is suffering from serious troubles. Like the German and Scandinavian merchant navies, it has declined substantially in recent years. In 1975 over 50 million tonnes of ships flew the Red Ensign. It is now less than 38 million tonnes, and many of those ships are

  1521
  laid up. This year there has been a further reduction of nearly 100 ships in the size of the British merchant navy.
  The reasons for that are perhaps the subject for another debate. However, one of the reasons is that our competitors pay lower wages. In some cases, as in the Soviet Union, competitor industries are run on a non-profit-making basis and are able to undercut us by 30 per cent, as a result. There is also the question of captive markets. Understandably, the Third world is more and more seeking to have cargoes carried in its own bottoms. This summer I was able to make a voyage on one of our cargo boats around some small ports that I had never heard of along the West Coast of South America. It was interesting to see not only the delays that our masters and crews encounter as a result of appalling congestion but the fine fleets of the small countries that we visited. They had built fine, modern ships operated at a lower cost which were often in competition with our vessels. Therefore, it is not easy to envisage the British shipping industry being able to pull British Shipbuilders out of its problems. At present, the results of many of our shipbuilding companies are very poor indeed.
  A point that I make strongly to the Minister is that we must help shipowners through changes in the present tax structure. I am sure that that is a point that my hon. Friend has taken on board already. However, with inflation and the present system of taxation it is extremely difficult for shipping companies to be able to find the cash to buy the replacement ship that will cost as much as two or three times more than the one that they are scrapping. I do not believe that the sort of scrap-and-build terms that are being talked about will in themselves be sufficient to overcome that problem.
  This is particularly serious in relation to the private companies. It may be that Labour Members do not have much sympathy for the private shipowner, but he is an important institution in this country as he provides employment for a large number of people as well as earnings and currency for the country. The private shipping companies are finding it extremely difficult to replace their tonnage because of the present tax laws. That is
  1522
  perhaps something that the Minister might raise with his colleagues in the Treasury.
  On credit terms, I believe my hon. Friend said that he would be interested to hear examples of better terms overseas. I draw his attention to the excellent paper read by Mr. John Parker, one of the directors of British Shipbuilders, on 17 October—
  Mr. Dick Douglas: Reference has already been made to his paper.
  Mr. Trotter: I apologise. I was trying to sell some ships to Chairman Hua at the time. I need not go into the details, but from the paper read by John Parker it is undoubtedly the case that far better terms are being offered by our competitors. I am told that the Export Credits Guarantee Department says that it requires better particulars and evidence. I think that it would like a short statement by the Head of State of the country concerned before regarding the evidence as acceptable. But it is well known that our competitors are giving better terms—
  Mr. Douglas: We are playing cricket.
  Mr. Trotter: Yes. I believe that that is something we must match.
  So far as I can make out from discussions with British Shipbuilders, the intervention fund will be adequate. I am pleased to hear that the delays in obtaining approval have been shortened as a result of the Minister's action. I am told that at one time it took five months to obtain the necessary layers of approval before quite a small dredger could be ordered from one of the yards. That sort of obstacle certainly required action if we were to be left in the race. It was no good our being forced to say that we would have to go back home and obtain consent from various levels of officials when our competitors could field a team prepared to conclude a deal before they left the room.
  I am not certain whether clause 2 provides adequate funds for conversion. I think I am right in saying that the money will be required only if a guarantee is called up. That is probably why a figure of only £2 million is inserted as being the possible cost, because it would arise only if the guarantee fell in through some failure on the part of the shipowner. If that is not the case, £2

  1523
  million does not seem to be very much when we are talking about converting ships by taking out their turbines and installing diesel engines. I believe that a lot of work of this nature can be obtained, which would be valuable for both our diesel manufacturers and for the repair yards as opposed to the building yards. There certainly seems to be a move for the big tankers to have their turbines replaced by much more economical diesel engines. I hope that that is something that British Shipbuilders will follow up energetically.
  I am concerned about the lack of success by British Shipbuilders in naval exports. It has not been able to achieve orders for naval ships although Britain was the leading exporter of warships until three or four years ago. The Government should look into what has gone wrong. Have political bars been placed on the sale of ships to certain countries? Bars may have been raised by the previous Government, but I should like to know if they still exist. Perhaps the Government will see whether conditions have changed to permit greater exports.
  I visit navies around the world, and I am told in some quarters that Britain is not considered politically reliable as a supplier of warships, although France and Germany are. The Governments of those countries apparently have a different attitude to trade. The designs of our ships are all right, but something has gone wrong on the marketing side.
  Perhaps some intervention fund money might be made available for naval export orders. I was in Portugal during the recess, and I know that the Portuguese wish to buy several ships for use as part of the NATO alliance in the Standing Naval Force Atlantic and as part of NATO's navies in the Eastern Atlantic. Portugal is an ally, and it would be a good use of part of the intervention fund to enable Portugal to purchase those ships. That would be a better use of the intervention fund than supplying merchant ships to our enemies, as has been done in the past.
  The hon. Member for South Shields (Dr. Clark) made understandable comments about the social consequences of the rundown of the shipbuilding industry. We both come from Tyneside, where unemployment is high. One of the problems
  1524
  of the merchant shipbuilding industry is that it is concentrated in three areas—in the North-East and on the Clyde and Mersey. The rundown of employment in merchant shipbuilding has been going on for a long time. According to the Geddes report, 80,000 people were employed in merchant shipbuilding in 1959, but now there are only about 20,000 so employed. We must be nearing the bottom of the decline, and there should be a minimum figure below which the industry should not fall.
  The effects are concentrated in the shipyards, but there is a spin-off effect on the suppliers of marine equipment throughout Britain. I declare an interest, as I advise the British Marine Equipment Council. Many hon. Members may not be fully aware that there are factories far away from the coast that are dependent upon the success of our shipyards, although they also export a great amount.
  The Government are taking the right course and are right to support the industry with public money. The ultimate fate of the industry, however, must depend upon those who work in it, and that is recognised by British Shipbuilders. There is pride among people who build ships and a different attitude amongst shipbuilders from that seen so often in British Leyland and some other factories. Perhaps that is because the ship is a more impressive object. We call her "she" by tradition. She is more impressive than a stream of motor cars on an assembly line. With good management, support from the Government and skill and pride in the work force of the yards, there is a future for merchant shipbuilding in this country.
  7.5 p.m.
  Mr. Dick Douglas: The hon. Member for Tynemouth (Mr. Trotter) has great knowledge of the industry. My interest in the industry extends over 30 years and I declare an interest as a member of the board of directors of Scott Lithgow (Offshore) and other companies in that group. I am particularly interested in the offshore oil market.
  I hope that the Minister had an interesting time when he visited Scott Lithgow, on the lower Clyde, and I am sure that he saw an excellent team of management and men, dedicated to ensuring the survival of that industry on their part of

  1525
  the Clyde. Apart from the presentation of the Bill, it would have been difficult to have the debate if Mr. John Parker, of British Shipbuilders, had not prepared the excellent paper for the Royal Institute of Naval Architects. I was present at the lecture. There are elements in that paper with which I disagree, which relate to the market going up steeply again in 1981–82. Some of the economic analysis in the paper was undertaken prior to the difficulties in Iran and the downturn in world trade on the oil market. What will be the Government's posture if we cannot bridge the gap between now and 1981–82? What will happen if that gap is wider? The Government say "Let market forces operate and let the market judge the survival of this industry". The Opposition say that the Government have a responsibility to intervene and ensure the survival of an industry that is important strategically and in terms of regional employment. Although the shipyards are mostly located in the North, many of the suppliers are not, as the hon. Member for Tyne-mouth pointed out. Therefore, the Government should indicate what their strategy will be.
  Reference has been made to naval building. We could do more to bring forward orders for the Royal Navy. I have a constituency interest, representing Rosyth. Theoretically, a replacement for the Polaris hulls will not be necessary until the 1990s. A decision must be made about the future now, otherwise it will be made by default. If we are to continue naval dockyards, although they will not be building ships, and secure the future of an integrated enterprise, the Government must indicate their strategy. The Government are directly responsible for the loading of the shipyards and dockyards of the Royal Navy. There has been an upturn in orders. We have obtained an order for two tankers, of 109,000 tons, from British Petroleum. Those orders are welcome because we expect them to use slow moving diesel engines. Although we are debating the shipbuilding industry, the inter-relationship of the marine engineering industry is important.
  A Lloyd's List article today indicates an upturn in the market for slow-moving diesel engines—albeit of a particular
  1526
  make. As the hon. Member for Tyne-mouth has indicated, there is a degree of fuel economy in using this type of engine. I hope that the Minister will give an indication of his expectations, because there is considerable concentration in the number of suppliers of slow-moving diesels within British Shipbuilders.
  The strategy of British Shipbuilders is made out in the corporate plan, which contains a number of elements, one of them being the offshore oil market. The Under-Secretary knows my feelings about this. Recently we lost an order to Finland. I do not know what my Government would have done, but presumably when the new Government came in they would have access to many papers on this issue. Ostensibly the gap between the Finnish price and the price that British Shipbuilders indicated would have been too large for it to bridge at that time, but there is a likelihood that other ships of this nature will be needed. I have worked this out in rough terms and I find that in price terms one such ship is equivalent to about half the Polish order. What is the Government's attitude? I do not believe that the price from the Finnish yards was fair. What steps were taken to examine that price in detail and to assess the reliability of delivery dates from that yard in the past? I have personal knowledge of semi-submersibles, which are not all that different from this type of vessel, and that yard has been late on its delivery times.
  It was repellent to the people of Scotland that the Scottish press should send individuals to Finland and that they should come back with stories from the Finnish yards claiming that the Finns were out to shut British yards.
  Having visited the Rauma Repola yard, I do not believe that the overheads in that yard are any less than the overheads in the United Kingdom yards, particularly those in Scotland.
  We are seeing an upturn in the offshore market and in the demand for jack-up rigs. The day-rate for semi-submersibles is $30,000, and rising, yet in the North Sea at present there is not one British semi-submersible operating. If there is to be a new order here, this is an opportunity for the Government to anticipate that probability and order the vessel in advance of demand for drilling purposes. The demand is fairly firm at the moment

  1527
  not only for rigs but perhaps for a vessel similar to the BP multi-purpose emergency support vessel.
  We have heard many comments about the credit situation, and I do not wish to repeat them. John Parker's report indicates that the situation is not one of a free market. In fact, the market is highly competitive, as other nations are fiercely determined to preserve their shipbuilding industries. The Government have a direct responsibility to define their strategy in strategic, employment and trade terms. They cannot avoid doing so. They must look at what other nations are doing and stop "playing cricket." We have wonderful civil servants, but they are not negotiators in terms of combating and competing with the Japanese and others in this regard.
  In the Act that nationalised the industry there is a very important reference to a decentralised structure. I am not dealing with the overheads of British Shipbuilders but it should be a cardinal principle that we preserve the maximum degree of flexibility and decentralisation in this industry.
  It has been said that the way to get orders is to go out and get them, but that is not easy in the present world market. The more that this Government accede to the strident cries of some of their Back Benchers, who are more interested in balance sheet returns than in preserving the industry, the more difficult this task will be. We are interested in people and in the industry, and we are determined to preserve it.
  7.16 p.m.
  Mr. Gordon Wilson: The House last discussed the shipbuilding industry on 25 July, when it was about to go into recess. At that time certain questions were put to the Minister about the security of employment in the Scottish yards. We did not get much by way of assurance from the Minister, but he gave no indication at that time that British Shipbuilders was due to embark on a policy of butchering part of the Scottish shipbuilding industry.
  Many of us who listened to the debate in the early hours of the morning last July had serious misgivings about the Government's policy on certain yards. Those misgivings were realised three weeks later when the news broke that British Shipbuilders was cutting back
  1528
  very substantially in the marine shipbuilding sector. The first announcement was that 70 per cent. of the redundancies, and 80 per cent. of the yard closures, would take place in Scotland.
  In Dundee, the Robb Caledon yard was faced with outright closure with no prospect for alternative employment, and no consultation. In fact, the decision of British Shipbuilders was taken with all the zeal and ruthlessness of the Victorian ironmasters. No attempt was made to fulfil any social obligations—obligations that are partly laid down in the Aircraft and Shipbuilding Industries Act. In that Act an obligation was placed on the Government to take account of employment and regional considerations. Whatever may have happened in the meantime between the Government and British Shipbuilders, the fact is that the nationalised corporation set out to close down the Robb Caledon yard and liquidate 1,100 to 1,200 jobs without any consultation or concern about the viabiity of the industrial structure of the city.
  The closure of the yard, had it gone ahead, would have dealt a severe blow to the economic vitality of Dundee and the surrounding areas. In retrospect I assume that the Government were not honest enough during the debate last July to set out their real intentions. They announced the decision in a cowardly fashion through British Shipbuilders a fortnight after the debate, when the House had gone into recess. Therefore, there could not be any real questioning of the Government's ultimate policy.
  The overheads affecting subsidiaries of British Shipbuilders have been referred to. I took part in the Committee and Report stages of the Aircraft and Shipbuilding Industries Bill. As the hon. Member for Dunfermline (Mr. Douglas) said, a provision for decentralisation was written into the Act. The intention was to give the maximum amount of power and decision making to individual companies. The Government stated bluntly that it was also intended to relieve the companies from the usual nationalised structure which was top-heavy with bureaucracy.
  In one of the substantial publications produced by British Shipbuilders there are some lovely pictures of its central marketing division in Knightsbridge, the huge structure, Hereditable House in Dover

  1529
  Street, which is the ship repair marketing office, and best of all, Benton House in Newcastle.
  The Robb Caledon yard in Dundee last year had to pay about £170,000 towards overheads. It is expected that for the current year that share of maintaining employment in London and Newcastle will be over £200,000. Those functions were originally carried out by the yards, which demonstrates some degree of bureaucratisation and waste at the headquarters. There is never any slimming of the body corporate at head office when yards are faced with closure and workers with redundancy. I hope that the Government will take that up with British Shipbuilders.
  Little concern has been shown for the social and economic consequences of these proposals, and there has been little comment from either Front Bench about the closures and redundancies announced during the Summer Recess. Although in Dundee, East we did not have the full support of the district council, with considerable local support and the support of the trade unions, the hon. Member for Dundee, West (Mr. Ross) and I, through staunch and determined action, with the retention of the "Golden Bay" cement carrier and the prevention of the launch of ship no. 576, succeeded in getting a stay of execution for the Robb Caledon yard, and it has been placed on probation.
  At one stage in the discussions, British Shipbuilders flatly refused the Robb Caledon yard an opportunity to tender for orders. It said that there was no future for shipbuilding in that yard, but the yard would have been prepared to go out of its way to seek orders that might have kept it going. The instructions came from the head office of British Shipbuilders. A long time ago when the corporation saw the state of equipment in that yard, it determined to liquidate it at the first possible moment, and it ruthlessly set out to do that.
  I congratulate the workers on their strong fight to safeguard the yard's future, although it is still in doubt as the relief is only probationary. I say to the Minister that, if British Shipbuilders or the Government endeavour to close the Dundee shipyard, there will be maximum opposition. The closure would cause grievous economic
  1530
  damage to a city that has seen many of its industries closing in recent years.
  There is pessimism about the future of the shipbuilding market. I am interested in oil and have observed what is happening in Norway. I receive a copy of that Government's information handouts. On 11 September 1979 there was a headline:
  "Norwegian shipbuilding orders for over 2,000 million Norwegian kroner. Contracts have been signed covering altogether 1 million tons and several large contracts have been negotiated with foreign yards. If these negotiations are successful, they alone will represent 1,500 million Norwegian kroner. … Ships on order for Norwegian owners will then constitute 30 contracts of altogether 1.5 million tons. … This year's orders, therefore, give rise to a degree of optimism.
  These facts do not imply that it has become so much more profitable for Norwegian owners to place orders, but improvements in freight market have made Norwegian shipowners consider renewals within the fleet to meet improved conditions."
  There is a lot of old tonnage in the Norwegian fleet at present, but that could also be said about the British merchant shipping fleets. If the Norwegians, with rising freight rates, are able to order ships from their country and even go abroad for orders, surely the British shipping industry can do likewise? There is something seriously wrong if it cannot.
  At the end of the handout it is said:
  "While Norwegian yards are dependent on subsidies, Norwegian owners are equally dependent on financing arrangements. Shipbrokers are hopeful that the authorities will continue their subsidies policy during this transitional period now that signs can be seen of a balance between building capacity and increasing demand."
  That is interesting. I do not believe that the Norwegians are bound by the EEC policy on shipbuilding incentives and subsidies. However, the Norwegian Government recognise their active role in maintaining the structure of the shipbuilding industry, and in this respect the Bill is insufficient.
  I welcome the Bill because without it the present crisis would be even more severe, but the Government are not putting enough pressure on the EEC with regard to the assistance that can be given. I have my doubts whether the arrangement reached with our Community partners will be kept, and we must remember that our main competitors are not just within Europe. We have major competitors seeking orders in Brazil and Asia.

