Sitting of 6 November 1979

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS

  WEST MIDLANDS COUNTY COUNCIL BILL [Lords] (By Order)
  Order read for resuming adjourned debate on Question proposed [28 June], That the Bill be now considered.
  Debate further adjourned till Thursday 15 November.
  DUMBARTON DISTRICT COUNCIL ORDER CONFIRMATION BILL
  GREATLR GLASGOW PASSENGER TRANSPORT ORDER CONFIRMATION BILL
  KILMARNOCK AND LOUDOUN DISTRICT COUNCIL ORDER CONFIRMATION BILL
  SCOTS EPISCOPAL FUND ORDER CONFIRMATION BILL
  STIRLING DISTRICT COUNCIL ORDER CONFIRMATION BILL
  Orders for consideration read.
  To be considered tomorrow.

ORAL ANSWERS TO QUESTIONS
  EMPLOYMENT

    Greater London Area
    Mr. Dubsasked the Secretary of State for Employment what is the latest figure for the number of unemployed aged 16 to 20 years in the Greater London area.
    The Under-Secretary of State for Employment (Mr. Jim Lester): At 11 October the number of people aged 19 and under registered as unemployed in the Greater London area was 21,134. I regret that separate figures for 20-year-olds are not available.
    Mr. Dubs: Is the Minister aware that the Government's policies will increase the number of unemployed? What does he propose to do about that? Will he take particular note that the problem affects young blacks more than it does their white contemporaries?
    Mr. Lester: On the figures just quoted, I am glad to tell the hon. Gentleman that there are now 2,459 fewer unemployed than in October 1978. We share the hon. Gentleman's concern about young blacks. Special schemes in his constituency have doubled in the last 12 months, and the proportion of young blacks on them is higher than the average number of young blacks in the country.
    Mr. Chapman: Can my hon. Friend give an indication of the number of vacancies suitable for young people in London? Does he agree that there is a shortage of labour, particularly in craft trades and most of the service industries? Does not that number far exceed the number of unemployed that he mentioned?
    Mr. Lester: The number of vacancies for young people is 8,991. If that number is trebled, it equals the number of people registered as unemployed.
    Mr. Sheerman: Is the Minister aware that in my constituency in Huddersfield there is a growing number of young women—
    Mr. Speaker: Order. There should be a seprate question about Huddersfield.

    201
    We are dealing with the Greater London area.
    Mr. Guy Barnett: I accept the figures given by the hon. Gentleman, but does he realise that there is a serious problem of mismatch, which we do not fully understand, relating to the availability of jobs and the number of unemployed young people? What research is being done by his Department to solve that difficult problem, which affects inner London in particular?
    Mr. Lester: I accept that there is a problem of mismatch, not only in London but in Britain as a whole. Clearly, a great deal of research can be done in terms of the Manpower Services Commission and training levels to see how this matter can be dealt with.
    Mr. John Grant: Can the hon. Gentleman assure the House that the inner city bias of the previous Government in favour of the mainline programmes of the Department of Employment and the Manpower Services Commission will be fully maintained, bearing in mind that Ministers other than those in the Department of the Environment will be less directly concerned with inner city partnership matters?
    Mr. Lester: The Secretary of State for the Environment has already committed us to an inner city policy. I have visited three inner city partnerships in the last three weeks.

    Northern Region
    Mr. Dormandasked the Secretary of State for Employment if he will make a statement on employment prospects in the Northern region.
    Mr. Jim Lester: Future employment levels depend upon a number of factors which cannot be predicted with any degree of certainty. The Government's policies, however, are aimed at helping industry and commerce flourish so that more real jobs will be created both in the Northern region and in the economy as a whole.
    Mr. Dormand: Is the Minister aware that the Northern Region continues to have the highest unemployment rate in the country and that, as The Guardian pointed out yesterday, it will get worse? Will he do three things immediately?
    202
    First, will he persuade the appropriate Secretary of State to establish a northern development agency—a proposal which has the support of the northern branch of the CBI, which should commend itself to the Minister?
    Secondly, will he try to persuade the NEB to place one of the Inmos manufacturing units in the Northern region?
    Thirdly, and equally important, will he immediately increase the grant that is made to the North of England development council?
    Finally, is it not a fact—[Interruption.] Conservative Members do not like the truth. Finally, is it not a fact that the Government are victimising the people of the North of England because they returned so few Tory Members to Parliament?
    Mr. Lester: I totally reject the last point. I think that if the people in that area were to return more Tory Members of Parliament they would be better represented.
    Of the five questions, three are not for me or my Department. However, I undertake to pass them on to the appropriate Department.
    The previous Government were not convinced, and nor are we, that the establishment of a northern development agency would help in alleviating the unemployment problems of the Northern region.
    Sir William Elliott: As one of the few Conservative Members of Parliament to be returned for the Northern region, may I ask my hon. Friend whether he is aware that a substantial proportion of redundancies in the Northern region are in engineering and associated industries, and that a number of our principal companies in the region are struggling and, sadly, will have to continue to struggle, to overcome the recent national engineering dispute?
    Mr. Lester: Yes.
    Mr. Radice: Is the hon. Gentleman aware that in Tyne and Wear 20 per cent. of unemployed men and 17 per cent. of unemployed women have been seeking jobs for more than six months? Is he also aware that the cuts in public spending which have just been announced will make that situation even worse?
    Mr. Lester: The policies of the previous Government increased unemployment in the Northern region by 42·3 per cent. I have made two visits to the Northern region recently. I assure the hon. Gentleman that there are many vacancies in that area within reasonable travel-to-work areas of high unemployment. One difficulty that we face is mobility, and another is the distance that people are prepared to move to get the jobs that are available.
    Mr. Bagier: Is the hon. Gentleman aware that the figures for vacancies versus jobs mean that there are 11 people chasing every vacancy? Does he not realise that it is absolute rubbish to try to argue otherwise? Does he further agree that his initial announcement amounted to saying that nothing would be done specially for the Northern region? How does he equate that with the fact that last week his right hon. Friend the Chief Secretary to the Treasury announced that there would be an increase of 300,000 unemployed in this country? What steps has he taken to support the North-East from the worst effects of those 300,000 unemployed?
    Mr. Lester: The interest that Ministers in my Department have taken in the North-East goes a long way to disprove the statement made by the hon. Gentleman. We have taken a great deal of interest in the problems of the Northern region. It is clear that the region has expanded its manufacturing base for chemicals, electronics, telecommunications, scientific equipment, textiles, clothing, pharmaceuticals, furniture and plastics. There are 1,384,000 people in employment in the Northern region. That is a fair base on which to work and for our policies to expand.

    Construction Industry Training Board
    Mr. Hooleyasked the Secretary of State for Employment what reductions have been made in Exchequer support for the operating expenditure and for grants of the Construction Industry Training Board; what percentage loss of support these cuts represent; and what consequential additional costs will have to be borne by the industry.
    Mr. Jim Lester: I am informed by the Manpower Services Commission that total
    204
    MSC financial support available to the Board in 1979–80 will be £15·5 million compared with actual expenditure of £14·86 million last year. Decisions on the grants offered to employers are taken by the Board, on which employers' organisations, trade unions and educational interests are represented.
    In June of this year the Construction Industry Training Board was asked, in common with other boards, to make economies in its use of public funds in the current financial year. The Board decided to raise a supplementary levy on employers which is expected to realise an additional £3·8 million to be devoted to the grants scheme. Economies are being made in operating expenses and the Board may also draw, if necessary, on its reserves.
    Mr. Hooley: Is the Minister aware that it is crass stupidity to cut back on industrial training in the building industry at a time when there is a shortage of skilled craftsmen in both the house building and modernisation programmes? Is he also aware that what has been done has resulted in extra burdens on private industry, on top of the burdens that it has to bear because of the high interest rates imposed by the Government?
    Mr. Lester: There has been no cutback in the overall level of training this year. A sum of £6 million was voted for special measures over two years to deal with skill shortages in the industry, and the £4 million which is being spent in the current year is not being changed.
    Mr. Cyril Smith: Is the Minister aware that the view of many hon. Members is that it would be possible to increase the amount of training carried out by training boards and still reduce their expenditure? Is he further aware that many people who work for the training boards are in receipt of five-figure salaries and that their numbers run into 50, 60 and sometimes 100 per training board? Has not the time come to review the whole bureaucratic machinery of some of these training boards?
    Mr. Lester: I thank the hon. Gentleman for his comments. He will be pleased to know that a review of industry training boards is now taking place.
    Mr. Heddle: Does my hon. Friend agree that now is the time to assess the

    205
    basic needs of training in the construction industry and to place the responsibility for providing an adequately trained work force fairly and squarely on the shoulders of the building industry?
    Mr. Lester: I agree entirely. One matter that causes great concern is that in the Greater London area, for instance, 50 per cent. of the training for the construction industry is carried out at skill-centres, and not by the industry itself.
    Mr. Heffer: Is it not true that when training was left to the industry employers failed to carry out training, and that it is therefore essential that support is given to the Construction Industry Training Board? Incidentally, I disagree with the hon. Member for Rochdale (Mr. Smith). Future apprenticeship training must come partly through the Apprenticeship Training Board, and the Government's attitude is scandalous.
    Mr. Lester: I should not want, by anything that I have said, to imply that we are not supporting the Construction Industry Training Board or training boards in principle. We are reviewing the way that they are working to see how they can best be improved.

    Unemployment Forecasts
    Mr. Winnickasked the Secretary of State for Employment if he will estimate the level of unemployment within the next 12 months.
    The Secretary of State for Employment (Mr. James Prior): No, Sir. But I have made no secret of my view that over the next year or so unemployment will rise.
    Mr. Winnick: Will not the Government's policy of reducing public expenditure cause a sharp increase in unemployment all over the country? How many in the community will lose their jobs, security and peace of mind as a direct result of the Government's policy?
    Mr. Prior: The hon. Gentleman must know from past experience that cutbacks in public expenditure do not necessarily lead to increases in unemployment—[HON. MEMBERS: "Oh."]—because in many respects the private sector is able to take up the slack. That is precisely what happened in 1976, and it could be repeated this time.
    Mr. Ralph Howell: Does my right hon. Friend agree that the high vacancy figures, particularly in the London area, prove that there is considerable voluntary unemployment? What is his latest estimate of voluntary unemployment? If he has no such estimate, will he assure the House that he will immediately investigate this matter?
    Mr. Prior: Obviously more people are taking longer to return to employment after a period of unemployment than used to happen a few years ago. Therefore, there is evidence of a good deal of voluntary unemployment. That affects not only the London area, but the whole country. It is not easy to get at these figures, as my hon. Friend knows. However, no one in the House should doubt that, whereas many people genuinely seeking work are unable to get it, there are large numbers of vacancies with, on paper, large numbers of unemployed people, yet strangely enough, the jobs are not being filled.
    Dr. Bray: Is the Secretary of State aware that all of us who have been doing our damndest to get the Hunterston ore terminal open are grateful for the statement that he made this morning that he will initiate the statutory procedures for the registration of Hunterston under the National Dock Labour Scheme? Is he further aware that that will immediately save thousands of jobs in Scotland?
    Mr. Prior: We can be grateful only when people settle their differences quickly and unemployment does not result. Britain is not in a sufficiently strong position to withstand a five-month strike, or lockout—or whatever one may call it—resulting from an inter-union dispute. We cannot afford the luxury of inter-union disputes or disputes between employers and employees.
    Mr. Budgen: Will my right hon. Friend comment on the article in The Guardian yesterday by Mr. Layard that the separation of the offices that pay unemployment benefit from jobcentres has increased the number of those who appear to be unemployed by reducing the pressure that should be put on those who are work-shy or who have secret jobs?
    Mr. Prior: As with all these articles, I am having that one carefully examined.

    207
    I do not wish to comment without a much fuller examination than the article perhaps undertook.
    Mr. Sheerman: Is the Minister aware that the number of young women and girls out of work is increasing, and that the figure is greater than for young boys? In my constituency, that is particularly true. We are concerned with the wool textile industry, and present Government policies are sending that industry into rapid decline. The number of jobs in the mending and ancillary trades is decreasing. Unless the Government take some action, the whole industry will be ruined.
    Mr. Prior: No one doubts that there are serious problems ahead, some caused by the decline of old industries, and at present new industries are not coming forward to take their place. Regrettably we are entering a pretty fierce world recession, with the number of unemployed already twice what it was in 1974. The outlook is pretty bleak.

    Closed Shop
    Mr. Michael Morrisasked the Secretary of State for Employment what current proposals he has for legislation on the closed shop.
    The Under-Secretary of State for Employment (Mr. Patrick Mayhew): Copies of the working paper giving details of the proposals for legislation on the closed shop were placed in the Library of the House on 9 July this year.
    Mr. Morris: Will my hon. and learned Friend take note of the strong case for any closed shop agreement to be renewable by a vote of the work force, say, every three or five years?
    Mr. Mayhew: The question of periodic reviews of closed shop agreements was considered in the working paper to which I have referred. We believe, that there are different aspects of the handling of closed shops already in existdnce which call for a certain amount of care. Therefore we propose that a code of practice, which we promised to introduce, is probably the best method of giving advice on that matter.
    Mr. Jim Marshall: Does the Minister agree that the closeness of the vote at the CBI conference this morning indicates
    208
    the deep divisions amongst employers on the principle of the closed shop? In view of the closeness of that vote and the outright opposition of the trade union movement, should not the Government bury any proposals that they may have on altering the principle of the closed shop?
    Mr. Mayhew: The principle of the closed shop is not threatened by anything proposed in the working paper. What is proposed is that where it is intended to introduce a closed shop there shall be proper safeguards for those already employed.
    Mr. Skinner: Start with the barristers.
    Mr. Mayhew: In so far as there is a closed shop in the provision of legal services, that has just met with considerable support from a distinguished Royal Commission.
    Mr. Bulmer: Will my hon. and learned Friend confirm that during the recent engineering strike people who wished to go to work were prevented from doing so by fear of losing their union cards? Will he seek to ensure that any group of workers in a closed shop who feel that they are being called out in breach of an agreement or without adequate consultation are given the right to call for a secret ballot?
    Mr. Mayhew: One of the most important proposals in the working paper is that which provides for a statutory right of appeal if somebody considers himself to have been unreasonably expelled from a trade union. That is half the sting of a closed shop.
    Mr. Beith: How are the Government getting on with their defence of the closed shop in the British Rail case at Strasbourg?
    Mr. Mayhew: The Government thought it right to be represented at Strasbourg and to take up the Commission's offer of a further oral hearing. The Government came into that case at a late stage and inherited a situation where great injustice had been occasioned to British Rail employees. That injustice would not have arisen had the proposals which we have put forward already been the law. The situation will not arise again.

    Baking Industry
    Mr. David Atkinsonasked the Secretary of State for Employment if he is satisfied with the working of the Baking Industry (Hours of Work) Act 1955.
    Mr. Mayhew: The working of the Act is anomalous and highly unsatisfactory. I have asked the Health and Safety Commission to give urgent consideration to whether night work in baking needs regulation any longer on health and safety grounds, and if so how it should in future be done, and to advise me. It is consulting on the matter.
    Mr. Atkinson: I thank my hon. and learned Friend for his encouraging reply, but does he agree that, given the unique nature of the industry, particularly the hours of work and the greatly improved working conditions that have been achieved over recent decades, the Act is no longer necessary? It is proving to be restrictive to employers and employees and should immediately be repealed.
    Mr. Mayhew: Those issues are among the matters on which I am hoping for advice from the Commission. However, it is plain that an Act which is ostensibly a workers' welfare Act should not be capable of being used for purposes of union recruitment.
    Mr. Frank Allaun: Contrary to what the hon. Member for Bournemouth, East (Mr. Atkinson) has said, can the Minister not see the justice of the bakers unions' bitter opposition to employing women and young people at night? Has he considered the unfairness of women having to leave their husbands and children at home in order to start work at three o'clock in the morning? It is also unfair for men to have to leave for work at three o'clock in the afternoon, and in consequence not see their children until the weekend.
    Mr. Mayhew: These are matters for advice from the Commission. The question is whether this industry, virtually alone amongst others in this country, requires special statutory protection for night work.
    Mr. Moate: Whatever the original purposes of the Act, does my hon. and learned Friend agree that it has been blatantly used to try to secure a closed shop, even against the interests and wishes of the
    210
    work force? When will there be a review, and if that review recommends a repeal of the Act will time be given by the Government for its early repeal?
    Mr. Mayhew: The exemption order to the provisions of the Act was varied in July of this year to require prior acceptance of a post-entry closed shop if master bakers were to be included in the provisions of the exemption order. That kind of consideration should not depend on union recruitment, the closed shop or any other matter of that kind. I have asked the Commission urgently to consider the matter and to report. I hope to receive its advice soon.

    Plymouth
    Miss Fookesasked the Secretary of State for Employment how many vacancies there are for skilled employment at the last convenient date nationally and for the Plymouth travel-to-work area.
    Mr. Jim Lester: On 7 September the numbers of vacancies notified to the employment services and remaining unfilled in the craft and similar occupations group were 67,006 in Great Britain and 405 in Plymouth. That group does not necessarily include all skilled occupations. The figure for Plymouth is for a somewhat wider area than the travel-to-work area.
    Miss Fookes: I recognise that it is easier to set out the problem than to solve it, but what action does the Minister propose to take to end the wicked waste of resources?
    Mr. Lester: My hon. and attractive Friend has asked a pertinent question. We are looking carefully at the reasons why people are not prepared to move and why they do not take skilled jobs in areas where they are available.

    Inner City Areas
    Mr. Tilleyasked the Secretary of State for Employment whether he is satisfied with the Manpower Services Commission's success in providing training places for young people in inner city areas.
    Mr. Prior: The Manpower Services Commission is constantly looking for improvements. I shall welcome the co-operation of the hon. Member.
    Mr. Tilley: I am grateful for that reply. However, is the Minister aware of the widespread concern that is felt and is being expressed here today in a lobby about the future of the Enterprise Workshop scheme? That scheme allows the creation of permanent jobs in viable co-operative ventures. Will the Secretary of State assure the House that Enterprise Workshop will not be axed but will be allowed to expand to provide many more desperately needed jobs in the inner city areas and elsewhere in Britain?
    Mr. Prior: I should be grateful if the hon. Gentleman would give me notice of the particular case to which he has referred. There are 556 training places available under the youth opportunities scheme. A new training centre should be operational by the spring for an additional 40 persons. I have every confidence that we can maintain our training effort for young people in the inner city areas.
    Mr. Haselhurst: Is there not some cause for concern that the Manpower Services Commission may be giving too much attention to schemes of its own origination and insufficient attention to worthwhile schemes that are being put forward by employers and voluntary organisations, sometimes in co-operation with one another?
    Mr. Prior: We should give every possible encouragement to the development of schemes that are put forward by voluntary organisations. The Manpower Services Commission could give more encouragement to those schemes. I am in touch with the chairman of the Commission with that idea in mind.
    Mr. Allan Roberts: Does the Minister agree that youth unemployment in inner city areas is a major contributory factor to vandalism and crime in those areas? Therefore, does he admit that cutting the budget to the Manpower Services Commission will exacerbate those problems, contrary to the Government's so-called law and order programme?
    Mr. Prior: I do not admit that. The Manpower Services Commission could have its budget cut and yet maintain an efficient and strong service. The number of young people who will enter the youth opportunities scheme this year should be over 200,000, compared with 162,000 last year.

    Trade Union Legislation
    Mr. David Priceasked the Secretary of State for Employment what discussions he has had with the Trades Union Congress about changes in trade union legislation.
    Mr. Mayhew: My right hon. Friend has had discussions with the TUC throughout the summer and autumn and he expects these to continue.
    Mr. Price: Will my hon. and learned Friend ask my right hon. Friend, when he next meets the TUC, to point out politely that trade unions in this country enjoy privileges and immunities under the law that are experienced nowhere else in the world and have not been experienced in this country since Henry VIII abolished benefit of clergy? Under the protection of these immunities trade unions such as SLADE can carry out recruiting practices that are more akin to those of the modern mafia than to those of the medieval Church.
    Mr. Mayhew: The report of Mr. Andrew Leggatt into recruiting practices, principally of the SLADE union, was published about a fortnight ago. The Government are satisfied that changes in the law must be made to remove immunity from actions which are described by Mr. Leggatt as being "akin to the protection racket". The Government believe that trade unions should have a privileged position, but the question is whether the immunities of today are greater than are necessary.
    Mr. Winnick: Bearing in mind what happened the last time a Tory Government were in office, would it not be wise for the present Tory Government to lay off the trade unions and to recognise that they play a vital role in the defence of working-class people?
    Mr. Mayhew: Since a large majority of trade union members consistently show themselves to be in support of the Government's policy on this matter, the hon. Gentleman's question was not appropriately phrased.
    Mr. Peter Bottomley: Will my hon. and learned Friend assure the House that the problem of the political levy will be raised with the TUC? Many employers

    213
    and trade unions seem to be in a conspiracy of silence to keep the political levy from trade union members who have opted out under the law.
    Mr. Mayhew: The administration of the 1913 Act, which controls the political levy and the use of a political fund by unions, is under the supervision of the certification officer. The Government wish to keep the operation of the Act under close supervision. It is capable of giving rise to much injustice.
    Mr. Rooker: Will the Minister undertake to make available to the House all the working papers appertaining to the discussions with the TUC over the period of office of this Government? In that way they will not be covered by the 30-year rule, as such papers are at present.
    Mr. Mayhew: I cannot think of a worse recipe for having frank discussions and consultations than to make all working papers immediately available for inspection. We are having, and hope to continue to have, useful and full discussions. I do not believe that that position would be likely to continue if everything was made available for immediate inspection.

    Consett and Stanley
    Mr. David Watkinsasked the Secretary of State for Employment what has been the increase in numbers of unemployed persons in Consett and Stanley over the last month.
    Mr. Jim Lester: I am sure that the hon. Gentleman will be delighted to hear that between 13 September and 11 October the number of people registered as unemployed in the area covered by the Consett and Stanley employment office fell by 151.
    Mr. Watkins: In that case, will the hon. Gentleman tell the House what has happened to the 390 people who were recently made redundant by the shutdown of the plate mill at the Consett steelworks? Will he tell us how many of the additional unemployed for whom the Government are planning, as announced by the Chief Secretary to the Treasury last Thursday, will be in Consett and Stanley?
    Mr. Lester: There is no way, in terms of planning, that we can forecast where unemployment is likely to fall. All that I can provide you with is the accurate figures of what has occurred in your constituency over the last month, which is what you asked for.
    Mr. Speaker: I did not ask for anything.

    Alnwick
    Mr. Beittaasked the Secretary of State for Employment what steps he plans to take to reduce unemployment in the Alnwick district.
    Mr. Jim Lester: The Government's policy is to create the economic environment in which employers are encouraged to develop their businesses and to create viable jobs. That will help to reduce unemployment both in Alnwick and in the country as a whole.
    Mr. Beith: When will that start? Why has the small firms employment subsidy, which could have been a useful device to achieve that end, been withdrawn from the Alnwick area? Why does the hon. Gentleman's colleague at the Department of Industry persist in trying to persuade a major employer who wants to set up a research institute that he would be better to establish it somewhere other than Alnwick?
    Mr. Lester: I shall take up the last matter with my colleagues at the Department of Industry. We have looked carefully at the small firms employment subsidy scheme. We felt that it was not creating much employment and that the tax cuts that we proposed were more likely to encourage small businesses to develop in Alnwick. Clearly, that is happening.

    Unemployment (Statistics)
    Mr. Strawasked the Secretary of State for Employment what are the latest rates of unemployment for the North-West and for the United Kingdom.
    Mr. Jim Lester: On 11 October the unemployment rates in the North-West region and in the United Kingdom were 7·1 and 5·7 per cent, respectively.
    Mr. Straw: Is the Minister aware that, as a result of the crazy and damaging economic policies which the Government

    215
    are now following, scarcely a week goes past without serious redundancies being announced in my constituency and elsewhere in the North-West? Will he confirm that as aid to industry in the North-West is slashed, and as public sector cuts mean fewer orders for the private sector industries of textiles and manufacturing, unemployment is likely to shoot up in the region? How much of the 300,000 increase in unemployment announced last week by the Chief Secretary to the Treasury will fall on my constituency and on the North-West?
    Mr. Lester: Is the hon. Gentleman aware that as a result of the crazy and damaging policies of the previous Government unemployment in his constituency increased by 298 per cent.?
    Mr. Nicholas Winterton: Is my hon. Friend aware that there is likely to be a substantial increase in unemployment in the textile industry in the North-West region unless the Government stand up for the best interests of that industry? Unless they do, a serious situation will develop. Many countries act in their own best interests, not least the United States, which practises the duality of oil pricing, and countries in the Far East, which abuse the multi-fibre arrangement. Will the Minister have a word with his right hon. and hon. Friends in other Departments to ensure that this strategic industry is not further undermined?
    Mr. Lester: Yes.
    Mr. McNally: Despite the Minister's cheap jibe, is he aware that many thousands of jobs in the North-West have been saved in recent years by the initiative of the National Enterprise Board? If, as the Secretary of State said "we are entering a fierce world recession", and if as he also said, "the outlook is pretty bleak", is not this the time for the right hon. Gentleman to speak up in Cabinet in support of the National Enterprise Board, to allow it to carry on its work in the North-West and other regions and not allow it to be emasculated by the ideological policies of the Secretary of State for Industry?
    Mr. Lester: That is clearly a question for the Department of Industry and not for the Department of Employment. My
    216
    right hon. Friend no doubt heard the question.

    Industrial Relations
    Mr. Needhamasked the Secretary of State for Employment if he has concluded his consultations with the Trades Union Congress and other interested parties on the Government's proposals for industrial relations.
    Mr. Mayhew: My right hon. Friend and I have already had meetings with the TUC, CBI and others on the Government proposals. These consultations are continuing.
    Mr. Needham: In the light of Mr. Andrew Leggatt's recent report into the activities of the SLADE art union, will support of the National Enterprise Board, my hon. and learned Friend please confirm that he intends to discuss with the TUC the blackmailing antics of that union in attempting to recruit its members? Will he make it clear to the TUC that, if it does nothing and sits on its backside, at the end of the day it cannot blame the Government for introducing new laws to take effect because of its lack of action?
    Mr. Mayhew: Last month the Government published a working paper in which they made it plain that they considered that the law had to be changed to remove the existing immunity which hitherto has protected the action of SLADE, to which Mr. Leggatt's report has drawn attention. While it is always welcome that voluntary action and guidance are taken and expressed, it cannot be enough to leave the protection of individuals to that alone, because it provides no enforceable remedy to individuals who are harmed.
    Mr. Douglas: When the Minister meets the TUC, will he tell it where the private sector is taking up the slack?
    Mr. Mayhew: The private sector is ready, willing and able to take up the slack. That is something that Labour Members have never learnt.
    Mr. McQuarrie: When my hon. and learned Friend meets the TUC, will he ask it to help to ensure that legislation on the closed shop and union reform is brought in at the earliest opportunity? In the small village of New Deer in my constituency, 37 employees are being

    217
    threatened with a strike by the bakers' union because, for "personal reasons", an apprentice baker has refused to rejoin the union. Is not that a disgusting state of affairs for Labour Members to accept?
    Mr. Mayhew: I have already made it clear that the Government regard the Baking Industry (Hours of Work) Act 1954 as anomalous and highly unsatisfactory. I entirely take my hon. Friend's point. The Government are consulting on the proposals which they published in July to provide proper protection for individuals in the operation of the closed shop. We shall continue with those and introduce legislation at an early date.