  1531
  It is a potentially weak proposal to tie our inducements to the situation within the EEC. The Government should consider again how to exert more pressure on our competitors outside the EEC market so that we are in a more competitive position. Without that, we shall lose orders.
  To sum up my arguments, first, the drop in intervention from 30 per cent. to 25 per cent. is retrogressive. Secondly, no attempt has been made to ensure that our industry is able to compete with Asia. Thirdly, what arrangements have the Government made to monitor our European competitors, and are those competitors willing and able to keep to the agreement?
  If the Government do not give genuine support to the industry in Scotland and, from what the hon. Member for South Shields (Dr. Clark) has said, the rest of the country, there will be industrial genocide. The closure of yards will damage the regional economies, and that is the last thing that these areas can stand at a time of increasing unemployment.
  There was a headline in the Daily Mail today which read:
  "Free jobfinding tour—and Scots head south".
  There is no long-term secure employment in Scotland.
  The people losing their jobs in the shipbuilding industry will be skilled workers. Those who are enticed away will be skilled workers, and in Scotland there is already a shortage of such people. The shipbuilding industry creates apprenticeships, retains skills and helps in developing our economy. The Government's failure to take action to assist that industry will have serious consequences.
  7.30 p.m.
  Mr. Donald Dewar: No one in the House will quarrel with the assertion that the shipbuilding industry is going through an extremely difficult time and that it will have no easy passage over the next year or two. The dire statistics about overcapacity and lack of orders are very familiar, even for those of us who have not read in great detail Mr. John Parker's much-referred-to papers. They are the
  1532
  ABC of any discussion about shipbuilding in the United Kingdom.
  It is worth saying that there are some signs of recovery. Although we cannot talk of a swift recovery, there are some signs that the position is becoming a little better. Freight rates have recovered considerably and the tonnage laid up is of a smaller order than it was six or nine months ago. I hope that we are on the way back to a position in which orders will begin to appear. If the accountant's mind of the Conservative Government, with their stringent financial approach to problems, is unfettered, my fear is that when we are in a position to compete for orders we shall not have the capacity, the skills and, in many areas, the industry to enable us to tender.
  When we talk about over-capacity, we in this country have not been the sinners. The United Kingdom industry has remained fairly static for a lengthy period. while other countries have been mushrooming their shipbuilding capacity in a way that is almost irresponsible. Mr. Parker asserts that the Japanese have been increasing their shipbuilding capacity at an annual rate of 16½ per cent. In the mid-1950s Britain held 25 per cent. of the world market. We now hold 3½ per cent. Cutbacks should be left to other countries. We must struggle to the best of our ability to maintain the hard core of our industry, because that is all that is left to us. We must not cut back on the same scale. If we do, we shall be cutting back to almost nothing. That would be an industrial disaster.
  I welcome the Bill as far as it goes. In a sense, it is an excuse to ask questions of the Minister. I genuinely welcome the fact that it is a Minister from the Scottish Office who is to answer the debate. I am not always grateful that the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, North (Mr. Fletcher), is in charge of Scottish industry, but it is convenient tonight because I am looking for some reassurance and some hard information that I can take back to my area about what is happening on the Clyde and in my constituency.
  I do not need to remind the Minister that shipbuilding is an essential central industry on Clydeside. That is equally true in the Garscadden constituency and

  1533
  surrounding areas. I have two principal shipbuilding interests. One is the Yarrow yard, which I do not need to dwell on this evening. I was depressed by the sentiments that came from the Conservative Back Benches—there have been only two Conservative Back-Bench speakers so far in the debate—especially by those of the hon. Member for Surrey, North-West (Mr. Grylls). The hon. Gentleman made it clear that he would like to see naval yards passing back into private ownership. We now have very few prosperous industries in my part of the world. I am glad to say that Yarrow is a prosperous yard. However, if prosperity depends upon the Carrington formula, that gives it a privileged position in bidding for public sector orders. It is naval orders, and accelerating naval orders, that are the basis of its prosperity. It is nonsense to suggest that it should be returned to private hands. It is crass stupidity to suggest that Yarrow should be sold off.
  It is important to take British Shipbuilders as an entity if we are to plan the labour force. Looking realistically at the world, we on the union side reluctantly accept that there will be a considerable rundown in Govan and Scotstoun Marine shipbuilders and on the lower Clyde. The one area where we can realistically hope that there will be an increase in employment is in the naval yard of Yarrow. It becomes nonsense to hive off the Yarrow yard, because once it is in private ownership there can be no realistic plan for the yard to pick up the inevitable slack that will be produced by the corporate plan in the other yards. I get angry when I hear the suggestion that, for all sorts of narrow and ideological reasons, we should sell off a yard such as Yarrow.
  I turn to my main worry, and that is the position of the Govan shipyards. As the Minister will know, Govan has two units. It has the main Govan yard, with 4,000 workers, and Scotstoun Marine—which is on the very edge of my constituency—where there are 1,200 workers. The corporate plan proposes that the 4,000 work force at Govan should be boiled down by about 1,200 and that Scotstoun Marine should be put on a care-and-maintenance basis, with its assets passed
  1534
  over to Yarrow. Its 1,200 work force will virtually disappear.
  That was a severe blow to an area that could ill afford that sort of job loss. I put it brutally that it was a kick in the stomach, and it was much resented. The work force was realistic and recognised that there were genuine short-term difficulties. The plan was accepted only on certain conditions. One was the Blackpool agreement that there would be no compulsory redundancies. It would be useful if the Minister were to take the opportunity to say that he positively endorses the aim of British Shipbuilders that there should be no compulsory redundancies and give it the backing of the Government's authority and blessing. I shall be listening specifically to his remarks to make sure that we get that assurance.
  There was a second and important condition with regard to Govan. When we were sold the package of a reduced work force we were told that if it were accepted there were two orders in the pipeline. These were for the standard Govan product—26,000-ton bulk carriers of the Cardiff class. I can speak personally because I was present on the day that the corporate plan was announced at a meeting between the unions and Mr. Archie Gilchrist, the managing director. It was specifically mentioned in the documentation and discussed at the meeting that the orders were on the way.
  Since then there has been no hard news at all of those orders. We do not know who is doing the ordering, the exact specification of the vessels, or when work will start. It is essential that we receive that news soon, because the morale in the Govan shipyards is crumbling fast. The credibility of the corporate plan, so far as it affects the yards, is now seriously in question. We are all genuinely pleased to hear of orders going to Sunderland, Scott Lithgow and Swan Hunter, as has happened in the past few weeks.
  The deafening silence on the Govan orders is destroying confidence in the yard. It is impossible to talk in terms of productivity, because morale is so low. The hon. Member for Tynemouth (Mr. Trotter) said that productivity was the key to survival. I do not disagree with that.

  1535
  How can there be productivity in a yard where there are 1,300 men standing around doing nothing? That is the present position at the main Govan yard.
  If there is to be a long delay, it will be better to know the current position rather than being left to guess the worst. If it is a problem of bridging a gap between production costs and successful tendered price, or problems about credit packages, I would rather the Minister came clean and told us whether the orders are still a hard fact—merely suffering from some temporary hold-up—or whether they have evaporated. The men in the yards are beginning to say "It is only a myth, a mirage, an illusion or a con trick." I recognise that two 26,000-ton Cardiff class carriers will not keep Govan going. We need six or eight a year to employ even a slimmed-down work force. That order was part of the package. The psychology of Govan shipyards and the Clyde at the moment is all-important.
  If we are to keep any credibility for British Shipbuilders and the Government—I may be asked why I should care about the Government, but I do because I want to have a reasonable level of morale in my constituency—we must know exactly what is happening, and we must know quickly. If we were to obtain orders now the steel trades would be put to work—at present they have no work—but the fitting-out trades would have nothing to do. The modest arrival on the stocks of the two orders to which I have referred will in no way solve our problem.
  Tomorrow morning I am attending a meeting that has been called by all the shipbuilding and engineering unions on the Clyde to consider the position at the Govan yard, which has been waiting anxiously for this debate. I undertook that I would raise certain specific matters during the debate. I have enough confidence in the Minister to know that he is well aware of the anxiety and the difficulties. It is extremely important that the hon. Gentleman says everything that he can so that we have a progress report to submit to the meeting tomorrow morning.
  It will be a disaster if we are given no news today. Good news would be doubly valuable. I hope very much that the Minister will be able to say something.
  1536
  I hasten to say that that is not in any way a threat. However, it is a warning. Patience is near to breaking point.
  I turn to redundancies, especially at Scotstoun Marine, but it is a factor that will apply in many yards throughout the country. At Scotstoun Marine about 1,200 men want to know their fate. It has been promised that there will be no compulsory redundancies, but I ask the Government to endorse that pledge from British Shipbuilders. There is little hope in the short term of finding the men other jobs in the industry.
  I have already referred to Yarrow and its importance in the local shipbuilding equation. Yarrow now has 5,700 employees. It is my information that by the end of the year it is intended to add another 300. It is hoped, although it is rather speculative, that Yarrow will be able to increase its work force to about 6,500 by the end of next year. There may be a build-up of 700 or 800. However, at Govan alone we shall be losing almost 2,500 men in the same period. If we are to have no compulsory redundancies, I must press the Minister to indicate how the Government will tackle the problem and how they will find their way out of the conundrum.
  I recognise that there is always a temptation for Conservative Administrations to do a Pontius Pilate act and say that a problem for British Shipbuilders must be confined to that organisation and that they, the Government, will not dirty their hands with it. However, given employment difficulties on Clydeside, on Clydebank, in Garscadden and on the west side of Glasgow, which is a matter of great concern to all political parties in Scotland, that attitude is not good enough. The hon. Gentleman is wise enough politically to recognise that. I want to know how he will manage the situation and what his thinking is. He cannot say that it is a problem for management and not one in which the Government will involve themselves.
  It seems that the only answer is to extend voluntary redundancy for the members of the work force who are in their sixties and to offer the same terms at Yarrow and at other yards throughout the country to try to produce the space to absorb those in the industry with a long-term future. I mention that in passing.

  1537
  My main question is: what will the Minister do with a ball that is firmly in his court, given the conditions that I have explained and outlined? I recognise the difficulties. I know that it is not an easy inheritance that world conditions have bequeathed to any Government in charge of shipbuilding. I agree with all those who have said that the answer must be in a determined effort to obtain new orders. I do not think that anyone will disagree with that cliche. There has been plentiful reference to the figures that appeared in John Parker's paper. They revealed the credit packages and credit terms that are provided by other countries throughout the industrialised world.
  I stress again that the Government must be prepared to compete if the industry is to survive. I recognise that there is always a temptation to be virtuous. However, at the end of the day it does not matter if we are wrong and we fail. It is no good being a sea-green incorruptible and saying "We played the game. We did not bid up the terms. We opted out and watched our industry die in the great cause of a well ordered world society." That will not be much good to my constituents if they lose their jobs. It will not be good to John Parker and his colleagues in British Shipbuilders if they lose their jobs. Top management though they be, they, too, will lose their jobs if they cannot attract the orders and if they cannot tender successfully against organisations in other countries which are engaged in the industry.
  The Minister will remember that in August two well known Scottish shipowners—Lyle of the Lyle Shipping Company and the Hogarth Shipping Company—bought four ships from Brazil. They were 26,000-ton deadweight bulk carriers of exactly the sort that are built on the standard line at Govan. What did British Shipbuilders say? It said that it
  "regretted the deal but that there was no way that it could compete against 15-year extended credit given by Brazil."
  If we are faced with that type of competition, surely we can in all honesty go to the Government and insist that British Shipbuilders must be allowed to compete and be given the wherewithal to do so. If we had obtained the orders that went to Brazil and the ships had been built by the Govan yard, I should not be making
  1538
  this crisis-laden speech about the atmosphere in my area and the future for the men involved in the industry in my part of Glasgow.
  If we are not able to obtain the orders that we need, and if we are satisfied that there will be an upturn in the market, we should be brave enough to consider and talk in terms of speculative building in advance of orders. I am talking not about the offshore market, as my hon. Friend the Member for Dunfermline (Mr. Douglas) did, but about general merchant shipbuilding orders. That may sound like heresy, but heresy can sound like good sense if circumstances drive.
  As I have said, patience is breaking. The Government, even if it means jumping through ideological barriers for them, must be prepared to take these issues by the scruff of the neck. In my area we cannot wait. It is a fundamental industry. I do not want to go through the whole litany of disaster, but in my area we have seen the Goodyear company close down. We have heard that the Singer company is going. John Brown engineering is laying off 600 workers. There is a question mark over Marathon. We know that 2,500 men are to go from Govan even if things go well from now on, and there is precious little reason for thinking that they will, given the Government's silence.
  Everywhere we look there is disaster looming. We have every reason to say that the Government should act to save yards such as Govan, where £30 million has been invested over the past few years to make it not a scrap heap but one of the most modern yards in British Shipbuilders' stable. At Govan productivity and flexibility have attracted a great deal of praise. The work force is consistent. It has made a great effort over the past few years.
  On the shipbuilding side of the industry we have seen a contraction from 38,000 men to 28,000. We are coming down to 18,000. We are talking not about a set of industrial Luddites who refuse to change but about an industry that has made enormous sacrifices and efforts. I hope that the Government will give the industry a chance to succeed. Indeed, the industry demands that chance, and it deserves it.
  The Bill is a symbol of the Government's good intention, but I want them

  1539
  to deliver. There may be doubts about the Government, but they are the only Government whom we have and we must look to them. If the Government do not act, and if they do not respond to what is a desperate cry from the yards, that will not be forgiven in my part of Glasgow.
  7.49 p.m.
  Mr. David Price: The hon. Member for Glasgow, Garscadden (Mr. Dewar) spoke with great feeling and knowledge. I assure the House that I have not changed my views since last night about 10-minute speeches.
  I declare some personal interest in this subject. My constituency surrounds the great port of Southampton. Therefore, a number of my constituents earn their livings from maritime activities, both at sea and on shore. Others of them work in the shipbuilding industry. I have commercial connections with the industry.
  The main point that I wish to put before the House has been touched upon by a number of hon. Members. The commercial terms upon which British Shipbuilders is able to do business with its merchant shipping customers is the heart of the problem. I shall not refer to the warship aspect because British Shipbuilders has told us that that side of the business is relatively satisfactory.
  In his foreword to the annual report of British Shipbuilders the chairman, Admiral Sir Anthony Griffin, said:
  "Our ability to win orders in the present climate is … dependent on price and financial credit terms since all shipbuilding nations have been forced to sustain their merchant shipbuilding companies by extraordinary measures."
  I draw the attention of the House to the phrase "sustain … by extraordinary measures". I fear that there is no fair competition here.
  The main customer of British Shipbuilders is, of course, British shipping. I need not remind the House that British shipping is part of world shipping and that its fortunes cannot be separated from the fortunes of world shipping. Hon. Members who have spoken in the debate will know that world shipping, like world shipbuilding, has been passing through its most severe depression since the 1930s. It goes without saying that these are not
  1540
  the most promising market circumstances for the bold ordering of new ships. Furthermore, the British merchant fleet is still relatively young. Over 80 per cent. of the tonnage is under 10 years old, and there is no urgent requirement for a massive replacement of existing ships.
  Nevertheless, if there is to be a European scrap-and-build policy, British shipping would not wish to be excluded from it, although I do not believe that that measure gets to the heart of the problem. The industry will welcome clause 2, which enables the same form of credit terms to be given to British owners as are available to foreign owners. That corrects the gross inequity which had the ridiculous effect of positively encouraging British owners to buy abroad—although many did not. The majority of the British fleet, I am glad to say, is still British built.
  The harsh realities of the world shipping market are the basic cause of the slackness of the order book. I remind the House of the remarks in the 1979 review of the British shipping industry by the General Council of British Shipping:
  "Those who have lower costs than ours, whether in flag of convenience fleets or elsewhere, cannot be compelled by law or industrial action to abandon their advantage. So the British fleet, like any other fleet, must fight the tough battle for competitiveness by its own exertions and largely on its own. It can ask that the Government does nothing to shackle it and does not impose charges or requirements that its competitors do not have to face; and in self-defence it may even have to ask the Government to match special advantages given by other governments to their fleets."
  Therefore, the main customers, British shipping, face the same handicap of the special advantages that are given by other Governments to their international competitors as do British shipbuilders. That is the point many hon. Members have made about the "special circumstances"—an anodyne phrase. In the long run, we cannot have a healthy shipbuilding industry without having a healthy shipping industry. They go together.
  The joint problems of British shipbuilders and British shipping are caused by the depressed and fiercely competitive world market.

  1541
  I support that general contention by giving details. Like the right hon. Member for Deptford (Mr. Silkin), I should like to quote from the admirable paper by Mr. John Parker, which we have all studied. It has almost been made a White Paper by the extent to which it has been quoted. As everyone knows, Mr. Parker is a main board director of British Shipbuilders. I shall complete the right hon. Gentleman's quotation:
  "Because of the severe financial crisis which shipowners have passed through"—
  are still passing through—
  "improved credit is a pre-requisite if the UK fleet is to be restored. In the export market too, the UK has adhered to the OECD understanding on export credit for ships but in situations where other countries have not and do not, it is crucial that BS have the opportunity to match such terms."
  That is the clear message which has emerged from the debate. Let me state clearly that I wish that this was not the case. I like people to play to the rules, as, indeed, does the House generally. However, we must address ourselves to the realities—nobody else plays to the rules. I hesitate to use emotive words like "cheat" and so on. I prefer Mr. Parker's phrase "special advantages".
  Unless we do something to match other countries, we shall be in difficulties. It is not a prospect that I relish, but it is preferable in the national interest and not only in the regional interest. Otherwise, our merchant shipbuilding capacity will go under. I am content with the arrangements on the warship building side.
  I should like to end on a cautionary note. It is not too difficult to balance the books if one is doing no business: the books balance themselves. I want to see British Shipbuilders doing business.
  7.57 p.m.
  Mr. Ernie Ross: Like other Labour Members, I welcome the Government's statement that the borrowing limit is to be raised for British Shipbuilders. It is a pity that more Conservative Members are not present today. I am sure that such Members have responsibilities to those who, if not directly associated with shipbuilding, are indirectly associated with the manufacturing industry.
  1542
  The Minister's statement falls short of what we regard as adequate Government intervention to maintain a viable and socially-responsible shipbuilding industry. Hundreds of men in my constituency work at the Robb Caledon yard, in Dundee. By their sheer persistency and refusal to accept that that yard was doomed, they won the admiration of many people in their valiant struggle to maintain shipbuilding on Tayside. I supported them wholeheartedly, as, indeed, did the people of Dundee. I am sure that all Labour Members wished them well.
  I hope that in his summing up the Minister will dissociate himself from the statement made by the hon. Member for Surrey, North-West (Mr. Grylls), particularly in his reference to the Robb Caledon shipyard and the compensation to former owners. No doubt the Minister is aware that on vesting day, when the yards were nationalised and taken away from the private owners who had run them down, in at least four of the yards liabilities exceeded assets. Surely, we would not wish to give extra financial reward for running down the assets of those yards.
  I do not apologise for reiterating the point that I made in an intervention in the speech of the hon. Member for Surrey North-West. I referred to the owners of the "Golden Bay", recently in Dundee, making a public statement that the ship, which the Robb Caledon yard had built for a New Zealand company, stood at the very edge of technology. That ship was built in a yard that both management and the work force agree has been totally starved of funds to modernise its machinery. It is of note that British Shipbuilders has recently made significant changes in its most senior management at Robb Caledon. That may tell a few tales.
  There are several questions that the Government must answer. It is to be hoped that they put the jobs of the men in the industry before the opportunity of scoring feeble debating points for their party.
  How do the Government intend to create the orders necessary to maintain output? I associate myself with the remarks made by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) about Govan. Will the Minister advise the House what subsidy or credit arrangements will be made by the Government to ensure

  1543
  that that yard can conclude a deal that will bring a prospective order for two 26,000ton ships, thereby making a genuine contribution to alleviating the general demise of manufacturing industry in that area?
  What steps will the Government take to make British shipowners order ships from British yards? The "captains of industry" now have a Government who are highly sympathetic to their interests. What guarantee have the Government received that they will work in the national interest when their track record over the past three years shows that the value of orders placed overseas by British companies was more than twice the value of the Polish order?
  What kind of assistance will be on offer in two years? It is inappropriate for the Government to adopt a "wait and see" policy.
  Does the Minister accept the views of the Cambridge Econometric Forecast Group, which, two days ago, said that domestic demand for shipbuilding was expected to fall by 9 per cent, this year and a further 7 per cent, over 1980–81? If so, does he concede that Government support will be necessary for the industry beyond the two-year period that the Minister laid down in his July statement to the House?
  The Minister also referred to the EEC document on the scrap-and-build programme. That document stated that:
  "The crisis afflicting the shipbuilding industry appears to be even more serious. … This turn for the worse makes such restructuring even more imperative and much harder. The reorganisation of the sector is a difficult, long-term process which cannot be successfully carried through unless there is a minimum level of orders. … In view of the seriousness of the crisis the action should have a real impact, in as short a time as possible, on the level of demand."
  The document also recognises the positive social implications of such a policy.
  Commissioner Davignon has presented these proposals on scrap-and-build to the Council of Ministers. Will the Government support the scheme? If so, will the Minister explain whether the Government will opt for the Commmunity scheme, financed and managed by the Community, or prefer a harmonised national approach, where the member States are responsible for its application? I am sure that the House would be interested to
  1544
  know which scheme the Government intend to pursue.
  Does the Minister agree that that is an essential item for the agenda of the Council of Ministers meeting to be held later this month? Will he assure the House that the Government will place that item on the agenda? Will he also assure us that the Government will adopt a positive attitude to these proposals, to ensure their early implementation?
  Many hon. Members have emphasised the need for more positive Government action in all areas. Tonight the Government owe it to the men in the shipbuilding industry to give as detailed a picture as possible of the future of the industry. I hope that the Minister will do that when he winds up the debate.
  8.6 p.m.
  Mr. Robert Hughes: I welcome the opportunity to follow in debate my hon. Friend the Member for Dundee, West (Mr. Ross). Both he and I represent East Coast Scottish constituencies with shipbuilding interests. But, in a sense, the contrast ends there because Robb Caledon, in my hon. Friend's constituency, is in serious trouble. I am one of the few Members of Parliament representing shipbuilding interests who can speak with some optimism for his local scene, although I share the great concern of the shipbuilding industry as a whole.
  I want to refer to the speech made by the hon. Member for Dundee, East (Mr. Wilson), representing the Scottish National Party. The hon. Gentleman is not present, but I have no doubt that he will read these remarks in Hansard. Of course he is an honourable and sincere man. However, I listened to his speech with an almost growing sense of disbelief. He said that he was party to having the Aircraft and Shipbuilding Industries Bill changed to allow for local management. He expressed concern about British Shipbuilders' social responsibilities and the grievous harm done to his constituency by the shortfall in shipping orders. The hon. Gentleman and his right hon, and hon. Friends should have thought of that earlier this year when they brought down the Labour Government. It is a bit much to have to take lessons from SNP Members about concern for constituents and then to hear them complain about the ravages that the Tory Government are inflicting on the