  PRIME MINISTER (ENGAGEMENTS)
  Mr. Neubertasked the Prime Minister whether she will list her official engagements for 6 November.
  The Prime Minister (Mrs. Margaret Thatcher): In addition to my duties in this House, I shall be having meetings with ministerial colleagues and others. This evening I hope to have an audience of Her Majesty The Queen.
  Mr. Neubert: If, during the course of the day, my right hon. Friend should encounter critics of the Government's public expenditure plans, will she draw to their attention the fact that the Labour controlled London borough of Brent is proposing to replace its retiring town clerk and chief executive with two men—an executive at £16,000 a year and a director at £14,000 a year? Does not that demonstrate the need for restraint, as well as illustrating the reason why the number of employees in local government has been rising rapidly?
  The Prime Minister: I saw the report in the press to which my hon. Friend refers. I also noted that in the year ending in June the number of local authority employees increased by about 30,000. It is a great mistake to think that administration is improved just by taking on more administrators. The truth is much more likely to be that too many cooks spoil the broth—not only that, but they make it too highly priced to be able to afford it.
  Mr. Pavitt: If the Prime Minister has time to look at the excellent administration and organisation of the London borough of Brent, will she make herself better informed than is her right hon. Friend the Secretary of State for Industry, whose statement about that borough appears in Hansard, and which he is refusing to withdraw in spite of the fact that it is totally untrue?
  The Prime Minister: The hon. Gentleman must refer questions such as that to the person who made the statement.
  Mr. Montgomery: During the course of her busy day will my right hon. Friend take time to look at the Daily Express and at the report of the CBI conference yesterday, where two people stated two views? One was that trade union leaders should get £40,000 a year, and the other that now that a Conservative Government are in power managers are being allowed to get on with managing, without too much Government intervention. Would it not be a good idea if those two things were married, so that trade union leaders got on with the job of looking after their members instead of interfering too much in politics?
  The Prime Minister: I noted both statements. If we are to increase the prosperity of British industry, managers must manage and trade union leaders must manage their members. I hope that both will do it very successfully.
  Mr. S. C. Silkin: Can the Prime Minister confirm today's reports that the Government of Rhodesia have decided to stop the supply of maize to Zambia? If she can, will she have regard to the special requirements of the Security Council's mandatory resolution, which requires us to give particular help to Zambia in view of its economic difficulties? Will she condemn the action that has been taken and announce that until that decision is reversed the Lancaster House discussions will be terminated?
  The Prime Minister: I can neither confirm nor deny the reports. Any reports of that kind demonstrate the need to get on with the Lancaster House conference and to reach agreement upon the matters that are in dispute there.
  Mr. Adleyasked the Prime Minister if she will list her official engagements for 6 November.
  The Prime Minister: I refer my hon. Friend to the reply which I have just given.
  Mr. Adley: Has my right hon. Friend had a chance today to see the text of the letter widely published this morning from the hon. Member for Hayes and Harlington (Mr. Sandelson) to Mr. Ron Hayward, in which the hon. Gentleman describes the NEC's actions as "the cancerous control of these commissars over Labour's affairs"? Does my right hon. Friend agree that if the situation has reached that pass it is a direct threat to the liberty and individual freedom of Members of Parliament? However much certain Labour Members—
  Mr. Speaker: Order. Last week the House invited me to try, even on open questions, to ensure that there was some relevance in supplementary questions. That applies to both sides. Perhaps the hon. Gentleman would make the point for which the Prime Minister is responsible.
  Mr. Adley: This is in today's newspapers.
  Mr. Speaker: So is my horoscope. Will the hon. Gentleman, and all hon. Members when called, try to ask a question on a matter for which the Prime Minister is responsible?
  Mr. Adley: Can my right hon. Friend offer any advice to these Members of Parliament in their predicament?
  The Prime Minister: I have not yet read the letter to which my hon. Friend refers. Naturally, I and most other hon. Members are concerned that for the future of democracy—[Interruption.] To some of us it happens to matter that we should have two major parties, both based on the liberty of the individual and on political and economic liberty.
  Mr. Heffer: The Chief Secretary to the Treasury said last week that another 300,000 people, possible more, would be out of work as a result of the Government's policy. How does the right hon. Lady justify those figures? What has she to say to those who will become
  220
  unemployed as a deliberate result of Government policy?
  The Prime Minister: No one can predict, with any hope of accuracy, the path of unemployment over the next few years. That was said by the previous Chancellor of the Exchequer. That is what I happen to believe. The previous Chancellor of the Exchequer also spent a long time trying to differentiate between forecasts and working assumptions. He did not succeed. I do not expect that I would succeed either.
  Mr. Mellor: Will my right hon. Friend find time today to comment on the Inner London Education Authority's proposal to close Highbury Grove school? Does she agree that this shows utter contempt for educational standards? It is a sheer act of political spite against a former headmaster of that school. Does she agree also that this lends great force to those Conservative councils which are seeking to break up an inefficient, perpetual Socialist monstrosity, and that they deserve Government support for what they are trying to do?
  The Prime Minister: The former headmaster, now Under-Secretary of State for Education and Science, has been one of the most successful headmasters of a comprehensive school. Many generations of children have cause to be grateful to him.
  Mr. Speaker: Mr. Callaghan.
  Mr. James Callaghan rose—
  Mr. John Grant rose—
  Mr. Callaghan: I understand, Mr. Speaker, that this school is in the constituency of my hon. Friend the Member for Islington, Central (Mr. Grant) and that he therefore wishes to ask a question. I wish to raise another matter. No doubt my hon. Friend will have the opportunity of asking a question as this matter relates to his constituency. Will the right hon. Lady, in her meetings with colleagues, ask the Chancellor of the Exchequer to say when he expects the minimum lending rate to come down, following his forecast that the lifting of the rate to 14 per cent. on 12 June was to be for only a few weeks?
  The Prime Minister: The right hon. Gentleman knows that the unwisest forecast of all is to say anything at all about interest rates. Although he asks the question, he knows that I would be most unwise to comment on it in any way.
  Mr. Callaghan: In that case, are house owners to reconcile themselves to an increase in their mortgage payments next January? Or does the Prime Minister propose to intervene once again to try to keep them down?
  The Prime Minister: I must be candid with the right hon. Gentleman. I think that there is very little hope of getting down the proposed increase in mortgage rates. Had the Government undertaken the expenditure proposals of the previous Government, the borrowing would have been infinitely greater, taxes, both income tax and value added tax, very much higher, and interest rates even higher than they are now.
  Mr. Anthony Grant: Will my right hon. Friend find time today to send a message to the President of the United States expressing complete support for any action that he might take on behalf of America against the outrageous activities in Tehran, over which the Iranian regime seems to have no control, or does not want to have any control?
  The Prime Minister: I wholly agree with my hon. Friend. The takeover of the United States embassy was an outrage to diplomatic relations everywhere. We are naturally pleased that our embassy was subject to that for only a short time. We will do anything that we can to help the United States to achieve justice.
  Mr. John Grant: In view of an earlier supplementary question, may I ask you, Mr. Speaker, whether it is the normal courtesy of the House that when an hon. Member intends to raise a matter relating to another hon. Member's constituency he gives him notice of that? May I inform the right hon. Lady that this is an extremely delicate constituency matter? It would be wrong for her or her hon. Friend the Under-Secretary of State for Education and Science, who replied to the debate last night, to do or say anything that might pre-empt a decision which the Secretary of State for Education and Science
  222
  will probably have to take fairly shortly. Will she confirm that that is the case?
  The Prime Minister: Nothing will stop me from saying that a previous headmaster of the school was an extremely good headmaster.

  SCOTLAND
  Mr. William Hamiltonasked the Prime Minister when she intends to make an official visit to Scotland.
  The Prime Minister: I have at present no plans to do so.
  Mr. Hamilton: I am not surprised to hear that reply. Is the Prime Minister aware that, as a direct consequence of the policies that her Government have pursued since May, de-industrialisation and unemployment are accelerating at an alarming rate, and that as a consequence she is known in Scotland not so much as an iron lady but as a myopic, petty little tinpot dictator.
  The Prime Minister: As the hon. Gentleman knows, no Government can keep yesterday's industries in existence, and no Government can keep industries in existence unless they are competitive with overseas industries. Everyone has the capacity to be a wage earner and a consumer. The tragedy of this country is that many people, as consumers, reject the products of their fellow wage earners because they are not sufficiently good value.
  Mr. Ancram: Is my right hon. Friend aware of the warm welcome given by young couples in my constituency and the rest of Scotland to the Government's announcement yesterday to local authorities that there will be no reduction in the availability of local government mortgages, and that in some areas, such as Edinburgh and Glasgow, the capital allocation for these mortgages will be increased?
  The Prime Minister: I am grateful to my hon. Friend. It is still preferable to have an opportunity to purchase a house rather than to be only the tenant of a council house.
  Mr. Harry Ewing: If the Prime Minister is so interested in creating tomorrow's

  223
  industries in Scotland, but is not intending to visit Scotland, will she at least call into her office the Secretary of State for Scotland and give him a good dressing down for refusing to tell Scottish industry who are to be the new agents for the European Investment Bank? Is the Prime Minister aware that, despite three letters to the Secretary of State, Scottish industry has been told that no further applications for finance through the European Invesment Bank will be considered? But the Secretary of State continues to refuse to tell Scottish industry who the new agents are to be.
  The Prime Minister: The hon. Gentleman had two questions there. There have been cases of the British taxpayer pouring into Scotland investment money that has not been properly or fully used for many months.
  Mr. William Hamilton: Where?
  Hon. Members: Hunterston.
  The Prime Minister: Fortunately, one of the disputes is reported today as being over. It is not enough for the taxpayer to put up money for investment. The money has to be used by those responsible for using it.
  The Department of Industry and the Scottish, Welsh and Northern Ireland Offices are agents for the European Investment
  224
  Bank. The first stage of the loan scheme is to end in December this year. When the scheme was announced it was said that the agents would be reviewed and the agencies are now being reviewed.
  Mr. David Steel: Knowing the Prime Minister's deep attachment to her mandate, may I ask whether she recalls the detailed commitment given by her colleagues in Scotland during the election campaign to the hill farming community? As that community believes that it has sympathetic ears among Ministers at the Scottish Office and the Ministry of Agriculture, will the right hon. Lady give those Ministers support in the battle with the Treasury to get a better deal for the hill farming community?
  The Prime Minister: The compensatory amounts payable to hill farmers are being reviewed and my right hon. Friend the Minister of Agriculture expects to be able to make an announcement by the end of the month.
  Mr. Harry Ewing: On a point of order, Mr. Speaker. I apologise to my hon. Friend the Member for Fife, Central (Mr. Hamilton), who tabled the original question, but in view of the Prime Minister's totally unsatisfactory answer on the question of the European Investment Bank I give notice that I shall seek to raise the matter on the Adjournment.

TEHRAN (BRITISH EMBASSY)
Mr. Eldon Griffiths(by private notice) asked the Lord Privy Seal if he will make a statement about the attack on the British embassy in Tehran.
The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd): At about 10 minutes to six yesterday evening, Tehran time, armed intruders broke into the British embassy compound and shortly thereafter took over the whole of our embassy building. The staff in the area at the time were taken, together with those wives and children who live in the embassy compound, to the house of the chargé d'affaires, Mr. Wyatt. They were not ill-treated, but were held under armed guard. The identity of the intruders and the motives for their attack on the embassy are still not wholly clear. Contacts between embassy officials and the intruders took place over a period of about five hours, after which they withdrew from the premises.
We have protested strongly to the Iranian Government at this attack on our embassy. A protest was made to the Ministry of Foreign Affairs in Tehran and I spoke yesterday afternoon to the counsellor in charge of the Iranian embassy here. It is imperative that the Iranian Government fulfil their clear obligations under the Vienna convention and take adequate measures to protect diplomatic lives and premises.
Mr. Griffiths: I am grateful to my hon. Friend. Will he please answer the following questions? What is the position of other British nationals in Iran? How many are there, and are they safe? What is to be the position about relations between Iran and any other Government, including our own, if diplomatic missions are not guaranteed to be inviolate?
Will my hon. Friend give an undertaking that since there must be a likelihood that Iran will not, or will not be able to, deliver its supplies of oil, there are contingency plans available in Europe and with the Americans to avoid a further scramble of the sort that we saw last time? Will he also give an undertaking that the Government will not be a party to arrangements to send back the Shah,
226
a sick man, to meet the blood lust of the Tehran mob?
Mr. Hurd: The British community in Iran, although smaller than it used to be, still numbers about 500. It is not under direct threat. The attack on the embassy clearly had some political intention and was not aimed at individuals, but one reason why we are determined to keep an embassy in Iran is that there is still a sizeable British community there.
We were in touch yesterday and have been in touch again today with our Community partners and the United States on my hon. Friend's second point. If there be a Government, calling themselves a Government, in Tehran, one of their clear duties under international law is to protect the diplomats accredited to them.
Of course, we are all the time considering the oil supply situation and what action we and our friends may have to take. I entirely agree with what my hon. Friend said about the Shah.
Mr. Dalyell: Given the increasing vulnerability of embassies of all countries throughout the world, is there not a case for international discussion of the updating of the Vienna convention?
Mr. Hurd: That is very much in our minds. Our embassies and those of other countries are increasingly at risk. Two of our ambassadors have been murdered in the past few years. But however hard one considers the matter one is driven back to the conclusion that although we can secure embassies against an individual intruder there is no escaping the fact that when an armed mob appears the responsibility for protecting an embassy must rest on the host Government. However we look at the problem, that is the answer that we are forced back to.
Mr. Temple-Morris: Is my hon. Friend aware that we are perhaps not at the end of the road of Tehran-based emergencies? Does he agree that yesterday's events and any future events must have a cool and firm response from the Government? As part of that response, will the Government make clear on any occasion that demands it that the Iranian Government and people cannot eat without the West, and the help of the West, and that there is nowhere else for them, with their theocracy, to go?
Mr. Hurd: I agree with my hon. Friend. I do not think that we can let the matter of yesterday's incident—which, as far as we are concerned, is closed—rest there. That is why we are in touch with the other Community countries represented in Tehran and with the United States. Further action will be required to bring home to the authorities in Tehran that under international law they have a clear obligation, which they have been neglecting.
Mr. Shore: We strongly endorse and reinforce the protest made by the Government, both in respect of the occupation of the British embassy and the temporary detention of British wives and children in Tehran.
Can the Minister say anything about reports that the Bazargan Government have tendered their resignation? If there is to be a change of Government in Tehran, will the hon. Gentleman make clear to whoever takes on responsibility that we expect minimum standards of conduct in relation to our diplomats, since otherwise it will not be worth having diplomacy in countries that so flagrantly flout the rules? Will the Minister also consult urgently other oil-consuming countries about arrangements that may have to be made if oil supplies from Iran are intercepted?
Mr. Hurd: I am grateful for what the right hon. Gentleman has said. There are reports that Prime Minister Bazargan has once again tendered his resignation. I think that the right hon. Gentleman is right in his implication that the political situation in Tehran and throughout Iran is likely to remain confused for some time, but that does not alter the obligations on the authorities in Iran to afford protection to diplomats in their capital.
I think that I have already answered the point about oil supplies. It is clearly a major Western interest that we should keep in close touch all the time with our partners and watch carefully and plan against possible developments to our detriment.
As for diplomacy, we have to make a judgment on whether we want to send British diplomats and their families to Tehran—there are just over 100 people
228
involved—in such an insecure situation. We have taken the view that because Iran will continue to be an important country in the Middle East it is right that we should ask those in our Diplomatic Service to undertake that risk. I believe that that is the correct judgment at the present time.
Mr. Speaker: Order. I propose to call one more hon. Member from either side. This is an extension of Question Time.
Mr. David Price: Following my hon. Friend's reply, will he consider whether it is right to expose to danger the wives and families of British diplomats in exposed posts such as Tehran? May there not be a case for unaccompanied service in those exposed posts?
Mr. Hurd: My hon. Friend has raised an important point about foreign service. The wives and families were brought out of Tehran. They were then allowed to return earlier this year. This is a difficult judgment. It is not sensible to ask people to remain on unaccompanied service in a difficult post for too long. Obviously, if the situation continues to be turbulent, confused and dangerous, this is a judgment that we must look at again.
Mr. Allan Roberts: Does the Minister agree that not only the Shah would be at risk if returning to Tehran, but that many Iranian students in this country would also be at risk, having been here for sometime and become Westernised? Will the hon. Gentleman undertake to persuade the Prime Minister and other Ministers to discuss the problem that is now arising as a result of the Government's paranoia about immigration? Deportation notices are now being served on Iranian students who do not want to return, forcing them to return. They are at risk if they return. Would not the Government consider extending to many of these students the well-known British hospitality, in terms of political asylum?
Mr. Hurd: The hon. Gentleman is going very wide of the question. If he has specific points about individuals whom he believes are at risk as a result of their political opinions, I suggest that he raises them with my right hon. Friend the Home Secretary.

COASTER "POOL FISHER" (LOSS)
Mr. Clinton Davis(by private notice) asked the Secretary of State for Trade if he will make a statement on the loss this morning of the coaster "Pool Fisher" carrying a 15-man crew.
The Under-Secretary of State for Trade (Mr. Norman Tebbit): The "Pool Fisher", a general cargo vessel of 1,028 gross tons, left the German port of Hamburg at 1300 hours on 3 November with a full cargo of potash in bulk. The vessel carried a crew of 14 and one passenger and was on voyage to Runcorn, where it was due to arrive on the evening of 7 November.
At 5.49 this morning Niton coast radio informed the coastguard that the "Pool Fisher" had transmitted a distress call on VHF ship-to-shore radio from a position west of St. Catherine's light, on the Isle of Wight. The "Pool Fisher" is believed to have capsized and sunk very shortly afterwards.
The coastguard immediately launched the Yarmouth and Bembridge lifeboats and scrambled helicopters from Lee-on-Solent and later from Portland and Culdrose. The search and rescue operation is being carried out, in severe weather conditions, by three warships, six merchant vessels and two lifeboats, assisted by four helicopters.
Two survivors from the vessel have so far been rescued and transferred to hospital; two bodies have also been recovered. We must all hope that the extensive search and rescue operation, which is continuing, will be successful in locating further survivors.
My Department is carrying out a preliminary inquiry in order to establish the cause of this casualty.
I am sure that hon. Members on both sides of the House would wish to join me in expressing deepest sympathy to the families and relatives of those who have lost their lives as a result of this tragic casualty.
Mr. Davis: Is the Minister aware that the Opposition wish to associate themselves with his expression of sympathy to those already bereaved and also to those families who are in desperate anxiety about those who are missing?
230
I welcome the preliminary investigation that the Minister announced. Will he indicate the age of the vessel and whether there is any information at present available to him to show whether that vessel complied with manning requirements? Does he expect to receive the full co-operation of the German authorities about the loading of the vessel? That is clearly a matter of considerable interest.
As to the search and rescue operation, is the hon. Gentleman aware that the Opposition very much appreciate the swift response with which this call was met by all those engaged in the matter? Is it possible that the search will continue during the hours of darkness? If not, when does the hon. Gentleman expect the rescue operations to be able to continue? Is there any likelihood of the severe weather conditions of which he spoke abating in the next few hours?
Is the Minister aware that the Opposition hope that the devoted activities of those engaged in the rescue operation will be marked with success?
Mr. Tebbit: I thank the hon. Gentleman for what he said about the devotion of those engaged in the rescue operations. He will probably find that the Meteorological Office is a better guide than I am about the weather. We can only hope that it will abate sufficiently to allow the continuance of a more effective search for the survivors. The search will continue whilst there is hope of saving life.
I have no reason to think that the co-operation of the Germans has been lacking in any way. I would be astounded and shocked if it were. I am sure that we shall receive their full co-operation.
As to the level of manning, I am not in a position positively to say whether the vessel was fully and correctly manned. However, the fact that there was a crew of 15 on a ship of 1,000 tons would probably be a broad hint in that direction. [HON. MEMBERS: "Fourteen."] I think that the number is 15.
I can assure the hon. Gentleman about the condition of the ship. The safety equipment certificate, which was issued by the marine service office in Liverpool on 26 February 1979, expires on 22 February 1981. The cargo ship safety construction certificate was issued on 28 April 1977 and expires on 28 February 1982. The load line certificate, issued by

231
Lloyd's Register of Shipping on 22 July 1977, expires on 24 February 1982. The general inspection carried out at Hull on 1 May 1979 found the vessel to be satisfactory.
Mr. Stephen Ross: Is the Minister aware that the Liberal Members of Parliament would like to be associated with his remarks and with those made by the Opposition spokesman? I pay a tribute to the lifeboatmen in my constituency who are out in rough weather at this time. I trust that they meet with success.
Is the Minister aware that this is the second such incident in the same area that has taken place in the past 48 hours? The other concerned the "Aeolian Sky", which was carrying dangerous chemicals that are now washing up along the shores, including those of my constituency, and costing local authorities a substantial amount of money to deal with. There were reports on the radio earlier today from the skipper of the "Esso Penzance" that the vessel that went down was listing last evening. Does that not suggest that we require much closer surveillance of ships using these busy waters and greater discipline among the masters of these vessels?
Mr. Tebbit: First, as far as I know, no chemicals have come ashore from the "Aeolian Sky". Secondly, the best possible surveillance that we can devise is being carried out on shipping. We are moving through the international organisations in every possible way to increase the standards of safety of ships, their construction, their operation and the standards of operation of their crew. However, we must say, time and again, that ships at sea meet hazards that are often unexpected and beyond the ability of the crew or the ship to weather. No doubt for a long time to come ships will continue to be lost in bad weather. It would be wrong for me to suggest that there was some magic means by which we could change that. We can only do our best to improve the standards of construction and seamanship—and that we are doing.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to call the three hon. Members who have been seeking to catch my eye. Mr. Adley.
Mr. Adley: Is my hon. Friend aware that everyone will want to express not only sympathy but admiration for the rescue services? Is my hon. Friend further aware that the hon. Member for Isle of Wight (Mr. Ross) and I have over the past few years expressed concern about the numerous bodies, including the Minister's own Department, that have responsibility for maritime affairs in the West Solent area? This is not meant as a criticism of anyone in particular, but does not the Minister agree that it is time for the position in the West Solent to be clarified? Could he take an initiative to see whether all the bodies concerned could be brought together, so that there could be a much clearer line of definition of responsibility for maritime activities off the coastline of my constituency and that of the hon. Member for Isle of Wight?
Mr. Tebbit: I take note of what my hon. Friend says, but I do not think that mariners are in any undue doubt about who is responsible for the safety of their ship when it is at sea, and this ship was at sea under the command of her master.
Mr. Prescott: The seamen of this country are entitled to expect this House to provide them with the best possible safety and rescue services, and they are grateful for what is being done at present by those services, but is the Minister aware that for a number of years seafarers have been expressing concern, as have courts of inquiry, at the continuing cutbacks in these services? Can he assure the House that further cutbacks, as highlighted in a publication of the Civil Service unions, sent to all hon. Members of this House, will not further reduce safety standards for our seafarers?
Mr. Tebbit: I can assure the hon. Gentleman that he would do better to take my word that nothing that is done in my Department will degrade safety at sea than to believe all that he reads in publications of that sort.
Mr. James Johnson: The Minister will know that this disaster follows closely upon similar disasters in the fishing Industry. Would he care to comment on the possibility of lives not being lost if it were made mandatory for ships of this sort to carry, in the manner of fishing vessels, electronic position-indicating radio beacons, known as EPIRB, for the

233
assistance of men who may be in the water?
Mr. Tebbit: As the hon. Gentleman knows, the question of the carriage of electronic position-indicating radio beacons was under consideration in my Department for some time before I took office. I have continued to take a close interest in the question. The object of my concern is to ensure that when such devices come into use they will be reliable, that they will not cause false alerts, and that they will be effective in leading searchers to the survivors. I look forward to their coming into use when we have achieved those objectives, because I believe that potentially they could save lives.

TEN-MINUTE SPEECHES
Mr. Garel-Jones: On a point of order, Mr. Speaker. You will be aware that yesterday, for the first time, we had the experiment of 10-minute speeches after 7 pm. I was present during most of that time and I detected an inhibition on the part of some hon. Members to give way to other lion. Members. There seemed to be a feeling that perhaps this would eat into their time allocation.
I should be very grateful, therefore, Mr. Speaker, if you would give us some indication of the likely line that you propose to take from the Chair and say whether, as a rugby football referee, you would be prepared to add on injury time, as it were, when an hon. Member gives way.
Mr. Speaker: The hon. Gentleman was kind enough to give me written notice this morning that he would raise this question. The House gave me quite clear instructions last week, when the very point raised by the hon. Gentleman arose in debate. It was made, I think, by the hon. Member for Islington, South and Finsbury (Mr. Cunningham). If I were to start by saying that I would allow injury time, the injury time would be longer than the playing time.

ISLE OF MAN BILL
Mr. George Cunningham: On a point of order, Mr. Speaker. On Thursday of this week, it is proposed that the House should deal with the Second Reading
234
Committee and Report stages and Third Reading of the Isle of Man Bill. The only purpose of the Bill is to give effect to an agreement reached between the United Kingdom Government and the Government of the Isle of Man, concluded on 15 October, yet the document with the text of that agreement in it has become available only at 3.30 pm today.
I suggest that it is totally impossible for hon. Members to do their job properly if they are asked to consider a Bill in all its stages on a Thursday when the document, which has been available in the Home Office for three weeks at least, is not even available in typescript in the Library. When I asked for it even at 3.20 pm today, it was not available.
The Leader of the House surely has no reason for putting an embargo on the availability of this document to Members. Why should they not have it at 3.20 pm rather than at 3.30 pm? But whether it is one or the other, it is just not good enough for us not to have such a document until 48 hours before the Bill is due to be taken.
There is another point, Mr. Speaker, that is more directly your responsibility. We have on the Order Paper today a motion at the end of business. Goodness knows why it has been put at the end of business. It would be much better to take it now. Members would then be able to table amendments to the Bill before Second Reading. This is the normal procedure when we are to take all stages of a Bill on one day. But because the Government, in their unwisdom, have put this motion at the end of today's business, it means that the only way in which a Member can table an unstarred amendment is by staying here until the end of business tonight and then getting in quickly in the course of the half-hour Adjournment debate.
I hope, Mr. Speaker, that you will therefore be extremely generous in the selection of amendments for Thursday, if any amendments are tabled, and that the Leader of the House will come forward and tell us what he is prepared to do in order to ginger up his administration of Government business in this place so that we are not constantly having this absence of the necessary documents in dealing with legislation.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): I am grateful to the hon. Gentleman for making that point and for informing the House that the agreement document is available now at the Vote Office. The Bill, of course, was available in very good time.
Mr. James Callaghan: With respect, if the Leader of the House hopes to proceed with business, he should give a clearer explanation than that and an apology to the House for the manner in which this business has been handled. Has he nothing further to say?
Mr. St. John-Stevas: The agreement is available, as the right hon. Gentleman knows. If the matter is to be pursued further, I suggest that it be done through the usual channels.
Mr. Callaghan: Further to the point of order, Mr. Speaker. As I understand my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham), there has been a document in the Home Office since 15 October—three weeks ago today. Why has it not been produced before? Why do the Government insist on taking all stages of the Bill on Thursday? Should not they reconsider the business for Thursday? If they wish to take the Second Reading then, that might be reasonable, but as the document has only just become available should not the Government allow the Committee and Report stages to be taken at a later date? Surely that is a reasonable request to make. I put it to the Leader of the House.
Mr. St. John-Stevas: I am willing to receive the request. There is nothing sinister about this. It is perfectly reasonable for there to be a gap between the arrival of a document and its printing. No one knows better than the right hon. Gentleman that one cannot order printers to deliver things at a moment's notice. But, as I have said, if the right hon. Gentleman feels that there is a genuine point here and wishes to pursue it, it should be pursued through the usual channels.
Mr. Dalyell: Further to the point of order, Mr. Speaker—
Mr. Speaker: Order. We have finished that point of order, I should have thought.