  1545
  people of Scotland, England and Wales when the SNP brought down the Labour Government with callous disregard for their constituents.
  I welcome the Bill. It does not go as far as I should like, but I never look a gift horse in the mouth. I confess that I wish that the Minister of State had shown more commitment and enthusiasm for this subject when he introduced the Bill. If British shipbuilding is to succeed, we need Ministers who are fully committed to the expansion of the industry and have a genuine desire to see it succeed.
  I suppose that we should be grateful because in the last six months we have moved on a little regarding Government policy on shipbuilding. A modicum of realism is now beginning to permeate the Government's thinking. We are beyond the heady days immediately before and after the election when there was talk of selling off public assets, including those in the shipbuilding industry.
  The Minister, when tackled about the incoming of private sector finance, said that the Government were committed to private sector finance going into the industry, but not yet. The "not yet" qualification means that the Government have no intention of handing back to private owners any section of British Shipbuilders until public money has gone in to make it profitable and viable. When the company is making money, it will go back to the private owners who were responsible for the decline of the industry over two generations or more.
  I do not propose to quote from John Parker's paper; I hope that he will forgive me. Most speakers in the debate have quoted from it, so he has had a good run today.
  I think that we are entitled to press home a point which we have pressed over many years. Subsidies, credit and tax facilities to help shipbuilders are available in other EEC countries—quite against the Treaty. Britain appears to be the only country running the different aspects of the Common Market as close to the rules as possible. We must go forward and deal with that situation.
  The Minister said that the Government might consider extending the credit scheme if there were very large orders.
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  I am not against very large orders being given extended credit, because such credit will go to the big yards which have the most serious problems. But I beg the Government to appreciate that smaller yards with first class records also need assistance.
  I mention particularly Hall Russell and Company Limited, in my constituency. I do not suggest that the work force or the management at Hall Russell is perfect. If one applies the hon. Gentleman's criteria of good industrial relations, productivity, delivery on time and first-class design, this yard meets them all.
  I have no doubt that management would like to see even greater productivity and I have no doubt that the men would respond. But if we are to create the conditions for getting better productivity, good industrial relations and co-operation from the work force, and if yards which have already achieved that do not get assistance from the Government and orders do not materialise, workers in other yards will ask why they should give up their traditional practices, become more flexible and give their all if such efforts do not pay off. I hope that we will see public sector orders brought forward.
  It is perhaps sad that almost every yard in this country is becoming dependent—perhaps over-dependent—on public sector orders. Even so, such orders must be advanced, not just to keep the work force in employment, not just for the sake of continuity, and not just to create confidence in British shipbuilding as a whole but because, in many respects, the jobs for which public sector orders are required are necessary in their own right.
  For example, there is a need for offshore patrol vessels in the conservation of our fishing stocks. Whatever fishing regime results from negotiations with the EEC, it will require to be properly policed. It is no use waiting until problems of over-fishing arise. We need these vessels now and I hope that public sector orders will be forthcoming.
  I support the policy of scrap and build. The Government support that policy in principle within the framework of the EEC. That is a major step forward. Even the idea that there should be a scrap-and-build policy is long overdue. However, the Government must go further. They must be willing to say how

  1547
  much they will put into the kitty, and they must also press on with negotiations to achieve a Community scheme as quickly as possible. Notwithstanding a Community scheme, the Government should consider a scrap-and-build policy for our merchant shipping fleet. I accept the Minister's view that such a policy is not a panacea for all our problems. The point that we tried to get across during discussions on the nationalisation of the industry, and the point that we are still making, since it is valid and relevant, is that we must have sufficient orders and sufficient capacity to enable our shipyards to keep going when the expected upturn in shipbuilding demand becomes world wide.
  The upturn might be in 1981, 1982 or 1983, but we must retain our optimism for the future. There is a shipyard in my locality which has earned its success and deserves success in future. I say to hon. Members from other shipbuilding constituencies that we have gone through the trough of despond and the difficult times when we were desperate for orders and trying to set our yards on their feet. Those problems are not yet solved and we need Government assistance and new orders to keep us going. We can show shipbuilding yards throughout the country where there is confidence and optimism. We look to the Government for the same commitment, the same optimism and the same enthusiasm for the shipbuilding industry. With that, our shipyards will prosper, and when the day comes that orders are going begging we will be at the forefront with a shipbuilding capacity worthy of our predecessors.
  8.14 p.m.
  Mr. Frank Field: I apologise for missing the Minister's opening speech. No discourtesy was intended.
  I bring three themes to the debate. The first is to report to the House, and to the Minister, the feelings of people in Birkenhead, which is heavily dependent on two industries—the docks and shipbuilding. I was interested to hear my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) recite the list of firms which had gone out of business there in the past year. The time when Birkenhead had a list of such industries still operating, let alone there to lose, has long since
  1548
  passed. Yet our two main centres of employment are under attack.
  If the Shotton steelworks closure goes through, we may lose our docks, and the Minister knows from his visit to Cammell Laird that the berths were largely empty. So we have a second unemployment threat on the horizon in our shipbuilding industry.
  Alongside the gut worry about where the next jobs will come from in Birkenhead there is also a feeling that by their present policy towards the shipbuilding industry the Government are trying to find an alibi. I want the Minister to tackle this head on when he replies to the debate.
  The fear is that funds are being offered on terms which make it impossible for the shipbuilding industry to be successful. Another 18 months have yet to run under the present commitment on funds. Come the end of that period butchery will begin in a ruthless fashion. I was struck by the contribution of the hon. Member for Surrey, North-West (Mr. Grylls). He appeared to be advocating for the shipbuilding industry the short sharp shock treatment of the Home Secretary. He put the case for more competition.
  The worry among workers at Cammell Laird is that the competition is not fair. It is very difficult for British shipyards to win orders if competitors are subsidised and advanced three-quarters to the winning post while we are still at the starting gate. I should like a specific undertaking from the Minister. If we find as the months go by that we are not winning our share of orders, will the Minister look again at the rate at which the intervention fund is used? Hon. Members have already spoken about the reduction in the use of the fund from 30 per cent, to 25 per cent. If we are not winning our share of orders under present policy, will the Minister give an undertaking that that aspect of Government policy will be re-examined quickly?
  My second theme has emerged from this debate, though it was beginning to emerge from the debate prior to the Summer Recess. None of us is foolishly putting forward a panacea for the industry. While it is true to say that there is no panacea, there are measures that the Government could take which would improve our chances of protecting shipbuilding jobs. I want to touch on three.

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  My right hon. Friend the Member for Deptford (Mr. Silkin) referred to correspondence that I had with the Minister during the Summer Recess. The first point that I raise with him now concerns public sector orders. They are not the only answer to our current problems, but they play an important part in safeguarding the remains of the British shipbuilding industry. I am still puzzled, after reading the Minister's reply, why he could not publish, here or elsewhere, the facts about public sector orders prior to his announcement before the Summer Recess. I ask him what public orders are being brought forward as a result of the Government's commitment to the House to speed up the placing of orders from the public sector. I hope that the Minister will answer that question.
  I am puzzled about what is happening on the export front to defence orders. Do the Government believe that many of our potential orders are blacklisted because they come from a nationalised industry? Ministers have said that we hope to gain much in defence orders from the new light frigate and the new design for the conventional submarine. Are any orders in prospect from those two initiatives by British shipbuilding?
  One of the advantages of speaking at the end of a debate is that one does not have to labour points because they have been argued by other hon. Members. I hope that the Government will consider returning to the scrap-and-build policy. It is not a panacea, but it is part of a total package to save the remains of the British shipbuilding industry. When will the Government make their plans public? When will they explain their attitudes and their commitment of resources to a scrap-and-build policy?
  I turn to the question of redundancy payments. Much has been said in the debate about the importance of the unions' policy to accept only voluntary redundancies and the backing given to that by British Shipbuilders. Will the Government commit themselves to such a policy? If they do, four changes are needed in the redundancy payments scheme for the shipbuilding industry.
  I do not believe that the redundancy scheme is generous. The four changes which I propose have been requested by
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  the workers at Cammell Laird. They complain that the redundancy payments scheme is unfair compared with other schemes. The payments to men retiring in their sixties are larger in the steel industry than they are in the shipbuilding industry. If one compares the position of men in the two industries who become redundant at 64, one sees that the difference is massive. For shipbuilding workers the sum involved is about £5,000. A steelworker receives about £12,000.
  Shipbuilding workers complain about the redundancy payments being paid in lump sums or weekly cash payments. This works unfairly in a number of ways. When one receives a regular weekly payment one is ineligible for supplementary benefit. What the Government give with one hand they take away with the other. Next, those weekly payments become taxable whereas a lump payment is not. And then, because many of the men who become redundant are old or sick some of them die shortly after they stop work. Their widows get nothing. If they were paid a cash sum payment their widows would be protected in some way. The workers want cash on the nail rather than have their redundancy payments spread over a period.
  Another complaint is about the tapering which begins at about 62 years of age. This does not apply to steel redundancy payments. They also complain that it is unfair, particularly to those on the staff side who have paid into occupational pensions, for those pensions to be taken into account when working out the rate of redundancy payment.
  I look for a number of commitments. If we find that the intervention fund is not being used enough and that the rate at which we are drawing on the fund is too little to protect the jobs that we are trying to save, will the Minister change the rate at which the fund is drawn upon?
  Will the Government make more clear their plans for safeguarding jobs by bringing forward orders in the public sector? Finally, how do they intend to amend the redundancy payments scheme? If we are to have a peaceful retraction of the industry, to which the unions and British Shipbuilders have agreed, the Government must be prepared to make major changes to that scheme.
  8.26 p.m.
  Mr. Don Dixon: I welcome the Bill, because it gives additional borrowing power to British Shipbuilders and removes the anomaly in relation to the ship repair industry. I urge the Minister to take away the two year threat which hangs over the industry. It has had a tremendous effect upon the morale of workers.
  The hon. Member for Tynemouth (Mr. Trotter) referred to shipbuilding workers being different from workers in other industries. He is right. I left school at 14 years of age and began working in a shipyard in my constituency. I worked in that yard all my industrial life. Working in a shipbuilding yard is not just a job, it is a way of life. The whole economy of a shipbuilding community is based on that industry.
  British Shipbuilders was born at a time of grave international crisis in the industry. The uncertainty that gripped the industry through the long period of argument when the aircraft and shipbuilding nationalisation measure was going through the House did untold damage to the shipbuilding industry and to its workers.
  Hon. Members have referred to the build-up in the industry over the last 25 years and to the overcapacity in world shipbuilding. By far the largest contributor to that overcapacity was Japan. Its shipbuilding industry grew thirty-fold between 1955 and 1975. In the same period the Western European countries increased their capacity by 7½ per cent. By 1976 Japan and Western Europe were building 85 per cent, of the world's ships. In the last five years there has been an increase of 40 per cent, in the shipbuilding capacity of the developing countries.
  Almost all countries have increased their shipbuilding capacity, with the exception of the United Kingdom. Our capacity has remained constant. Our share of the world market has fallen from 25 per cent, to 3½ per cent. It is clear that the United Kingdom shipbuilding industry has not contributed to the overcapacity of world shipping.
  Since the war, the United Kingdom shipbuilding industry has been subject to report after report. I worked in the industry immediately after the war. The shipyards which were in private hands, had full order books and were making
  1552
  fairly high profits. One yard where I worked was paying a 30 per cent, dividend at a time when platers' helpers were shoving shell plates around the yards on wooden barrows. That was the sort of equipment possessed by shipbuilders just after the war. They were not interested in investment. With fat order books, they were interested only in profits.
  In 1962, the Paton report dealt with productivity and made recommendations In 1966, the Geddes report, to which the hon. Member for Tynemouth referred, examined the shipbuilding and marine engineering industries. Its main recommendation was rationalisation. The result was that the number of major shipbuilding companies was reduced from 27 to 11, incidentally, with the co-operation of the trade unions. In 1972, there was the Booz Allen report. If ever there was a case for nationalisation it is to be found in that report. The report recognised that the Geddes report had provided funds for restructuring the shipbuilding industry but only on a short-term basis and that a long-term strategy was required. Finally, in 1977, came the nationalisation of the shipbuilding industry of which I and many workers in the industry had dreamed for many years.
  I ask the Minister to remove this two-year threat and to give the industry a chance. We are not competing in a perfect world. Other countries give not only generous but hidden subsidies to their shipbuilding industries. They also have import controls. France, for example, will not import oil unless it is carried in French oil tankers. Korea will export only in ships that fly the Korean flag. If the Government are sincere in wanting to help the industry over the present lean period in world shipping until the predicted upturn in the 1980s, the Minister has to answer some questions. My hon. Friend the Member for South Shields (Dr. Clark) asked how many public sector orders had been brought forward. The Minister referred to this matter in his statement on 23 July. Many questions have been asked about the scrap-and-build scheme. This is not a recent innovation. It has been a practice in the Japanese shipbuilding industry for a considerable time. I would like to know when a scrap-and-build scheme is to be put into effect. What funds will be provided? What encouragement will be given

  1553
  to British shipowners to build ships in British yards?
  In his statement, the Minister said:
  "For the most part, the shipbuilding industry is located in special development areas, and we are concentrating our regional industrial assistance on those areas." [Official Report, 23 July 1979; Vol. 971, c. 42.]
  If the idea is to regenerate British industry through small industries, why on earth does the Government's industrial strategy take away the control of IDCs for factories under 50,000 square feet? I would also like to know how British Shipbuilders can maintain a capacity of 430,000 tons based on an intervention fund of approximately £100 million when the Government have applied for only £120 million over a two-year period.
  Today's statement on public expenditure cuts will have severe effects in areas where there is a concentration of shipbuilding, certainly in my constituency, where male unemployment is 15·9 per cent., and where the young and active have to leave to get jobs. This leaves the older population, which has to rely on public services and social services. The Minister must protect the shipbuilding and ship repairing industry. It must be given a reasonable chance and reasonable support until the predicted upturn in the 1980s.
  8.34 p.m.
  Mr. James Thin: I am glad to follow my hon. Friend the Member for Jarrow (Mr. Dixon). His constituency and the town is a name that is burnt deep in the history of social disaster and economic deprivation. None of us will ever forget the hunger marchers of Jarrow. My hon. Friend has long experience of the industry that we are discussing. It is an industry which, like steel in my constituency, is especially subject to an adverse economic climate.
  Whilst the industry is perhaps not experiencing a blizzard equal to that of the 1930s, it is certainly suffering from the chill winds of economic misfortune, and they are not of its own making. Whilst it is the responsibility of the industry—the firms and everyone in it—to try to ensure that the vessels it is selling are best able to weather rough seas, I think that the industry and the people who have committed their lives to it are entitled
  1554
  to call upon the Government to do all that they can to provide the necessary life-saving equipment to assist them to weather the storms.
  My hon. Friend the Member for Jarrow and my right hon. Friend the Member for Deptford (Mr. Silkin) spelt out the industry's problems in a worldwide context. These were dramatically illustrated by the figures given by my hon. Friend of the declining share of the world market of British shipping and shipbuilding. That is a feature that no firm or individual could have been expected to foresee. That is a compelling and major reason for justifying Government intervention in support of an industry. For that reason we welcome the Bill, and I welcome this opportunity to discuss the industry's needs.
  The industry is prepared and able, as it must be, to face foreign competition. We are certainly not asking for it to be given an unsinkable life raft or some comfortable arrangement to enable it to get by with overmanning and lazy ways. However, we are entitled to defend it—I do not say protect it, and I choose my words carefully—against unfair competition. I can give an example of competition that can by no means be described as fair.
  A shipyard in my constituency lost an order, which was almost on the point of signature, because a Japanese yard was able to step in and offer 100 per cent, finance over a 25-year period, when the estimated life of the ship was 15 years, at an estimated 3 per cent, interest. Those must be the economics of bedlam. It is most difficult to see any sense behind them.
  It demonstrates clearly the sort of practice that is going on. We cannot talk, justified though it may be in a different international context, of the need to stand on our own feet and of the need for competition and so on in these circumstances. The industry will by all means stand on its own feet and survive through fair competition, but the competition that it is facing is unfair. Let us not fight by the Queensberry rules in a catch-as-catch-can, no-holds-barred contest. Let us play the game the way that it is being played by our competitors.
  The yard in my constituency is Smith's Dock. The Minister knows of it because

  1555
  I have written to him about it. He has a warm invitation from the management and unions to visit the yard. He has provisionally accepted, and I hope that he will be able to come. If he does, he will find encouragement. It is a fairly small yard, similar to the one described by my hon. Friend the Member for Aberdeen, North (Mr. Hughes). It gives hope for the future of the industry because the co-operation between management and men is very good. There is consultation and mutual support. This has been reflected in the yard's impressive performance and record of good deliveries.
  The yard, unlike most others, has not, however, had the benefit of public money for investment and modernisation. It has achieved its record of productivity and of good delivery dates in the absence of investment and modernisation. The cranes and other equipment are outdated. The management and workers in the yard have put their case to me forcefully. They have told me that what is needed is the relatively small sum of about £7 million. For that sum the productivity of the yard, good as it is, could be transformed. I do not expect the Minister to accept this figure on trust. I urge him, busy as he is, to find time to meet the people on the ground. They will be able to show him the importance of such an investment. Smith's Dock is one that will help the industry to survive. It is ready to play its full part in the future, as it has in the past.
  I welcome the Bill. I urge on the Minister the need to enable the industry to fight its competitors on equal terms.
  8.43 p.m.
  Mr. Bruce Milan: The Minister will no doubt be gratified to have heard the general welcome that the Bill has had today, but that should not in any way delude him. Considerable concern and anxiety about the shipbuilding industry have been expressed by almost every hon. Member today. The one exception was the hon. Member for Surrey, North-West (Mr. Grylls). He is not here at the moment and I do not therefore intend to reply to any of his points, but for someone who has taken an interest in the industry over a considerable period he exhibited very little understanding of its problems. Indeed,
  1556
  I felt that some of his comments were unworthy even of him.
  Other hon. Members have spoken with a great deal of knowledge of the industry and a great deal of concern for its future. There have been speeches by several hon. Members from Scottish constituencies, and by hon. Members from shipbuilding areas south of the border. My hon. Friend the Member for Jarrow (Mr. Dixon) is able to speak with tremendous personal experience of the shipbuilding industry, as are other hon. Members, including my hon. Friend the Member for Redcar (Mr. Tinn).
  Although I do not wish to encourage the Minister to speak until 10 p.m., he has ample time to reply and I hope that he will deal as adequately as possible with many of the constituency points because they cause considerable anxiety in the areas concerned. I particularly wish the Minister to say something about the Robb Caledon situation in Dundee which was referred to by my hon. Friend the Member for Dundee, West (Mr. Ross). It is a fragile situation. A period of grace has been allowed, but it is not clear what will happen at the end of that period. I should like to see a future for the Dundee yard if that can be achieved. If that is not possible, I hope that alternative employment will be provided in that extremely difficult area.
  The problem of the Govan yard is the most serious difficulty facing British Shipbuilders. Not a single ship is on the stocks there. Ships are being fitted out, which is maintaining employment in the fitting out trades, but Govan is one of the core yards of British Shipbuilders and everyone wants it to continue.
  There was a promise of two bulk carriers, but there is considerable apprehension that the order will not come to Govan. I hope that the apprehension is unnecessary and I know that if the Minister can say something optimistic about the position at Govan my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar) will be pleased to hear it. From a constituency point of view, I shall be happy to hear good news because the Govan constituency is next to my own. My hon. Friend the Member for Glasgow, Govan (Mr. McMahon) would have spoken in the debate but for the fact that he had an unfortunate accident and had to return to Glasgow earlier this week.

  1557
  Many hon. Members have pointed out that the yards in difficulty are concentrated in areas that already have serious unemployment problems. I was horrified to hear the Chief Secretary to the Treasury admit today that the White Paper on public expenditure was assuming that the level of unemployment in this country would rise by 300,000 in the next year, from 1·35 million to 1·65 million.
  We know from experience that such a major increase in unemployment, horrifying as it is for the whole economy, is particularly disastrous for areas that already have a high level of unemployment. In Scotland the prospect must be that we shall more than proportionately share in that rise in unemployment and that must also be true of the North of England and other areas where the shipbuilding industry is located. Today's serious announcement makes it all the more necessary that we should maintain a viable shipbuilding industry in the next few difficult years.
  The levels of reduction on the merchant side which have already taken place since nationalisation and are projected for the next year are considerable. By this time next year, there will have been a 50 per cent, reduction in employment in merchant shipbuilding compared with the figure in July 1977. That is a massive reduction.
  About 65 per cent, of the cost of a ship is bought in and the shipyard cost represents only about 35 per cent. That has implications when we talk about efficiency in British Shipbuilders because the corporation will be affected by inflation, which is outside its control. It also means that the level of unemployment resulting from the reduction to which I referred earlier will be very much greater than the figures that I have quoted. We can add at least the same number of jobs again and probably more. Therefore, we are talking about very substantial reductions in those areas.
  Much of the material that is bought in is manufactured locally. It is an industry with that kind of tradition. We are facing a drastic rundown, even at best. It is a remarkable tribute to the trade unions concerned, and an indication of their confidence in nationalisation, that
  1558
  they have been able, with certain difficulties, still to be ironed out, to accept that kind of reduction. It has been modified, to a certain extent, by increased employment in naval shipbuilding, but it is still a substantial reduction.
  If we have that kind of reduction, and if we are to maintain a viable industry and achieve the increased productivity we all want, and British Shipbuilders and the workers want, we must give some confidence to that part of the industry that remains. It is impossible to have a satisfactory industry if, even with that kind of projected reduction, those remaining are not reasonably sure that their jobs will continue. That is the problem with which we are faced. It is not just a problem for British Shipbuilders. It is a problem for the Government.
  We must see that we maintain a viable industry and that we help it over what everyone agrees will be a difficult period, until, sooner or later, the time comes when the industry will be able to survive and prosper without vast sums of public money.
  I am assuming that there is agreement in the House that we wish to maintain a shipbuilding industry. It would be ludicrous for an island nation such as ours, with a tradition of shipbuilding and the need to maintain naval shipbuilding, to say that we did not wish to have a shipbuilding industry and that we were indifferent about whether the industry prospered or collapsed around our ears. We must maintain the shipbuilding industry, for its own sake and because we cannot afford the continuing de-industrialisation of this country.
  We know that there are massive problems in other industries, such as the motor car industry. Many of our industries have problems. We cannot say, when faced with problems, that it does not matter whether the industry collapses. That would lead to complete and utter disaster.
  I believe that the kind of industry that British Shipbuilders is talking of maintaining—an industry on the merchant shipbuilding side with an annual capacity of between 400,000 and 450,000 compensated gross tons—is the minimum we should aim for. I wish we could aim for something greater than that. If the circumstances were such that we could,

  1559
  realistically, aim for something more than that, I would argue for it very strongly. But most of us accept that there are difficulties. Equally, we accept that having set that kind of level for the industry we must do everything possible to maintain it.
  The level of orders over the next few years is a problem. All the speeches today have been directed at the problem of how to obtain orders over the next few years that will maintain the industry at the kind of level I have mentioned. British Shipbuilders has set a target of 45 ships. I think that that was originally over 12 months. The target it set was for a range of different types of ships totalling between 400,000 and 450,000 tons.
  There is a tendency to look at that target in the short term and to forget that if we are to maintain such a capacity for merchant shipbuilding we shall require that level of ordering every year. Indeed, for a healthy industry we require a good deal more in the next two or three years to get a reasonable order book. Therefore, this is not a short-term problem. We should not simply say "We have a problem of orders for 45 ships over the next 12 to 18 months and if we get through that, things will be all right." That is only the start. We must keep getting this every year if the industry is to survive and prosper.
  The industry has obtained 10 orders within the last month or so. We must all be extremely grateful for that. These orders range from the quite small to the very large. They have a total value of £168 million. However, we would be deluding ourselves if we looked upon this as a ground for optimism. I have always found that in the shipbuilding industry there is a tendency when things get a little bit better for people to become far too optimistic, and when things get a little worse to become far too pessimistic. The latter quality has, unfortunately, been necessary over the past few years because the downturn has been so deep and prolonged. But, just because things have become a little better over the last two or three months, we must not feel that we have turned the corner and that there are grounds for optimism.
  Looking at the world situation—not just at what has happened to the industry in some parts of the world with the general
  1560
  ordering situation but also at the fact that the capacity of the industry has risen and in many cases it has risen in countries which are not subject to the normal rules of supply and demand and cost efficiency for one reason or another—we can see that we are faced with a very difficult problem. We must not allow the small improvement over the last month or two to make us optimistic and to believe that we have not still got a critical problem.
  It is against this gloomy background that we must consider the Bill.
  Obviously, we welcome the increase in the total financial limit that the Government are providing. However, we all know that that limit by itself, although obviously not meaningless—if we require these sums of money, we must pass the necessary legislation—providing for additional total borrowing powers, will not solve any problems faced now by the industry.
  I believe that the Government's mention of a deadline for viability of two years' time is a profound mistake. I know why Governments do this. They think that they must not give people the impression that there will be unlimited sums of money available for an unlimited period I accept that. No one wishes to see that happen. However, it is quite unrealistic, and it actually adds to uncertainty rather than removes it, to lay down a completely artificial timetable.
  With the best will in the world, with the most efficient management, with improvements in efficiency, and with great luck as well as good judgment in obtaining orders, I do not believe that it is realistic to talk about a two-year deadline. I hope that the Minister will make clear tonight that this is not an absolute deadline and that, although the Government are looking two years ahead, which they are perfectly entitled to do, that cannot be the end of Government assistance for the industry. We must see the industry through this period.
  Mr. Adam Butler: I should like to kill this so-called deadline—dead. We have made it quite clear that we chose two years as being preferable to one year, because there was no question but that one year would not be long enough. We felt that to have a two-year period, at

  1561
  least, would give an opportunity to the industry to see that length of time ahead. However, we have made it absolutely clear that if the Government are to go on putting public money into British shipbuilding, if it is necessary at that time—and one does not know what the state of the market will be—we shall weigh very heavily in our considerations the extent to which the industry has been able to put its own house in order and the success which it has had in getting its productivity right and in establishing its own competitiveness. That is the attitude that we have taken.
  Mr. Millan: I am grateful to the Minister for that explanation. It is still slightly equivocal, but I shall take the first sentence of what he has just said as being an important statement—that there is no question of an absolute deadline for the industry.
  Mr. Robert Hughes: Perhaps the Minister should ask his right hon. Friend the Prime Minister to be clear in answer to questions about the two-year period. In an answer to me today on British shipbuilding, she said:
  "Our policy is to continue financial support for British Shipbuilders for a period of two years while they take the measures necessary to achieve viability."
  It is this constant repeating of the two-year period which makes it look like a deadline.
  Mr. Millan: My hon. Friend has made the point that I was about to make. I hope that the Minister will take it on board. There has been a widespread belief, to which Government statements have given some currency, that there is a deadline of 18 months, as it is now, to two years. I take what the Minister responsible for the industry has said as being authoritative—that there is no such deadline. It is useful to get that on the record.
  I now want to deal with the intervention fund. I am obviously disappointed about the overall level of the fund. I would have preferred it to be higher, but I do not complain too much about that because, although the previous Government made large sums of money available for the intervention fund, they found that it was not used to the maximum
  1562
  extent because the orders were not there even with the large levels of assistance that we made available at the time. That is why I am particularly worried about the reduction in the percentage from 30 per cent, to 25 per cent. Indeed, it is in effect a reduction to 23 per cent, of the contract price because the shipbuilders' relief is now being deducted, and that is equivalent to about 2 per cent. Therefore, we have a reduction from 30 per cent, to 23 per cent.
  I was astonished at what the Minister said about this. I know that he is under pressure from the EEC, but he gave the impression that this would not make a substantial difference to the operation of the fund and to the obtaining of orders. That was not our experience in government until May of this year. Indeed, in many instances 30 per cent, was simply not enough, and we found considerable difficulty in getting orders even with 30 per cent. Unless we are able to use to the maximum the "exceptional circumstances" phrase that was used in a parliamentary answer, I do not believe that there is the slightest prospect of getting an adequate level of orders to see us over the next few difficult years. I simply do not believe that 25 per cent, is enough.
  Of course, I regret that. Everyone would like to see the level of subsidy everywhere brought down. However, as so many hon. Members have said, including Conservative Members, we must be realistic about this. We are in a competitive situation, and if the level of subsidy that we are able to offer is less than what is offered elsewhere we simply shall not get the orders.
  There is some misunderstanding about the way in which the intervention fund operates. There is a feeling that, with a 25 or 30 per cent, level, all that happens is that it is made available for every order. That is not the position. The position is that if the economic price at which British Shipbuilders can tender for a particular ship is not sufficient to get the order—in other words, there is a competing tender which is less—one is able to bridge the gap by the intervention fund. Of course, we can use the intervention fund to bridge the gap only to the extent that it is necessary. There is no question of a standard 25 or 30 per cent, subsidy through the use of the intervention fund

  1563
  Therefore, the intervention fund itself does not drive prices down.
  Prices have been driven down in other parts of the world, and if we are to compete we need a higher level of subsidy. That is the most worrying thing that has happened in terms of Government aid to the industry since this Government came to power. I am, of course, referring to the level of the intervention fund being reduced from 30 per cent. to 25 per cent. I hope that the Minister will say something about that.
  Every hon. Member who has spoken in the debate has said that we must make our credit facilities competitive with those of other countries. Mr. Parker's paper has been extensively quoted, and I shall not quote further. I re-emphasise the point made by many hon. Members, that however the rules are applied other nations take good care that ships ordered by their shipowners go into their own yards. That happens in France, Germany, Denmark and elsewhere. Our shipping industry is more complicated and it is not possible for every ship ordered by British shipowners to go into British yards. An improvement has taken place in the past two or three years and credit terms are important in this respect.
  Our credit terms must be competitive, and if that means bending the rules I am in favour of that. The French have been bending the rules on all sorts of things for years and they are irritated now over the Iamb issue because they have been found out explicitly by the European Court. Bending of the rules takes place on a considerable scale in different areas, including shipbuilding and by different countries. We must be aggressive and look after our own national interests. Other countries do that and we must learn to do it as well.
  The Government have said that they are in favour of advancing public sector ordering. I hope that the Minister will give the House details about recent events. It is important to have those details, and to ensure that the question of eligibility for intervention fund assistance—agreed on the public sector side by the previous Labour Government—is cleared up. I hope that the Minister will also speak about the naval side of the shipbuilding industry. We have concentrated today on merchant shipbuilding, but the naval
  1564
  side is important as it gives a cushion to redundancy in some shipbuilding areas.
  After today's announcement that the defence budget will increase, we expect some of that money to go into British shipyards. So far I see little sign of that happening. In a recent debate on the hydrographic services the Minister said that the Government were still considering the feasibility studies on three coastal survey ships that had been announced by the previous Labour Government in April. That does not suggest a great sense of urgency. Naval shipbuilding is good business, costs a lot of money and takes a lot of labour. We want a sign that the Government are fulfilling their pledges.
  I know that the Government favour scrap and build in principle. I am always worried about EEC or international schemes in a complex area such as that of scrap and build. Not every member of the Community is equally enthusiastic about scrap and build. The scheme is likely to be so complex that if a number of nations are involved it will be difficult to get agreement. I am becoming increasingly depressed by the slow way in which these ideas that have been kicking around for a long time are being pushed forward.
  Many hon. Members have said that it is important to get a scrap-and-build scheme in the Community, but that is not absolutely necessary. We can have our own national scheme. Italy has a scrap-and-build scheme which has worked very successfully in the circumstances of the Italian shipbuilding industry. If we can get some agreed rules in the Community to ensure that there is no abuse, which is always possible with an industry which is world-wide and which does not recognise national frontiers, this would be very useful. But we do not have to wait for agreement of an EEC scheme. We can have our own national scrap-and-build scheme. I hope that the Government will say that, unless we reach agreement in the Community very soon, we will introduce our own national scheme. We are perfectly free to do so. If Italy can do it, so can we.
  I turn to the question of building for stock. This proposition seems to frighten Governments and even British shipbuilders, to some extent. I firmly believe that we are faced with the need to

  1565
  consider this matter urgently. Govan is an example of this need. It is not a revolutionary or a radical idea, because private shipbuilders built for stock in the years between the wars and if they had not done so the industry would have been in a worse position than it is.
  That does not mean that one puts any old ship into any old yard in order to keep it going, regardless of the circumstances. That would be extremely foolish. But there are many yards with standard ships which they have been building successfully for some time, for which there is a world market, and where it makes sense to build ahead with a good deal of confidence that such ships will be sold. If the orders are not immediately available, it makes economic sense to build for stock rather than have a situation in which large numbers of people, who will be wanted in the long run, get paid for standing around and doing very little. That is demoralising and uneconomic. I hope that we shall have an indication of the Government's attitude on this matter.
  We also need to look at the new kinds of vessel that are available and for which there is interest throughout the world. My hon. Friend the Member for Dunfermline (Mr. Douglas) mentioned the emergency support vessels in the North Sea. One of these—the BP order—came to Scott Lithgow yards, but we lost the Shell order to Finland. I agree with my hon. Friend that there is no rational explanation for the Finns' tender price, except massive subsidies. In no way could that order have been taken at that price without a massive subsidy.
  I am not advocating indiscriminate subsidies at any kind of level, but there is interest in a further ship of this kind for the North Sea and it would be utterly tragic if it did not come to a United Kingdom yard. Similarly, it would be utterly tragic if the new ideas for oil production platforms which Conoco is pursuing did not come to a British yard. Some work has been done on that platform at Scott Lithgow and naturally I should like to see that order come to Scotland. But it is most important that at least it comes to a British yard, whether it is in Scotland or in some other part of the country.
  1566
  I wish to see the Government adopt an aggressive attitude if necessary, particularly with the oil companies concerned. It must be remembered that they are in the North Sea because the Government allowed them to be there and we should insist that the maximum amount of their ordering for platforms or whatever is done in British yards.
  Very little has been mentioned today about ship repairing or marine engines. However, both are important parts of the industry. I hope that the Minister will say something about them because they also face problems which are just as urgent as those of the merchant shipbuilding section.
  I conclude with a comment about the Government's responsibility. They have already changed their attitude since the election. The policy outlined in the manifesto was to stand back and allow the industry to cope with its own problems. They have since had to face the reality that it is in the national interest for the Government to see shipbuilding and other industries through the problems that they are facing.
  The Government have taken action over the shipbuilding industry, but it is not enough for them to provide a framework, and definitely not the present unsatisfactory framework of the policy on scrap and build and the credit arrangements. The Government must be actively involved with the British shipbuilding industry to solve its problems.
  The Minister has spent a considerable amount of time in the past few months on the problems of the shipbuilding industry. However, he did not appear to understand that these problems can be solved only by active co-operation with the industry. The industry's problems will not be solved if the Government stand back and let it get on with it. We demand that the Government act in the interests of the industry and the large number of people whose livelihoods depend on it.
  9.17 p.m.
  The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): There is a great deal of common ground between the right hon. Member for Glasgow, Craigton (Mr. Millan) and myself in our concern over employment in Scotland—a concern that must be shared by many hon. Members.

  1567
  The right hon. Gentleman pointed out that 65 per cent. of the building costs of a ship are for bought-in items, but the majority of that 65 per cent. is bought from other British companies, including such nationalised industries as British Steel. British Steel is in turn dependent on the National Coal Board. However, our industries are not necessarily helping each other, because of overall costs. British Shipbuilders sells its products internationally and its problems are therefore more acute than some of the other nationalised industries which supply it.
  Unlike the right hon. Member for Deptford (Mr. Silkin), the right hon. Member for Craigton was realistic in accepting that the British shipbuilding industry must reconsider its capacity, and that is encouraging.
  The right hon. Member for Craigton asked about the shipbuilding orders under this Government, but we should not look at it in that way. As my hon. Friend said in opening, the figures this year are just a little more encouraging than last. This year there have been 280,000 tons of orders in 10 months, compared to 246,000 tons for the whole of last year. In this debate it should be sufficient to settle for the fact that four months of the 10 were under a Labour Government and their particular regime—albeit sometimes without any intervention fund—and six months under a Conservative Government.
  Mr. Douglas: I am grateful to the Under-Secretary for giving way. Before moving away from discussion on the Finnish order, I must say that one of the reasons for acceptability on the part of the Offshore Supplies Office was the amount of British equipment involved. When considering international competitiveness, how does that square with £40 million in relation to £60 million—plus? The equipment is standardised and specified by the oil company. It has to be catered for by United Kingdom suppliers. There is no earthly reason in accountancy or actuality terms for the difference.
  Mr. Fletcher: The hon. Gentleman makes a valid point when he refers to specified items in the ship. I plan to refer later to the order that he mentioned.
  This is a small Bill—a rather thin measure—but an important debate, as
  1568
  the contributions from both sides of the House have made clear. The Bill has stimulated a considerable amount of criticism from those who believe that we are not doing enough to protect our shipbuilding industry, not to mention those who believe that we are doing too much. Let me make it clear at the outset that we wish to see a viable and competitive shipbuilding industry in the United Kingdom. Along with other shipbuilding nations we recognise that with the present state of the market such an objective cannot be achieved without a measure of Government support.
  As an indication of our determination the Bill gives effect to part of the policy that we announced in response to British Shipbuilders' corporate plan. It advised that an industry of the present size could not be sustained. Unlimited provision of public funds to safeguard the industry could never achieve that, even if we wished it. The previous Administration admitted that contraction was inevitable. They did not face the issue during the time between the election and the presentation to them of British Shipbuilders' corporate plan. They neither accepted nor rejected British Shipbuilders' advice, but said that they would proceed on a step-by-step basis.
  We are doing a great deal more by proceeding on a two-year basis. When we came into office we found that the intervention fund had lapsed, which made it difficult for British Shipbuilders to obtain orders. The provision that the previous Labour Government had made for intervention fund assistance before it lapsed had been much under-utilised, as the right hon. Gentleman recognised in his speech.
  Mr. Dewar rose—
  Mr. Fletcher: I should like to proceed, if I may. Some hon. Members believe that I should not take all the time that remains, and they are not all on the Government Benches, either.
  The unions have been more realistic than the Labour Party in accepting the contraction in British Shipbuilders' preferred strategy. As hon. Members have pointed out, there are signs that the world-wide market is picking up. With world-wide over-capacity we remain of the view that British Shipbuilders would find it difficult to reach its target.