RHODESIA
Mr. Robert Hughes: In view of the widespread and detailed reports appearing in the news media that the Government are to publish a Rhodesia Bill to-morrow, which is to be driven through the House with all stages completed on Thursday, I ask you, Mr. Speaker, whether the Leader of the House has sought to make a Business Statement on this topic. It is a matter of great importance. If the matter is handled in such a roughshod manner it will cause difficulties for everyone.
Mr. Speaker: I have no information on that matter. No request has been made to me for a Business Statement.

STATUTORY INSTRUMENTS, &c.
Mr. Speaker: By leave of the House, I shall put together the Questions on the five motions to approve statutory instruments.
Ordered,
That the draft Industrial Assurance (Northern Ireland) Order 1979 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Administration of Estates (Northern Ireland) Order 1979 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Statutory Rules (Northern Ireland) Order 1979 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Tax, Consumer Credit and Judicature (Northern Ireland Consequential Amendments) Order 1979 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Legal Aid, Advice and Assistance (Northern Ireland) Order 1979 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. MacGregor.]

SCHOOL RECORDS
4.2 pm
Mr. Andrew F. Bennett: I beg to move,
That leave be given to bring in a Bill to establish a right of access by parents to their children's school records: and for connected purposes.
The way in which school records are kept varies very much from school to school and from authority to authority. Their importance also varies from one area to another. In many areas school record cards and the information on them help to decide to which secondary school a child will go or in which stream or set he is placed if he goes to a comprehensive school. At a later stage record cards are often used to show to prospective employers, or a precis is made from them for reference to prospective employers. A school record may influence entry of a pupil to further education or his chances of obtaining a place in a college or university.
The school record becomes especially important if the child has to move from one school to another or if he gets into trouble and a report has to be prepared for a juvenile court.
School records contain a variety of information that again varies from school to school or authority to authority. Some concentrate on factual information, such as the child's reading age, mathematics attainment, and any tests or examinations that he has taken in school. They often contain useful information for the school to enable it to contact parents if there has been an accident at school or if the school needs to get in touch with a parent for any other reason.
Many school records contain much more information, much of which is based on the opinion of a teacher about a child's character or his behaviour in school. Records often contain information about the parents' behaviour or character. Although schools try hard to ensure that references are maintained accurately, it is obvious that with so many records, and especially when statistical information is contained in the records, it is easy for errors to appear. That is so even in schools of an average size, in which it is often found that there are two or three pupils with identical names. It is especially so in large
238
schools, in which it is often found that there is a handful of pupils who all have the same names. That is not confined to names such as Smith or Jones; it often applies to comparatively odd surnames within a large school. Wrong entries in records become more and more likely in larger schools.
In view of the importance of records and the possibility that mistakes can be made, parents and older pupils are naturally concerned that they should see the records and should be able to ensure that the information contained in them is accurate. They are anxious to see exactly what the school thinks of their children's attainment and behaviour.
A few authorities already allow parents to see their children's records. They seem to experience no problems. However, many authorities are not prepared to disclose the information contained in the records. The aim of the Bill is to produce a uniform system throughout the country to enable parents, as a matter of course and at any reasonable time, to see their child's record on request and to ensure that on attending for a parents' evening one of the documents that parents will automatically be shown is the child's record card.
The second aim of the Bill is to regulate who else is entitled to see school records. The irony of the present system is that although, very often, parents cannot see the records, they are kept in a rather casual manner and many others are allowed to see them. The records often contain confidential information provided by the parents.
I recognise that a difficult problem presents itself. If the school record is to be a useful record within the school, it must be freely available to the staff. However, at the same time it should not be shown to those outside the school. The promoters of the Bill have tried hard to deal with the problem and to ensure that records are shown to those outside the school only with the parents' consent.
It will be claimed by some that if the Bill is enacted teachers will stop recording information on record cards and will pass on information by word of mouth rather than record it. I hope that that will not happen if the Bill is enacted. Even if it did happen, it would be far better than allowing to remain on record cards much of the information that is now

239
given on them, which remains on them for the whole of a pupil's career.
An infant school teacher, for example, may suspect that a child has been light-fingered and has removed property belonging to another child or a piece of school equipment. If it is a serious problem, the teacher may well mention the matter to one or two other colleagues. For the next few months the teachers will keep a watchful eye to ensure that the suspected pupil does not remove property while receiving other lessons or when moving to another class. It is far better for that to be done verbally—once the problem has passed, it will almost certainly be forgotten—than for an entry to be made in the school record. Such an entry may stay with the pupil through junior and secondary schools. Indeed, it may be referred to when someone is producing a reference when the child leaves school. Verbal messages are much more likely to be forgotten, when irrelevant, than information placed on a record card.
If the Bill is enacted, I hope that teachers will not stop putting information on record cards. However, if that is the effect of the Bill, it will be better to ensure that rather doubtful information is not included. I know that the Conservative Party has made a great deal of its belief in a parents' charter for schoolchildren. One essential element would be to give parents the right to see what is contained in their child's school record.
I hope that the House will give me leave to introduce the Bill and will find time to allow the Bill to complete its remaining stages.
Question put and agreed to.
Bill ordered to be brought in by Mr. Andrew F. Bennett, Mr. J. W. Rooker, Mr. Robert Kilroy-Silk, Miss Jo Richardson, Mr. Bob Cryer, Mr. Jim Marshall, Mr. Toni McNally, and Mr. James Lamond.

SCHOOL RECORDS
  SCHOOL RECORDS
  Mr. Andrew F. Bennett accordingly presented a Bill to establish a right of access by parents to their children's school records, and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 16 November and to be printed. [Bill 70.]
ORDERS OF THE DAY

  INDUSTRY BILL
  Order for Second Reading read.
  4.8 pm
  The Secretary of State for Industry (Sir Keith Joseph): I beg to move, That the Bill be now read a Second time.
  The main purposes of the Bill are to modify the functions and powers of the National Enterprise Board and the Scottish and Welsh Development Agencies, and to make various other amendments to the Acts governing them; to make further provision relating to the disposal of property by the English Industrial Estates Corporation and enabling the Corporation to make use of private finance in the Government's factory programme; to give statutory recognition to reductions in the regional development grants scheme; to permit the provision of Government guarantees in foreign currencies under section 8 of the Industrial Act 1972; and to repeal the planning agreement and compulsory information powers conveyed by the Industry Act 1975.
  Thus the Bill gives effect to our manifesto undertakings, and in particular contributes to our policy of reducing public expenditure and reducing the size of the public sector.
  I need hardly remind the House of our opposition to the basis on which the National Enterprise Board was established in 1975, and our continuing opposition to the way in which it has been encouraged to operate. In our view, it is not sensible to maltreat savings and capital, blame them, as a result, for failing to do all that they could be expected to do and then set up a public agency to fill the gaps. There should be no need for public sector investment finance in manufacturing industry provided that savings and enterprise are sensibly treated.
  The taxpayer contributes heavily to industry by way of relief for investment and against the effects of inflation on stocks. The NEB was set up to operate, and has tried to operate as far as possible, as if it were a commercial holding company. However, its immunity from insolvency insulates it from commercial disciplines. Moreover, the emphasis laid

  241
  upon the NEB inevitably distracts attention from the need to create encouraging conditions for savings and investment, and feeds fantasies about short cuts to prosperity.
  It was not sensible to overspend, overtax and overborrow; it was not sensible to penalise savings; it was not sensible to be hostile to profits earned in competition; it was not sensible to tilt the risk/reward ratio against risk; and it was not sensible to be hostile to the private sector, on which jobs, prosperity and social and public services all depend. But the NEB exists—
  Mr. Eric S. Heffer: Surely the right hon. Gentleman must agree that the National Enterprise Board was not dreamed up out of the air. As a result of years of Conservative government and of declining industry, the NEB was an absolute necessity that was forced upon us, apart from any political dogma, to enable us to deal with our problems.
  Sir K. Joseph: The hon. Gentleman and his colleagues evidently excluded from consideration, as the relevant policy, the creation of conditions that would have encouraged risk and enterprise investment. They used the creation of the NEB as a sort of all-purpose magic wand which would, in their view, have allowed them to continue maltreating enterprise and risk-taking, all in the hope that the panacea, as they saw it, of the NEB would solve all the economic problems of the nation.
  The NEB exists and has tasks in hand. I have always paid tribute to the public spirit and good intentions of the chairman and the board and the efforts of the staff. At least for a time the NEB can perform a useful function by looking after certain major shareholdings in a very few companies of national importance which have to be given the chance of becoming viable and attractive again to investors, pension funds and individuals.
  While that remains so, we have been prepared to allow the NEB to maintain a limited involvement in two other roles. One is to assist in the development of certain companies in some areas of advanced technology where the hostile climate towards risk, which I briefly described, discouraged private investment. In a few cases the NEB can act as a catalyst in some aspects of some new technologies.
  242
  The other limited role we propose for the NEB—again, only in so far as the private sector cannot immediately meet the need—is to provide investment in firms, particularly small firms, in certain areas of high unemployment, principally the English assisted areas, where there is a need to strengthen a weak industrial structure. A similar task in relation to Scotland and Wales falls to the Scottish and Welsh Development Agencies.
  Although I can accept that the NEB should have, for the time being, the roles I have mentioned, I cannot accept, as I told the House on 19 July, that the NEB should act as a kind of public sector, general purpose merchant bank. There is no lack of facilities of this type in the City and they are capable of providing all the opportunities that a sound company needs for securing venture capital.
  Mr. Stephen Ross: If capital is so readily available, will the right hon. Gentleman tell me why the only finance available to the last remaining small light aircraft company—BrittenNorman in my constituency, which has twice been put into liquidation, first by Barclays Bank and then by the National Westminster Bank—came from Switzerland via Germany? Why is it that when I appealed to the City to put money into the British aircraft industry nothing was forthcoming?
  Sir K. Joseph: Does not the hon. Gentleman realise that he is making the very case that I am trying to make? Capital institutions abroad sometimes see opportunities in this country which our own capital institutions do not, just as our capital institutions often see opportunities abroad which foreign domestic institutions have missed. There is a reciprocity of the mobility of capital which is greatly in the interests of all the countries concerned.
  We intend that the NEB's involvement in companies, under each of the roles that I have mentioned, should always be temporary. In each case the objective must be to do no more than is necessary for no longer than is necessary to bring the company to a condition in which the free capital markets can again take over. We expect the need for NEB involvement, in its advanced technology and regional roles, to decline in future, although I

  243
  would not want to set a fixed term for it. We shall naturally keep the position under review
  Mr. Tom McNally: Is there not something self-defeating in what the Secretary of State is saying? The purpose of NEB involvement in many firms was to rescue firms at a time when private capital had had all the assistance about which the right hon. Gentleman is boasting from the Administration of the right hon. Member for Sidcup (Mr. Heath). At a time when those same firms have come through their problems, the right hon. Gentleman's policy will cause new uncertainties. As he said, the NEB exists and has done a good job for certain firms. Why bring this new uncertainty and doubt into the situation? Why not let the NEB get on with the job?
  Sir K. Joseph: It is for the NEB to judge, in the interests of the taxpayer and the individual companies, the right time to put them on the market. After all, as the hon. Member for Stockport, South (Mr. McNally) implies, the NEB has had some successes and some failures. Some companies in which the NEB has invested have been put into receivership by the NEB itself. It is not possible to insulate companies from risk and uncertainty in an intensely competitive world market. Ownership by the NEB, as the experience of some individual NEB companies manifests—I make no criticism—is no permanent guarantee to any trading activity in a highly competitive world.
  We have decided to incorporate some of the changes that I have described in the revised NEB guidelines rather than in the Industry Bill. This will provide a measure of flexibility in accommodating economic developments and adapting the scope of the NEB to the merits of particular cases. A draft of the guidelines will be laid before the House in the near future, and I intend to issue a direction putting the final version into effect as soon as this Bill has become law.
  Before we can do that, we need to amend existing legislation governing the NEB—the Industry Acts of 1975 and 1979—in a number of important ways. We thought it right, at the same time, to make parallel changes to all the important points in the Scottish and Welsh Development Agencies legislation, the pro-
  244
  visions of which relating to the industrial development functions of the Agencies are similar to those in the Industry Act 1975. It may be helpful, therefore, to take the House through clauses 1 to 8, which deal with these matters, before going on to the remaining provisions and the reasons for including them in the Bill.
  Mr. Michael Grylls: When my right hon. Friend describes the new limited role of the NEB—which I certainly appreciate—does he not, in his heart of hearts, still believe what he said previously in the House, that it is wrong to pump taxpayers' money into the NEB? The fact that it has made glaring mistakes and lost a lot of money is an example of this point. Will my right hon. Friend also tell us whether he intends to arrange that the Comptroller and Auditor General should be allowed to look at the books of the NEB so that he can report properly to the Public Accounts Committee, as the all-party Public Accounts Committee frequently recommended during the period in office of the previous Government?
  Sir K. Joseph: On the first point, some of the NEB's investments are not ripe for sale to the private sector. They are very new investments by the NEB and it will ill serve the companies concerned and the taxpayer if we do not allow the NEB to gestate them—I do not think that that is a totally unsuitable word—until they are considerably riper.
  As the NEB must carry out some such function and has responsibilities for some other companies, we thought it made sense to give it two other roles for a limited period. There will be very limited finance, and I think that that is in the public interest.
  My hon. Friend will know that the Government are inquiring into the role and functions of the Comptroller and Auditor General, and we propose to wait for the result of that review before making a decision.
  Mr. Nick Budgen: Can my right hon. Friend explain why it is necessary for the NEB to have a role in respect of advanced technology when it seems that any amount of capital will be available for exploiting

  245
  the North Sea? It is difficult to understand why it is necessary to support that role.
  Sir K. Joseph: My hon. Friend makes a very plausible, almost valid, point. Private enterprise money has been available in abundance for a very risky operation in the North Sea. But it so happens, because of events in the late 1960s particularly, that private money has been rather frightened off some of the smaller possibilities in some high technologies. Because of that experience, it seemed sensible to let the NEB, for a short while, act as a catalyst.
  My hon. Friend will be quick to realise that the experience of investors affects their judgments for a while, maybe longer than is justified by increasing knowledge and a changing market. However, I accept that my hon. Friend has a valid point of view which we had to take into account before making a decision.
  Mr. Tony Benn: Will the right hon. Gentleman be a little more candid with the House? Is it not the case that there would not be a single nuclear power station built in Western Europe, the United States or probably anywhere else if the private market had been called upon to fund it? Is it not a well-established fact, in every country in the world, that advanced technology has required sometimes up to 100 per cent, funding over a long period? Is not the right hon. Gentleman's argument so theoretical as to be virtually meaningless?
  Sir K. Joseph: Perhaps I have misunderstood the right hon. Gentleman's intervention, but surely he is not right. After all, one has to distinguish between the functions of the public sector as client and as supplier. But, even distinguishing those two functions, in America the private sector, as client, has ordered nuclear power stations from the private sector as supplier—subject, it is true, to safety regulations laid down by the public sector; and quite right, too. The right hon. Gentleman's intervention was invalid.
  Clause 1 gives the NEB—
  Mr. George Park: On clause 1. I see that the NEB is to cease to have the function—
  Sir K. Joseph: I have not got there yet. Perhaps the hon. Gentleman will let me come to clause 1.
  Clause 1 gives the NEB and the Agencies a new function of
  "promoting the private ownership of interests in industrial undertakings by the disposal of securities and other property"
  held by them. This reflects our policy that the size of the public sector should be reduced. But I cannot say when particular holdings are likely to find buyers. That responsibility lies with the NEB. Some of the companies in which it has holdings are already mature enough to stand on their own feet; others will take more time before they are ready for disposal. [Interruption.]
  I am taking the House through the Bill. Inevitably, in going through the clauses, I am repeating one or two of the points I have made in reply to questions. If the hon. Member for Bolsover (Mr. Skinner) would prefer me not to answer questions, that is another alternative; but, so far as is compatible with the time available, I prefer to answer as many questions as possible.
  Subject, however, to the interests of the individual company and of the taxpayer whose money has been invested, we can expect to see disposals by the NEB as a natural part of its activities. [Interruption.] Does the hon. Member for Bolsover want to intervene? Obviously not.
  Clause 1 also abolishes the NEB's statutory function of extending public ownership into profitable areas of manufacturing industry, a function which neither of the Agencies has ever had, and for the NEB and the Agencies it abolishes the functions of promoting industrial reorganisation and of promoting industrial democracy in their subsidiaries. The former, the promotion of industrial reorganisation, is altogether incompatible with the present Government's industrial attitude.
  I do not know what my predecessor had in view about the promotion of industrial democracy. I recall that the Government of which he was a member found it difficult to make up their minds on the matter. It is clearly sensible that industrial relations be good, but that is a matter for companies, not for the NEB.

  247
  The qualification in clause 17(2) makes it clear that this new function does not require the NEB to sell any of its holdings immediately, although all of them will be sold as soon as practicable.
  Clause 1 also modifies the functions of the Agencies so as to make it clear that the promotion of employment should be undertaken with an eye to economic development in Scotland and Wales and not as an end in itself, which may be self-defeating.
  Clause 2 provides two powers. It enables the NEB—
  Mr. Park: On clause I, where it provides that the NEB shall cease to have the function of extending public ownership, I want to be clear about what the Secretary of State is saying. Is he saying that if no private capital is available, either at home or abroad, for a particular company or industry which by general agreement is essential in the national interest, the Secretary of State, notwithstanding that, is content to see that company or industry go to the wall rather than allow the NEB to intervene? Secondly, on the selling off of assets, is the right hon. Gentleman saying that where the NEB has intervened successfully and has brought a company back into viability, instead of the profits then coming to the advantage of the general Exchequer, they should go to the few people who may be able to hold shares?
  Sir K. Joseph: On the first part of the hon. Gentleman's question, in the unlikely hypothesis that he postulates, the answer is "Yes". [HON. MEMBERS: "Oh".] Yes, because the hon. Gentleman is postulating a situation in which something that is widely accepted to be in the national interest and is profitable enough for the NEB to invest in—under the previous Government, the NEB had guidelines requiring it, overall, to make profits—such an investment, in the national interest and potentially profitable, would not find private investors.
  Secondly, the hon. Member should realise that, in the disposal, the assets disposed of will be paid for. The income to the NEB so received from the buyers will go back to the taxpayer, and thus directly the taxpayer benefits from the sale of the company.
  Mr. Stuart Holland: In relation to the first point, is not the right hon. Gentleman aware that it is not hypothetical but very much concerns British Leyland? The right hon. Gentleman claimed that the first point was hypothetical—that a company of major interest might not be able to get funds from private enterprise. Is not he aware that one of the reasons why the NEB had to intervene in British Leyland was the divorce between finance capital and industrial capital in Britain, leading to the point at which Lord Stokes complained that the whole of British Leyland, in his time, was valued by the City of London as virtually no more than the value of one empty office block?
  Sir K. Joseph: Surely, however, the hon. Gentleman will accept that there can be two opinions about any particular situation. For instance, there were plainly two opinions about the rescue by the Government—or was it the NEB at the wish of the Government? I cannot remember at present—of the Chrysler operation. There there was a split camp, we are told, with the right hon. Member for Chesterfield (Mr. Varley), my predecessor—a sincere man—taking one view and his Cabinet colleagues taking another. Surely Opposition Members will recognise that there can easily be two views about what is in the public interest.
  Mr. Charles R. Morris: Will the right hon. Gentleman give way?
  Sir K. Joseph: I really have given way enough.
  Clause 2 provides two powers. It enables the NEB and the Agencies to transfer securities to the Secretary of State, and it enables him to direct the NEB and the Agencies to make such a transfer and to prescribe its terms. Under the law as it stands, transfers can be only one way—to the NEB. We want to make two-way movement possible. Even if the NEB wished to secure such a change, I am advised that it could not do so under the present law.
  Clause 3 enables payments to be made in reduction of the public dividend capital of the NEB and the Agencies. There is no existing power to reduce it. This provision is now needed to enable the NEB and the Agencies to surrender to the

  249
  Consolidated Fund the receipts from the sale of shareholdings which were purchased by means of public dividend capital. The provision also has the effect of enabling appropriate accounting adjustments to be made. Similar adjustments would be needed if shareholdings were transferred to the Secretary of State. The Secretary of State is given the power to determine the amount of the reduction in each case, subject to Treasury approval.
  In general, I expect the reduction to be equal to the amount received from the sale or to the value of holdings transferred to me. But in certain cases—the advanced technology disposals—the NEB will be allowed to retain a proportion of the proceeds to finance any further investments of the same type that may be justified. The Bill provides for this.
  Clause 4 deals with the financial limits of the NEB and the Agencies. The limits are to remain at their present level—£3,000 million for the NEB, £500 million for the Scottish Development Agency and £250 million for the Welsh Development Agency. The power to increase these amounts by order is to be abolished.
  Earlier this year we opposed the provision in the Industry Act 1979 enabling the Secretary of State to raise the NEB limit to £4,500 million. In practice, it was probably unnecessary even then, and now that we intend to reduce the scope of the NEB that measure is entirely inappropriate.
  Clause 5 reduces the financial powers of the NEB and the Agencies. In the case of the NEB, the power to acquire shares in any company, without the consent of the Secretary of State, is to be reduced from £10 million to £5 million and from £2 million to £1 million for the Agencies. This change is in line with the Government's intention to tighten control over the use of public funds for industrial investment. More generally it reflects our intention to save public expenditure by reducing the availability of funds to these bodies.
  Clause 6 reduces the maximum number of NEB board members from 16 to 12. The NEB has never had even as many as 12 members and there seems to be no reason why it should do so in future. This clause also removes the requirement to maintain a register of board members' financial interests. The register, which has
  250
  to be published by the NEB in its annual report, has always been of doubtful value since the Secretary of State is required to satisfy himself, before he appoints a board member and from time to time thereafter, that the person concerned has no conflict of interest. The inquiries made for this purpose are more searching than those required for the register. The NEB board is also required, quite separately, to satisfy itself about conflicts of interest. I propose, therefore, to abandon the register and to take the opportunity to do the same in respect of British Shipbuilders, which is covered by clause 16.
  Clause 6 also empowers the Secretary of State to nominate persons to be appointed as chief executives of the NEB and the Agencies. This is appropriate in view of the importance of such appointments if, as has been the case with the Agencies, the chief executive is the only fulltime member of the board.
  Clause 7 abolishes the powers of the Secretary of State to direct the NEB and the Agencies to use his powers under sections 7 and 8 of the Industry Act 1972 to give selective financial assistance. This is unnecessary since other powers exist for the same purpose. The powers in respect of the Agencies have never been used, and the NEB has used its powers only to provide additional funds to British Leyland on terms identical to the NEB's own direct investment. We therefore intend to abolish these powers.
  Clause 8 abolishes the power in section 4 of the Industry Act 1975 which enables the NEB to furnish technical assistance overseas together with the parallel provisions relating to the Agencies. These powers have never been used by the NEB or the Agencies.
  I now cone to that part of the Bill which deals with the English Industrial Estates Corporation. Three corporations—for Scotland, Wales and England—were set up in 1960, although they had existed in a different form for many years. In 1975 the Welsh and Scottish Development Agencies took over the functions of the Welsh and Scottish Corporations while acquiring much wider powers in relation to factory building than had been enjoyed by their predecessors. However, no corresponding change was made to the powers of the English Industrial Estate, Corporation.