  1569
  The key is orders, and British Shipbuilders will need to make a determined effort to compete through improved productivity, design and marketing. We all wish to see jobs preserved, but in our view the only way to do that on a sure basis is to be competitive.
  Mr. Dewar: I am grateful to the Under-Secretary for giving way. We shall be indulgent if he takes a little longer than usual, as long as he answers all our questions. He referred to the unions' realistic approach to the problems of redundancy in accepting that a certain amount of labour shedding is inevitable. He will be aware that the unions have an understanding with British Shipbuilders that no redundancies will be compulsory. Does he endorse that, and will he do everything in his power to ensure that that is the policy of British Shipbuilders?
  Mr. Fletcher: The hon. Gentleman pleads with me to give way so that he may repeat one of the arguments that he advanced before I can get anywhere near referring to or trying to reply to the argument when first introduced. Obviously he wants to say everything twice. That is not a good example following the vote that took place last night.
  Mr. Dewar: Answer the question.
  Mr. Fletcher: I shall come to it. It is my intention to try to cover most of the issues that have been raised.
  First, I turn to the speech of the right hon. Member for Deptford. After the experience of five years of a Labour Government, after sitting on the British Shipbuilders' corporate plan for several months and after witnessing trade union acceptance of British Shipbuilders' restructuring plans, I am surprised that he still cannot bring himself to accept the need for some contraction of the shipbuilding industry. There was nothing in the right hon. Gentleman's remarks that suggested that he is any more realistic about the world of industry today than he was 10, 20 or 30 years ago. That is sad, because the right hon. Gentleman always gives the impression that he is a calm, collected person, who is always willing to listen.
  The unions agree that there is over-manning in the industry, but the right hon.
  1570
  Gentleman does not. His advice to the industry is to return to the good old days of the previous Labour Government, to bury its head in the sand and to ignore the economic facts of life. The right hon. Gentleman referred to Government-to-Government competition. He seemed to see no solution to the problem. He appeared to find favour with the fact that there is not a free market in world shipbuilding. I think that that fairly represents the words that he used.
  Surely the right hon. Gentleman recognises that we must tackle the problems of totally disproportionate Government intervention. The appropriate forums are the various international bodies, such as the EEC and the OECD. We have made some progress in reducing the level of Governments bidding for orders. It is in the best interests of the industry and employment in the industry in the United Kingdom that we continue to do so.
  The right hon. Gentleman also referred to public sector orders. He was concerned about the contents of the White Paper on public expenditure. He will know, if only by listening to the debate, about the tremendous dependence of our industry on public sector orders, not least defence orders. He will have noted from the White Paper that defence expenditure is being increased by 3 per cent. That must be significant for the shipbuilding industry.
  Mr. Millan: I asked the hon. Gentleman to give some examples of public sector orders. Are we to get some?
  Mr. Fletcher: In recent months MOD orders have brought contracts to Scott Lithgow, Vickers and Appledore of a total value of about £200 million. There has been a carry forward of public sector orders, but new significant orders have been placed.
  Mr. Millan: Will the hon. Gentleman give us some examples?
  Mr. Fletcher: I began by saying that we should share 10 months—namely, four months to Labour and six months to the Conservatives—to avoid becoming involved in petty niggling about who happened to be in office when orders were placed. There is now niggling about MOD orders, and it is coming from the Opposition Benches.

  1571
  I return to the remarks of the right hon. Member for Deptford on Government intervention and Government aid. The right hon. Gentleman must know that the previous Administration accepted the EEC's fourth directive, under which aids to shipbuilding must be regressive. Surely we would be behaving like characters from "Alice in Wonderland" to object now, when, in accordance with the directive, the aids are being reduced. If the right hon. Member for Craigton did not know that before he came to tonight's debate, he knows it now.
  The right hon. Gentleman asked which countries were opposed to the scrap-and-build policy. So far, the question has not been discussed by the Council of Ministers, although we hope that it will be discussed soon. Therefore, there has been no definitive expression of national attitudes. At this stage, we prefer not to speculate as to what those attitudes might be. Part of the problem is that neither we nor the other countries have, as yet, found proposals upon which to reach a decision. At this stage, we support the idea in principle but we cannot commit ourselves to accepting a scheme the details of which are uncertain. Any scheme must be cost-effective. The rule of thumb should be that he who benefits pays. My hon. Friend the Minister of State made that point, and he has urged the acceleration of a decision on the matter.
  My hon. Friend the Member for Surrey, North-West (Mr. Grylls) is not present, but I should like to say that he was right to remind the House of the severe financial climate in which the provision is being made. He was also right to remind the House that hundreds of millions of pounds should not be approved lightly, as has been done too readily by the House in the past.
  The hon. Member for South Shields (Dr. Clark) asked about scrap-and-build. I have already covered that point. In particular, he asked if the United Kingdom Government would make a financial contribution to it. Again, I have answered that point. Obviously, we would contribute to the right scheme—a scheme that we believe to be helpful to the industry. He asked for an assurance that the matter will be on the agenda in Brussels. Unless there is a reasonable prospect of a proposition
  1572
  coming forward upon which we can reach agreement, the answer must be "No".
  My hon. Friend the Member for Tyne-mouth (Mr. Trotter), with his knowledge in these matters, made an important contribution. He has great experience not just at home but in other countries of the shipbuilding and naval business. He told us that he had come to the House for the debate hot-foot from meeting Chairman Hua. I hope that that meeting will contribute something to the future orders of British Shipbuilders. He was encouraging about the future of the industry. I am glad that someone of his knowledge and experience does not believe that the future of British Shipbuilders is altogether a matter of gloom and doom.
  Dr. David Clark: While the Minister is dealing with the EEC, would he care to comment on the development aid to shipbuilding areas which are administered by his Department? What about the additionality factor?
  Mr. Fletcher: That proposal is being discussed under the regional development plan. Most of the areas affected are special development areas under the Government's regional policy. Aid has been accentuated to those areas, thus reducing the number throughout the country as a whole. The question of additionality is still under discussion.
  The hon. Member for Dunfermline (Mr. Douglas) asked about Government strategy after the two-year period, if the industry remains as depressed and unprofitable as it is today. He would have heard the answer given by my hon. Friend the Minister of State in an intervention during the speech of the right hon. Member for Craigton. What matters is that we have given British Shipbuilders the opportunity to try to put its house in order and to adjust to the world situation. We must see what progress is made in that direction.
  The Shell ESV order was a matter of concern to all members of the Government as it was to all members of the Labour Government. We sought assurances from the Finnish Government about any subsidy involved. They assured us that no subsidy was involved. If any subsidy involved were anything like the difference between the British and the

  1573
  Finnish price, it must have been a substantial strain on the economy of a small country to obtain one shipbuilding order. Whatever we may think about the assurance from the Finnish Government, we should bear that point in mind.
  Mr. Douglas: I have great admiration for the Under-Secretary, but he cannot expect us to be so naive as to accept that the Finnish company Rauma Rapola was interested only in one order. I have no doubt that the hon. Gentleman read the Scottish newspapers. If so, he would have seen that the Finnish company was determined to keep its place in the market and to prohibit and inhibit anybody else coming into it. It was not a one-off; it was a long-term strategy. If the Government fell for it, God help us.
  Mr. Fletcher: We are not talking about a marginal difference between the two prices. Whatever the subsidy may or may not have been, I hope that the hon. Gentleman will agree that the difference was so great that there was no way that the British Government could intervene. Questions about delivery and reliability of the order are for those who placed it, not for the Government.
  Mr. Thin: Even if the Under-Secretary accepts the Finnish Government's assurances, will he explain how the Japanese were able to take an order from Morocco, to which I referred in my brief contribution, with 100 per cent. finance at 3 per cent. interest over 25 years, when the estimated life of the vessel was 15 years? It is difficult to see how there is not some element of fiddling or subsidy there.
  Mr. Fletcher: I cannot answer for the arrangements that may or may not have been made by the Japanese Government in that instance. The Japanese have a much stronger economy than that of the United Kingdom. When it comes to giving credit terms or anything else, the Japanese are in a stronger position than we are in view of the economic situation that we inherited from the Labour Government.
  I turn now to the impatient hon. Member for Glasgow, Garscadden (Mr. Dewar), who assured me that I would share his concern about unemployment on the West Coast of Scotland, which I do.
  1574
  The hon. Gentleman was concerned about Yarrow (Shipbuilders) Ltd. He imagined that it would be extremely cruel and wicked for Yarrow to be sold back to the private sector. Regarding employment prospects should Yarrow become an independent yard again, the hon. Gentleman will appreciate that over the years that company received many naval orders from foreign Governments. The arrangements under which Yarrow now operates must be of concern to the hon. Gentleman, as it is to us. That is one point.
  Mr. Dewar rose—
  Mr. Fletcher: Is the hon. Gentleman going to intervene on every answer that I make to every point, or is this the last one?
  Mr. Dewar: I suspect that it is not the last one. I apologise, but I am very tempted. The logic of what the hon. Gentleman seems to be saying is that he suspects that Yarrow in private hands would be more successful in attracting overseas orders than Yarrow in the hands of British Shipbuilders. Is that the inference that we are to draw from his remarks? If so, it is an astonishing vote of no confidence in British Shipbuilders by a Minister.
  Mr. Fletcher: It is a matter of the evidence available comparing Yarrow as a private enterprise and as a nationalised yard and the number of orders that have been received. I had hoped that the hon. Gentleman was putting his question because of his interest in, and concern for, employment in that particular yard and that he would not be dogged by dogma—as he might have said himself. An announcement has been made about the Scotstoun yard and the hon. Member put the position correctly, although he knows that Yarrow now has the opportunity of taking on more men. That might ease the Scotstoun redundancies. The point he raised concerned the question of an order for Govan Shipbuilders. Details of orders are essentially a matter for British Shipbuilders and there must be commercial confidentiality whether a yard is nationalised or not if it is to have any prospect of competing in world markets.
  As the hon. Gentleman said, British Shipbuilders announced in August in a letter of intent two ships for Govan

  1575
  Shipbuilders. It has not yet become a firm order. I fully appreciate the hon. Gentleman's anxiety and I share it with the work force at Govan. It will be of little comfort to it to know that other yards are also anxious as to whether current negotiations will be successful. The industry faces that situation all the time. It is not unusual for a considerable period to elapse between a letter of intent and a contract. In the meantime, British Shipbuilders is making every effort to secure additional work for Govan. That is the position and there is nothing else I can say about it.
  Mr. Dewar: This is an important point, and it is almost the last time I will interrupt the hon. Gentleman. I suppose that the Minister accepts that when the corporate plan was unveiled to the Govan work force letters of intent were said to be in existence. The work force was led to understand—I do not think he can dispute this—that orders were forthcoming subject to mere formalities. He is now saying that these letters of intent have not been translated into firm orders. I fear that if he leaves it like that it will be taken as a very gloomy message indeed. Work forces are becoming thoroughly disillusioned. Can he at least assure us that negotiations are alive and active and that the Government are optimistic that they can be brought to a successful conclusion? If he leaves the situation as it is, it will be seen as anything but a message of hope.
  Mr. Fletcher: I can only say that letters of intent take time to mature. A letter can take six months or more before it becomes a firm order. That is not unusual in the industry and it certainly applies in this case. I almost hesitate to answer any of the other points raised by the hon. Gentleman because he seems to find impossible to contain himself.
  I come now to the Blackpool agreement. During the talks at Blackpool, British Shipbuilders' officials stated that 6,000 job losses could be met by natural wastage, inter-yard transfers, a sensible ban on recruitment and by voluntary redundancies. The agreement also stated that until all alternative avenues had been exhausted no compulsory redundancies would be declared, and then not without further consultations with the shipbuilding
  1576
  negotiating committee. That was the position then and it is the position now.
  My hon. Friend the Member for Eastleigh (Mr. Price) spoke of British ship-owners whose importance is often neglected in debates such as this. I am particularly grateful that he mentioned how the difficult question of Government-to-Government competition affects not only the shipbuilding industry but the ship owners. They, in turn, are competing in world markets.
  I am always prepared to listen to an hon. Member for Jarrow in a shipbuilding debate. I am sure that the hon. Member for Jarrow (Mr. Dixon) will find that his questions have been answered when he reads Hansard.
  I am tempted not to bother to answer more of the specific issues discussed by the right hon. Member for Craigton in view of his total lack of interest in what I am saying. He asked about Dundee. He will know that British Shipbuilders proposes that the Dundee yard should be placed on a care and maintenance basis at the end of its current order book, which extends some time into next year. Although that was accepted by CSEU the work force took industrial action. Following discussions it was agreed that a drive should be launched to find alternative viable employment for the Dundee yard. A joint working party comprising British Shipbuilders' headquarters staff, representatives of the SNC and the local community has been formed. The possibilities include ship repair and oil-related work. The working party met on Monday and the yard is now working normally.
  Mr. Gordon Wilson: The potential of the Dundee yard for shipbuilding work was part of that agreement.
  Mr. Fletcher: It is important that there should be flexibility in the employment prospects and in the use of that important industrial area. As I understand the agreement, that flexibility exists. I hope that everybody involved will seek to find viable employment. Those are important words whether they refer to shipbuilding or anything else.
  Hon. Members have drawn attention to the contraction of the industry in Scotland which is implicit in British Shipbuilders' plans. It is important to

  1577
  put the facts in perspective. The main brunt of the contraction in recent years has been met in Merseyside and the North-East of England. Since mid-1977 over half of the 8,000 jobs lost in British Shipbuilders were lost in the North-East alone.
  The plans of British Shipbuilders involve the loss of nearly 4,000 jobs in Scotland but a substantial and strengthened shipbuilding industry will be left in Scotland. It will continue to make a viable contribution to employment, particularly on the upper and lower Clyde.
  Shipbuilders throughout the world are finding it difficult to secure orders. Many British shipyards are desperately short of work. However, there are one or two encouraging signs in Scotland. Scott Lithgow, for example, has recently won an order for a 109,000 tonnes deadweight tanker which will provide about 1,300 man-years of work. That company is developing a reputation for advanced technology with its emergency support vessel for BP and the sea bed operations vessel ordered by the Ministry of Defence.
  Scott Lithgow is making strenuous efforts to diversify into offshore work. The Ferguson Brothers Swallow yard has a full order book. Hall Russell, as the hon. Member for Aberdeen, North (Mr. Hughes) will be keen to acknowledge, has a world-wide reputation for small, specialist vessels. Yarrow is fulfilling important defence contracts.
  We are aware of the impact that the contraction of the industry will have on the shipyard areas. The Secretary of State for Scotland has established a working party to tackle the problems of industrial decline in the Clydebank area, including Scotstoun. He has asked the Scottish Development Agency to pay particular attention to the shipbuilding areas. The SDA is likely to play a significant part in implementing the working party strategy for the upper Clyde. It has appointed a senior member of staff to work with the local authorities in Dundee.
  We shall continue to do everything possible to continue the diversification of the industrial structure of these areas. Recent changes in regional support which have improved the relative position of the special development areas should
  1578
  assist in these efforts. We have taken decisive action to support British Shipbuilders in its strategy. We have negotiated an intervention fund.
  British Shipbuilders knows the framework of Government support for the period ahead. We have therefore ended a period of uncertainty for the industry about the support it can expect from the Government. It knows the terms under which it has to meet the challenge of a difficult and competitive industry. The challenge is tough. It is bound to be so, given the continuing excess of world shipbuilding capacity. But it is a challenge that British Shipbuilders and everyone in the industry must do their utmost to meet. The Government will do all they can to help within the framework of the support we have announced.
  Mr. Douglas rose—
  Mr. Deputy Speaker (Mr. Bernard Wetherill): The hon. Gentleman has spoken once in this debate.
  Mr. Douglas: I thought that the Minister was giving way.
  Question put and agreed to.
  Bill accordingly read a second time.
  Bill committed to a Committee of the House.—[Mr. Wakeham.]
  Committee tomorrow.

  SHIPBUILDING [MONEY]
  Queen's Recommendation having been signified—
  Motion made, and Question proposed,
  That, for the purposes of any Act of the present Session to raise the limits imposed by section 11 of the Aircraft and Shipbuilding Industries Act 1977 in relation to the finances of British Shipbuilders and its wholly owned subsidiaries, and to extend the application of section 10 of the Industry Act 1972 to include the alteration of completed and partially constructed ships and mobile offshore installations, it is expedient to authorise—

  (a) any increase in the sums charged on or issued out of the Consolidated Fund or the National Loans Fund under the Aircraft and Shipbuilding Industries Act 1977 which is attributable to provisions of the said Act of the present Session raising to £500 million the limit imposed by section 11 of the Aircraft and Shipbuilding Industries Act 1977 in relation to British Shipbuilders and is wholly owned subsidiaries, and authorising the Secretary of

  1579
  State to provide by order for that limit to be further raised to £600 million;

  (b) any increase in the sums payable out of money provided by Parliament under the Industry Act 1972 which is attributable to provisions of the said Act of the present Session extending the application of section 10 of the Industry Act 1972;

  (c) the payment of any sums into the National Loans Fund or the Consolidated Fund.—[Mr. Wakeham.]

  9.52 p.m.
  Mr. Dick Douglas: I hesitate to intervene in this debate to hold up the amount of money going to British Shipbuilders. Several points were raised during the earlier debate about the marine engineering industry, but the Minister totally failed to take cognisance of that issue. If there is a flow of funds to British Shipbuilders, that is British Shipbuilders in totality. It has responsibility for the marine engineering industry. If the Minister chooses to reply, I should like him to indicate what future he sees for this industry in terms of slow-moving diesel engines, carbines and other work that might go to those areas. I should like to know particularly how much of these total sums being made available in cash flow terms to British Shipbuilders might be designated for the
  1580
  important marine engineering areas of this country.
  The Minister of State, Department of Industry (Mr. Adam Butler): I think, Mr. Deputy Speaker, that this must fall within the money resolution. I remind the hon. Gentleman that I referred to the advantages of extending the home credit scheme to conversions in respect of marine engines. I hope that he will take my remarks as a definite reference to this subject. I believe that my hon. Friend the Under-Secretary of State for Scotland would acknowledge that he did not return to the point in his winding-up speech on Second Reading. He perhaps felt that the reference that I made was sufficient as a general reference and that it was probably not the right occasion for him to deal with particular points. As for the money resolution, a sum of money is provided for under clause 2 of the Bill for the extension to conversions. On the borrowing limit within British Shipbuilders as a whole, some of that money will be available for the marine engine activities of that company. I hope that my remarks satisfy the hon. Gentleman.
  Question put and agreed to.

  EUROPEAN COMMUNITIES (WHEAT AGREEMENT)
  9.54 p.m.
  Mr. Nigel Spearing: On a point of order, Mr. Deputy Speaker. You may know that there has always been difficulty about the documentation of some of these documents. I draw your attention to the agreement that the Government of the day place in the Library a list of the documents to which hon. Members may wish to refer in the course of debates of this sort.
  I think that you will have in your possession, Mr. Deputy Speaker, the letter dated 25 October from the Ministry of Agriculture, Fisheries and Food which cites seven principal sets of documents relating to this debate. But it does not cite either of the documents mentioned in the schedule to the order, namely, the two treaties. In addition, you will have had your attention drawn to and will have in your possession another document of a parallel nature to those treaties and to which no reference is made in the document laid in the Library.
  In view of these principal points, I submit that the documents have not been drawn to the attention of Members and that the Government have not fulfilled their duty in the matter. Due to the irregularity and the anomaly surrounding the treaties mentioned in the schedule and the alternative treaties which are available and printed, I ask that you exercise your discretion and accept a motion to adjourn the debate immediately the motion has been formally moved, to allow these matters to be fully and properly discussed before the merits of any treaties are debated.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): I thank the hon. Member for Newham, South (Mr. Spearing) for his preamble. The matter was drawn to my attention as I entered the Chamber. I have examined the letter to which the hon. Member referred, and it is true that the fifth extension of the convention is not mentioned in it. However, the fifth extension is mentioned on the back of the draft statutory instrument, and I take the view that anyone wishing to take part in the debate and examining the draft
  1582
  statutory instrument would see that the fifth extension was necessary for the debate and would be able to obtain a copy. As I understand it, a copy is freely available in the Vote Office. I do not think, therefore, that the hon. Gentleman has made a very strong point.
  Mr. Spearing: Further to the point of order, Mr. Deputy Speaker. It is true that the fifth extension of the convention is mentioned in the document. The schedule reads:
  "1. Protocol for the Fifth Extension of the Wheat Trade Convention"
  and so on. However, when I asked the Vote Office for documents relating to this debate, the only document I was given was the single sheet of the order. The protocol for the fifth extension of the wheat trade convention mentioned in the schedule, embodied in two documents, is apparently within the Official Journal of the European Communities. The number is L.152, 20 June 1979, page 10. As far as I am aware, these documents are not in the Vote Office. They are in the bound volume of the Official Journal and are not generally available to Members.
  There is a further matter relating to a Command Paper—Cmnd. 7593—which is not drawn to anybody's attention in the letter, in the Official Journal or in the schedule to the order.
  In view of these two further factors, I submit, Mr. Deputy Speaker, that a debate on a motion to adjourn this debate would be in order, particularly since for a number of years there have been difficulties of this nature. Rather than delay the House with a long series of points of order, which I and my hon. Friends, in developing these factors, may feel compelled to put to you, it would surely be for the convenience of the House to have a debate on that matter—which is within your discretion—so that it can be thoroughly aired.
  Mr. Deputy Speaker: The hon. Member would have a valid point if the papers were not available, but the Official Journal of the European Communities is reprinted in toto in Cmnd. 7593. The documents are, therefore, available for the debate.
  Mr. J. Enoch Powell: Further to the point of order, Mr. Deputy Speaker. You have just informed the House correctly that the contents of the

  1583
  document, as cited in the schedule, are available as a Command Paper. That, of course, is the natural form in which a document to be brought to the attention of the House would be available. But we are confronted with the fact that it is precisely that Command Paper which is not referred to in any portion of the document before the House.
  I am aware that there is a precedent, unfortunately, in section 77 of the Finance Act 1978, for legislation by this House by reference to a European Communities document. We are not here in that case, because we have a Command Paper which contains the requisite text. Unfortunately, however—and I support the submission made by the hon. Member for Newham, South (Mr. Spearing) that this is a fatal flaw against the debate continuing—no reference has been made to the Command Paper, and until the statement made by yourself, Mr. Deputy Speaker, most hon. Members would have been unaware that there was a Command Paper containing what purports to be the text of a treaty.
  Mr. Deputy Speaker: The papers are available, and the Library has a list of the documents which are necessary for reference in the debate, including the Official Journal. On the back of the draft statutory instrument, as I have already told the House, is a list of the other papers which may be required in the debate. They are also available. I do not think, therefore, that the right hon. Gentleman has a strong point in regard to adjourning the debate. When debate has been adjourned in the past, it has been because papers have not been available. In this case the papers are available.
  Mr. Douglas Jay: Further to the point of order, Mr. Deputy Speaker. I also, in the course of the afternoon, inquired at the Vote Office in the Lobby for the papers which were relevant to the debate. I was handed this single sheet entitled " The European Communities (Definition of Treaties) (International Wheat Agreement) Order 1979 ", and nothing else. I inquired whether there were any other documents relevant to the debate and was told that none was available.
  We are now informed that there is in existence, apparently, a Command Paper which is, in fact, the treaty which we are
  1584
  being asked to discuss. There was no reference to that in the Vote Office, and there is no reference to that Command Paper in the order which is before the House.
  We are, after all, being asked this evening, in effect, to legislate. We are under this curious procedure when the House is asked to declare that a particular treaty is a treaty for the purpose of the European Communities Act 1972. We are giving validity in United Kingdom law to that treaty. Surely, it is a most anomalous position if the actual document—in the form of a Command Paper, as usually happens—is not available to the House. There was, indeed, no way of discovering that it existed until the debate commenced.
  Mr. Graham Page: Surely, Mr. Deputy Speaker, if there are quite clear references to the Official Journal in the schedule to the order and the Official Journal is available in the precincts of the House, it is not necessary to put copies of that in the Vote Office. If it were necessary to put in the Vote Office copies of every document mentioned in every statutory instrument which comes before us, the Vote Office would be completely cluttered up with documents. If documents are referred to in the order, in an explanatory note, or in the schedule, surely it is for right hon. and hon. Members to search them out within the precincts of the House, whether they be in the Vote Office in the basement or in the place on the other side of the road where the Official Journal is kept.
  Mr. Spearing: Further to the point of order, Mr. Deputy Speaker. I am not sure whether you or the right hon. Member for Crosby (Mr. Page) have grasped the original point that I sought to make. For that I must ask your forgiveness. The documents to which the right hon. Gentleman referred, and to which you referred, Mr. Deputy Speaker, and which are named in the schedule, are part of the Official Journal. You, Mr. Deputy Speaker, have a photocopy of it, as I have. I suspect that we are the only two hon. Members to have it. But it is not mentioned in the letter dated 25 October from the Ministry of Agriculture, Fisheries and Food. However, it is mentioned in the schedule to the order. All Governments have said that they would

  1585
  place in the Library letters informing hon. Members of the documents that are relevant to a debate.
  Neither Command 7593, which is a mysterious parallel and which no one would know about, except by chance, nor any extract from, or reference to, the Official Journal is in the letter deposited in the Library by the Ministry of Agriculture, Fisheries and Food.
  Those facts, the undertakings given by Governments of both parties in respect of documents and the presence of the other Command Paper, which is not mentioned anywhere, justify the House being given some clarification before we proceed. If the House as a whole learns that we have not been able to clarify the matter, there could be further problems and difficulties that could be resolved in an easier and more pleasant way this evening.
  Mr. Deputy Speaker: May I remind the hon. Gentleman that a previous Speaker made a ruling about the availability of papers. The hon. Gentleman may have been in the House at the time. Mr. Speaker said:
  "I have decided, therefore, to accept the recommendation of the House of Commons (Services) Committee that in future a Department should supply to the Library in advance a list of all those older papers which appear to it to be relevant to a forthcoming debate."—[Official Report, 21st February 1966; Vol. 725, c. 34]
  The list placed in the Libary is of the older papers, and the draft statutory instrument has on the back of it a note of the further papers that are required.
  I do not know what was or was not said to the right hon. Member for Battersea, North (Mr. Jay) when he went to the Vote Office, but presumably he looked at the statutory instrument and saw that the fifth extension was mentioned. He could have gone to the Library to obtain a copy of the Command Paper.
  Mr. Spearing: It is not there.
  Mr. Jay: On a point of order, Mr. Deputy Speaker. I was not able to go to the Library to obtain a copy of the Command Paper because its designation was not mentioned on the order that was given to me.
  Mr. Spearing: Nor is it mentioned anywhere else.
  Mr. Deputy Speaker: All the documents are available, and my strong feeling is that if all the documents are available the debate can surely proceed. If documents were not available, it would be unreasonable for the debate to proceed, but they are available and have been properly printed. I think that we should proceed with the debate. In view of the points of order that have been taken, I should make clear that the one and a half hours for the debate will start now.
  10.8 p.m.
  The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): I beg to move,
  That the draft European Communities (Definition of Treaties) (International Wheat Agreement) Order 1979, which was laid before this House on 25th July, be approved.
  The wheat trade convention and the food aid convention comprise the International Wheat Agreement which came into operation on 1 July 1971 for a period of three years. It has been extended periodically since then by protocols, the most recent extension expiring on 30 June 1979. Protocols extending both conventions for a fifth time for a further two years, to 30 June 1981, came into operation on 1 July 1979.
  The main purpose of extending the conventions is to keep the machinery of the International Wheat Council and the food aid committee in being so that negotiations on new conventions can continue in those forums.
  It might assist if I remind the House of the purpose of those two bodies. The objectives of the wheat trade convention are to further international co-operation in connection with world wheat problems, to promote the expansion of international trade in wheat and wheat flour, to contribute to the fullest extent possible to the stability of the international wheat market and to provide a framework for the negotiation of economic provisions in a new wheat trade convention. The objective of the food aid convention is to carry out a food aid programme, with the help of contributions, for the benefit of developing countries.
  After a number of years of preliminary negotiations within the International Wheat Council in London, a negotiating conference was convened in Geneva under the auspices of the United Nations

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  Conference on Trade and Development in February 1978. The aim of this conference was to conclude a new international grains arrangement, comprising a new wheat trade convention with substantive economic provisions, a new food aid convention with an objective of 10 million tonnes of aid annually and also a consultative arrangement on coarse grains trade.
  Three sessions of the negotiating conference were held in Geneva in February and March 1978, November 1978 and January and February of this year. By the end of the third session in February this year, negotiations on coarse grains and food aid were nearing a conclusion. However, discussions on the economic provisions to be included in a new wheat trade convention ran into difficulties in three main areas. I should like to explain those to the House for the sake of clarification.
  The first main area of difficulty related to the level of prices within which the market should stabilise. The second area of difficulty related to the volume of reserve stocks necessary or desirable to achieve stabilisation. The third area of difficulty was the extent to which the special provisions should be contained within the agreement in order to assist developing countries to hold stocks and thus participate fully in the new convention.
  It became apparent that fundamental issues such as those I have explained could not be easily resolved to the satisfaction of all the parties. Accordingly, the chairman of the conference suspended the proceedings until such time as a basis for their resumption could be established.
  I should stress that the United Kingdom's part in these negotiations—we participated in this with the European Economic Community—was to attempt to achieve a workable agreement which would make a real contribution to world food security through the stabilisation of wheat prices on the world market.
  No agreement could be regarded as meeting these objectives unless it attracted significant support from a reasonable number of developing countries, since those countries account for about 50 per cent. of world trade in wheat. Equally, we believe that any new agreement must recognise the legitimate demands of
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  efficient exporters to ensure that prices on the world market are sufficient to cover the cost of production, otherwise there can be no certainty that supplies will continue to be available to the market.
  The European Economic Community attempted to tread a middle course between the opposing points of view—obviously, there was an element of balance to be struck here between importers and exporters—and has been instrumental in seeking to protect the interests of the smaller developing importers.
  It is, perhaps, not surprising that the suspension of negotiations—I acknowledge this—has been widely deplored by other international organisations concerned with food security. Certainly it is apparent that failure to stabilise the wheat market must place developing importing countries at risk as to the availability of supplies at prices which they can afford.
  I emphasise that we are, therefore, anxious to ensure that negotiations should continue as soon as there is a reasonable basis for further discussion.
  Mr. Spearing: The Minister mentioned the protection of the interests of smaller importing countries. Can he tell us whether those countries are inside the EEC and, if they are, which they are? If they are outside the EEC, could he cite examples and aver that it is in the interests of the EEC to look after the interests of those countries that are outside its boundary?
  Mr. Buchanan-Smith: Yes, it is in the interests of the EEC to look after them. These are countries outside the EEC. I hope that that is one of the points which that hon. Gentleman will acknowledge in this debate, because it demonstrates an outward-looking responsibility of the EEC.
  In relation to that, I am very glad to say that the United Kingdom Government have been taking a lead. We have been endeavouring to strike the correct balance. There is this balance to be struck, because the EEC, as the hon. Gentleman knows, is not the major exporter on to the world market. Obviously we have interests in that. What we have tried to do is to strike a balance between

  1589
  the other major exporting countries, particularly the United States of America, and the importing developing countries, which are the smaller countries to which I referred.
  Mr. Spearing: Which are they? Name them.
  Mr. Buchanan-Smith: Having said that, I should like to point out that recent developments on the world wheat market have not made the conclusion of negotiations any easier. If anything, things have become more difficult since the suspension of negotiations. In particular, as we know, prices on the world markets have firmed up, partly as a result of the increase in demand and partly in response to the difficulties faced by major exporters in handling and transport.
  The situation is not critical, in that world wheat stocks are high and, statistically at least, there is no shortage. However, the current level of prices has increased exporters' expectations of future returns, and the various logistical difficulties that have been experienced this year, arising mainly in relation to weather, shipping and other such factors, have called into question the extent to which a reserve stock policy could be effective in stabilising prices as long as the majority of the stock is held, as it is at present, by the exporting countries.
  In conclusion, I should confirm that the International Wheat Council is making every effort to attend to these outstanding issues, but in the meantime we have to make sure that the extension of the present agreement is not only the best that can be achieved but is in itself a contribution towards world food security because it provides for the continuing availability of food aid to those who need it and because it encourages Governments who are parties to the agreement to keep a careful eye on develpments in the wheat market.
  For those reasons, I commend the order to the House.
  10.17 p.m.
  Mr. Gavin Strang: The Minister of State has explained that the order is necessary so as to provide for an extension of the current agreement and, indeed, that without such an extension we would not be able to continue with the International Wheat Council and
  1590
  the food aid committee. I think that all hon. Members would want to pay tribute to these organisations, and I do not believe that anyone in the House would want to prevent the order going through and thus to prevent the continuation of their valuable work.
  The Minister of State also referred to the breakdown in the talks which were aimed at providing for a new wheat agreement, a much more ambitious agreement, of course, which aimed at buffering the changes in world price by internationally co-ordinating reserve stocks. That is an objective to which most Opposition Members would subscribe, as, perhaps, would the Minister himself.
  Of course, the European Commission handles the trade negotiations on our behalf and on behalf of other member Governments within the European Community. We can all comment on the reasons for the breakdown of the talks, but I would express the view that in this situation I do not think that the Community has been at fault—putting it at its lowest—as has been the situation perhaps, for example, in the international sugar negotiations, where the stance of the Community in relation to the International Sugar Agreement was nothing short of disreputable.
  It is not my intention to take up the time of the House on this matter. I know that a number of my right hon. and hon. Friends wish to particiate, as, I suspect, do some Conservative Members. Nothing that I say should be construed as indicating that we are against the order.
  It was my hon. Friend the Member for Newham, South (Mr. Spearing) who provoked this debate. It is right that he should have the opportunity so to do. I am not saying that I agree that we should have had this debate on the Floor of the House, but I defend my hon. Friend's right to provoke the debate. I know that he wishes to develop some interests that he has in the general area of the Community's position in relation to world commodity agreements and so on. Therefore, we are happy to support the order.
  10.21 p.m.
  Mr. Richard Body: I agree entirely with the hon. Member for Edinburgh, East (Mr. Strang) when he said that the Common

  1591
  Market had behaved in a disreputable way over the International Sugar Agreement. It has been almost as disreputable over wheat. The hon. Gentleman must be well aware that the Common Market has largely been at fault in not enabling an agreement to be reached at Geneva under UNCTAD. Had that agreement been reached last February, we would not now be troubled with this order and the necessity to continue the International Wheat Council, which since 1971, when it was established, has achieved very little and, indeed, seeks to he no more than just a forum of discussion.
  In a sense, this is a rather futile exercise. We are invited to approve an Order in Council which has been laid in accordance with section 1(3) of the European Communities Act. But the treaty with which we are concerned is a protocol. If one looks at article 6 of that protocol, one sees that the signatory Governments are required to lodge their instruments of ratification with the United States Government before 22 June 1979. We know that the signatory Government in regard to this country has lodged its ratification. But it has not been the United Kingdom Government.
  If one looks at article 3 of the protocol, one finds that the word "government" in relation to this country means the EEC. Therefore, it is that institution that has asserted itself as the Government of this country—that is the very word used—for the purpose of the protocol. We also know that in accordance with article 1 of the protocol this convention has taken effect and continues until 30 June 1981. That remains a fact whatever action this House now seeks to take. If we all troop into the "No" Lobby tonight and vote against the order, it would not have the slightest effect, because an institution purporting to be the Government of this country has ratified the protocol, which is now valid in international law and cannot be invalidated.
  I return to the reason why we are concerned with the order. As my hon. Friend the Minister of State explained, the Geneva talks under UNCTAD collapsed not so many months ago. We know the reasons why. My hon. Friend gave three, but the outstanding one was the failure to agree on the level of prices. That failure was due to the Common
  1592
  Market under the influence of France. It was not under our influence, because in so far as we expressed our opinion we negotiated on behalf of the developing countries that would import the wheat. I believe that the United Kingdom Government played a fair and notable part in those negotiations as one of the 40 countries at the conference.
  The conflict was between the Common Market, under the influence of France, and the United States. This was a conflict between a high-cost producer and a low-cost producer. In any clash between a high-cost producer and a low-cost producer over how the world market is regulated, it is plain common sense that the fault lies with the high-cost producer. It was the behaviour of France and the Common Market at that UNCTAD conference of 40 countries that caused to talks to fail. The conference was summoned in February 1978 by the United Nations because of the desperate plight of so many importing countries of the Third world which needed wheat supplies from the principal donor countries willing to supply them.
  Before that conference, 4 million tonnes was being made available to the Third world countries and the whole purpose of the talks was to jack it up to 10 million tonnes. That increase of 6 million tonnes would have been invaluable to the developing countries. Yet those talks crashed because of the utter selfishness of the high-cost producing countries within the EEC.
  All the high hopes of the developing countries crashed dismally and there seems to be no prospect now of the conference being reconstituted. I do not think that my hon. Friend can offer any hope of its being reconstituted for some time. If there was hope, there would be no need to fall back on the talking shop of the International Wheat Council, which has not sought to do much in the years of its existence. With all due respect to those who serve on it, it has achieved nothing since its inception in 1971. It is simply an international quango.
  I would not say the same about the food aid programme, which has achieved a great deal, and we all pay tribute to it. However, it has not done enough, and the whole purpose of the Geneva conference under UNCTAD was to liberalise the

  1593
  international market and give the developing countries access to a further 6 million tonnes of wheat.
  We must now ask ourselves whether there is any chance of the convention succeeding. I do not think that it will achieve anything more than it has achieved since 1971. We should press other member States of the EEC to agree to a reconstitution of the UNCTAD conference, and we in the United Kingdom should take a lead in pressing for a more liberal attitude towards the developing countries and an agreement with the United States about the level of prices.
  If that were achieved, there could be little doubt that the UNCTAD conference would succeed, and then there would be no further need for the International Wheat Council. We could dispense with it, as we have no happy memories of its achievement in its eight years of existence.
  10.29 p.m.
  Mr. Nigel Spearing: May I first thank you for your patience, Mr. Deputy Speaker, at the outset of the debate. You read from the Speaker's statement of 1966, which referred to old documents and which technically debarred you from accepting an application to move the adjournment of the debate. However, I wish to draw to the attention of the House a point of substance in relation to documentation. I shall therefore first address myself to the procedural part of the order before turning to the wheat agreement itself.
  As we all know, difficulties have arisen over the procedure for ratifying international treaties, some of which may have legislative effect in this country by means of a statuory instrument procedure designed to give effect to domestic legislation. I hope that the suggestions of the Procedure Committee, which was composed of hon. Members with various views on European matters, will rid us of that problem. The other day 20 hon. Members rose in the House to enable the debate to take place in this Chamber and not upstairs, and to ensure that hon. Members, the Leader of the House and everyone in government is aware of the effective nature of statutory instrument procedure in general and its particular application to definition of treaties orders.
  The controversy surrounding the order in question is in two parts—the documents
  1594
  cited in the schedule and the nature of the explanatory note. The schedule names the international treaties and refers to protocols for the fifth extension, and so on of the Official Journal of the European Communities, No. L152, 20 June 1979, page 10, and the second page 13. Reference has been made to the copy which some hon. Members have obtained from the Library.
  Coincidentally and fortuitously—and through the excellent service of Her Majesty's Stationery Office daily list or pink slip—and I cannot remember which—I discovered that there was a document called Cmnd. 7593, Miscellaneous, No. 16 (1979), which is in Her Majesty's treaty series. As far as I am aware, that is precisely the same document as that which is contained in the European Communities journal. However, in citing the treaties, the order cites the European Communities journal extract and does not cite Her Majesty's paper deposited in this House by command, which is a parliamentary paper.
  Even if the Minister of State, Ministry of Agriculture, Fisheries and Food, cannot explain that extraordinary situation tonight, he should certainly draw it to the attention of the Lord President of the Council, who is responsible for orders, and of the Foreign Secretary. It appears that this House, for the first time, is being asked to give assent to a treaty the existence of which is purported to be solely within the journal of the European Communities. In doing that, I suggest, the order implies, suggests or condones that the institutions of the Community not only have the right to make the treaty by virtue of the European Communities Act—which I concede—but that they have the right and obligation to provide, print and supply the substantive copy of a treaty to which Her Majesty, Her Majesty's Government and the United Kingdom are party. That is a constitutional matter of which the House should take serious note. However, it goes further than that. As I have shown, that need not have been cited so. It could have added Cmnd. 7593 as a sort of dual reference, although I think that that would have been bad. Instead, it is silent about the treaty series paper that was presented to Parliament by the Secretary of State for Foreign and Commonwealth Affairs by command of Her Majesty in July 1979.