  251
  The consequences of this are that the English Industrial Estates Corporation has no power to invite or encourage private sector support for, or participation in, its activities. It has no power to help or encourage its tenants to buy their factories, except for the purpose of providing accommodation for its tenants. It has no power to give loans, mortgages or guarantees for the purposes of disposing of factories and estates. All these are activities which we are anxious to promote so that we can pursue the policy that I have already announced of seeking to secure more private sector involvement in the Government's advance factory programme and introduce a degree of self-financing by selling factories wherever possible. We are also taking the opportunity to tidy up various other aspects of legislation under which the Corporation operates.
  Clause 9 gives the Corporation the same industrial estate functions as the Scottish and Welsh Development Agencies. It makes it clear that the Corporation's job is to provide industrial or commercial premises and such ancillary facilities as may be needed. It also makes it clear that the Corporation has the power to dispose of anything that it owns for any purposes—in particular, to transfer to private ownership some of its immense industrial estate. Clause 9(2) states what the Corporation can do in order to discharge its functions. We have modelled the powers on those of the Welsh and Scottish Development Agencies. Under this clause the Corporation is empowered to acquire land and other property. At present the Secretary of State has to acquire the land and then lease it to the Corporation. This means double conveyancing whenever freehold land is bought or sold and the keeping of two sets of records of land held in both the Department and the Corporation. This duplication is pointless and wasteful.
  The functions of the Corporation under clauses 9(1) and 9(2) apply anywhere in England. However, I have no plans at present to permit the Corporation to act outside the assisted areas other than as may be necessary to meet its obligations for the completion or management of existing factory estates.
  Mr. Eldon Griffiths: Now that my right hon. Friend has almost completed his explanation of
  252
  the clauses concerning the powers in the Bill, I wish to ask a question arising from those clauses. Is he conscious of the fact that in taking powers away from the NEB—a measure which I completely support—he is giving great power to his own Department? By reducing the powers of the NEB—which I want to see—will the Secretary of State not be increasing the powers of his own civil servants? I am not entirely happy about that.
  Sir K. Joseph: I am aware of only one increase of power. My hon. Friend may have others in mind. This Bill is not intended to increase the activities of Government or civil servants. The only power that is being given to me and my civil servants will enable us the more effectively, if a case arises, to dispose of assets held by the public sector to the private sector. If my hon. Friend has a particular point, perhaps he will write to me so that I can take it into account before the Committee stage.
  I still have several clauses to deal with and I believe that the House would like an introduction to them. In clause 9(3), I appear to be running straight into something which slightly contradicts what I have just said. Clause 9(3) places the Corporation under my direction, though only to accompany the fact that the Bill gives a great deal more power to the Corporation to enable it to dispose of what are now public sector assets, merely leaving a supervisory role to the Secretary of State.
  In practice, I intend to reduce day-to-day intervention in the Corporation's affairs and substitute a framework of broad guidelines and financial duties.
  When the Welsh and Scottish Estates Corporations were subsumed in the Agencies, they ceased to enjoy Crown status. There seems to be no argument for treating the English Corporation any differently, and provisions corresponding to those in the Agencies' Acts have been introduced in clauses 9(4) and 9(5). This means that from a certain date the English Industrial Estates Corporation will cease to have automatic planning permission for its projects. Clause 9(5) will have the protective effect of conferring planning permission on developments initiated before the end of March 1981. This is a transitional arrangement. Without it there could be serious disruption of the

  253
  existing programme which was planned and budgeted for over two years ago and will still be in progress next year.
  The corresponding provision in both the Scottish and Welsh Development Agencies Acts confers planning permission only in respect of developments initiated before the commencement of the Acts. There was some feeling at the time that the key phrase "developments initiated" meant cases for which plans had been prepared. More recent advice suggests that the phrase could be restricted to cases where work has been started on the site. Given that the English programme is so much bigger and the time that elapses between planning and construction, we feel that the later date of March 1981 is reasonable. I assure the House that the Corporation will not ride roughshod over the normal requirements of consultation with the planning authorities. I shall require this to continue.
  Clause 10 hands over to the Corporation the freehold of all the land that it now leases from me. My own powers remain unchanged.
  Clause 11 enables me to increase the membership of the Corporation beyond the maximum of four.
  Clause 12 makes a minor technical change.
  I now turn to the subject of regional development grants. In my statement of 17 July on changes in regional industrial policy I announced the withdrawal of regional development grants in the intermediate areas and indicated that the Industry Act 1972 would be amended accordingly as soon as possible. Clause 13 has that purpose. It amends the table in section 1 of the 1972 Act to give effect to the new policy.
  The opportunity has also been taken to give statutory recognition to the changes effected administratively in the regional development grant scheme. This follows the exclusion of mining works and construction equipment by the Labour Government, as part of the 1976 public expenditure cuts. It removes the provision for derelict land clearance areas which are now spent. The clause consolidates the provisions of the Regional
  254
  Development Grants (Variation of Prescribed Percentages) Order 1979 which reduced the rate of grant payable in the development areas from 20 per cent, to 15 per cent. It also provides for the continuance of the transitional provisions effecting all the changes.
  Clause 14 and schedule 1 amend section 8 of the Industry Act 1972. The amendment is largely technical. It is designed to overcome the difficulty that the sterling limits on commitments in section 8 in practice make it all but impossible to undertake liabilities denominated in foreign currency. No such difficulty exists in the case of assistance under section 7. The exchange risk cover scheme for loans by the European Investment Bank and the European Coal and Steel Community in the assisted areas is mounted under section 7.
  The amendment will enable the Secretary of State to give foreign currency guarantees without a sterling limit. In order to retain the present parliamentary control over sterling commitments and to introduce similar control over the aggregate of foreign currency commitments, clause 14 and schedule 1 exclude commitments for foreign currency guarantees from the existing section 8 limits and establish a separate overall limit on commitments for foreign currency guarantees. This limit is specified in special drawing rights, as these tend to be rather more stable than any single currency, and are roughly equivalent in magnitude to the existing sterling limits in section 8.
  I emphasise that these are enabling powers. We expect primarily to use them to support overseas projects for the exploration and development of new sources of raw materials to improve our security of supply. The opening and development of a new mine is a costly business these days, and it often takes place in developing countries. The finance required is often of a nature or term which is beyond the resources or capability of an individual company or the market. In such cases it may be right for the Government to underwrite some of the risks—as ECGD already does when certain political risks are involved.
  Each case will be considered on its merits, in the light of the likely economic benefits and the need for Government

  255
  support. In general we shall seek to charge premiums at an appropriate level.
  Mr. John Bruce-Gardyne: I am anxious to take up my right hon. Friend's argument about the preservation of parliamentary scrutiny and control. Does my right hon. Friend accept that so long as the Government choose to interpret section 8 of the principal Act in such a way as to make during the recess massive grants—far beyond the limits which Parliament set in 1972—without reference to Parliament, it is a mockery to talk of parliamentary control?
  Sir K. Joseph: My hon. and much respected Friend will realise that it is a little unfair for him to talk of the Government choosing to interpret section 8 of the main Act in the way that I have done in the case of Dow Corning. Section 8(8) of the main Act specifically provides that where an urgent decision has to be made when Parliament is in recess it is appropriate for the Government to give the House of Commons information through the usual procedure. If that happens, the opportunity for debate in time to influence the decision is lost.
  I am at ease in my conscience that that provision was suitably applied in the case of Dow Corning. One could have a different view about the decision but because of the delays caused to Dow Corning after the negotiation by the previous Government, which was followed by the election and a change in regional planning policy, a decision had to be made urgently. I made that decision and announced it to the House. My hon. Friend must recognise that that contingency is provided for in section 8(8) of the main Act. Public expenditure commitments will not allow it to happen often.
  Schedule 1, which is linked to clause 14, falls into two parts. Paragraphs 1 to 4 establish separate ceilings for existing sterling commitments and commitments for new foreign currency guarantees. Paragraphs 5 and 6 are technical. They set out the detailed mechanics of valuing foreign currency commitments and the circumstances under which the SDR ceiling can be exceeded because of exchange rate fluctuations. These are on parallel lines to similar provisions in the Export Gua-
  256
  rantees and Overseas Investment Act 1978.
  The remaining provisions of the Bill are of a miscellaneous nature. Clause 15 is brief. Its purpose is to sweep away the paraphernalia of planning agreements and disclosure of information by companies, which occupy no fewer than 12 pages of the Industry Act 1975.
  Planning agreements and compulsory disclosure of information were dead letters from the start. There were only two planning agreements—one with a company which was being rescued by the Government and the other with a nationalised industry. Both agreements have lapsed and will not be renewed. The disclosure of information provisions have never been used.
  We are much in favour of co-operation among industry, trade unions and Government in its proper sphere. The National Economic Development Council and the resources of its participants are available for this purpose. Certainly we are not opposed to the disclosure of information by companies so long as that is entirely voluntary.
  Mr. William Waldegrave: Does my right hon. Friend admit that there was at least a grain of sense in what his predecessors were trying to do in one area of planning agreements? Does he accept that where the Government or nationalised industries are the sole buyers of a product from an industry it is to the advantage of industry to be able to plan formally the development of its business over the medium term? I declare an interest since the company for which I work is in that position in some of its divisions.
  Sir K. Joseph: I am sure that that is greatly in the interests of the industries and firms involved. But I am not sure that a planning agreement is the right method of seeking to solve the problem of fluctuating market conditions. I acknowledge the importance of the subject where there is a single buyer.
  Mr. Stuart Holland: We face an interesting situation. In a previous statement to the House on regional development incentives the Secretary of State said that he was rolling them back because he was not persuaded of their effectiveness. The

  257
  Labour Government's policy for the regions involved direct intervention by the National Enterprise Board and indirect intervention through planning agreements backed by regional aid, If the Secretary of State is to limit the role of the NEB and scrap the planning agreement formula, and if he does not really believe in regional incentives, how will he provide jobs for the regions?
  Sir K. Joseph: It is an illusion to assume that jobs respond only to grants from the taxpayer. They respond to market opportunities, the reputation of the work force and the drive of local entrepreneurs and those from outside. In the months and years ahead we shall see that those forces, even with a lower contribution from the taxpayer, will provide more benefit. We apply the principle of disclosure of information ourselves. When in Opposition, we voted for what is now section 27 of the Industry Act 1975, which provides for the public use of the Treasury's economic model. That provision is being retained. I wish everyone well with it.
  Clause 16 deals with the register of financial interests for members of British Shipbuilders for reasons I have already covered in respect of the NEB. Clauses 17 and 18 deal with technical matters.
  I commend the Bill to the House.
  4.50 pm
  Mr. John Silkin: The Secretary of State has underlined and reinforced his view of Conservative philosophy which he gave on 24 July 1979 in the debate on regional policy when he said:
  "The Conservative Party does not presume to think that it can run industry. Our job is to create the conditions in which industry runs itself."—Official Report, 24 July 1979; Vol. 971, c. 378.]
  The House will be aware that only yesterday, speaking at Droitwich, the director general of the National Economic Development Office, Mr. Geoffrey Chandler, with the independence and authority of his office, said:
  "Industry's failings need very much more to remedy them than an appropriate environment alone. Industrial policy should involve all parts of society, including the Government, since it is to Government that the country is entitled to look for leadership."
  258
  What we are getting with regard to one section of industry is not leadership but anarchy.
  Looking at the words closely, let us see again what the Secretary of State said:
  "The Conservative Party does not presume to think that it can run industry."
  That may be true of private industry. Is it true of public industry? When we come to that, we see that the right hon. Gentleman's attitude towards public industry, whether the Post Office, shipbuilding, steel or the National Enterprise Board, is very different. There he presumes to think that he can run it, management included, and I shall prove it to the right hon. Gentleman. I speak primarily in connection with the National Enterprise Board, but I hope and know that those of my hon. Friends from Scotland and Wales will talk about the Scottish Development Agency and the Welsh Development Agency.
  It is true that the Secretary of State has trivially divested himself of one or two powers. They are not important. They are particularly the shipbuilding and NEB registers. But the hon. Member for Bury St. Edmunds (Mr. Griffiths) made a significant point. I am about to give him a short dictation on what he might put in that letter which his right hon. Friend suggested that he should write, but he is probably ahead of me on it.
  Let us see what the Bill amounts to, because apparently the Secretary of State does not know what powers he is taking. Clause 2 extends his powers of direction to enable him to require the NEB and the Agencies to transfer their assets to him. That is a formidable power. Clause 3 gives him power to force the NEB and the Agencies to make payments in reduction of their public dividend capital—another formidable power. Clause 6 is the power to nominate the chief executives, who must come from the Board. That power is akin to the kind of power that the right hon. Gentleman took when he was reorganising the National Health Service. I said at the time that it had more than a squint towards monarchy—and there is an authoritarian streak in the right hon. Gentleman which I greatly deplore. The idea of his appointing what will be a kind of Secretary of State's

  259
  supergrass to the Board will not increase the morale of the NEB.
  The right hon. Gentleman said that there was one power that he might have taken, but he was not certain about it, and he stopped dead at clause 9(3). He really should not have stopped there. That concerns the general or specific directions of the right hon. Gentleman with which the English Industrial Estates Corporation must comply. These are formidable powers. I shall come to others later.
  It is perfectly true—and the Secretary of State with great candour admitted it—that the Conservative Party when in Opposition wanted to kill the NEB stone dead. The Conservative Opposition found they were unable to do it, so they left it with four essential functions—mutilated perhaps, but preserved. The first three were support for small firms; support for firms in assisted regions, particularly in the North and North-West; and support for high technology. That was the form of adult education that the right hon. Gentleman thought private industry needed in high technology. It did not have the education to go in for the risk itself, so in the meantime the NEB would do it.
  The fourth function left to the NEB was that of assisting companies which had been in difficulties. The NEB will still be backing Rolls-Royce. It will be interesting to know whether it will be backing BL. Perhaps the right hon. Gentleman or his hon. Friend when he replies to the debate will tell us what is in prospect there.
  There is a future problem. The Secretary of State, not today but on an earlier occasion, said that he would allow the NEB to provide temporary support for companies which got into difficulty only in exceptional circumstances. Under the Tory Government there will be many such companies—so many that it would be of advantage if we were to learn what the Government's policy will be towards the ducks that they will be laming during the course of their industrial policy.
  I promised to go a little further into the interference with management and the powers that the Secretary of State is to give himself relating to the NEB.
  260
  First, he has told the NEB that it must sell £100 million worth of assets to raise cash this year, but the choice is up to the Board. If the choice were up to the Board, it would not do it in that way at all. If it has to raise this sum—I do not think that it is necessary, but this is a matter across the Floor of the House—there are many ways in which it can be done other than getting rid of assets. Such a way and such a basis is bound to lead to enormous uncertainty and loss of morale not only in the NEB—I was glad that the Secretary of State paid tribute to the staff and their capability—but among those who work in the vulnerable industries such as Fairey Engineering, Ferranti, ICL or BBK. The Board knows that taxpayers' money has gone into saving these industries, and it is told that the moment those industries are saved they will be "flogged" to any private individual who cares to make his bid. The reward will go not to the taxpayer but to those who had no confidence in those industries and did nothing whatever to help them.
  Sir K. Joseph: Will the right hon. Gentleman explain what he means by that? The proceeds of sale will go back to the benefit of the taxpayer via the processes outlined in the Bill.
  Mr. Silkin: Perhaps I had better explain it, because clearly the Secretary of State does not understand. Assets are sold at a time when they are rewarding and profitable. Who has made that profit? It is the people of this country by their efforts and their money who have made it possible. The assets will be sold off—the Secretary of State knows this perfectly well—in a bargain basement sale and those who were unwilling, unable and incompetent to make those industries successful will reap the benefit.
  Mr. Budgen: Will the right hon. Gentleman give way?
  Mr. Silkin: The Secretary of State is more qualified than the hon. Gentleman to deal with me, but I willingly give way.
  Mr. Budgen: I am very grateful to the right hon. Gentleman for being so kind as to allow me to put a question to him. Perhaps he will humbly allow me to ask him why these assets will be sold only at bargain basement prices.
  Mr. Silkin: In many cases they are minority holdings, and the hon. Gentleman knows as well as I do that that is frequently a factor in sales of companies which makes a difference to the price.
  Dr. Jeremy Bray: Surely there is clear support for my right hon. Friend's contention in the enormous demand for BP shares, which the Government have grossly underpriced.
  Mr. Silkin: That is perfectly true. I am glad that I was able to reply to the hon. Member for Wolverhampton, South-West (Mr. Budgen), but perhaps the Secretary of State should have tackled that point himself.
  I said that I would further detail the functions and powers that the Secretary of State is taking for himself. He is removing the statutory function of the NEB to promote industrial democracy. He did not appear to think that that was a great step, but he does not propose to put anything in its place. He talked of his brief in good industrial relations. He can talk as much as he likes, but it would have been a good idea to place such plans in the Bill. He may say that they will be in the draft guidelines, but that is not important. They should be in the Bill.
  Clause 5 of the Bill diminishes the NEB's delegated powers by reducing its commercial judgments to transactions of £5 million from a figure of £10 million. I wonder whether the hon. Member for Bury St. Edmunds is still in agreement with me now I have reached this point. The Secretary of State is cutting the amount of the NEB's commercial judgment by £5 million. The right hon. Gentleman, who does not want to interfere in industry, will exercise that judgment. Whose commercial judgment will it be on a project of £6 million? The House should be well aware that it is the Secretary of State, his Department and his civil servants who will be making that commercial judgment and not the NEB.
  Clauses 1 and 2 cripple the role of the NEB even further. Through his power of direction, the Secretary of State seeks to intervene and force private sector partners to take different and perhaps unacceptable partners in the future. That is the power which he is giving himself. I do not believe that there is a single precedent for that power in any legislation. If there
  262
  is, perhaps the right hon. Gentleman will tell us. It is giving enormous power to one man and his Department, but it will also deter private sector companies from entering into arrangements with the NEB which would be of considerable benefit to them.
  We are left in no doubt as to the right hon. Gentleman's real intentions for the NEB. Has he been converted, however temporarily, to the existence of the National Enterprise Board in a somewhat limited field, or is he deliberately but slowly, like the Chinese water torture, destroying it? It cannot be disputed that he is intensely damaging morale.
  Let me remind the Secretary of State what the previous Conservative Government of which he was such a distinguished member did. When they came to office in 1970, the first thing that they did was to destroy the IRC. Two years later they set up the Industrial Development Executive to do almost exactly the same job. In the meantime, apart from the waste of time, morale in industry had totally disappeared.
  I do not know whether the Secretary of State intends finally to destroy the NEB but he is effectively destroying its morale. I believe that last year the NEB had a profit of over 11 per cent., increasing to 15 per cent. or 20 per cent., but it will now be an eternal loss-making organisation. Nothing could be more damaging to morale.
  Mr. Eldon Griffiths: I was obliged to the right hon. Gentleman for helping with the first half of the letter that I was beginning to compose to my right hon. Friend. He and I have much common ground in this matter. He appears to be saying essentially that the NEB has a good deal to fear from my right hon. Friend's Department, and I agree with him that if there is one thing worse than the NEB it is the Civil Service. His speech is powerful and interesting. Would he agree on behalf of the Labour Party that the only thing that is worse than keeping the assets in the hands of the NEB is to transfer them to the effective power of the Civil Service?
  Mr. Silkin: I might agree that the worst possible fate for the assets is for them to be transferred to the effective control of the Secretary of State. There

  263
  are two things that the right hon. Gentleman should not be doing with the NEB. He should not be selling off profitable companies such as Ferranti, which is doing well. The taxpayers should not have to pay the bill for something which the right hon. Gentleman has created.
  Under the Bill the NEB's total borrowing power is put at £3 billion. I believe that under the Industry Act 1979, although it may have been earlier, the sum, which was then £4½ billion included private borrowings. With private borrowings of a large company, the new figure of £3 billion will soon hit the ceiling. The right hon. Gentleman will have to come back to the House over and over again to ask for new Bills, which will have to go through all their stages. His right hon. Friend the Leader of the House will be very displeased with him. Those are the things that he ought not to be doing.
  What should the right hon. Gentleman be doing? I should like to quote further from the speech of Mr. Geoffrey Chandler:
  "The role of organisations like the National Enterprise Board should be recognised in stimulating investments in new technology and new industries."
  The Secretary of State was half-hearted about that, but I shall give him some examples.
  By the Secretary of State's decree, the National Enterprise Board is to have a £20 million involvement in titanium. That is a clear example of where private financial aid is not available for something that is vital for the country. If we did not purchase titanium here, we should probably have to buy it from Russia. Its use is in defence, and the Prime Minister must have been in a quandary as to which of her two ruling but conflicting prejudices should operate.
  There are about 18 examples of high technology where the NEB is doing a joint deal, and such explorations would not have been undertaken unless it had come in.
  Mr. Les Huckfield: The Secretary of State is not listening.
  Mr. Silkin: The right hon. Gentleman is listening. He always closes his eyes when I speak.
  264
  I should like to know from the Minister in replying, what is happening to the next instalment of the £25 million for Inmos. Without it, the first £25 million will go down the drain.
  I have given examples of where the NEB has proved its enormous value for the future of our country. I turn to the report of the advisory council on applied research and development, which states that there are 6,000 to 7,000 industrial robots in the world and that our share is 60 to 70. The report outlines the various fractions owned by other countries. For example, the United States has half the total amount and Japan has a large portion also. The report states that the Government should give companies several million pounds a year as an incentive. We are dealing with something of enormous benefit in which we should have a British stake. However, the National Enterprise Board approved the allocation of £318,000 to a firm in the North-West to develop robots, which anticipated the report's recommendation. The NEB has shown that it is capable of dealing with such matters with imagination and speed.
  The House has rightly complained about the length of Front Bench speeches. Therefore, I shall deal with the broad picture in about four or five minutes.
  What sort of a country will the Labour Government—there will be a Labour Government—inherit at the next election? They will inherit a country, if the Financial Times leak is correct, in which the engineering industry will have contracted by 20 per cent. by the beginning of 1983. It will be a country in which the twin evils of Tory policies and import penetration will have created a desert. To expect a Labour Government to respond to that by easy nostrums is to ask the impossible. However, we can begin to establish the important tools of the trade with which we might rescue the country. We require a reinforced National Enterprise Board with greater powers and more money. We shall need that after the devastation that will be created by the Secretary of State and his colleagues.
  I agree with the right hon. Gentleman that there have been few planning agreements. However, he did not point out that the planning agreement itself is becoming more and more used throughout Europe and the world as well as in this

  265
  country. In France, the development contract, which is the broad equivalent to the planning agreement, is being extended in its powers. The industrial desert that we take over will require us to give statutory powers to planning agreements.
  The right hon. Gentleman laughed at—indeed he is abolishing them—the provisions about disclosure of information. He believes that there is enough disclosure and that we need no more. I shall quote from Mr. Chandler again.
  The Parliamentary Secretary to the Treasury (Mr. Michael Jopling): Oh, no.
  Mr. Silkin: The Director General of NEDC is more independent and authoritative than is the right hon. Member for Westmorland (Mr. Jopling). The Director General said:
  "The market mechanism should be improved by the production of better and more independent disclosure about company performance."
  That is exactly the purpose of the disclosure sections of the Industry Act 1975.
  Those are the sort of matters that we shall have to undertake. By the time the Secretary of State and his colleagues have succeeded in bringing the country to that desert, the topical question will be whether to restrain the growth of manufactured imports by import penetration ceilings. We shall have to restore better and improved regional aids. We have seen how those aids link up with shipbuilding, which we debated last Thursday, with the NEB, which we are debating today, and with steel, which we shall debate to-morrow, and how they are part and parcel of the hope for the industrial recovery of the country. We reject the industrial policy of the Government and the Bill which gives it life.
  5.15 pm
  Sir William Elliott: I am pleased to follow the right hon. Member for Deptford (Mr. Silkin). In the name of the brevity which is now the vogue, I propose to make a short speech. First, however, I should like to make a few comments on the right hon. Gentleman's speech.
  The right hon. Gentleman suggested that a Labour Government would inherit an industrial desert. I doubt very much whether there will be a Labour Government after the next general election. The
  266
  North-East is an industrial desert in terms of unemployment. We inherited that position from the previous Government, of which the right hon. Gentleman was a member.
  The right hon. Gentleman referred to the state in which the engineering industry would be when a Labour Government came into office. I should like to refer to the engineering industry's difficulties in the North-East. The present high rate of unemployment in that area is in no industry more heavily subscribed to than in engineering and its associated industries. Those industries are undergoing a massive struggle, in the aftermath of the enormous industrial dispute.
  There can be no better indication of the difference in ideologies between the two sides of the House than the remarks of the right hon. Gentleman about proceeds and profits in connection with cutting down the role of the National Enterprise Board. My right hon. Friend the Secretary of State pointed out in an intervention that the proceeds of sales would benefit the taxpayer.
  That will not be the only benefit to the taxpayer. Once those holdings are sold, the discipline of the money market and open competition will ensure that they positively thrive. That is the profit that will come to the taxpayer, part of which will go to the Exchequer for the benefit of the weakest in our society.
  I shall leave my comments on the right hon. Gentleman's remarks at that. However, I take up his closing statement that he rejects completely the industry policy as expressed in the Bill. I welcome the Bill and the industrial strategy of the Government which the Bill outlines and illustrates.
  Mr. John Evans: They will not like the Bill on Tyneside.
  Sir W. Elliott: I believe that they will.
  Mr. Don Dixon: The hon. Gentleman and I represent areas of high unemployment. Will he explain to the House how the Government's regional policy will help our areas? The Government intend to rejuvenate British industry by supporting the small businesses and, at the same time, take away IDCs for factories of less than 50,000 sq. ft. in area, which will hit areas like ours.
  Sir W. Elliott: The hon. Member for Jarrow (Mr. Dixon) should wait until I come to my remarks on the part of the Bill which deals with the matter to which he has referred.
  I wish to refer to clauses 9 to 12. They propose wider powers for the English Industrial Estates Corporation. They give the Corporation a greater economic role and, much more important, a greater promotion role. I know the Corporation well. I pass its headquarters in the North-East on my journeys to and from the House. It is situated in the middle of the Team Valley trading estate, which is one of the most successful and oldest trading estates in the country. It was established by a Conservative Government before the war.
  These proposed new powers for the Corporation are wholly desirable. Having known the Corporation well, and talked often to its officials and successive chairmen, it is my opinion that, unfettered, the English Industrial Estates Corporation can play a distinct and significant role not only in the economic recovery of the North-East but in the economic recovery of the country as a whole.
  The North-East has been far too dependent in the past few years on the service sector, predominantly the public services, for economic growth. There is a strong possibility at present—I speak advisedly—of potential manufacturing growth through the trading estates of the country as a whole, particularly through the trading estates of the region that I know well. A recent report brought some light to our gloom by highlighting the fact that there has been considerable success in the trading estates of Peterlee and Washington in County Durham. At present there is considerable interest by the private sector in trading estates in the North-East. In fact, an official of the Corporation to whom I talked recently said "Developers are now looking at the North of England, whereas previously they have never looked further north than Watford".
  I welcome the extended powers of the Corporation because I believe that they will contribute greatly to our industrial recovery. As my right hon. Friend said, until now the Corporation could indicate but could not persuade. In my opinion, that has always been ridiculous. It is my
  268
  belief that in its headquarters in the Team Valley there is greater knowledge, experience and expertise in respect of regional development than there is anywhere else.
  Today at Question Time there was again a call from Labour Members for a development agency for the North. I wish to speak against such a body and, indeed, against any other bodies. We have enough of them. We have had enough subsidy. Let us have practical application towards creating real employment and new jobs. I believe that this can be done through the trading estates.
  Mr. Heffer: I am absolutely intrigued. I should like to know what has been happening with private enterprise over the years. Why has it not solved all these problems and built the new factories? Why have the industries not gone to the North? Why is it that successive Governments, including Tory Governments, have had to create regional policies and so on? What have the Conservatives been doing?
  Sir W. Elliott: It is more a question of what the previous Labour Government have done in recent years. There is certainly an indication at the present time that the private sector wishes to develop.
  Mr. Heffer: Rubbish.
  Sir W. Elliott: In laying down the broad guidelines for the Corporation, I hope that my right hon. Friend will consider the following points. First, will he recognise the present and, I hope, increasing demand for smaller factories? In the North of England there is a distinct interest in factory space between 1,500 sq ft and 5,000 sq ft. The hon. Member for Liverpool, Walton (Mr. Heffer) asked what we have been doing. I believe that here lies the key to our industrial recovery—the encouragement of the small and medium-sized business. Such businesses wish to come to the trading estates in the North-East. Thank goodness for those trading estates, and thank goodness for the establishment of the Team Valley in the 1930s. I can assure the hon. Gentleman, who comes from an area similar to my own, that but for the trading estates we would now be in a sorry plight indeed. I believe the further development and