  1595
  Through the lack of either notice of such a paper in the order or availability in the Vote Office or the Library, or, with respect to you, Mr. Deputy Speaker, through lack of ability to debate adjournment, the Command Paper has not been brought to the attention of the House. I suggest that that is verging on a matter of privilege. It suggests that authority rests not with Her Britannic Majesty, who has the sole prerogative to make treaties with foreign Powers, but with the institutions of the European Community.
  I have to adhere to the European Communities Act 1972 out of law but not conviction, but I feel that even those who agree with that measure will not agree with the suggested transfer of responsibility. I shall raise the issue again. I hope that the Government will account for this extraordinary situation that throws constitutional matters of great significance into the current arguments about the EEC.
  I move on to the explanatory note. I do not know how many times I have patiently and carefully protested about the non-explanatory nature of so-called explanatory notes. I know that it is strictly not part of the order. However, it is meant to explain and it does nothing of the sort. It reads:
  "This Order declares the 1979 Protocols for the Fifth Extension of the Wheat Trade Convention and the Food Aid Convention constituting the International Wheat Agreement 1971 (Official Journal of the European Communities, No. L152, 20th June 1979, pages 10–15) to be Community Treaties as defined in section 1(2) of the European Communities Act 1972. The International Wheat Agreement 1971 is a Community Treaty by virtue of section 1(2) of the European Communities Act 1972 and this Order ensures that the Protocols which extend its validity will also be Community Treaties."
  I do not believe that anyone, however carefully and however many times he reads that, will understand what on earth it is all about.
  This is not the first time that hon. Members have made these comments about explanatory notes. When we had a similar order before us last year the then Chairman of the Joint Committee on Statutory Instruments, the right hon Member for Crosby (Mr. Page), noticed a similar explanatory note so called. The Committee called for further particulars. I quote from the Thirteenth Report of the Joint Committee on Statutory Instruments—Session
  1596
  1977–78, House of Commons 16-xlvii. The fourth paragraph reads:
  "the Committee draw the special attention of both Houses to the draft European Communities (Definition of Treaties) (No. 7) (International Wheat Agreement) Order 1978 on the ground that it requires elucidation, which does not appear from the draft Order itself or from the Explanatory Note printed with it. Such elucidation has, at the Committee's request, been provided in written evidence submitted by the Foreign and Commonwealth Office, which is printed as an appendix to this Report".
  Sure enough, as an appendix to the report there are at least three pages of fairly close print which set out in reasonable detail what it is all about. The Joint Committee of last year drew the attention of Her Majesty's Government, especially the Foreign and Commonwealth Office, to this matter when it laid this year's order, which is a virtual repeat. Surely it should have been most careful to take account of what had gone before, mend its ways and expand the explanatory note. It would have had half a page in which to do so. But it did not.
  It is not for want of trying. On 25 April 1977, this matter was raised with a Minister in the Labour Government by my right hon. Friend the Member for Battersea, North (Mr. Jay), who asked:
  "Is my hon. Friend giving an assurance that in future the Government will publish some form of memorandum simultaneously with the order, giving the information for which we have asked? Is that definite?"
  He was asking not even for a full explanatory memorandum but for an additional one, which I admit is second best. The then Minister, my hon. Friend the Member for Oldham, West (Mr. Meacher), said:
  "I am very sympathetic to the request that my hon. Friend the Member for Newham, South made, which has been voiced on both sides of the House. I hope that he will leave it to us to examine the best way in which that can be done."—[Official Report, 25 April 1977; Vol. 930; c. 989.]
  Of course, nothing was done. So, on 16 March 1979, I had an Adjournment debate, no less, on the whole matter relating to the way we designate treaties and ratify them. I asked my right hon. Friend the Member for Ebbw Vale (Mr. Foot), then Lord President of the Council and therefore responsible for these orders. He dealt with my request as though it

  1597
  had been voiced for the first time in the House. Referring to me, he said:
  "My hon. Friend asked me further about the explanatory memorandums and how much information they gave to the House and the country. I again acknowledge to him that I think that one of the difficulties the House has is the way we get the information. If he will give me the opportunity of sending him the details, I can indicate to him that we have sought to carry out our earlier undertakings. I should have thought that considerable improvement had been achieved, although I have no doubt that there is further progress to be made.—[Official Report, 16 March 1979; Vol. 964, c. 1069.]
  Of course, no progress has been made.
  I wonder how far polite requests can go, no doubt to different civil servants as they move round in progression, and to different Ministers, who speak with the same voice to the same briefs. Such requests are constantly presented by hon. Members, perfectly reasonably, so that they, let alone the public they represent, at least can understand these documents—and, after all, the public may be the subject of such legislation. Just how much further are we to go? Are we to get out guns and shoot people? Are we to seek to divide the House? What are we to do? I would seek the guidance of some hon. Members opposite, because it is not just a matter for one Government or the other; it just goes on and on and on. I for one have just about had enough, and I think that I had better take a leaf out of the book of my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham), who occasionally gets his way by doing what may appear to be unreasonable things in support of reasonable objectives.
  New Members opposite who have had to wait here in case there is a vote might begin to learn. It is not just a matter of sides; it is Back Benchers versus the rest. If it is difficult for us in respect of those who are a few hundred yards up the road in Whitehall, this sort of situation brings general politicians and general bureaucracy into disrepute. It is a disease which has to be stopped, and we have got to stop it here.
  Mr. John Carlisle: I am here not to await the Whips' fancy but to hear a reasonable debate on a very important topic, and I think that the diatribe we have heard for the last half-hour has disillusioned most of us on this side of the House.
  Mr. Spearing: I gave way because I was about to proceed to the substance of the matter, but I am afraid that the hon. Gentleman, being a new Member, will, unless ways are mended, be of my opinion within a few months or years. I hope that he will not be, because I hope that a new intake of Members will ensure that the Executive and those who serve them take more cognisance of what is said in the House and serve the general public in the way that they deserve, and not wrap things up in technical legal jargon which the public cannot be expected to understand.
  I turn now to the substance of the matters before us. I accept that these are important matters. That is why we are having a debate on the Floor of the House and why 20 right hon. and hon. Members stood.
  The International Wheat Agreement 1971, of which this is a renewal, is a disagreement, not an agreement. It has been dragging on because it has not been implemented. The objectives of the agreement, Cmnd 4953, are:

  "(a) To further international co-operation in connection with world wheat problems, recognising the relationship of the trade in wheat to the economic stability of markets for other agricultural products;

  (b) To promote the expansion of the international trade in wheat and wheat flour and to secure the freest possible flow of this trade in the interests of both exporting and importing members, and thus contribute to the development of countries, the economies of which depend on commercial sales of wheat".

  Wheat and starving people are of great concern to all Members on both sides of the House.
  I was disappointed with the Minister's opening speech. He was coy about some of the reasons for the agreement not having borne fruit. The order authorises a treaty to extend it for a further two years, so we shall not have another opportunity to debate it for two years, unless agreement is reached in the meantime.
  The real reasons for the disagreement continuing are the policies of the CAP and of the European Economic Community as regards its international wheat regime and its effect on the world wheat market. Such is the growing volume of wheat produced in the EEC that there is a risk—I put it no higher than that; the Minister will do doubt tell me if I am

  1599
  wrong—that the United Kingdom will have a wheat surplus next year or the year after that. It may not be a wheat surplus of the grain that we require for bread making, but I suggest that we are perilously near to having our own wheat mountain.
  The basis for that suggestion is a written answer which came to me on 24 October from the Ministry of Agriculture, Fisheries and Food. I asked how much had been spent on intervention buying of certain crops and what were the production subsidies for cereals used for starch manufacture. In 1978 the United Kingdom Intervention Board for Agricultural Production paid out £11 million buying up surplus cereals, some of which would have been wheat, for manufacture into starch. I think that it would come as a shock to most people to learn that such large sums were being spent buying up cereals grown in this country for manufacture into starch. Of course, that £11 million pales beside the £71 million spent by the board on milk support. The significance of those figures is seen in relation to world trade.
  World production of wheat is about 400 million tonnes, of which 70 million tonnes enter world trade. Of those 70 million tonnes, the EEC produces about 10 million tonnes. Therefore, about one-seventh of world trade in wheat, give or take a small proportion, originates in the EEC.
  We tend to think of the United States as the great food bin, but its wheat production is about the same as that of the EEC. Therefore, to some extent we are rivals in exporting cereals. The difference is that United States farmers produce that wheat—I understand that the Australians and Canadians are in a similar position—at a much lower cost than EEC produced wheat. This is for a variety of reasons of which climatic and natural factors are major contributors. The difference is made up in the export of this, approximately, 10 million tonnes of wheat by the EEC by a subsidy.
  Export subsidies, and production grants, and what have you, for cereals as a whole in the draft budget for 1979 amount to about £1,000 million. That is a billion pounds, which, significantly enough, is the same sum as we are having to tip into the budget. That is the measure
  1600
  of it. Roughly the same amount of money as our contribution to the budget is being spent on export restitutions on cereals.
  Granted it is not all wheat, but it is cereals produced in the EEC, including rice which is being dumped on the world market. If one adds subsidised sales and other agricultural aids we get a total of £1,173 million and the bulk of that goes on export refunds. This money goes, in a rather mysterious way, through the intervention agencies and they pay the difference, to exporters, between the EEC intervention price and the world market price.
  Does the Minister regard these as commercial sales? I thought that commerce, in the general sense, was an "at cost" kind of production with a percentage for profit and a percentage for transport, brokerage and the rest of it. Quite clearly the words "commercial sale" can hardly be applied to EEC exports, although, as I have read, the International Wheat Agreement of 1971 is based on commercial sales of wheat.
  I apologise to the Minister for my sedentary interruptions when he sought to reply to my query about who were the cereal importers whom the EEC was protecting. I elicited the fact that they were not members of the Community and I invited him to state the names of the countries concerned. Inadvertently he did not do so. I ask him to tell us the names of these countries and whether they are importing wheat at the world market price or whether they are getting it at a special cut rate from the EEC.
  I take issue with the Minister on the claim that the EEC, by virtue of its participation in the International Wheat Agreement, has an outward-looking, responsible, attitude to what I call world citizenship. I put it to the House—particularly to hon. Members on the Government Benches—that it is the reverse and, though he may not realise it, the hon. Gentleman may have been indulging in the sort of Eurospeak which, as we get nearer to 1984, seems to become more strident.
  I suggest to the Minister that the effect of the sale of this 10 million tonnes of subsidised EEC wheat is to depress the state of the world market. That not only causes the United States Government to have a "set-aside" programme for which,

  1601
  incidentally, they provide some public support, but the sale also threatens the existence of farmers in Australia and the Argentine and in other temperate countries well suited to producing grain and wheat. This situation not only puts land out of cultivation but possibly it puts good farmers out of business, not because they are inefficient, too greedy or have too high standards of living but because they have the disadvantage of competing with the massively subsided exports of EEC wheat.
  There is a danger if the world reaches—as it soon may—one of the periodic five or six year crises for wheat when China and Russia have bad harvests and look for stocks to buy up. The stocks will not be there because the EEC wants lower world stocks than even the United States. That contrasts terribly with its intervention buying and storage policy. The EEC believes that there should be one rule for the EEC and another for the rest of the world. These productive lands should be the areas of wheat production through which the world, operating a policy equivalent to that of Joseph of Egypt, shows compassion to the rest of the world.
  The Community's CAP export policy, to which the Government adhere—worse luck, although less than they did when they first took us into the Community—is not contributing to solving the world problem as it is claimed, but the reverse. Even if that is not so, the policy involves a risk. The Government should look more closely at the effects of wheat exports on the world.
  I hope that the Government will think again about their support for the CAP. They should ensure that in subsequent Geneva meetings we reach genuine agreement. I hope that when we next discuss this matter we shall have better cheer not only for the House and our citizens but better cheer for a hungry world.
  10.57 p.m.
  Mr. Graham Page: I intervene to raise two matters mentioned by the hon. Member for Newham, South (Mr. Spearing). He said that the Command Papers were not referred to in the order. The order does not follow precedent in leaving them out. We have become used to referring to the Command Papers which contain the treaty and not having to
  1602
  chase along the tunnel under the road to the other building to look up the Official Journal.
  Other orders of this type have referred to Command Papers. One would expect Cmnd. 4953, which contains the International Wheat Agreement of 1971, to be mentioned in this order together with the Command Paper containing the fifth extension.
  Following the report by the Joint Committee on Statutory Instruments in which an explanatory memorandum was requested, Departments have provided that Committee with an explanatory memorandum. I understood that the Government gave an assurance that the appropriate memorandum would be placed in the Vote Office before we debated the draft order. The purpose of such orders is to introduce a treaty into the law of this country. One cannot tell from reading the draft order what items of law are introduced. This was debated in the House and Members complained that they did not know which laws were introduced by such an order.
  The assurance was given that the Government would state in a memorandum—although this is a matter for the courts to decide eventually—what items they thought were brought into our law by a definition of treaties order. It would certainly be of great help to right hon. and hon. Members to know the Government's view and to know the purpose of the order so far as our law is concerned.
  I hope that the Minister will see that the debate is checked to discover if I am right in my recollection that such an assurance was given by the then Government. If I am wrong, I seek an assurance that an explanatory memorandum such as the extremely good one given to the Statutory Instruments Committee will be available in the Vote Office.
  11 p.m.
  Mr. Douglas Jay: I wonder whether the Minister can allay some of the genuine anxieties aroused by the procedural difficulties we have encountered. Can he assure the House that, in future, when the substantive document to which one of these orders refers already exists both as a Command Paper and as an entry in the EEC journal, the order will give the reference to the relevant Command Paper instead of, or as

  1603
  well as, the reference to the EEC journal? I would have thought that this step should be possible. It would remove one of the difficulties that we have encountered tonight.
  11.1 p.m.
  Mr. Buchanan-Smith: When the right hon. Member for Battersea, North (Mr. Jay) asks me for a simple assurance, I am immediately put on my guard to expect that it will be one of the most difficult assurances to give. While you have ruled, Mr. Deputy Speaker, that the order is technically in order and properly presented, I have listened carefully to the points of order and to the remarks of the hon. Member for Newham, South (Mr. Spearing) elaborating them. I have also listened carefully to the right hon. Member for Battersea, North, and to my right hon. Friend the Member for Crosby (Mr. Page), whose knowledge of these matters probably exceeds that of any hon. Member in the House. I can assure hon. Members that there has been no intention, in the presentation of the order, to make matters more difficult. I ask them to be patient while I look into the points that have been raised. I have not found it easy, since I am dealing with the matter for the first time. I became more worried on entering the Chamber to find the hon. Member for Newham, South and certain of his hon. Friends waiting to raise these problems.
  I do not believe that it is the intention of any Government to try to obscure these matters and make them more difficult. I would like to look at the points that have been raised. This is not the time for a snap answer. I know that this will be no consolation to the hon. Member for Newham, South, when nothing has changed following assurances from other Ministers and other Governments. But no purpose is served by clouding issues and making them more difficult for hon. Members to understand.
  As the hon. Member for Edinburgh, East (Mr. Strang) indicated, this is an important matter. We want debates to take place in as sensible and useful an atmosphere as possible. I undertake, therefore, to examine those matters for which my Department is responsible and to draw to the attention of my right hon.
  1604
  Friend the Leader of the House the more general aspects.
  I turn briefly now to the specific points raised in the debate about the substance of the order. I am glad that the order has been welcomed generally, and particularly I was glad of the remarks of the hon. Member for Edinburgh, East. Although I accept some of the reservations voiced by my hon. Friend the Member for Holland with Boston (Mr. Body), I believe that the food aid convention has been worthwhile. Although the wheat convention may not have lived up to the aspirations that some may have had for it, it has provided limited help in stabilising world wheat markets. In view of that we must welcome it, but only as a step towards a new arrangement under UNCTAD in the way that I described earlier.
  Perhaps I may take up two points made by my hon. Friend the Member for Holland with Boston. The first concerns procedure. The Government under an order such as this are not the United Kingdom Government but the EEC. The EEC has deposited only a declaration of provisional application, and accession to the protocol will take place only once each member State has ratified in accordance with its own constitutional procedures. There is that protection for the constitutional point that my hon. Friend raised.
  My hon. Friend's second point related to the substance of the order. This is important. My hon. Friend was being less than fair when he said that the EEC was at fault for the UNCTAD conference failing for the three reasons I described. The real reason for the failure of the third session of the conference was related much more to the gap between the major exporting countries, such as the United States, and the importing States. The former is seeking a price that it believes to be necessary to give a proper return to its producers. The latter are naturally hoping to secure wheat at the lowest possible price.
  The main role of the EEC in these negotiations was not to try to encourage the high-price exporting countries but to try to bridge the gap between the two groups who are parties to the agreement. I believe that the EEC had a constructive role to play in those negotiations, and I can assure my hon. Friend that we and

  1605
  the EEC will do our best to work for the reconvening of that conference.
  It is no use trying to reconvene, however, until some of the difficulties have been ironed out. There is no point in reconvening simply to talk. We want to do so to bring forward a new convention, and we shall be working towards that.
  Mr. Spearing: Will the Minister now name some of the small importing States that he believes the EEC is helping?
  Mr. Buchanan-Smith: I shall be delighted to do that, and I apologise for not having been able to do so earlier. I was referring to the smaller importing developing countries which have a deficit in wheat. Gambia and Senegal are examples of the countries I have in mind. There is a fairly long list of others in different parts of the world.
  Perhaps I may deal now with the points of the hon. Member for Newham, South about the role of the EEC. He suggested that it played a somewhat destructive role in world cereal export markets. Frankly, he is being less than fair. The EEC could have the destructive and disruptive role that the hon. Member seemed to claim for it if it had a much greater influence on world markets.
  I should like to put that point into perspective. It must be remembered that the Community does not have a surplus of grain as such but has a fluctuating export of soft wheat and barley that is very much dependent on the harvest and so on, and that it imports very large quantities of cereals, particularly of hard wheat. The hon. Gentleman went through some of the figures and indicated that the EEC share of the world cereal trade is relatively small. Indeed, in the current cereal year it is estimated that the wheat share will be about 7·5 million tonnes, accounting for roughly 10 per cent. of the total world trade. It is important to get those figures into perspective. More than half is accounted for by the export of flour to traditional markets—about 3 million tonnes grain equivalent—and by the Community's commitment to the food aid convention, amounting to about 1·3 million tonnes.
  It is clear, therefore, that the amount of grain put on the world market by the EEC is relatively small in relation to the total figure. It take the hon. Gentleman's
  1606
  point that if even a small quantity is put on the world market in an irresponsible way, it can have a disproportionate effect, and that there can be manipulation on one sort or another.
  Looking at the history of the EEC in recent years, we find that it has endeavoured to release grain to the world market in a responsible way, and as close as possible to the price level established at the time.
  I think that I have answered most of the points made in the debate. I am grateful to those hon. Members who have taken part in it. I am particularly grateful for the welcome from the hon. Member for Edinburgh, East. I hope that the House will be assured on the specific points raised. I shall make sure that the procedural points are drawn to the attention of those who have the responsibility for considering them.
  Question put and agreed to.
  Resolved,
  That the draft European Communities (Definition of Treaties) (International Wheat Agreement) Order 1979, which was laid before this House on 25 July, be approved.