  269
  encouragement of those estates to be extremely important, and I see the Bill as providing that encouragement.
  Secondly, under clause 11, will my right hon. Friend seek to appoint extra members of the Corporation who will be representatives of the assisted areas? Thirdly, will he consider the possibility of proceeds from any sales made by the Corporation being retained in the area of sale? That is perhaps a little optimistic, but in respect of the North-East I hope that any proceeds from sales might be circulated in the region.
  Above all, will my right hon. Friend recognise—I am sure that he does—that developers and entrepreneurs exist? I talk to them with some regularity. They are anxious to develop and to provide new employment, but the incidence of capital taxation is a massive deterrent to their doing so. I hope that it will be accepted that there is a natural desire on the part of small business men to build capital which their children and their children's children can inherit. The small business man wishes to establish a business that his children and children's children can take over. I therefore hope that the Government will continue on the path of reducing taxation, particularly capital taxation.
  Dr. Oonagh McDonald (Thurrock): Does the hon. Gentleman recall that a recent survey of small businesses showed that the motive which he has attributed to small businesses is entirely absent? Business men find that their children are not particularly interested in taking over the business, as a result of which entrepreneurial activity seems to be exhausted with the originator of the small business in question.
  Sir W. Elliott: I am grateful to the hon. Lady. She allows me to express a point of view that I have heard business men express several times. I have heard industrialists deplore the fact that their sons are not interested in going into business, as the hon. Lady has suggested. Why? It is because of the enormous amount of Government interference in private business—[HON. MEMBERS: "No."] Oh, yes—that has come with successive Labour Governments. Another reason is the penal taxation to which I have referred, which has been applied to
  270
  private business by Socialist Administrations.
  I feel that I have spoken long enough—I am sure that there is agreement on that. I believe that the country needs a new industrial revolution. My part of the world played a great part in the last one. The new industrial revolution must provide encouragement to the new creators of wealth. I repeat that they are there if they get the right encouragement.
  I welcome the Bill. When it reaches the statute book, I believe that it will make a major contribution to our industrial recovery.
  5.27 pm
  Mr. Tony Benn: The Secretary of State for Industry treated us to another of his lectures on economic theory, and described how the disengagement of Government from the economy was to be achieved. However, at no stage did he relate the Bill to what he knows to be the reality of the economy of the Western world and of Britain. One could have listened from the beginning to the end of his speech without getting any sense of his awareness of the fact that the United States is on the brink of a further decline into recession and that Germany is faced with major unemployment. Indeed, Germany has followed quite different policies from those that have been widely criticised here and has exported its unemployed as its guest workers have been sent back to Greece, Turkey and Yugoslavia.
  The right hon. Gentleman is responsible for industrial policy in a country where there are now millions of people desperately frightened about their future, yet he simply gives us another version of his Adam Smith-Milton Friedman lessons and tells us that the market will settle it for us. The reality is that the industrial desert to which my right hon. Friend the Member for Deptford (Mr. Silkin) referred has been progressively developing under all Governments since the war.
  The right hon. Gentleman was right to say that we need changes in policy. I cite shipbuilding as an example. Thirty years ago, 48 per cent. of the world's ships were launched in British yards. Now, the percentage is not statistically significant. The same can be said

  271
  about motor bikes. Twenty years ago, we produced the best in the world, but a big growth market was virtually wiped out by the way in which our economic system worked with regard to motor vehicles and engineering. Even Ferranti Electronics and Alfred Herbert had to come to the Government to keep themselves going.
  We are now faced with an accelerating decline of our own industrial system. The right hon. Gentleman should do more than address the House of Commons. He should have addressed some of his comments to the shipyard workers of Govan who have no ships to replace their existing order, which has now been launched for fitting out. He should have addressed the people of British Leyland, faced with the closure of 13 plants. He should have addressed those at Corby, where male unemployment will rise to 30 per cent., and those in the mining industry confronted by imports of coking coal. If people imagine that that is done on market forces, I recall that on the last occasion when the previous Conservative Prime Minister got the generating board to import coking coal, by the time it arrived it was more expensive than British coal. It was then sold by the generating board, at a loss, to the French power industry.
  The right hon. Gentleman should address his mind to those people in this country who actually create the wealth by working in industry and should not solely address the interests of the financial bodies which supported his Government and for whom he has a prime concern. I must say to the right hon. Gentleman—I follow the newspaper reports containing comments by those who would like to support him—that there is no real confidence that the policy upon which he has embarked will achieve any of the objectives which he believes and claims it will achieve. There is no forecast that investment will increase, no forecast that growth will increase. With rising unemployment, there is no forecast that productivity will increase. What is forecast is higher interest rates, which will depress the economy still further. The lifting of exchange control will permit an accelerated export of profits. No one should suppose that while there are countries in the world where trade unions
  272
  are illegal, as there are, it will not be more attractive to export profit to those countries to produce goods with sweated wages and bring them back to this country, rather than to set up businesses in the constituencies of the North-East and the North-West.
  Under arrangements which the Government are encouraging, we are using oil revenues to fund imports. Zero growth and real cuts in public expenditure will mean higher unemployment and will be followed by an inexorable move towards chronic unemployment, to the point where—even if there was a world recovery and this country was to have a short, fevered boom—it would lead to so many imports to re-equip our industry that when the rest of the world was taking off the British economy would fall flat on its face and would be subject to another stop-go period.
  I must also say to the right hon. Gentleman—it has to be said soon, although I hinted at it in the summer—that if industrial policy follows this course the next instrument of the Cabinet will be the Special Patrol Group as the problems created by deindustrialisation come to be presented to the public in terms of law and order. There was great resentment in Corby last week—when the steel demonstration took place—at police helicopters circling overhead and riot police out with shields. Yet it is happening all over the country. The right hon. Gentleman may not be told this as he goes around. If, however, one goes to Merseyside, where chronic male unemployment has been a curse over a long period and where in some areas, I was told in Liverpool on Sunday, there is 50 per cent. youth unemployment, it will be seen that the way that the detention centres for short sharp sentences are interpreted by young people is that they are a way of frightening them off from causing trouble during a prolonged period of mass unemployment.
  I warn the right hon. Gentleman that if the industrial policy he follows leads to this type of social tension the Special Patrol Group will not be a substitute for the National Enterprise Board as a way of dealing with it. This policy will lead to an inevitable attack on our democratic freedoms.

  273
  I want to be brief so that the 10-minute rule for speeches can perhaps apply even before 7 pm. The Bill will be effective in one sense. I believe that when history comes to be written the right hon. Gentleman will be credited with having killed once and for all the consensus politics of post-war years. It will not be possible, after four years of his policy, to go back to slightly strengthened planning agreements or a little bit more for the NEB. We shall inherit from him an economy so desperately damaged that there will be a demand for certain clear policies.
  I want to deal briefly with those policies. There will be a demand for new policies because the right. hon. Gentleman's policy is not to transfer power back to the citizen. It is to transfer power from this House—where people are elected to discharge their responsibilities—not to the British entrepreneur but to the international speculator, who will play with our currency to suit his short-term advantage. If the right hon. Gentleman loses the confidence of British business and has no exchange control to protect him, the pound may plunge when he is in power and he will learn how necessary are some defences.
  I want briefly to touch upon one of the policies that I believe will be demanded.
  Sir Keith Joseph: It is hard to choose at which point to intervene, such, with respect, is the nonsense being talked. Does not the right hon. Gentleman recognise that when the full panoply of exchange control was in action, when his Government were in office, the pound plunged by nearly 40 per cent.? Exchange control does not prevent buyers and sellers of currency all over the world, who represent the pensioners and workers of other countries, operating through their employers, reacting to supply and demand.
  Mr. Benn: If the right hon. Gentleman really believes that world pensioners gather together and move their savings from capital—[HON. MEMBERS: "Oh."] That does not happen. The right hon. Gentleman knows very well that the pressure upon currencies is politically motivated. If he will listen, I shall give him an example. I sat in the Cabinet in 1976
  274
  when the IMF ordered the Cabinet to cut £4,000 million off public expenditure or else it would destroy the stability of our currency. No one will persuade me that that was the magic hand of the market reaching an independent assessment—
  Sir K. Joseph rose—
  Mr. Benn: The right hon. Gentleman must let me finish. No one will persuade me that there were a lot of magic hands reaching a consensus that the pound should not be supported. As any observer knew, the inflow of currency from oil was about to make the pound very strong. That was a deliberate political attack by the world bankers on the public expenditure policy of an elected Labour Government. The right hon. Gentleman can argue until he is blue in the face. I shall give one further example. I remember, as the right hon. Gentleman will remember, that in the Cabinet in March we were told that the gilt-edged market required an increase of 1 per cent. if the bonds were to be off-loaded. The interest rate was raised by 1 per cent. The following day the financial newspapers reported a £200 million windfall profit in the City in a single day as a result of that pressure. That same week, I was negotiating with the miners for a wage increase in the whole year worth £75 million for 250,000 miners. Is anyone going to persuade me that the City of London, by pressure brought to bear on a Labour Cabinet, was entitled to get for its own speculators three times as much as the miners got in a whole year for digging coal, which is a vital energy source?
  The right hon. Gentleman lives in a dream world if he thinks these are market forces. They are political pressures to which he is deliberately subordinating the interests of the people he was elected to represent.
  Sir K. Joseph: The right hon. Gentleman should know that the leads and lags in our overseas trade can move hundreds of millions of pounds a day in and out of a currency because of the judgments of the treasurers of employers and the investors of pension funds all over the industrialised world in the probable movement of different currencies. That is the reality to which the performance of elected Governments has to respond. That is why, long before the IMF came on the

  275
  scene, the pound plunged. It was caused by a lack of confidence in the economic policies of the Government of which the right hon. Gentleman was a member.
  Mr. Benn: The more that the right hon. Gentleman speaks, the more his total disconnection from reality becomes apparent. Let me give him an example. At one stage during the French election campaign two and a half years ago, it was thought that the Left might win. By the magic hand of the market people moved their money from Paris to London—just in case. The pound was riding high. When the French Left lost, the money was moved back to Paris and we had pressure for cuts in public expenditure because the pound was weak again.
  The right hon. Gentleman is like "Alice in Wonderland", living in a jungle. The reality is that he is transferring power over the jobs, prospects, living standards and public services of our nation to those who do not for one moment share the interest that every hon. Member ought to share for the welfare of our fellow citizens.
  There was a time when the Tory Party claimed to be patriotic—whatever Tories thought that to mean. They are now more interested in the success of international capital in disciplining this country than in jobs, growth, hospitals, schools and old people's homes in this country. There is no future for this country until we elect a Government who make full employment a prime objective of public policy.
  There should be an Industry Act—I need not go into the details—to give an elected Government power to invest in our skills and industry to secure sufficient production to meet our needs and to fill the gap left by capital that is exported. There must be 100 per cent. ownership of our oil to finance those developments.
  Any OPEC Minister would tell the Secretary of State, if he bothered to listen, that they have the same objective. They want to invest their oil revenues in manufacturing industry so that when their oil runs out they can sustain their living standards. At the present rate of de-industrialisation, we shall find when our oil runs out that we shall be re-entering the world oil market at 80 dollars a barrel without the manufacturing industry to secure it. There will be chronic unem-
  276
  ployment and emigration of our skilled people within half a decade from now.
  We must control imports. I regret having to say that, but I have been driven to the conclusion that such action is necessary in order to give ourselves a breathing space. Hon. Members should not think that we do not have import control now. Let them ask an unemployed worker on Merseyside whether his unemployment is not an import control on him, to prevent his buying a Japanese television set, French shoes or American tobacco. Unemployment is the form of import control in which the Government believe. But the country wants a planned trade balance so that we cannot be destroyed before we have re-equipped.
  We must amend section 2 of the European Communities Act. Nothing that I have described or that the Labour Party has adopted as policy can be carried through while section 2 of that Act transfers effective powers to the Commission to operate under the Treaty of Rome.
  We must also secure a greater role for the trade union movement. Declaring war on those who represent the workers who create the wealth in industry is an act of supreme folly of which the previous Conservative Cabinet, in which the Secretary of State served, was also guilty.
  I regret the right hon. Gentleman's speech, not for what he said—I have read his books and pamphlets and it is all there—but because he proved in a single speech, at a critical moment of our industrial history, that what he believes, thinks and wants to do has nothing to do with the interests of those whom he was elected to represent.
  5.45 pm
  Mr. Kenneth Baker: It is a pleasure to follow the right hon. Member for Bristol, South-East (Mr. Benn). He has made clear throughout his political career, both as a Minister and a Back Bencher, that he believes that the capitalist system has failed and will continue to fail and that the only hope for this country is more intervention.
  The right hon. Gentleman has been in office in high positions for a total of about 10 years, during which time he had responsibility for discharging many of the matters of which he has spoken today.

  277
  His theories would gain greater acceptance if he could point to some successes in his record.
  What would the right hon Gentleman like to be remembered by—the interventions of the Industrial Reorganisation Corporation, his intervention in the co-operatives, or the massive increase in unemployment under the Government of which he was a distinguished member?
  Mr. Benn: If the hon. Gentleman cares to invite the Library to do what was done for me and to look at the interventions in which I was involved, he will find that there are 500,000 jobs in existence in firms into which I put public money, involving £5 billion of production and £2 billion of exports annually. Although I would like to have gone further, that in itself is a record of which I am intensely proud.
  Mr. Baker: During the period in which the right hon. Gentleman held office, our industrial production fell substantially and unemployment rose significantly.
  The right hon. Gentleman said that as a result of the Government's policies the Special Patrol Group and the riot police might be needed to control violence on the streets or at factory gates. For a senior politician to speak in those terms is exceedingly irresponsible and inflammatory. It may encourage certain people to take such action, and we can be sure that if that does happen the right hon. Gentleman will be like Pontius Pilate, washing his hands of it and saying "This has nothing to do with me, but I forecast it all some months ago."
  What has struck me most about the debate, apart from the right hon. Gentleman's intervention, has been the stark contrast between the atmosphere in the House today and yesterday's atmosphere in the Chamber. Yesterday there was passion and anger over the Education (No. 2) Bill. Today speakers have been heard in almost complete silence. I detect from the Labour Benches, and especially from the right hon. Member for Deptford (Mr. Silkin), a sense of frustration that my right hon. Friend the Secretary of State has not lived up to the ogreish and sinister reputation that he is supposed to have.
  278
  Instead of abolishing the NEB in the Bill, my right hon. Friend has trimmed its powers. Instead of abolishing regional aid, my right hon. Friend has trimmed it. Clearly, such pragmatism sticks in the craw of the Labour dogmatists.
  I welcome the trimming of the areas that benefit from regional aid. In the past 15 or 20 years, we have seen on the map of England, Scotland and Wales a slow growth of the areas that benefit from regional aid. The impact of regional aid in stimulating development in some of those areas has been blunted. It is a sensible policy to concentrate aid in those areas where the need is greatest. After all, if all areas get regional aid, no area gets regional aid.
  I accept that there are pockets, including Tyneside and Merseyside in particular, with deep intractable industrial problems that need assistance from the State. I shall argue for that in a moment.
  Recent policies on regional aid have discriminated against parts of the South-East, particularly London. I remind hon. Members representing constituencies far from London that there are many depressed parts of the capital. In East and South-East London, unemployment is as high as in parts of Tyneside, Merseyside and Clydeside.
  In the 1960s, successive Governments used regional policies to drive jobs and businesses away from London. Indeed, one perceives a decline in London's economic activity. As I represent a London constituency, that concerns me greatly. One of the inhibiting factors of that was the policy whereby firms applied for IDCs and office development permits. I welcome the action taken by the Government to abolish office development permits and to raise the level to £50,000 for industrial development certificates.
  Mr. Dafydd Wigley: In accepting the severe problems experienced by many London areas, especially the problems of urban renewal, does the hon. Gentleman accent that the unemployment problem in London may be located in certain areas? It is implied only that there is a greater distance to be travelled—perhaps 10 or 20 miles—to a job. Unemployment at equal and higher levels, not only in Wales but in North-East England and Scotland, may mean travelling 50 or 100 miles to look for a job,

  279
  uprooting a family and moving away from the area.
  Mr. Baker: I accept what the hon. Gentleman said about problems in Scotland. However, he underestimates the London problem if he thinks that it is a question of commuting, as it were, from the suburbs into the East End. The regeneration of the East End of London is an infinitely more complicated and profound problem, arising from the decline of the upper dock area.
  Mr. John Evans: Does the hon. Gentleman appreciate that the decline of London's docklands has to do with technological change and absolutely nothing to do with any Government's regional policy?
  Mr. Baker: The root cause was the containerisation revolution. The restrictions that existed as a result of our planning laws upon many parts of the East End of London—this is generally recognised between the two parties now—was one of the factors that prevented large parts of the East End of London from responding to that change in a creative way. It is depressing to go from this Chamber only three or four miles to the east to see the industrial desert which the right hon. Member for Bristol, South-East described.
  I come now to the role of the National Enterprise Board. I welcome the fact that the Government have not abolished the NEB. For some years I have advised several computer and high technology companies, in one of which the NEB recently acquired a stake. I have seen how this industry developed. There is a role for the NEB in providing capital for some of these industries which, to my certain knowledge, have had difficulty in finding capital, for historic reasons.
  Mr. Budgen rose—
  Mr. Baker: I shall give way to my hon. Friend later. I am aware that an interesting debate is taking place on the Government Benches. However, allow me to develop my argument before I give way to my hon.—and old—Friend.
  I detect three roles for the NEB, but they are roles to which the Government have agreed.
  Mr. Budgen: Surely my hon. Friend agrees that there is always capital available, at a price. If the market takes the view that the companies with which he is associated are high-risk concerns, unhappily they must pay higher interest rates for money. That is all there is to it.
  Mr. Baker: I should be only too pleased to invite my hon. Friend to a course on the problems of higher technology. The capital flow into that industry—this is accepted by hon. Members on both sides of the House—was exceedingly sluggish. Therefore, I detect three roles for the NEB. The first is to act basically as a catalyst.
  Here we part company totally with the Opposition. They do not want the NEB to be a catalyst—something which promotes change but which remains unchanged in itself. They want a much more interventionist role. This is where I do not agree with them. I do not want the NEB to become a huge holding company, for two reasons. First, there is little record of any huge holding company in any other Western industrialised country that has been a success. Our short record in this matter does not point to its being a success. However, it would be successful in acting in a catalytic role in bringing about change.
  Mr. Dennis Skinner: Yes.
  Mr. Baker: I am glad that the hon. Gentleman understands this matter. I do not underestimate the hon. Gentleman's intelligence.
  I come now to general industrial assistance. This is no area for the naive and unworldly. Every Government in the world in one way or another assists industry, covertly or overtly. The classic case is that of the American economy. The United States computer industry could not have been built up without the assistance of the Government and substantial public procurement. We live in a world where many other Governments give assistance to some of their industries. Therefore, I welcome the Government's approach—Which is not to say that there should be no assistance to industry. If they were not assisting industry, they would be playing the game according to rules which do not exist internationally. However, I am against the continuous and fretful interference—which is favoured by the Opposition and personified by the

  281
  right hon. Member for Bristol, SouthEast—in British industry and many companies where there is no justification for intervention. Such assistance as is given should be selective and pragmatic. That is the policy of the Government.
  It is fashionable to say that British industry is in a state of irreversible and total decline and that we are washed up as an industrial country. I profoundly disagree with that. That is defeatist talk. I know of some good companies in a variety of industries that are doing well. I strongly resist the belief and suggestion that we are finished. It is depressing that when we debate industrial matters we usually talk about the declining industries or those that are contracting. Tomorrow it will be the turn of the steel industry. I know that hon. Members feel strongly about this matter. Indeed, for some constituencies it is an important matter. In the past 15 years we have had many debates on the steel, car and shipbuilding industries. We inherited those industries from Victorian and Edwardian days and they are now in a state of cyclical decline. I wish that the House would debate the industries of the future which will create the jobs in the next 10 or 20 years.
  As Members of Parliament we should be more preoccupied with examining the forces that promote growth rather than presiding over the post mortem examinations of decline. I wish that the House would be a little more preoccupied with the problems of the future rather than those of the past.
  5.58 pm
  Mr. Lawrence Cunliffe: Like all new Members of Parliament, may I start, as my first duty, by placing on record my appreciation and gratitude for the help, advice and kindness which is usually shown to us by established Members of Parliament.
  I should like to mention my predecessor, Harold Boardman, who served this House for 34 years. He had a reputation as a quiet, efficient and methodical constituency Member of Parliament, who did not hit the sensational press headlines. Nevertheless, he was highly respected for doing a thorough job as a constituency Member of Parliament, first and foremost. I recognise that fact, and I am sure that some long-standing right hon. and hon. Members recognise it also.
  282
  I am only the third Labour Member of Parliament to be elected in the last 54 years of unbroken Labour rule—if I may call it that—to represent this mining constituency and cotton producing area. Like the legendary Joe Tinker—who was the predecessor of Harold Boardman—I also hope to stay here for a long time and to give the same stalwart service as they gave to this House and to the nation.
  Leigh is an industrial town. It owes its prosperity to many different kinds of industry, mainly textile manufacture, coal mining, electrical cable manufacture, plastics and the production of many electrical accessories.
  Recently the Prime Minister visited the constituency to see for herself the first new spinning mill to be built in Lancashire for 50 years. Unlike many towns in the industrial North-West of England, Leigh is extremely adaptable and has diversified rapidly. Like its people, who are endearing, brave and resilient, Leigh has met the challenge of change with courage and tenacity over 100 years.
  I have commented previously on the entrepreneurs for whom we are looking on the horizon of our industrial framework. Unless there is some positive encouragement, we may not find the people, as we have done previously in this historic part of Lancashire, to produce British goods of top quality for export.
  A feeling of pessimism has taken over since the Secretary of State announced the measure to change the area status grant. I make no apology for restating again and again the points I made as a member of the delegation of North-West Members of Parliament when we met recently to talk about the devastating effects that the change in the area status grant will have in this part of the country. Measures of this kind, as we have said before and reiterate now, will force firms to reconsider their future investment plans, and in all probability they will be reluctant to embark on expansion programmes because of the cut. The cut will have a serious effect on industry in my area. The 12 textile mills within my constituency are operating with exceptionally tight profit margins. The difference in the amount of the grant means that there is a high risk that the

  283
  mills will become uncompetitive and unable to meet the challenge of foreign competition, which has always been on the horizon. It is already affecting the viability and effectiveness of the firms to compete in world markets, and will certainly do so in the future.
  In some cases it is now being said that many firms will be forced to cut back on jobs and eventually close. I have given only a few illustrations of firms which have already made open announcements on what they feel will happen to their future investment programmes.
  The arguments put to the Secretary of State were well-researched and rational. They were not from supporters of my party. They were from men of long experience in industry, many of them consultants, giving their appreciation of what they felt was bound to happen in the long term to the kinds of industries they represented. They said that Leigh will become a dying town. Some firms have threatened to leave the area immediately.
  One example is that of a very famous international firm with a great reputation in the export market. It has been responsible for medical centres in Nigeria, time-cabins for the winter Olympic Games in Switzerland, and various other prestige export orders. I put this case to the Secretary of State for his comments. It was pointed out to him that here was a firm which had doubled its work force and trebled its capital expenditure. It had been developing a £l½ million project, exactly like the £6 million textile mill created by the Carrington Viyella group. The capital turnover of this firm had expanded by three times in a period of four years, and its labour force was rapidly increasing.
  Now that Leigh has become a degraded area, that firm can move seven-eighths of a mile up the road to an area with full development status, because Wigan has been promoted. I acclaim the increase in status given to Wigan. The ironic part about it is that my constituency is an integral part of the Wigan metropolitan authority, and an arbitrary line has been drawn through the middle of it. This is completely discriminatory in its effect. I mentioned to the Secretary of State the high unemployment in the Wigan sector as against my own constituency. My hon. Friend the Member
  284
  for Newton (Mr. Evans) also has an interest in this matter. We pointed out that obviously the decision was a suicidal one. We said that there would be a mass exodus of these small firms which were developing large expansion programmes.
  The director of the firm that I mentioned states:
  "We have a modern purpose-built factory and have built a trading estate that has created even more jobs for Leigh people. It really would be a temptation to move to a special development. There are four of our competitors in Wigan who are going to benefit."
  What is to happen to firms of this character? Who is to come to their assistance in this area? I make no apologies, Mr. Deputy Speaker, for quoting my own constituency problems. The Leigh area, along with the rest of the North-West, will become the industrial backwater of Great Britain if we are not very careful.
  I put it to the Secretary of State again this evening that we are likely to lose firms which have shown great initiative, enterprise and entrepreneurial ability. What is to happen to them when they have exhausted their self-help? It cannot be denied that many of their foreign competitors are directly subsidised by their own Governments, not only in money but also in materials. Sonic of our great fastener industries have evidence that a foreign competitor received a 100 per cent. grant towards the cost of materials alone.
  This is a standing disgrace, when we are trying to fight by the Queensberry rules and the Government talk about keeping our chins high. I can assure the House that there is nothing more depressing and distressing than this and that nothing acts as a greater deterrent to many of our people, both employers and employees. With the best will in the world, and with all their drive and stimulus, they cannot compete with market forces of this kind. The position is quite ridiculous, and it can be put right only by means of intervention. There are greater problems in the North-West with many questions left unanswered.
  I respect the Secretary of State for listening attentively to the views of Members. However, there are issues on which we part company for obvious reasons. The right hon. Gentleman said that if an area was downgraded it was a sign of hope. I understand that "hope springs

  285
  eternal". With his usual vision, he explained that the areas would restimulate themselves. As someone who has worked in semi-darkness all his life as a mining engineer, I must tell him that sight is a special blessing. However, there are times and places when it is far more blessed not to see. The Government's industrial strategy is an example of the blind leading the blind.
  I turn to the question of derelict land grants. For forward planning and investment reasons, it is imperative that we have a clear and understandable answer to the question whether the grants will be retained. We must try to do away with the ugly urban sprawl that blights the Greater Manchester area.
  6.12 pm
  Mr. James Hill: It is a privilege to follow the hon. Member for Leigh (Mr. Cunliffe). It was a speech of some power, full of compassion for his constituents. With his practical experience in mining, he will prove a valuable asset to his party. No doubt in future we shall hear many such speeches from him, which will add to the wealth of knowledge of the House. I congratulate him.
  Unfortunately, I cannot congratulate the right hon. Member for Bristol, South-East (Mr. Benn), who has left the Chamber. The National Enterprise Board was the right hon. Gentleman's brainchild. He said at Brighton in 1971:
  "We want industry to be in the public sector to change the power structure of our society".
  His speech showed that he has not changed his views. The principal aim of the right hon. Gentleman's NEB was to promote social and political policies. Secondary aims were economic viability and profitability. That is where his structures fell in the past.
  The NEB's record of intervention has been not quite as disastrous as has been suggested by some of my extreme hon. Friends. However, it has not led to the regeneration of British industry, which was the misnamed title of the White Paper that first foreshadowed the NEB.
  I am at a loss to understand the statement of the Opposition spokesman, the right hon. Member for Deptford (Mr.
  286
  Silkin), that the NEB is coming into a profitability figure of between 11 and 15 per cent. and that any criticism of the NEB destroys the morale of the staff. We all know that the moneys loaned by the NEB—for example, to British Leyland and Rolls-Royce—are not included in its portfolio. It produces its profit figures before interest and taxation. The NEB figures for last year showed an 8·6 per cent. return on the capital involved, but that does not compare with the way that private enterprise has to operate.
  Already this year five of the companies sponsored by the NEB have gone into bankruptcy. The latest is the Hartlepool-based Technical Resources (Equipment) that went into receivership on 24 October. It received backing in September 1978 from not only the NEB but the British Steel Corporation. The NEB invested £100,000 in loans.
  There were other companies. In November 1978, Power Dynamics collapsed, having received £180,000 from the NEB. As was mentioned earlier in the debate, British Tanners cost the NEB about £5 million. Those amounts may seem insignificant, but if merchant banks had been involved there would have been several changes of chairman and directors.
  The Secretary of State for Industry explained that he is not closing down the NEB but merely reducing its ability to finance without reference to the Department. He is leaving £3,000 million with the NEB. That may be criticised by hon. Members on both sides of the House as either too much or too little. That £3,000 million is there to deal with the eventualities of the next 12 months and the commitments that may have to be made. It is not by any means an over-large sum.
  The Scottish Development Agency will receive £500 million, and £250 million will go to the Welsh Development Agency. That is in keeping with my right hon. Friend's thoughts on how the NEB should slowly but surely devolve itself of its responsibilities
  There has been criticism this afternoon of the abolition of exchange controls and forecasts of how that will affect capital. It has been suggested that there will be no private investors willing to invest or take up where the NEB finishes. We have been

  287
  told that capital may flow out of Britain to be used for sweated labour to produce goods that will be returned to us, so creating another balance of payments problem. That is scaremongering almost to the nth degree.
  As was so adequately explained by the Secretary of State, the money market is not there to represent the views of any particular Government body. It will move freely within its market. I am sure that my right hon. Friend has it in mind never to interfere through any financing process with the money markets.
  One of the commitments in the Conservative manifesto was that we should dispose of certain assets. The Bill will make it possible to dispose of assets that I believe are nominal. We are speaking of between £100 million and £150 million.
  One of the main objectives of my right hon. Friend is to support microchip high technology of the future. As has been said so often, there has been little enough private investment in that area of technology. I speak on behalf of Mullard, a company that has a magnificent factory in my area. It has been in micro-chip processing high technology for over 10 years. It has catalysed the input of capital into high technology. It has gone far beyond anything that the NEB or any other Government body has done. It is possible to get private enterprise involved. We must beware of the NEB supporting companies such as Inmos, which may be having a retrograde effect on those who have already invested in the micro-chip revolution.
  I hope that a careful eye is kept on companies outside the United Kingdom that the NEB is financing. I say that for obvious reasons. I am concerned that we remain one of the foremost researchers in micro-chip technology. It would be wrong if such companies were to compete against industry and high technology that have been financed by private investment. As for the selling off of land from holding bodies to be used by my right hon. Friend the Secretary of State, there is nothing wrong in that. It is happening throughout the Government's policy structure. If it creates a small factory unit more rapidly and if it creates more job opportunities, the quicker it happens the better.
  288
  The Bill is largely confined to the NEB. We may talk of many things, such as regional development grants, but when everything is boiled down the Bill is concerned with the NEB. It stems from a commitment in the Conservative Party manifesto. It is a measure that has to be enacted because the Government's philosophy is so far apart from that of the previous Administration. We must allow private enterprise to have its share of the market. We do not want another superior merchant bank lending money at levels that no one else can match. We do not want to fail by not releasing the NEB and some of its excellent staff to function in more productive areas.
  6.23 pm
  Mr. Gregor MacKenzie: My right hon. Friend the Member for Deptford (Mr. Silkin) indicated that he would seek in the main to discuss the NEB. He said that he hoped that one or two of his hon. Friends from Scottish and Welsh constituencies would choose to refer to the work of the Scottish Development Agency or the Welsh Development Agency, and I intend to do that.
  Before I direct my remarks to the work of the Scottish Development Agency, may I say, on behalf of all my colleagues, how honoured we were to hear the speech of my hon. Friend the Member for Leigh (Mr. Cunliffe). It was a good speech. It was a wise speech. I agree with a great deal of what my hon. Friend said. He talked about regional policy, a topic with which I propose to deal.
  I was pleased to hear the tribute that my hon. Friend paid to his predecessor, Mr. Harold Boardman, a man well respected in the House. As my hon. Friend said, Harold Boardman did not choose to shout his philosophy from the rooftop of the House. He was not the noisiest of hon. Members. I always think of him as one of the wisest of my colleagues, and one to whom I could go for advice and guidance, which he freely and willingly gave. When my hon. Friend next sees him, I hope that he will pass on our sincere good wishes. I hope that we shall hear from my hon. Friend frequently in future.
  The debate is taking place against a background of massive industrial problems in Scotland. There are massive unemployment problems. Not a week

  289
  passes without our hearing of a firm closing down. There was a time when we were worried when we heard of a closure involving 20 employees or 100 employees. The closures that are now taking place result in thousands of employees losing their jobs. We have seen that happen at Singer, Massey-Ferguson and Monsanto, firms that have been established in Scotland for many years.
  The closures are causing us immense worry. Naturally we are worried about the closures of private enterprise companies in Scotland, but also we want an assurance from the Government about the future of the shipbuilding and steelmaking industries in Scotland. When we were in Government we faced many of the problems that now face the present Government. We had the problems of closures. I think that my right hon. Friend the Member for Glasgow. Craigton (Mr. Millan) dealt with the closures sympathetically by a flexible use of selective financial assistance.
  In the area that I represent, and in the area represented by my hon. Friend the Member for Central Ayrshire (Mr. Lambie), there have been steel closures. Before we had closures of the sort that are now taking place, we laid plans in co-operation with the British Steel Corporation and the Scottish Development Agency. As my right hon. Friend the Member for Bristol. South-East (Mr. Benn) said, many of us are worried about the announcements that the Government are making. If we are to have announcements concerning the shipbuilding and steel industries in Scotland that compare with the announcement made recently about Corby, I fear that we are in for a great deal of industrial difficulty.
  I read in yesterday's edition of The Guardian that the Secretary of State for Scotland is greatly concerned about the future of industry in Scotland. I was delighted to read that. I was pleased to read that he was especially concerned about the future of Clydeside. I say to the Under-Secretary of State for Scotland that it is no use reverting to that which cook place in 1970. The then Government decided that they would rely entirely on a few tax concessions. They said that from those concessions investment would grow. They talked about
  290
  individual freedom for firms. Against that background there were pious hopes that we would create many more jobs. That policy did not work in 1970. We all know that there had to be a change in 1972. We hope that there will be a change in the Government's attitude in the near future.
  If the Secretary of State for Scotland is to succeed in his task of regenerating Scottish industry, he will need not fewer but additional aids. I have been worried, as I know my right hon. and hon. Friends have been, about the fact that in the past few months a number of measures have been introduced that have adversely affected Scottish industry. We have seen an increased rate of VAT. That did not help. We have had cuts in local authority expenditure. Those cuts will not help since it is tremendously important in Scotland to improve the environment in which we live so that we may attract industry to the more difficult areas.
  We have had cuts in regional aid. I read in the press that the cuts were not as bad as they might have been. I read that the Secretary of State for Scotland did an enormously good job in preventing more severe cuts. If the Secretary of State for Industry had had his way, we would have no aid at all.
  We now have the Bill. I believe that it will make it more difficult for the Scottish Development Agency to fulfil one of its main functions, that of industrial development. It will create for the Agency a great deal of uncertainty.
  When I was Minister of State, the present Under-Secretary used to twit me about the Scottish Development Agency. He said that I believed that it was some kind of magic wand that would solve all Scotland's problems. I have never believed that. I have always believed that it is the role of the Secretary of State to lead in the task of regenerating Scottish industry. I also believe that this is a role for the Scottish Economic Planning Department—one of the best Departments in Government. But I believe that, if it is given the freedom and allowed to get on with the job, the SDA can make a tremendous contribution to the economy of Scotland.
  My right hon. and noble Friend Lord Ross and my right hon. Friend the Member for Craigton set up the SDA in order

  291
  to give us an executive arm to improve the environment in which we live, to build our factories and above all to create more jobs by bringing more investment into Scotland. There was simply not enough local investment; and there still is not enough. This is something that the SDA has done very effectively in the few years that it has been in being.
  We have all tried one way or another to create more jobs in Scotland. I have been to America, as have my right hon. Friend the Member for Craigton and the Under-Secretary. I am delighted when I read in the newspapers about American companies either setting up or expanding in Scotland. However, we really must try to help ourselves. It is our own business to create jobs in Scotland. That is why my right hon. Friend the Member for Craigton, when he piloted the Scottish Development Agency Bill through the House of Commons, stressed that it was one of the main functions of the Agency to help Scotland to get on its feet, without depending constantly on inward investment, welcome though that is.
  During the Estimates debate I listened very carefully to the speech of the Secretary of State, who said that the Agency was
  "absolutely crucial to Scotland's recovery."—[Official Report, Scottish Grand Committee, 17 July, 1979; c.15]
  He used the words "absolutely crucial", yet now he is creating a great deal of uncertainty in the minds of many people in Scotland. Although the Secretary of State describes the SDA's work as absolutely crucial, I am not sure that he absolutely believes in it. I am quite sure that the Tory Party in Scotland does not absolutely believe in it. If that party had its way, we would not be considering this Bill today. We would be considering a Bill to abolish the Scottish Development Agency. Scottish Tories have never liked that organisation and during its existence they have constantly carped and criticised the Agency in the silliest way.
  The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): I assure the right hon. Member that my right hon. Friend and I hold the SDA in the same high esteem as he does.
  Mr. MacKenzie: I am glad to hear that. However, the hon. Member knows
  292
  as well as I do that there are many Conservative Members who constantly criticise, in the stupidest possible way, anything that is done by the SDA. Even when the chairman had a sink put in his office, parliamentary questions were asked about it. They have carped and carped all the time, and that has done nothing for the morale of the Agency.
  Mr. Harry Ewing: Will my right hon. Friend accept my congratulations on educating the Under-Secretary? He spent a long time in the last Parliament voting line by line against the SDA, but now he says that he holds it in high esteem. I can only assume that this is a result of my right hon. Friend's efforts to educate him.
  Mr. MacKenzie: I listened to the hon. Member during the course of the proceedings on the previous Industry Bill, and I got the firm impression that he was not at all interested in the SDA. Perhaps his ministerial experience has changed that.
  Mr. Alexander Fletcher: I assure the right hon. Gentleman that our criticism of the Labour Government's Industry Bill was that it did nothing to help the SDA. The Bill that we are are debating today will enable the Agency to operate much more effectively.
  Mr. MacKenzie: That is not the view of any of us who have tried carefully to read this Bill. The ridiculous criticism of the organisation and investment plans of the SDA had an exceptionally bad effect on its morale. I had only one criticism of the Agency, and that was that, because of the criticism to which it was subjected, particularly from the Under-Secretary and his former hon. Friend the then Member for Glasgow, Cathcart, Mr. Edward Taylor, it became far too cautious in its approach to industrial development and in its work for service industries.
  There have been difficulties and investment failures, but this week we have all received the annual report of the SDA. It is an encouraging document. It allows hon. Members to look at the positive side of the Agency's work. If it had not been for the Agency's investments—some 36 all told—we could have lost more than 10,000 jobs in Scotland—jobs that we can ill afford to lose.

  293
  I have two questions for the Government. What role do the Government envisage for the SDA in electronics? There has been a great deal of talk about this recently, and special studies have been made. Do the Government now intend to give the Agency special powers in this matter?
  On the issue of small firms, the SDA is entitled to be congratulated by every hon. Member. As a result of the work it does for small firms, some 4,000 such firms in Scotland have benefited in some way, either through direct financial support or through the counselling services of the Agency. On Second Reading of the Industry Bill on 23 January, the present Under-Secretary said this:
  "What I am suggesting and what I shall repeat, is that it might be worth reconsidering whether the investment function, the small business function, should remain with everything else that the SDA does."—[Official Report, 23 January, 1979; Vol. 961, c. 249.]
  I want an assurance from the Minister that the Agency will continue to work for small firms.
  My last word to the Government is that I recall the criticisms that were made some years ago of the Highlands and Islands Development Board. Those criticisms were made in very much the same spirit as the criticisms we hear of the Scottish Development Agency. But now the Highlands and Islands Development Board is a highly respected organisation. The same applies to the SDA. It is a young organisation and it has had its teething troubles. But no one can deny that at present everyone has difficulties. I repeat what the Secretary of State said in the Estimates debate—
  "Far too much was expected of the Agency far too quickly."—[Official Report, Scottish Grand Committee, 17 July 1979; c. 16.]
  Those are the words of the Secretary of State, not mine.
  I believe that a young organisation such as this can be a great power for good in Scotland. I hope that the Government will give it a chance to get on with the job and prove itself before we are asked to pass a Bill such as this.
  6.40 pm
  Mr. John Bruce-Gardyne: I have always had the greatest respect for the right hon. Member for Rutherglen (Mr. MacKenzie), though I do not always
  294
  agree with his views. When he recounted the grim condition, as he described it, of industry in West Scotland, I could not help but be reminded that we have had regional development policies of one sort or another for 20 years now, and they do not seem to have done us much good. I do not find that particularly surprising. The right hon. Member for Rutherglen said that the attitude of my hon. Friends towards the SDA had made it cautious. From what I have read in some of the press accounts of the SDA's latest report, not all its investment could enjoy that epithet over the last year or so.
  Turning to one or two other aspects of the measure before us, I confess that my attitude towards Industry Bills is rather like George I's legendary attitude to "Boets and Bainters"—I hate them. A number of my right hon. Friends, including the present Chief Secretary, some of my hon. Friends and myself kept the House sitting until 10.30 on a Friday night during the debate on the Industry Bill in 1972, for, I believe the first time since the Agadir crisis of 1913. If I had been present when the Industry Bill of 1975 was presented, I should have joined with my right hon. and hon. Friends in voting against it with great enthusiasm.
  I accept that the present Bill is the best of the bunch, though I confess that do not think it is entirely without flaws. I cannot pretend to be a great devotee of the NEB. It has sometimes seemed to adopt a posture reminiscent of Mr. Lytton Strachey's explanation of his intentions when he appeared before the conscientious objectors' board during the First World War. He said that he would endeavour to interpose himself between British maidenhood and lusting German soldiers. Sometimes the apparent role of the NEB is to interpose itself between the Department of Industry and its clients. Whether that is a profitable and worthwhile purpose is open to question. But if one has a dog, there is not much point in barking oneself. If we determine to retain the services of this body, for better or worse, I see some strength in the arguments advanced by the right hon. Member for Deptford (Mr. Silkin) about the additional powers to control the Board which my right hon. Friend will acquire in the Bill.

  295
  I am concerned about the discretionary powers of civil servants. Indeed, it is precisely for that reason that I remain deeply doubtful, to put it mildly, about the wisdom of supporting the Bill in the Lobby tonight.
  I referred just now to the Industry Act 1972, which is, in a sense, the principal Act to which the Bill provides a number of amendments.
  Mr. John Silkin: A good Act.
  Mr. Bruce-Gardyne: The right hon. Gentleman says that it was a good Act. As he knows, I never took that view, and I have not changed my view.
  There is one section in that Act which caused many of us grave concern, and that is section 8. It was drawn so widely that it allowed Ministers and civil servants almost unlimited discretion to act in what was described as the national interest. So great was the concern in 1972 that my predecessor in my present constituency, John Davies, and Christopher Chataway were finally induced, late at night, to insert into the then clause 8 a provision which required the Government to come before Parliament to seek approval in any case where a grant of more than £5 million of taxpayers' money was made to one project under the terms of that clause. My understanding—and this causes me great concern—is that the Department of Industry is in breach of this legislation, and I shall explain why.
  In September my right hon. Friend announced the provision of a grant, amounting to almost £35 million, to an American concern called Dow Corning to enable it to extend its silicone plant in South Wales. That will create, so we are told, an additional 125 jobs. That works out at a subsidy of £276,000 of taxpayers' money per job created, which I suspect is a record. I find it hard to believe that we ever managed to go higher than that.
  Not only that, but the purpose of this provision was to enable Dow Corning to set up or expand in South Wales a factory which would ultimately produce almost half the world demand for silicon, a product which I understand is at present in substantial surplus. Dow Corning expects that that demand will grow. Let us hope that the company is right, because
  296
  of all the major companies in this business the smallest, and therefore the most vulnerable, is not very far away—it is ICI. I wait to hear from my right hon. and hon. Friends that under section 8 of the Industry Act 1972 ICI is coming back for a countervailing subsidy.
  What is more weird is that the grant to Dow Corning was originally a regional development grant, for which provision is made in clause 13 of the Bill. But, because those grants have just been reduced, the Government invoked a selective investment scheme which had already been terminated in order to top up the sums required to persuade Dow Corning to embark upon this remarkable investment. Therefore, first the Department cut the level of the grant and then it compensated for that by invoking a scheme which had already terminated.
  In itself, that seems to me to be weird. But I assumed that under section 8 of the Industry Act 1972 Parliament would, in due course, have an opportunity to discuss these matters and hear from my right hon. and hon. Friends of the circumstances that led them to make what seems to me to be a remarkable offer to this giant American company.
  One can imagine, therefore, that I was more than a little surprised to learn, when I questioned my right hon. and hon. Friends on this matter, that they had no such intention and that my right hon. Friend had placed a statement in the Library of what he had done, which was to be the end of it. My hon. Friend the Member for Basingstoke (Mr. Mitchell), who is Under-Secretary of State for Industry, wrote to me telling me that a debate would be a matter for the Table Office and the Government's business managers.
  I do not believe that my right hon. Friend the Chief Secretary and many of my hon. Friends stayed up on that Friday night seven years ago, and argued with great conviction and determination to secure the concessions which the then Government gave, only to discover that such a massive grant would escape totally all forms of parliamentary scrutiny and ministerial explanation.
  My right hon. and hon. Friends point to the fact that a proviso was included at the time to the effect that, if the House was in recess and there was an urgency about any matter, the Government could

  297
  proceed. However, I must remind my right hon. and hon. Friends that the then Minister responsible, Christopher Chat-away, said that
  "under Clause 8 the Government shall have to come to the House to secure an Affirmative Resolution in the case of any project which exceeds £5 million."—[Official Report, 31 July 1972; Vol. 842, c. 257.]
  It was not "may" but "shall". This provision, I believe, has been ignored and flouted today.
  It may be that there are good and sufficient reasons for the action that the Government took in the summer. I can well believe that this was one of the skeletons that right hon. Members opposite left in the cupboard when they departed, and that my right hon. and hon. Friends found themselves almost committed to this bizarre investment. But at least the House should hear about this and have this explanation. Then, if my right hon. and hon. Friends can satisfy us, good and well. We may not like it, but we may accept it. But I do not accept that it is sufficient that we in this House who went to the lengths that we did to impose in the 1972 legislation that objection for parliamentary scrutiny should today find that it is being so roughly ignored.
  My right hon. Friend tells me that there are precedents. Apparently this happened in the previous Parliament in the case of Mobil Oil and in the case of Roche Chemicals. All that I can say is that had I been present I should have taken the same attitude then as I take today. Parliament made these stipulations. It is not good enough for Parliament's decision and will in this matter to be circumvented in this way.
  For those reasons, I find it impossible to give my support in the Lobby tonight to a Bill which makes no provision—as I believe we should make—to ensure that this sort of evasion of the obligation of parliamentary accountability is ignored in the future.
  The Minister of State, Department of Industry (Mr. Adam Butler): I thought that it might be appropriate for me to deal with this point now. That is why I have waited until my hon. Friend has come nearly to the end of his remarks to answer the particular point that he made and the serious charge, which was
  298
  that the Government had been acting ultra vires in this matter. It is something that I wish to deny absolutely and only to confirm what my hon. Friend himself then supplied in the way of evidence—that, of course, as part of the Industry Act 1972, in clause 8(8), there is that proviso to which he drew the attention of the House.
  Therefore, whatever the merits of the case in question—Dow Corning—and whatever the merits of my hon. Friend's argument in regard to parliamentary scrutiny, I remind him that, however long ago it was—say, seven years ago—I was very fully in support of him at the time to reduce the figure below the £10 million that was in the then Bill. It was because of pressures which I added to those which he and other colleagues were applying at the time that we reduced that figure. I should like to take a little credit for that. As far as I am aware—he must correct me if I am wrong—my hon. Friend supported that proviso in subsection (8), which is part of the Industry Act 1972.
  Mr. Cyril Smith: Speech.
  Mr. Butler: I am answering the point raised by my hon. Friend, which is a serious one because it is a charge that the Government are acting ultra vires. Therefore, all I would say to my hon. Friend is that as the Industry Act 1972 and that section and subsection are still applying, there can be no question of acting ultra vires in this matter.
  Mr. Bruce-Gardyne: All I must say to my hon. Friend, having listened very carefully to what he said, is that I was hoping that he would give me the assurance that, in view of the absolutely specific and categorical undertakings of the then Minister who held his office in 1972, the Government would be making arrangements to bring this proposition before the House and to explain what they have done and to explain the justifications for it. That they did not do. In those circumstances, I am bound to say that my opinion is unchanged. It is that we are in this instance acting at least in a condition of avoidance of the responsibilities of parliamentary control and, I would be inclined to say, in evasion of them.
  6.55 pm
  Mr. John Evans: The hon. Member for Knutsford (Mr. Bruce-Gardyne) has obviously struck a very powerful blow in that he has drawn the Minister of State to his feet to give him some private winding-up comments on his own speech.
  Although I totally disagree with the hon. Member for Knutsford on most issues to which he addresses himself, particularly economic issues, I fully support the stand that he has taken tonight. I agree that it is absolutely essential that this House has the power of scrutiny over the Executive and over the other various bodies which successive Governments set up from time to time. Indeed, it is a criticism which crosses party lines that Governments and Whitehall have a tendency to set up various extra-parliamentary bodies and then, when we seek to pursue their activities, we are told that the Minister has no responsibility and that it is a matter for the board, whatever the board may be.
  It was a pleasure to listen to my hon. Friend the Member for Leigh (Mr. Cunliffe), who made such a powerful maiden speech. I am a neighbour of his and I know the tremendous work that he has already done in the constituency since he was elected to this place. He will prove to be a tremendous Member of Parliament for that constituency, like his two distinguished predecessors who represented it for over 50 years.
  This is the second appalling Bill that the House has had to debate this week. Like the Education (No. 2) Bill that we debated yesterday, this one is ideologically motivated. Again like the Education (No. 2) Bill, which will do nothing for our education system and will, indeed, damage it, this Bill will wreak havoc with much of what is left of Britain's industry, particularly the industry that is left in the assisted areas.
  I should like to mention briefly the NEB's role. I am not a particular supporter of the NEB. I think that over the next four or five years in Opposition the Labour Party will have to think through its policy in relation to the NEB and publicly owned industries. I make no apology for my view that if we are to have industries taken into public ownership, that should be done through
  300
  a Bill and we should set up properly established publicly owned industries with a considerable degree of worker participation in the management of those industries written into the Bill, and we should not write loose clauses in an Industry Bill which suggest that the NEB should do something about promoting industrial democracy.
  I regard the treatment that the NEB and Inmos have dished out to the North-West as appalling. I also charge them with misleading us at the time of the suggestion that we would be entering the microprocessor industry when they stated that there would be four plants, all situated in assisted areas, each employing 1,000 people. Now we are told that two sites will be chosen, each with two plants employing 1,000 people each or one plant employing 2,000 people. There is some doubt as to precisely how that will work out. We still await the announcement.
  I also believe that the two plants will be situated in the South-West of England and in South Wales. The reason for that is that it will be argued then that they are in close proximity to the headquarters in Bristol—which, frankly, should never have been placed there in the first instance. As I and some of my hon. Friends, and some Conservative Members, argued during the decision-making process on the Inmos microprocessor production units, the research and development centre particularly should have been placed in an assisted area. I believe that we were right in that argument.
  I have no quarrel with South Wales receiving fair treatment in this respect, but I do not believe that the decision to place these units in the South-West will have anything to do with assisted areas. The argument will be that it makes economic sense because they will be located close to the Inmos headquarters
  I concentrate on clauses 13 and 14, which give effect to the Secretary of State's announcement on 17 July that he intends to slash the amount of regional industrial aid available to assisted areas. That announcement came as no surprise to those of us who have long been concerned with regional industrial strategy. We have recognised for a long time that few London-based Tories comprehend the value of regional industrial assistance, let

  301
  alone its sheer necessity and economic good sense.
  If this so-called review of regional aids was aimed at improving the quality of regional policy, I should be the last person to dissent from the necessity of it. I was critical on many occasions of my own Government's regional policy. I could never fathom why oil companies received such enormous grants to prospect for oil which they knew was in the North Sea. I cannot imagine any oil company in the world spending money if it thought that there was no oil to find.
  It is significant, despite past criticism, that the Secretary of State makes no policy change in that area. The oil companies will still receive massive handouts from the taxpayer to look for oil in the North Sea and around our shores. For any regional policy to make sense, we should not tolerate that situation.
  A more important feature of regional policy is that it should be based on the creation of jobs. Far too much Government aid has been given to capital-intensive firms which employ only few people. Certain aspects of regional policy must be carefully thought out by the Labour Party before it next takes office.
  Mr. John Patten: Did not investment in capital-intensive industry characterise the Labour Government's industrial aid development policies over the last two decades?
  Mr. Evans: It characterised the policies of successive Governments over the past two decades. We have not had a Labour Government continuously over the past 20 years. I was critical of my own Ministers on that aspect and I shall continue to criticise until we have a reasonable regional policy. We will not have a review of regional policy. What is proposed demonstrates a cynical determination by the Government to transfer resources and wealth from the poor to the rich, from the impoverished regions to the more prosperous areas. We have two nations—the impoverished North of Britain and the wealthy South of England. This is a frightening feature of the Government's policies. The evidence is there to be seen.
  302
  It is appalling that the Secretary of State treats us with such contempt in suggesting that his exercise will lead to a more efficient and more cost-effective regional strategy. Out of this vicious exercise has come the transfer of £230 million from the "have nots", through regional assistance, to the pockets of the wealthy by way of income tax cuts. If anyone disputes that, let him ask himself a simple question. How much more financial assistance has been given to areas with the greatest problems, the special development areas? The answer is, not a penny.
  How can those special development areas be more successful under this policy than they were under past policies? They have not been given more money or power. The argument used to be that, because many of the assisted areas lost their status, firms would troop into the special development areas. It is not so. In no way will the special development areas be more successful now than they were in the past. I hope that the Minister will deal with that point.
  We must come to terms with the question of the necessity for a regional strategy. I do not doubt that the Tory monetarists and the believers in the infallibility of market forces will object strongly to the concept of financial assistance from the taxpayer; but that is what Government financial assistance is about, no matter what may be the problems of an area. That view fails signally to take into account the fact that market forces created the problems in those areas in the first place. That is the dilemma facing those who argue in favour of market forces. They fail to accept that market forces in areas with declining industries created the initial problems.
  The main cause of regional poverty and decline is the inevitable rundown of basic industries. It is important to remember that those industries once produced Britain's wealth from steel, textiles, shipbuilding, coal and heavy engineering. They were the wealth producers which gave us so much to be proud of in the past. Invariably their decline is coupled with a poor communications network and poor or marginal agricultural land.
  In the majority of those areas extensive industrial dereliction creates an unpleasant environment. Inevitably, because of the lack of employment opportunities

  303
  and the poor environment, young skilled workers emigrate to more prosperous areas leaving behind the elderly, the unskilled and the unfit.
  A particularly depressing effect of the vicious declining spiral that affects those areas is the lack of opportunities for young people. As more textile mills, steelworks, engineering plants, shipyards and other industrial projects continue to decline, fewer apprenticeships are available, resulting in an increase in the pool of unskilled labour. Against this background the fight to create jobs in a depressed area must be seen; against this background must the cuts proposed by this Government be judged.
  When one seeks to persuade employers to establish themselves in assisted areas, they see only deprived communities with a shortage of skilled labour and an unpleasant environment. How much easier it is for a potential employer to set up his shop in a pleasant town within easy reach of London. That is what happens on too many occasions. Against that background must the Government's abolition of assisted area status for vast areas of North-West England, Yorkshire and the Northern region be judged.
  If these areas had difficulty in attracting industry, with financial assistance from the Government, how will they succeed without it, particularly as the Government have relaxed the necessity for industrial development certificates in the non-assisted areas? The IDC policy increased the prosperity of the region that I have the privilege to represent. The relaxation of that policy with nothing worthwhile replacing it only adds to our problems. I suspect that next year the Government will decide to abolish the IDC policy.
  My constituency, which has special geographical problems, is a microcosm of the disastrous situation created in the North-West by the Government's attempt to abolish a worthwhile regional policy in that area. When one examines the Secretary of State's list of downgradings, one is struck that the North-West, which is declining faster than any other region, has been savaged most severely. One is also struck by a curious anomaly in the list for the North-West. Although the list of downgradings from intermediate area
  304
  to non-assisted area status covers two pages in the Secretary of State's report, it omits the Blackpool travel-to-work area, the Lancaster travel-to-work area and the Southport employment office area. Each of those areas is left with intermediate area status. These are Tory seaside resorts, and I suggest that that has more to do with their being left out than the magnitude of their problems.
  The problems of those areas are nothing compared with the problems of Newton-le-Willows, Haydock, Leigh and Golborne, in my constituency. One can only regard the Secretary of State's decision with curiosity. I accept that the intermediate areas have problems, but they pale into insignificance compared with the problems in certain areas in my constituency.
  Irlam has a terrible problem. It is a small town which earlier this year faced the closure of its wonderful steelworks. Despite poor communications—Irlam desperately needs a link to the M62—Salford city council and the British Steel Corporation struggled desperately to bring new employment to the town. They have achieved only small success. The removal of assisted area status from Irlam creates a serious problem. Since Irlam has suffered a steelworks closure, it is entitled to assistance from the European Coal and Steel Community and the benefits of cheap loans in order to create employment for redundant steel workers. The town is in danger of losing that facility. I believe that Irlam is entitled to that financial assistance.
  Newton-le-Willows is part of the St. Helens metropolitan area and is in Merseyside. However, Newton-le-Willows is included in the Warrington-Cheshire travel-to-work area. Warrington-Cheshire and Newton-le-Willows lose their independent area status whereas St. Helens retains its development area status. Newton-le-Willows was forced into St. Helens during local government reorganisation. I have asked, pleaded, begged and demanded that Newton-le-Willows be transferred to the St. Helens travel-to-work area and employment office area, but I have been told that it cannot be done. That is in direct contradiction with the argument put forward during local government reorganisation. I hope that the Government will reconsider the matter.