  TROOPER WAYNE BELL
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Le Marchant.]
  11.13 p.m.
  Mr. Ted Fletcher: I wish to put a case for a public inquiry into the circumstances surrounding the death of Trooper Wayne Bell, of the 15th/19th King's Royal Hussars, in West Germany on 14 November last year.
  From correspondence that I have received from the Minister, I can summarise the background to the case. The views that I am now expressing are the views of the Ministry. It appears that Wayne Bell returned to barracks on a Saturday after spending a convivial evening with his friends. There was a certain amount of high spirits when they returned to barracks, and a little horseplay. It appears that they were chasing each other along a corridor when Wayne Bell slipped and banged his head against a protruding pillar. As a consequence, his comrades put him to bed. When he did not recover, they reported to the medical reception

  1607
  station and an ambulance arrived about 10 minutes later. A nursing sister came with the ambulance and in answer to an inquiry she was told that Wayne had been drinking. She may have formed the conclusion that he was under the influence of alcohol. At that time he was conscious.
  When Wayne as taken to the medical centre, the nursing sister carried out a more detailed examination and she noticed two small grazes on the back of his head. She did not attach much importance to that at the time. She reported what she had found to a doctor, who carried out a further medical examination. He also noticed grazes on the back of Wayne's head, but he claims that there were no signs of injury. He concluded that Wayne was suffering from the effects of alcohol and arranged for him to be taken to the unit guardroom.
  The doctor left instructions that Wayne should be woken every 15 minutes, and that was done, but the orderly sergeant-major became concerned about his condition and arranged for him to be returned to the medical reception centre. Wayne was unconscious at that time. He was placed in a bath for a short time in an attempt to revive him, but without success.
  About an hour later it was realised for the first time that Wayne was in a critical condition and he was dispatched by ambulance to the local hospital at Paderborn, where urgent resuscitation was carried out. After about 45 minutes, when Wayne failed to respond to the treatment, he was transferred to a civilian neurosurgical unit at Heesen, where an operation was performed to stop bleeding from the left side of his brain. However, his condition continued to deteriorate and he died on 14 November. A post mortem examination was held on 17 November and it confirmed that there were abrasions on the head, but no fracture of the skull. The cause of death was a deep haemorrhage, which was not apparent when the operation was carried out. That is an outline of the case submitted in the first letter that I received from the Minister in April.
  I then received representations from Mr. Bell senior, which I forwarded to the Minister. I received in reply a letter that contradicted certain parts of the first letter. For example, the time factor was
  1608
  not mentioned in the first letter, but the Minister conceded in the second letter of 14 June that what Mr. Bell had said about the delay in Wayne receiving treatment was largely correct. The Minister wrote:
  "What Mr. Bell says is largely correct. It was two hours from the time Wayne was brought to the guardroom from the medical reception station until he was returned there by Land-Rover."
  I emphasise "Land Rover" because the word "ambulance" was used in the first letter. The letter continues:
  "It is true that once Wayne had been returned to the medical reception station it was an hour before the medical officer was called."
  That information was not in the first letter.
  Mr. Bell senior went to see the German surgeon who performed the operation. The surgeon said that when he received a telephone call from the unit he was advised that Wayne was suffering from alcoholic poisoning, but the surgeon told Mr. Bell that it was apparent to him that Wayne was suffering from brain damage. In fact, Mr. Bell was informed by the surgeon at the clinic that his son had a fracture of the skull, and that his head was struck with such force that the surgeon was under the impression that he had been in an automobile accident.
  There we get a differing medical opinion. One doctor says that there were small abrasions. The surgeon who operated says that the condition was more serious, that it was obvious to him from the start, and that it appeared to him that Wayne had been in a car accident.
  Then there is the suggestion that Wayne was treated as though his condition was due to the effect of alcohol. But the truth must have been quite apparent to the authorities, because they had been told that Wayne had banged his head. In addition to that, Wayne was running up and down corridors in horseplay with his colleagues, and obviously this could not have happened had he been in such a condition through alcohol that he could not have run at all. Therefore, it must have been apparent to the authorities, having been told that he had banged his head, that something very serious was wrong with this boy.
  I ask the Minister this question: why was Wayne sent to the guardroom when beds were available at the medical centre?

  1609
  Why was he sent to the medical centre, transferred back to the guardroom, and sent back again to the medical centre when in fact he could have been kept there?
  These are only a few factors arising out of this particular case. There are many questions that need to be answered, but those questions will not be answered because the inquiry that was held by the military authorities was a private inquiry. Mr. Bell was not allowed to attend, nor was any member of his family. He was not allowed to have a legal representative there. He could not listen to the evidence. This inquiry was conducted behind closed doors.
  Had this accident occurred in this country, there would have been an inquest. A coroner's court would have taken evidence. The coroner and legal representatives would have been able to cross-question witnesses. Parents would have been allowed to be present. At the end of the day a verdict would have been given. If the coroner had had any strictures, he would have made those strictures. It would have been open and above board. It would have been reported in the press. Everyone would have known that justice had been done.
  If a serving soldier in West Germany meets with an accident, there is no public inquiry whatever. Indeed, it has been impossible for Mr. Bell not only to be there personally but even to get a transcript of the proceedings of the inquiry. This gives rise to serious suggestions that the Army may have something to hide. I am not suggesting for a moment that it has something to hide. All that I am saying is that when inquiries are conducted in these circumstances it gives rise to the question whether something is being swept under the carpet.
  I can understand that in certain circumstances secret inquiries are necessary, particularly if they are dealing with information that might otherwise be revealed to a potential enemy, but this, obviously, is not such a case. All that the inquiry had to determine was how Wayne met his death. It could have been determined publicly without any adverse effect.
  I do not want to prejudge the issue. It may well be that the military authorities
  1610
  have done everything that they possibly could in the circumstances. If that is so, obviously they should not object to an open inquiry. But whilst they object to a public inquiry there will always be nagging doubts whether the medical staff concerned exercised the degree of skill and care that is expected of them.
  I am telling the Minister that justice should not only be done but should be seen to be done. Justice has not been seen to be done in this case.
  I gather that there are precedents for public inquiries, because the Minister says in his letter to me:
  "It is not the general practice"—
  I emphasise "general"—
  "to hold them".
  Therefore, I presume that particular inquiries have been held in public. This is clearly a case in which the facts should come out at a public inquiry.
  It is essential that not only the Bell family but other families with sons serving in the Armed Forces—and, indeed, the public at large—should be sure that justice has been done. Therefore, the Minister should reconsider his decision, conveyed to me in a letter, that an inquiry should not be held. I sincerely hope that he will reflect on what I have said tonight.
  The Bell family have gone through a great ordeal through the loss of a much-loved son. Their demand for a public inquiry should not be pushed aside as if their feelings were of no account. They are a military family. The father has been in the Armed Forces for 27 years, and Wayne thoroughly enjoyed the Army. Indeed, he was such a good soldier that he was sent to Darlington to help in a recruiting campaign. It comes as a great shock to the family to see the barriers that are being put up by the military authorities to stop them learning how their son died. As a consequence, it is essential that there should be a thorough inquiry into the circumstances in which this boy met his death.
  I urge the Minister to act quickly. Almost 12 months have passed since the untimely death of Wayne Bell. It will be increasingly difficult, as time goes on, to hold a public inquiry. I understand that, for example, one of the witnesses has left the Service and another has been sent to

  1611
  Northern Ireland. The further we get away from these events, the more difficult it will be to hold a public inquiry with all the evidence that is necessary. The delay is certainly not due to anyone other than the Department. In its letter of last April, the writer said:
  "I am only now in a position to let you know the result of the inquiry."
  Six months passed before the results of the inquiry were known to the local Member of Parliament and the Bell family.
  The Minister advises the family to pursue the case through their solicitor. Where would that get them? Only the Minister can decide whether an inquiry should be held. That is why I appeal to him to give consideration to this request. Why should the Bell family be put to the expense of obtaining a legal opinion? They are a working-class family, with limited financial resources. Why should they be put to the expense of operating through a solicitor when the Minister has the power to demand an inquiry?
  Another matter that arises is that Wayne Bell had a considerable sum of money—about 300 deutschemarks—when he died, and it has disappeared. I think that only £1·13 has been returned to the family. They have also lost a valuable gold medallion—a family heirloom presented to Wayne by his grandfather. Although the Minister says that all possible inquiries have been made, it is unsatisfactory that no trace can be found of these items.
  That is not the main point. The main issue is the need for an inquiry into the circumstances in which Wayne Bell met his death. Such an inquiry must answer the question whether the correct medical procedures were carried out. It must consider whether there was any delay in summoning medical assistance. It must decide whether there has been any negligence on the part of the authorities.
  For all these reasons, I hope that the Minister will assure me tonight that there will be a public inquiry. If he decides that it is not possible to give me that assurance tonight, I hope that he will reflect on the matter in the next two or three weeks. Perhaps he would let me know then whether he would be prepared to consider such an inquiry. I appeal to him to hold a public inquiry in this case, in the interests of natural justice.
  11.31 p.m.
  The Under-Secretary of State for Defence for the Army (Mr. Barney Hayhoe): First of all, I would like to express my sympathy to the Bell family over the tragic death of their son. I am fully aware of the deep concern felt by the hon. Member for Darlington (Mr. Fletcher) about the circumstances surrounding the tragic death of Trooper Wayne Bell. I notice that in introducing this subject, the hon. Member referred to "the Minister" the whole time, as if it were a single Minister, but there was a change in the middle of the correspondence, and the first letter was sent to him by my predecessor.
  In view of the hon. Member's suggestion that there was some discrepancy between what was said by my predecessor and what I have said in correspondence, it would be wise for me to go quickly over the general background to this case. Responsibility for providing medical care for the Army in Germany in both peace and war rests with the RAMC and the Queen Alexandra's Royal Army Nursing Corps. These corps operate five military hospitals, an RAF hospital, and a number of medical reception stations, which are maintained both to relieve pressure on the hospitals and to provide a medical service of what might be called "cottage hospital standard" in areas where there is a significant Service population, and which are often remote from the hospitals.
  The hospitals are equivalent to good general hospitals and their standards are high. Of necessity, the medical reception centres are much smaller. Their main function is to provide treatment in less serious cases and to undertake initial assessment of treatment in other cases which must subsequently be referred to hospitals possessing a specialist staff and a more complete range of equipment and facilities. In cases of emergency, where transfer to a military hospital is considered impractical, patients are referred to nearby German hospitals.
  At the time of his death, Trooper Wayne Bell was serving with his unit—the 15th/19th King's Royal Hussars—near Paderborn, in Germany. He had enlisted in the Army in September 1975, and was 20 years old. On the afternoon of Saturday 11 November 1978, Wayne Bell went out drinking with some friends in Paderborn. He returned to the barracks

  1613
  about 6 p.m. and, in the course of some friendly horseplay in the corridor, slipped and banged his head on a projecting wall pillar. His friends thought that he was either dazed or unconscious, and they put him on his bed and at the same time summoned an ambulance from the nearby medical reception station at Sennelager.
  The ambulance was dispatched immediately and arrived at the scene of the accident 10 minutes later. A civilian nursing sister who came with the ambulance noted that Wayne, who was still lying on his bed, was conscious. His friends informed her that he had been drinking with them, and the nursing sister returned in the ambulance with Wayne to the medical reception station at about 6.30 p.m., where she carried out rather more detailed examinations.
  She noticed two small grazes on his head, but she could find no evidence of serious head injury after carrying out checks of pulse, respiration, level of consciousness and eye pupils. These checks are a matter of routine in such cases. They are designed to provide an initial assessment of the patient's general condition. The nursing sister was aware at this stage that there might be a head injury, but in the absence of any indications to the contrary she concluded that Wayne's condition was due to the effects of alcohol. She reported her findings to the medical officer on duty, and he carried out his own examination. He, too, noted the small grazes on Wayne's head, but could detect no signs of a serious head injury. On this basis he also formed the opinion that Wayne was suffering from the effects of alcohol.
  References have been made to the fact that no blood tests and X-rays were taken. Facilities for taking blood tests were not available at the medical reception station, and the specimens would have had to be sent to the nearest military hospital. Nor were there any X-ray facilities at the medical reception station. The decision to undertake an X-ray examination is a matter for the attending doctor's discretion under normal medical practice, but I understand that even had Wayne's symptoms suggested that an X-ray would be advisable it is unlikely that the true nature of his condition would have been detected. I am advised that X-rays of the skull are notoriously difficult to read
  1614
  because of the complexity of the skull, and perhaps I should add that the comprehensive post mortem examination revealed no fracture of the skull.
  I need not stress the difficulties facing doctors in cases involving drink and the possibility of head injuries. The medical staffs are, none the less, accustomed to dealing with them and are aware of the possibility that head injuries may be more serious than at first apparent. Clear guidance and procedure exist to ensure that account is taken of such a possibility, but ultimately the action that is taken depends upon the medical opinion and judgment at the time of the examination.
  In this case the medical officer decided that the evidence indicated that Wayne was suffering only from the effects of alcohol and he should therefore be taken to his unit guardroom to recover. At 8.15 p.m. he was returned to the guardroom, but, as a precaution, instructions were left that Wayne should be woken up, if necessary, every 15 minutes to ensure that this state of intoxication did not worsen, to keep a check on his general condition and to ensure that he did not otherwise harm himself. I have no doubt that at that time the medical officer felt that he was taking adequate steps to ensure the well-being of his patient.
  The doctor's instructions were followed by the guardroom staff. At about 9.50 p.m. the orderly sergeant-major became concerned about Wayne's condition and called the orderly officer, who issued instructions for him to be returned to the medical reception centre. In the interests of speed, Wayne was taken to the medical reception centre in a Land Rover. I do not think that there is a conflict between that statement and what was said by my predecessor in his letter last April.
  By that time the staff at the medical reception centre had changed shift, and though the medical officer on duty was the one who had seen Wayne earlier, there were now at the centre two fully trained State registered nurses, and in addition two regimental medical assistants who had volunteered to carry out extra duties that evening because their medical officer was not present, but was on call by telephone. The units were on exercise in the area.

  1615
  The soldiers who had brought Wayne to the reception centre explained that it had not been possible latterly to rouse him. He was examined by a civilian nurse and was found to be unconscious, but his blood pressure was normal. His symptoms and general condition still suggested that alcohol was the cause. There were at that stage no indications that the situation was more serious. The nurse therefore did not call the medical officer. Instead, the two regimental medical assistants, at the suggestion of one of them, were allowed to place Wayne in a cold bath for about one minute in an attempt both to revive the patient and to wash him.
  The first indication that Wayne was in a serious condition was that his breathing stopped at about 11 p.m. His pulse was still detectable, but it was necessary to resuscitate him. At this point the medical officer was called, and he arrived within a few minutes. He realised that Wayne's condition required more specialised and intensive treatment than the medical reception centre was equipped to provide, and, as a result, the nearest military hospital being about an hour's drive away, it was decided that Wayne should be sent immediately to the local German hospital in Paderborn, where he arrived at about 11.50 p.m.
  The initial diagnosis still linked his condition with his intake of alcohol, but after 45 minutes his condition deteriorated. For the first time, at 12.3 a.m. on 12 November, a symptom was observed that indicated that a head injury might be at the root of the problem. As a result, he went to the civilian neurosurgical unit, where he arrived at 2.30 p.m.
  An extra-dural haemorrhage of the brain was diagnosed, following a special X-ray. I am advised that that form of haemorrhage results from damage to a blood vessel external to the membrane covering the brain and that it is usually associated with severe external damage to the head. However, I remind the hon. Gentleman that there was no external evidence of such a severe injury, and no skull fracture was found at the post mortem.
  On the basis of the diagnosis an operation was carried out to arrest bleeding, but unfortunately the condition of the
  1616
  patient deteriorated and he died on 14 November.
  The post mortem examination confirmed the presence of a superficial abrasion, showed that there was no skull fracture, and found the cause of death not to be an extra-dural haemorrhage in connection with which the operation had been performed but a sub-dural haemorrhage involving the network of blood vessels covering the brain.
  There is no doubt that the medical staff at all times made a judgment as to what they thought was best. The inquiry revealed no ground for disciplinary action against any individual. However, the administrative procedures and instructions that existed were not followed completely throughout the sequence of events. These have therefore been thoroughly reviewed, revised and expanded in order to extract every possible lesson from the tragic circumstances of this case.
  The hon. Gentleman suggested a need for a public inquiry. I regret that I cannot agree. The domestic investigations carried out by the Army were thorough and comprehensive. Witnesses were interviewed and statements taken. I do not believe that a public inquiry would elicit any new facts. A summary of the facts has already been given to the solicitors acting for Mr. Bell.
  I hope that what I have said tonight will give further information about the circumstances surrounding these tragic events. I am considering whether the information that the Department can give parents in these summaries of boards of inquiries can be expanded if such an unfortunate case as this recurs in the future.
  I hope that the hon. Gentleman will welcome the fact that I am having a further look at the procedures governing inquiries into the deaths of Service personnel overseas, and trust that the hon. Gentleman and the Bell family will be assured by what I have said that—
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned accordingly at seventeen minutes to Twelve o'clock.

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