  305
  About two-fifths of my constituency is in the Warrington borough council area and part of it is in Warrington new town. Warrington new town has been successful in attracting industry. Indeed, it is one of the fastest growing areas in the North-West. It has attracted firms from the United States, Japan and Europe. Both the new towns philosophy and Government regional aids have been successful there. Warrington has tremendous advantages with its first-class communications network. It is of real benefit to the North-West because of its growth potential. When its success is beginning to come through, the Government's assistance is cut off.
  Any sensible regional strategy would assist areas of natural growth. We should encourage them through Government assistance. When Warrington was starting to take off, the Government cut off its assistance. The future is bleak.
  In 1976 the European Commission calculated that the wealthier regions of the EEC compared with the poor regions improved from a ratio of five to one in 1972 to six to one in 1975 and that the gap was widening. The Commission emphasised that that widening gap was a threat to the stability of the Common Market. I suspect that the ratio is now about seven to one. All member countries accepted that and established the regional fund to help individual countries' regional policies.
  Irrespective of the Government in power, each member country accepted the principle that the free play of market forces could not be allowed to devastate large areas of the Community because of the obvious problems. This Government have turned their back on that principle. Every citizen should recognise that this reactionary Tory Government are prepared to sit back and allow large tracts of the United Kingdom to become industrial wastelands. I do not believe that the British public voted for that. I shall fight this evil policy line by line in Standing Committee.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): I must tell the House that Mr. Speaker did not announce the operation of the 10-minute limit on speeches between 7 pm and 8.50 pm. However, if
  306
  hon. Members voluntarily limit their speeches to 10 minutes, I shall be able to call all those who wish to speak.
  7.18 pm
  Mr. Kenneth Carlisle: It is clear that the House disagrees about much but it is widely accepted that no Act of Parliament has real authority unless it conforms closely to the wishes of the majority of British citizens. One of the recurrent themes in my general election campaign was the distrust of nationalisation and nationalised industries felt by my constituents. That was a genuine feeling not only among those who voted for me but among those who voted against me.
  That view is held partly because of people's experience of nationalised industries. Customer dissatisfaction always seems greatest with monopolies and nationalised industries. The view is also held partly because of a fear of the power of these industries and a distrust of their size, and partly because people believe that, in general, the Government have no business to run industries. History has shown that Governments run businesses badly.
  This Bill has authority because it reflects the wishes of so many people. It is a sensible Bill. It restricts the power of the NEB to extend public ownership. It is right to remove a potential threat from large sections of profitable industry while, at the same time, saving unnecessary Government expenditure.
  An uncertain political future has always hampered investment. The Bill does something at least to remove that uncertainty. The public will welcome retention of the NEB as an occasional nursing home for sick businesses and an occasional nursery for new ones.
  It is unrealistic to say that Governments should never interfere in the private sector. The new role for the NEB keeps open that option. In the past the NEB's record of investment and help has been less than brilliant. In future it must exercise its function less frequently and with greater skill. It is not just bad luck that five NEB-backed companies have gone into receivership this year with a consequent loss of taxpayers' money.
  As soon as the NEB companies become profitable, they should return to the private sector. The NEB must work with and complement the private sector, not

  307
  compete against it. The NEB, far from being an agent of nationalisation and promoter of Government expenditure, will become an added buttress to the private sector. One of the more wishful aims of the NEB has been to promote industrial democracy in its undertakings. Industrial democracy means that people should feel involved in the business in which they work. Paradoxically, it is always those who work for Government-controlled institutions who feel least involved. The ultimate decision over their lives rests with a bureaucracy that is too remote and they do not feel that their opinions really count. The efforts of the NEB have suffered from that flaw.
  Involvement of a work force succeeds best in small units within the private sector. In those small units people can affect their destiny. It is in small businesses that people can most easily share the profits through one of the many schemes available and so learn the economic realities of their business. It is in the private sector that profits are made.
  However well-meaning the original intention of the NEB, it can best foster profits and a sense of involvement by curtailing its own activities. In the annual report for 1978, the chairman of the NEB saw it as forming a bridge between nationalised industries and private enterprise. The tenor of the report envisaged a growing one-way traffic across that bridge—from the private sector towards that side controlled by the Government. That bridge is too dangerous to be left untouched. In other circumstances the traffic could become far too heavy for the foundations of the bridge.
  Our aim, in tune with the wishes of the electorate, is to reduce that bridge to a footbridge, with a flow of traffic in both directions. Such a modest footbridge could be of real assistance to British industry. In contrast, the NEB bridge, which was built by the Socialists, has the same drawbacks as the Humber bridge today.
  7.23 pm
  Mr. Stuart Holland: Although the speech by the hon. Member for Lincoln (Mr. Carlisle) was not a maiden speech, I congratulate him on the metaphor of a footbridge between the public and private sectors.
  308
  The Bill will reduce British industry to a walking pace, if not to its knees. As my right hon. Friend the Member for Deptford (Mr. Silkin) pointed out, the Secretary of State has presented a document expressing an economic philosophy that is scarcely relevant to the industrial needs of Britain in this half of the century.
  Several of the points made by the Secretary of State demand rebuttal. The right hon. Gentleman argued that the National Enterprise Board distracts attention from the need for savings, as if we were short of savings rather than investment. The Wilson committee on financial institutions demonstrates that it is the lack not of cash but of the means and capacity to embody those savings and investment from which Britain suffers.
  The Secretary of State said that it was not sensible to overspend, overtax and overborrow. However, private business is underspending, is undertaxed and under-investing. With the introduction of tax relief on stock appreciation, effective corporation tax has been virtually reduced to zero. That was a policy introduced by the previous Labour Government, whom I criticised then as now. The policy showed too great a faith in the capacity of the private sector to go out and make profits when by the same policy those profits were subsidised by tax relief. The Government would be well advised to change that policy by introducing an effective corporation tax on those large businesses which now are making large profits. Some of that money could then be used for public spending in the regeneration of British industry.
  The Secretary of State argued that the NEB had reduced risk in the economy. My right hon. Friend the Member for Deptford demonstrated that in practice the sale of assets held by the NEB would enable those who gained those assets to do so without having taken any risk during the period in which the NEB was restructuring those activities. That is the brunt of our criticisms of the proposed sale of NEB assets.
  The Secretary of State is in a Lewis Carroll world, as my right hon. Friend the Member for Bristol, South-East (Mr. Benn) pointed out, when he talks about too much public spending. Is he not aware that on the basis of the latest comparative data given to me by the

  309
  Government in a parliamentary answer between, for example, West Germany—so much admired by this Government—and the United Kingdom, public spending in West Germany is higher than in the United Kingdom? In the latest figures, public spending represents 44·4 per cent. in West Germany as against 44·3 per cent. in the United Kingdom. That may be a difference of only 1 percentage point, but that exactly supports my argument.
  The United Kingdom is not out of line, but is almost in parallel with the one economy that is held up as the embodiment of the market mechanism. The West German economy along with that of the United States is taken by the Government as an embodiment of the entrepreneurial spirit and risk-taking initiative. In their anxiety to cut public spending, the Government have failed to recognise the extent to which public enterprise is not a drag on the economy. Britain has brought into public ownership the same sectors of basic industries, such as gas, electricity, power supply, water and transport, as every other Western European Government.
  The predominantly Tory press has perpetrated the myth that Labour Governments have leapt ahead with nationalisation. In reality, on the latest available figures on the contribution of State enterprise to value added in the mid-1970s, West Germany had more public enterprise as a percentage of output than the United Kingdom. How can the Government talk about the need to reduce the stake of the public sector on economic grounds, or on grounds of being out of line, when that is refuted by the figures?
  The Government are closing their eyes—in their approach to the NEB—to new forms of intervention adopted by Governments in Western Europe, particularly since the early 1960s. The extension of public ownership is not in itself Socialist. The Government have yet to learn that. The extension of public enterprise has been undertaken as ardently—if not more ardently—by Governments of the Right and Centre in other European countries. They have a clearer grasp of the internal logic of capital and its workings within the market mechanism. They have a clearer understanding that the competitive process is inherently unequal between different social groups, different sectors of
  310
  industry, different regions and different urban areas.
  The evidence on this matter was well taken by the Expenditure Committee in the early 1970s—a Committee of which the Minister of State, the hon. Member for Bosworth (Mr. Butler), was a member and to which I was an adviser. The report of the Sub-Committee surveyed the evidence on new public enterprise agencies—the Industrial Reconstruction Institute in Italy, the Industrial Development Institute in France introduced in the 1960s, the re-organisation of Germany's United Industry Company, VIAG, Belgium's introduction in the late 1960s and development in the early 1970s of the National Investment Corporation, and Sweden's introduction at that time of the Statsföretag or State Holding Company, apart from the introduction in the last decade of a Canadian Development Corporation and an Australian Industries Development Corporation.
  Those are Governments of different political complexions reacting to the realities, and the realities are the failure of private enterprise to invest both in high-risk advanced technology sectors and in basic sectors of industry where the scale of investment and the long period of the pay-off for profitability, frequently now from 10 to 20 years, is too much for any private contractors to undertake unless, in lieu of public enterprise, there is a guarantee of public spending. In the United States, this guarantee of public spending has come indirectly through the NASA programme and military spending.
  In these respects, not only in the scale of its attack on the public sector but in the Secretary of State's determination and enthusiasm for rolling back the frontiers of the State, the Bill puts the Government in a class of their own among the Euro-Conservatives. Alone among those Governments they are enthusiastically dismantling the means of intervention in what remains of a fundamentally unreconstructed class and capitalist system. I repeat, State intervention is not in itself Socialist or a model of the Left. The Government have opted for laissez-faire versus State capitalist intervention. They will regret that act.
  For example, the Secretary of State talked of the NEB as a panacea to solve

  311
  all our industrial problems. As one of the co-authors of the proposals for the National Enterprise Board, I assure him that not even the authors of that concept or of that holding company would claim so much. The NEB was forwarded originally in the Labour Party as a public agency which should have been backed by planning agreements, with new powers to reveal information and to negotiate change in big business in our economic system. In this respect, too, the Government's policy is unsoundly based.
  When I asked the Secretary of State for Trade to let me have up-to-date information on the ratio of foreign production by British businesses abroad relative to exports from this country, the answer was that the Government had no information on that question. I suggest that, when the Government have a chance to amend the Industry Bill, they should look up the facts and figures. I also suggest that they ask the civil servant who felt that there was no information on the issue to look at the United Nations reports on multinational companies and to work out from company data the ratio of foreign production by these businesses.
  One of the main problems in our economy and one of the main weaknesses of British industry is that, relative to our leading competitors, we have too much foreign investment. For example, relative to West Germany and Japan, whose business outside those countries amounts to less than 40 per cent. of their visible export trade, Britain's business abroad produces goods the value of which is more than double our total visible trade. We are in this sense five times more multinational than Germany and Japan. It is one of the fundamental causes of our industrial decline and one of the reasons—developed and reinforced by the press—behind what now amounts to a national psychosis of failure in this country.
  We are not industrially incompetent. We are among the most competent industrial nations of the Western world. But we are putting our investment, talent, skills, know-how and organisation mainly into foreign activity rather than into domestic enterprise. That major problem will be massively aggravated by the ending of exchange controls and the liberalisation of foreign investment under this Government.
  312
  One argument used by the Treasury to date is that a high proportion of the foreign investment by British business abroad is financed from savings abroad. Hitherto, where exchange controls have acted, that has by and large been the position. But now, for the first time, under this Government's policy, we have a formula for a massive outflow—a haemorrhage—of capital from industry which urgently requires regeneration and restructuring.
  In this context, the Labour Party's policy for planning agreements was a crucial complement to the extension of public enterprise. The disclosure of information on what big business is doing is a crucial complement to any kind of industrial planning.
  I refer back on the disclosure of information point to the Secretary of State for Trade's admission that he had no information on the scale of our business abroad. If we cannot know what industry is doing when and where abroad, why and in what way, how can we expect trade unionists to negotiate or even see the point in discussion with management on the terms on which they would undertake the retention of that industry in this country?
  Frankly, I am highly critical of the attitude of my right hon. Friend the Member for Huyton (Sir H. Wilson) towards the planning agreements policy. In the latest volume of his memoirs he has, in effect, cited the planning agreements policy and revealed why he was not persuaded of its efficacy. While this was not simply the personal decision of one Minister, it is criticism of the then Government that I bluntly make. The readiness of that Government to withdraw the reserve right to oblige management to reveal certain key information in a company to those who work within that company is one fundamental reason why the class war at board room and shop floor level is so acerbic and sharp.
  It is important to realise, against the propaganda of the press in this country or, to put it charitably, against the arguments of those who do not know, that planning agreements were not conceived as an act to be brought down from the mountain, as was the Ryder plan for British Leyland, and imposed on a take-it-or-leave-it basis on the shop floor. The

  313
  concept behind planning agreements was one of negotiation. The obligation was to sit around a table and negotiate the future of leading companies and industries on the basis of real information. But this Government, by dismantling means of intervention in the economy, are effectively accelerating into an economic nightmare in the dark on sidelights. Unless they adopt powers for disclosure of information and inform themselves, whether or not they inform the trade unions, we shall all be in considerable trouble. I regret the watering down of the Industry Act in that respect.
  As regards regional and urban policy, it was clear to many people in the Labour Party in the early 1970s that industrial incentives were not biting in the manner in which they could bite in the immediate post-war period. It was also clear that industrial development certificates or controls over location were being undermined by the flight of new multinational capital to areas such as Hong Kong, Taiwan, the Philippines, Mexico or Brazil, where the cost of labour was one-quarter or less than that in Britain and where, in effect, there were no basic trade union rights, press freedoms or civil liberties.
  We reasoned that, because of this and because of the new evidence on the concentration of British industry, in a situation where literally less than 100 firms account for half the output and employment, the visible export trade and the pricing decisions in the economy, it was crucial in the regional and urban context to know where these firms were to locate their activities. They accounted for more than half the employment creation in the economy. Again, the policy was not supposed to be simply one of NEB intervention or regional development incentives but of planning negotiation, whereby, if we had published where leading enterprises were planned to be located, many investment decisions could have been negotiated by the trade unions, which could welcome rather than oppose them.
  In practice, the CBI launched a hysteria campaign based on the argument of commercial secrecy. In the Continental evidence on planning agreements—planning agreements introduced in Belgium, France or Italy—there was never any question of those concerned discussing the design pro-
  314
  file of a car or the compound formula of a drug. What the Government and the unions have a right to know is the overall shape and future direction of the companies' activities. Without that, the trade unions could not be responsible to their members or the Government to the electorate.
  In that context, I certainly regret the watering down of the Industry Act in the previous Labour Government's industrial policy. However, in contrast to that Act, which was judiciously used in many circumstances, this laissez-faire Bill is literally turning its back on the reality of industrial intervention in the second half of this century. It is a formula for industrial failure and a signpost for industrial slump. In that sense it should certainly be rejected by the House.
  7.42 pm
  Mr. John Patten: I am sure that the House is grateful to the hon. Member for Vauxhall (Mr. Holland) for his interesting description of State intervention around the world. If nothing else, it proves that there is some use for his old university lecture notes.
  An important point slipped out from what the hon. Gentleman said, which was missed by his right hon. Friend the Member for Bristol, South-East (Mr. Benn) in his check list of what the next Labour Administration under Left-wing control would promise industry in this country—and I am grateful to the right hon. Gentleman for remaining in the Chamber. Those promises ranged from import controls to compulsory planning agreements. The one point that he did not mention and which the hon. Member for Vauxhall included was the promise that under such measures we should return to high levels of corporate taxation from which to pay for the so-called industrial regeneration. I wonder what the CBI and many intelligent and far-sighted trade union leaders like Frank Chapple will make out of that kind of comment.
  There are three points about the Bill which interest me. First, there is its relation to regional policy. Secondly, there is the comparison that can be made with the Labour Government's legislation of 1975, in which the right hon. Member for Bristol, South-East was much involved. I wish to go into the relationship between

  315
  fact and fantasy that is evident in a comparison between the 1975 Bill and the 1979 Act.
  Finally, I should like to look at the National Enterprise Board in its new role as envisaged by my right hon. Friend the Secretary of State. He has so rightly seen that it has some residual role to play, for which it may be suited, but it has no genuine entrepreneurial role to play, for which it has been proved to be totally unsuited.
  In his statement on regional policy on 24 July, my right hon. Friend said:
  "The main purpose of the policy is to encourage investment where it makes sense to the investors to go … redistributing the taxpayers' money will not suffice in itself to eliminate the gap between the assisted and non-assisted areas."—[Official Report, 24 July 1975; Vol. 971, c. 365–73.]
  I say "Hear, hear" to that. As a rider, one could add that redistributing taxpayers' money will not narrow the gap between profitable and non-profitable industries. That is absolutely clear.
  There is a world of difference between the ideological drive of many Labour hon. Members, who see redistribution of earnings as a part of their industrial policy, and the much more sensible and pragmatic approach that is characteristic of the 1979 Bill, of which we are having the Second Reading today.
  With the provisions for regional policy, particularly in clause 13, it is quite clear that the Bill immeasurably strengthens the help that individual assisted areas can hope to receive from the Government resources and funds that are available. Clause 13 relates the limited resources to the crying needs in the most industrially disadvantaged areas, which is a needs-oriented policy of extreme common sense.
  That strand of common sense has run through all that my right hon. Friend has said in this debate, which makes for interesting comparison with what was said by many Labour Members who were in Government and spoke in the debates that followed the publication of the Industry Bill 1975.
  I am sorry to see that the hon. Member for Liverpool, Walton (Mr. Heffer) is not in the Chamber. He was enthusiastic about planning agreements. I should like to quote what he said about those aspects
  316
  of the 1975 Bill, which he thought was critically important:
  "through Planning Agreements we shall seek to encourage companies to seize the opportunities open to them in"
  some
  "English regions … the Planning Agreement arrangements will provide a unique opportunity".—[Official Report, 18 February 1975; Vol. 886, c. 1241.]
  It nearly was a unique opportunity. Only two companies entered into these planning agreements—the National Coal Board and Chrysler.
  Fantasy surrounded these provisions in the Bill, page after page, clause after clause. There were provisions about planning agreements and the disclosure of information, none of which was enacted. When we realise who piloted that Bill through the Commons, that is not surprising. It was the right hon. Member for Bristol, South-East, who, despite my attempts to lure him to stay in the Chamber, has left. The statements that he made during the debate on that Bill are extraordinary. He proved himself to be, as he did this afternoon, the Peter Pan of post-industrial society. He is endlessly trying to slip a last chapter into the history book of the Industrial Revolution. We are now a post-industrial society, and that book is complete. The endless business about the regeneration of traditional industries through new forms of activity is in the realms of fantasy. The points raised by the right hon. Gentleman in the debate in 1975 make one wonder. I respect the right hon. Gentleman's intelligence and sincerity, but I doubt his grip on industrial reality. In his speech about the disclosure of information he said:
  "the power of the ideas that have already gone into this policy … excites the imagination of people".
  How they must have danced in the works canteens and the pithead bars when they read that the 1975 Act would include provisions on disclosure of information. How heartbroken they must have been when those provisions were never enacted.
  Mr. Stuart Holland: It is clear that the hon. Gentleman speaks with no personal experience in these matters.
  Mr. Budgen: Tell us about the toil.
  Mr. Deputy Speaker: Do not tempt the hon. Member—he has already made one speech.
  Mr. Holland: I take your point, Mr. Deputy Speaker. As a result of the debate on the Industry Bill and how it was grasped in the North-East, the trade unions which represent 25 of the largest companies in the North-East met to negotiate, on an inter-union basis, how to cope with the planning agreements formula. Four years later, because we did not have planning agreement powers, the trade unions had to get together to face the closure of plants at Vickers Scotswood with no alternative because of the lack of powers. In that respect, they regretted the passing of the Act.
  Mr. Patten: I am grateful to the hon. Gentleman for his remarks, although I am not sure what to make of them.
  I shall pick a further example of rhetoric from the right hon. Member for Bristol, South-East. Having painted the rosy picture of the workers of the country dancing with delight at the introduction of the provisions for disclosure, he boasted:
  "these provisions for greater disclosure will go a long way towards bringing about industrial democracy".
  He ended triumphantly:
  "We have come to the end of a chapter in our industrial history."—[Official Report, 17 February 1975; Vol. 886, c. 939–46.]
  Indeed, today we have come to the end of the chapter in our industrial history that was written between 1974 and 1979 under the previous Labour Administration. That history is nothing of which Labour Members can be proud. They cannot afford to be proud of bringing the whole legislative process into disrepute by introducing Industry Acts containing many provisions that they had no intention of enacting.
  Lastly—[Interruption.] I have to get some sort of reaction from Labour Members below the Gangway.
  Mr. Norman Buchan: The hon. Gentleman has been complaining about the need for dissemination of information. Why should the Bill prevent the disclosure of interest of those involved in industry, for example, shipbuilders? Do the Conservatives believe that it is pointless? Or are they ashamed of interests that might be held by their number?
  Mr. Patten: Doubtless the hon. Gentleman's question will be answered fully by the Minister of State. As far as I know, the provisions about disclosure of interest of the members of the NEB and British Shipbuilders are being removed. My right hon. Friend the Secretary of State made that clear this afternoon. They served no useful purpose, and it is because of the need to remove from legislation or orders matters which serve no purpose that they will be got rid of.
  The Under-Secretary of State for Industry (Mr. Michael Marshall): The hon. Member for Renfrewshire, West (Mr. Buchan) obviously did not hear what my right hon. Friend the Secretary of State said this afternoon. Members of the NEB, British Aerospace or British Shipbuilders have to make their interests known at the time of their appointment. Under existing statute, they have to make the updating of those interests known to the Secretary of State. Therefore, the matter is already covered and the provisions become redundant. They were also discriminatory because they did not apply to British Gas or British Steel and others.
  Mr. Buchan: I sought the answer of the hon. Member for Oxford (Mr. Patten) and not of the Under-Secretary of State. It was the hon. Gentleman who was looking for a reaction. The point is that the initial disclosure of information is insufficient and not made public enough. The hon. Gentleman was implying that it was unnecessary. However, the Under-Secretary has said that it is needed. Does the hon. Gentleman agree with that or does he believe that all members of all institutions should have private political interests unknown to the community at large?
  Mr. Patten: During my speech I have referred to the disclosure of information, as was put forward in the 1975 Act. That was the disclosure of information under planning agreement frameworks to the lower echelons of management and trade unions. I was not referring to the disclosure of members' interests. I am grateful to my hon. Friend the Under-Secretary for helping me out on the matter. [Interruption.] As a new Member, I make no apology for being unable to take the hon. Member for Renfrewshire, West (Mr. Buchan) through

  319
  every clause and subsection of the Bill. Indeed, it would be unreasonable to expect many hon. Members with greater experience than mine to deal with such points.
  What is revealed by comparing the speech of the right hon. Member for Bristol, South-East in 1975 and his speech this afternoon is that he has not learnt any lessons. He promises more of the same. In a speech in Manchester on Saturday he promised more planning agreements, more import controls, more of the same sort of issues which were debated endlessly in 1975.
  I watched the faces of many of his right hon. and hon. Friends when a glazed expression came over the right hon. Gentleman's face as he went through a check list of the things the next Left-wing Socialist Government, if they were elected, would do. The right hon. Member for Deptford (Mr. Silkin) gazed blankly at the end of the Mace, the hon. Member for Bolsover (Mr. Skinner) looked blankly at the toecaps of the shoes worn by the hon. Member for Keighley (Mr. Cryer). Nothing exposed the divisions in the Labour ranks so much this afternoon as the differences in the speeches between the right hon. Member for Deptford and the right hon. Member for Bristol, South-East.
  The NEB has been given a residual role by the Bill. It is a role that it is well fitted to carry out. I hope that all my right hon. and hon. Friends will recognise that the Bill is framed in a non-ideological context. It is highly pragmatic and related to needs and the relationship of needs to resources. I am sure that neither I nor my right hon. Friend the Secretary of State believes that pragmatism is the lowest common denominator in all legislation and Government policy. However, in my right hon. Friend's attitude towards the NEB there is a clear indication of the sense of realism that has been shown by the Government towards industrial policy. That realism contrasts sharply with the sense of fantasy which ran through the debate in 1975 and which we have heard from Labour Members during this debate.
  7.59 pm
  Mr. Cyril Smith: I am grateful to you, Mr. Deputy Speaker. I am sure that, like me, the hon. Member
  320
  for Caernarvon (Mr. Wigley) had begun to wonder whether minority party Members would have an opportunity to speak. I am grateful to Mr. Speaker for not imposing the 10-minute rule after 7 o'clock. Had he done so, it would have allowed me to prove to my hon. Friends who voted for it that they were idiots, because it is just another infringement on the rights of minority parties in this House.
  I am pleased to follow the hon. Member for Oxford (Mr. Patten), whose speech would have done credit to the Young Conservative conference. He fell into the trap which he accused the right hon. Member for Bristol, South-East (Mr. Benn) of falling into. That is what has been going on throughout the debate since 4 o'clock, and with the exception of about three minutes I have heard every minute of it.
  The hon. Gentleman criticised the right hon. Member for Bristol, South-East for indulging in a party political, see-saw battle based on party ideology. The country is sick of that battle, and it does industry no good at all. Indeed, it does little credit to this House. What we have heard today is the attitude "It is my bat and ball, and if I cannot bat I am going home". That is what it is all about. The debate has been a classic example of that.
  When the Labour Government introduced their Industry Bill in 1975, Opposition Members voted against it. As soon as they came into power, they said "We shall change all this. We shall throw it out because it is not part of our ideology." As the right hon. Member for Bristol, South-East said, if Labour ever get back in power they will alter it yet again. All this is supposed to be for the benefit of British industry. Speaking as someone with a small business, I can think of nothing that does industry greater harm, and upsets our reputation abroad more, than the constant battle of see-saw politics from one Government to another.
  With few exceptions, the vast majority of hon. Members accept the need for a mixed economy. That means that the vast majority of hon. Members agree that there is a role for both private and public enterprise. For God's sake let us sit down and agree what the mix should be, so that these constant battles cease, thus

  321
  enabling us to get on with the job of ensuring that the ingredients in the mix represent the best deal possible, be it a deal assisted by Government or one assisted by private capital.
  One thing should be quite clear, because I believe it to be a fact. Basically, the National Enterprise Board has done a good, useful and necessary job. In passing, I must point out that I have criticised it, and continue to criticise it, for its ill-founded decision to develop and encourage the microchip industry in the North of England. I believe that the Manchester area, with its high technical skill and historical links with the very foundation of the computer industry—
  Mr. Michael Marshall: Rochdale.
  Mr. Smith: No, not Rochdale. I said that the Manchester area was an obvious place for the microchip industry to be developed. With the history of universities such as Manchester and Salford in regard to technology in general and computers in particular, that was an obvious place to locate that industry. As a northern Member, I should like to pay tribute to the hon. Member for Newton (Mr. Evans) for his great fight in trying to get that industry located in the Manchester area of the Northern region. I am only sorry that his efforts were not more successful.
  The NEB has done a good job. There is clearly a need for some kind of vehicle which allows Government investment, occasionally even Government takeover and often simply Government aid. The NEB is, and has proved itself to be, such a vehicle. Why, then, do the Government seek so drastically to reduce its power in this Industry Bill? Indeed, why make the Board virtually ineffective, even to the point, in clause 6, of allowing the Secretary of State to impose executives on the Board? Presumably that will reduce the NEB's chairman and Board to nothing more than paper-weight people, because the chief executives will now be appointed by the Secretary of State.
  The Government should beware, because the Conservative Party will not be the only party that will exercise this power. In years to come the Tory Party may find that by that clause it has
  322
  created a rod for its own back. Of course, the Government have introduced this because it is party political doctrine. They argue that it was in their manifesto and that they have a mandate to do it. They do not have a mandate to do anything, because 58 people out of every 100 who voted at the general election did not vote for the Government's manifesto but for someone else's. I do not take the view that the Government have a mandate to do anything. What they have is a majority of hon. Members of Parliament through a system which cheats the electorate of this country. At any rate, they have a majority and they will push the Bill through because that is what party doctrine and the party system demand. That is what party politics in this House is all about.
  However, there is one thing that worries me a great deal, and my colleagues will confirm this from private discussions that I have had with them. I appreciate the danger of creating a machine that is too easy for the Socialist State to take over. That is what worries me about the NEB. Even if the NEB was destroyed by this Bill, if the electorate in its non-wisdom decided that it wanted a Socialist State—I mean a Socialist State as opposed to a social democratic State—it would elect one, and that State would have the power to reintroduce the NEB. Therefore, that is not a good reason for demolishing the NEB now.
  Rather than destroy the NEB, the Government should be altering the purpose of its existence. What is more, they should ensure that over the years it does not build up huge companies or take over huge companies. The Government could do that by requiring the Board to sell off such companies after a period of years, when it was not financially objectionable to do so, or socially objectionable on the basis that the company in question manufactured a basic essential commodity such as steel. If the Board simply existed to help companies that were in difficulty, to get them on their feet and to sell them off within a given period, always provided that at the time of selling off it was not an economically unwise time to sell them—in other words, provided that the taxpayer got a fair return for his investment, which is what selling shares is all about—there would then be some merit in the Government

  323
  taking action about the NEB in some Bill or other.
  What we now have is a Bill that is designed to create party ideology on the one hand and to destroy it on the other. That will do nothing whatever to help industry and enterprise in this country. Therefore, the view of my party is that the NEB should be retained. But it should not enable the State to gobble up private industry through an investment policy. It should be compelled to sell off companies within a given period.
  There is a need for a vehicle to facilitate State help, not only to the regions but to industries that need help. Saving industries means that jobs are saved and that people who would be put on the dole are prevented from going on the dole. I have never seen the equation worked out, but it is possible that if the Government invested in industry they would save public funds by virtue of the number of people who were prevented from going on the unemployment register and living on State funds. Cases have been cited today. It was said, I think, that six companies backed by the NEB have gone bankrupt or are in the receiver's hands.
  An example was given where £100,000 had been invested. I wonder how many people have been kept off the dole for how long as a consequence of that £100,000 investment. It is possible that the cost to the State would have been a lot more than £100,000 had that investment not been made and people simply been placed on the dole. I am not saying that this was the case. I do not know the company. I do not know the statistics. But it is a possibility. It is part of the equation and part of the mathematical calculation that needs to be taken into account.
  It will not surprise the House that my colleagues and I are disappointed to find that section 2(2) (d) of the 1975 Industry Act is to be dismantled. This section relates to the need to promote industrial democracy. It is time that the Government started giving attention to the promotion of industrial democracy. I do not expect the Government to listen to anyone from a minority party but they might at least listen to the next president of the CBI, the deputy chairman of ICI. Yesterday, in a speech to the CBI conference, he made a slighting reference, in my opinion, to the views of the Secretary of State
  324
  for Industry. I think his words were that the views of the Secretary of State were "not enough". He then went on to say that he believed that those views may come home to roost in the winter ahead.
  These are the words of the next president of the CBI, the deputy chairman of ICI. I was watching him on television. I say that because, strangely enough, most of the newspapers have not reported the remarks. I hunted through newspapers like the Daily Telegraph and the Daily Mail—all those papers that express opinions freely in an unbiased manner for the benefit of the British public. I found parts of his speech that praised the Government but I could not find any reference to his concern about what would happen this winter as a consequence of the monetarist policy outlined by the Secretary of State for Industry. On the television news, he said that he believed that greater worker parfticipation, greater communication between workers and management and greater involvement of workers in industry were vital to the future of industry. I am not saying that those were his exact words, but I agree entirely with the views he was expressing.
  We may have differences of opinion about what form that worker participation should take. But, at the present time, the argument is dead. I know of no discussion that is going on at Government level about worker participation in industry. The Bullock report has been ditched. Thank God for that. But the whole principle of worker participation in industry appears to have been ditched with it. If the Government do not reassess their attitude to worker participation and if they do not start the dialogue between workers in industry and between the trade unions—I differentiate between the two—and between the CBI, the chambers of commerce and all those concerned with industry and commerce, they will pay the price in the long term, if not in the short term.
  My colleagues and I consider that this Bill is a piece of party political, doctrinaire propaganda introduced by a Government elected on a minority vote whose only excuse for doing anything these days seems to be "It was in our manifesto". We would welcome an Industry Bill which amended the reasons for the existence and the powers of the National Enterprise Board. But a Bill

  325
  that merely seeks political confrontation, as this Bill does, is to be condemned. It is for that reason that we shall vote against the Bill tonight.
  8.15 pm
  Mr. Nick Budgen: This Bill has been much attacked by right hon. and hon. Members on the Opposition Benches on the ground that it is a doctrinaire Bill that entirely carries out the promises that the Tory Party made at the last general election. That is not so. This Bill is a compromise. It is, I hope, only a first step, but it is certainly a compromise. At the last general election, our position was considerably modified from the position that we held in 1975.
  Mr. Eric G. Varley indicated assent.
  Mr. Budgen: I see that the right hon. Member for Chesterfield (Mr. Varley) nods in agreement. Our first position was that we would entirely abolish the National Enterprise Board. The second compromise position, which I support, in the manifesto, was:
  "We shall therefore amend the 1975 Industry Act and restrict the powers of the National Enterprise Board solely to the administration of the Government's temporary shareholdings, to be sold off as circumstances permit."
  This Bill is a further compromise on that position. No secret is involved. My right hon. Friend the Secretary of State for Industry said, in opening the debate, that he had added to the powers of the National Enterprise Board a responsibility for advanced technology. He has also given the Board a requirement to provide investment in areas of high unemployment, particularly for the benefit of small firms. I am an enthusiastic, perhaps overenthusiastic, supporter of my right hon. Friend. I support what he says as a compromise and a first step.
  Why do I support the Bill as a compromise when it goes much against the principles that I supported in Opposition? I suppose that I mainly support it because of the argument put forward by the hon. Member for Rochdale (Mr. Smith). I agree with him. There must be, in a democracy, an element of continuity in Government policy. Even for those of us who feel passionately as ideologues, there cannot be a sense in which every policy is immediately changed as soon as a dif-
  326
  ferent Government comes to power. There must be a sense of proceeding slowly and carrying the country with us.
  I also take the point that was fairly made by the right hon. Member for Bristol, South-East (Mr. Benn). It is true that the British business community is ambivalent in its attitude towards freedom. I know what is happening on the Stock Market. That is happening not only because a fairly substantial recession is anticipated but because the business community is adjusting, with difficulty, to a new political climate. I understand that situation. I understand that in many instances business men do not approve of any particular political philosophy. I do not attack them for taking that attitude. It is their job to make profits, no matter what Government are in power, and to adapt to varying and different political philosophies. It is plain, from statements made at the CBI conference in Birmingham, where there was a pretty substantial vote in favour of protectionism, that business men are, as yet, ill adjusted to the freedom that the Tory party offers them. I accept that and I accept that we have to move slowly.
  My right hon. Friend the Secretary of State has been the most significant advocate of the new Tory philosophy. I thank him for converting the Tory Party to monetarism and for persuading us to accept that cash limits and declining monetary targets are right for this country, in spite of the certainty that it will cause considerable hardship as we squeeze inflation out of the system. Of course, we cannot proceed immediately on every front, but let us understand the price that we have had to pay in the Bill for the great successes on other fronts.
  When, in Opposition, we attacked the NEB, we did not do so solely on the ground that it was wasteful of public expenditure, though it was certainly that. We attacked it because we feared the growing power of the State and because we considered that the balance of power had been shifted too much in favour not of the bureaucrat—let us not have a vulgar attack on the Civil Service—but in favour of politicians, and not only Socialist politicians.
  Let us understhand what we are doing in extending the powers of the NEB to allow it to invest about £50 million of

  327
  taxpayers' money in the microchip industry and an unspecified amount in favour of small business. We are, I hope only temporarily, extending the power of the State, albeit at a time when that power is being exercised by a Tory Administration.
  I am doubly sceptical of power being exercised by Socialist Governments because they have the great disadvantage of believing in State power, but I am fairly sceptical of power being exercised by Tory politicians. My right hon. Friend said that the reason for giving the NEB responsibility for high technology was the difficulty in getting investment into that area. That argument has been used time and again. I have read and re-read my right hon. Friend's pamphlet "Monetarism is Not Enough". In that, he refers to what happens when the squeeze comes and large business goes to the Government. He said:
  "The large ones go to the Government for aid. This is nothing to do with their intrinsic merits though one can cook up an argument in favour of any decision once it is taken."
  That is true and I am afraid that, once the decision has been taken to support high technology projects, some sort of argument in its favour could be cooked up.
  The difficulty is that we know that Tories like expensive toys. The Tories liked Concorde, and what an expensive and embarrassing toy that turned out to be. On the other hand, we know that Labour Members like old-fashioned toys. They like the steel industry and the coal industry. They believe that there is something more manly and more virtuous about disagreeable toil. We like smart new toys because that shows that we are whiz kids and more up to date. In the end, it is a value judgment to intervene in the economy taken by fallible politicians.
  If we decide to put £50 million into high technology, we must recognise that when we lose power—and let us not in the arrogance of a massive victory forget that we shall lose power eventually, no doubt mistakenly—it will be intellectually easier for a Labour Government to turn back to intervention once more.
  There may be a slightly better case for intervention in favour of small business.
  328
  The long years of intervention have resulted in pretty massive support for big industry to the disadvantage of small industry. My preference is to get rid of all forms of intervention, but I suppose that there is just a case for what I call countervailing intervention.
  I hope that the great crusade that my right hon. Friend has fought in the Tory party and the country will be recognised in a couple of years' time and that, after we have been through what will probably be an extremely disagreeable recession with a pretty high rate of unemployment, the country will understand that the days of high spending and State intervention have gone for ever.
  If that happens, I hope that we shall withdraw, yes, even from our expensive toys, and say to the small business man that we have cut his taxes and he is better on his own. I hope that we shall be able to say, as we promised at the last election, that there should be only a limited role for the NEB and that by slow and steady persuasion we shall at last adhere to our promises, which are based not only on economic arguments but on deeply held philosophical views, that the role of the individual will be enhanced and the role of the politicians, whether Tory or Socialist, reduced.
  8.28 pm
  Dr. Oonagh McDonald: No doubt the Secretary of State will be glad to have the support of the hon. Member for Wolverhampton, South-West (Mr. Budgen). However, he will wonder, as he reflects upon the hon. Gentleman's speech, quite what to make of that support.
  The National Enterprise Board was recently described in the February National Westminster Bank Quarterly Review in these words:
  "It has become a State investment bank operating on commercial criteria, competitive with private sector agencies, and with an increasingly well-defined policy."
  That description of the Board's present state is fair enough. It is very far indeed from the original Labour Party plans for the NEB, which saw it as exerting a controlling interest over a large slice of the economy.
  In the days to come, after the industrial devastation brought about by the policies of this Government, we may, when the Labour Party returns to power, need to

  329
  view the NEB in its original terms. However, that is not the question at present.
  The Secretary of State, having viewed the National Enterprise Board no doubt in the way in which it was described, and understanding some of its activities, realised that it had an important role to play in, for example, investment and high technology companies. Indeed, the Secretary of State told the House on 19 July 1979:
  "The market has been discouraged in recent years from supporting such ventures. … it seems sensible to use the NEB as one means of familiarising the market with new technologies. For my part, I see this role as being necessary."—[Official Report, 19 July 1979; Vol. 970, c. 2006.]
  However, the Secretary of State went on to say that he hoped its role in that respect would be temporary.
  The Bill reflects the Secretary of State's ambivalent attitude. He believes that the NEB should not exist if market forces operate truly in the way in which he believes. Nevertheless, it does exist. It has a useful role. He realises that it must have some kind of continuing role. Therefore, in the Bill, he has allowed its continued existence, for the time being at any rate. No doubt he would argue that the previous Labour Government left the country's economy with gaps that were created—it is claimed—by high taxation and that it was necessary to have the NEB for a time to fill those gaps.
  If we reflect on the history of the previous Labour Government, we may think that high taxation was a cause of the lack of investment by manufacturing industry in this country during their period of office. Anyone who thinks that must be living in cloud-cuckoo-land. The stock relief provisions introduced in 1974 cost £6 billion in terms of lost revenue to the previous Labour Government. Every conceivable incentive was given to manufacturing industry to invest in this country—to such an extent that many of the large companies did not pay any corporation tax during at least some of the years when the previous Labour Government were in power. We cannot accept that those gaps are created by high taxation. It is the failure of manufacturing industry that creates the gaps. That is why the National Enterprise Board must step in to provide essential funds, especially for small and
  330
  medium-sized companies and companies introducing the new kinds of technology that we shall need if we are to compete sensibly with America and Japan.
  The Secretary of State feels that he cannot quite get rid of the National Enterprise Board yet. What has he done in the Bill? I do not think that he has retained the NEB, in a fully operational sense, for as long as he believes that it should continue in existence. Instead, the clauses hamstring the Board and ensure not a rapid but a slow death. Perhaps the hon. Member for Wolverhampton, South-West will be glad to watch its slow decline as a result of the Bill's structures when it eventually becomes law.
  Let us examine what the Bill does. Clause 1 is a gratuitous insult. It removes from the NEB the statutory function of supporting and promoting industrial democracy. That is a gratuitous insult to working people now—just at a time when the Government's economic policies will put industrial relations under the severest ever strain and when leading industrialists are coming to realise the importance of industrial democracy. Yesterday the director general of the National Economic Development Office pointed out that more should be done to encourage employee involvement in companies either through share participation or through other forms of participation.
  To choose at this time to remove those statutory powers and functions from the Board is to take yet another step back into the past, into which the Tory Government are determined to drive us.
  Clause 2 thus gives the Secretary of State important powers. It is he who will now direct the investment policy of the National Enterprise Board, and insist that shares should be transferred to him. The Secretary of State can also use those powers to direct the sale of shares currently owned by the NEB, from one company to another.
  Earlier in the debate an hon. Member said that the Labour Government were guilty of continuous and fretful interference in the activities of industry. The Bill gives the Secretary of State precisely the power of continuous and fretful interference in the activities of the National Enterprise Board.

  331
  It is not clear to me why the Secretary of State should want these powers, why they have been written into the Bill, or whether he understands the damaging effects that they may have. They could deter the private sector from coming to arrangements with the National Enterprise Board, for a company's shares, after having been purchased from the NEB by the Secretary of State, could be transferred to a totally unacceptable partner.
  A company specialising in medical technology would hate to have its shares, currently owned by the NEB, transferred to GEC. Such companies are anxious and worried about that possibility and about the action which the Secretary of State may take once the Bill gives him that sort of power. It is not necessary for the Secretary of State to have such powers, for through the guidelines laid down in December 1976 the Secretary of State has sufficient control over the level, size and disposition of investments by the NEB. No further powers are necessary.
  It would be interesting to hear the Secretary of State's reason for introducing this clause into the Bill. Surely it runs counter to everything for which he claims to stand. It gives him more opportunity, not less, as a member of the Government, to intervene directly in British industry. It is not removing the Government from industry. It brings industry and the Government much closer together, possibly in a very sensitive way.
  I give as an example British Leyland, one of the companies for which the NEB is responsible. The fact that the NEB has been an intermediary in the past has been useful, as the NEB has been able to deal with the sensitive problems faced by British Leyland. The implications of this clause are that it will bring the Secretary of State, the Government and British Leyland closer together and give the Secretary of State all the powers that he needs to intervene directly. The Bill is far more interventionist than any measure proposed by the last Labour Government.
  Clause 4 will also have disastrous effects on industry. It deals with the statutory borrowing limits. That limit was laid down at £3 billion by the last Labour Government, with a possible extension by affirmative order to a maximum of £4·5 billion. Under the Bill passed by the
  332
  Labour Government just before they went out of office, the Government simply had to bring an affirmative order before Parliament and the borrowing limits could be raised. Under this Bill, the Secretary of State will have to bring further Bills before Parliament, during a very heavy legislative programme, in order to extend the borrowing powers of the NEB. That will be senselessly slow and bureaucratic, because these measures also apply to subsidiary companies of the NEB.
  Let us suppose that a small company is faced with, say, increased costs of raw materials and wishes to borrow money in order to cover the cost. Let us suppose also that its decision to do so would raise the amount borrowed to just above the NEB's borrowing limits. That company would have to wait for a Bill to go through Parliament for the borrowing limits to be raised before it could take a simple and normal action of that kind.
  The Bill is absurdly bureaucratic and for that reason I am suspicious about the Government's intentions in bringing it forward. It is not the compromise measure that it appears to be. It is a way of slowly strangling the NEB and making it ineffective. The future of the NEB should be discussed in Parliament following its annual report and accounts. There should be an annual debate on its activities, with the possibility of raising such matters as the borrowing limits whenever necessary.
  That is all that is needed by way of Parliament's jurisdiction over the NEB. The Bill will clip its powers and those of its chairman in such a way that the NEB will slowly die. It will die at a time when it is extremely important for it to live. Many hon. Members have said during the debate that the NEB has played an important role in the economy though in a more limited way than I should have liked to see. It does what the Government are supposed to be committed to doing, namely, helping small firms. I understand that when Cabinet members attended their first meeting they were supposed to have emblazoned on their hearts "Small is beautiful". Many members of the Cabinet were formerly associated with the largest companies in the country rather than the smallest.
  Every Government action makes it more difficult for small companies to operate. Taking away an important source of funds for small and unusual

  333
  companies in this manner is a dangerous course of action at a time when we need to support our industries in order to supply the jobs.
  The NEB has not only worked in that area but has been active in areas such as medical technology, computers and developing the microchip. Those are areas in which our competitors are moving quickly ahead. The Financial Times today contains a supplement dealing with Japanese industry. It lists medical technology, computer technology and aeronautics as areas in which Japan is able to move ahead quickly and in which the Japanese Government are prepared to invest money.
  At a time when we could move ahead and use our skills, the Government want to starve such companies of funds and ensure that we fall behind in development and rely on imported technology from America, Japan and West Germany.
  That is why my right hon. and hon. Friends and I will vote against the Bill. It is designed to destroy slowly the NEB and to wreck its ability to help small firms as we move into recession and when we desperately need to ensure that jobs are provided.
  8.44 pm
  Mr. Allan Stewart: The Bill contains proposals to revise the legislative framework in which the Scottish Development Agency undertakes direct industrial investment. The result of the Agency's activities so far suggests the need for a new framework. To put it mildly, the results have not been such as would in the private sector encourage shareholders to indulge in riotous celebrations.
  It has been argued that the Agency is accident prone. Certainly there have been one or two individual and unfortunate episodes. Perhaps the best-known incident was that of a fish processing company which found itself in difficulties as a result of a scarcity of fish. The Scottish Development Agency set up a new venture, doubtless with the latest and most sophisticated management techniques. There was extensive and comprehensive consultation with all concerned except, apparently, the fish. There was a scarcity of fish before, and the fish were not terribly impressed with the need to co-operate with the new
  334
  dynamic State entrepreneurship designed to regenerate Scottish economy. Another £3 million of taxpayers' money was wasted.
  More generally, the Agency has been required to work towards a minimum average historic cost-based rate of return on assets of 15 per cent. by 1981. Progress so far may be described as limited. The return last year was minus 14·3 per cent. All six subsidiary companies of the Agency made a loss. One company went into receivership. Let us hope that the new framework, with the emphasis on working towards disposal, will lead to improvements.
  I mention one general reservation about the work of institutions such as the Board and the Agencies. I refer to the effect which providing assistance to a company has on its competitors. That is often overlooked. Some hon. Members may think that that is purely theoretical, but it is a practical issue that is of great importance in my constituency.
  On the borders of East Renfrewshire and West Renfrewshire there is the major Talbot car plant, which has recently announced redundancies. It competes with British Leyland. There is a major carpet manufacturer in my constituency, and the Scottish Development Agency has helped one of its competitors, British Carpets Ltd. I have a tanning company in my constituency, and the Minister will know of the strong representations that were made and the legal action that was taken by the tanning industry over the Board's involvement with British Tanners Products. I hope that in future the effect of intervention and assistance by the Agency and the Board on competitor companies will be borne in mind more than has been the case in the past.
  I turn briefly to clause 4, which prevents a Secretary of State from raising the financial limits of the Agency. The Scottish Development Agency has been something of a Labour virility symbol in Scotland. In the dying days of the previous Administration its potential budget was increased to £800 million. Doubtless that was extremely helpful to Labour candidates during the general election. In answer to questions such as "What are you going

  335
  to do about investment, comrade?" prospective Labour candidates could say "We have allocated up to £800 million to the Agency."
  However, that bore no relation to reality. The Agency has now spent not much over £100 million. The present ceiling would still allow it to spend five times as much in the second five years of its existence as in the first five years. The present rate of spending would take it into the next century. The industrial investment role, which by any criterion has not been much of a success, has been extremely limited. The Agency has spent only £20 million.
  The Bill redefines the framework of the Agency of selective assistance and of regional development grants but it does not concern itself with the interaction between the various forms of Government assistance. I hope that on a practical level the Government will take the opportunity to consider that interaction.
  In the SDA's recently published report it is stated that West of Scotland Weatherproofs has gone into receivership. The circumstances surrounding its original move to an SDA factory were investigated by the Parliamentary Commissioner for Administration. Major efforts have been made by the hon. Member for Glasgow, Maryhill (Mr. Craigen) and others to help the company. The key point is that various Government Departments were involved and there were major delays. The managing director, who is a constituent of mine, expected to be able to move into his new factory in September 1973 but he did not move in until October 1974. It is fair to say that the company never recovered from the high costs incurred because of the delays. I hope the Government will look again at the facts of that case and at the practical operation of the various types of assistance to industry.
  I finish on a positive note. No doubt the investment role of the Agency will change following the enactment of the Bill. I hope that the Agency will learn from the experience of the Welsh Development Agency, which, as I understand it, has successfully guaranteed loans from the private sector. There has not been a great deal of this kind of action in Scotland. The direct investment area is bound to be small, but within the financial frame-
  336
  work laid down by the Bill there may be new ways in which the Agency can develop on the basis of its strength so far.
  It is disappointing that the proposals for urban development corporations have been limited to south of the border. There may be potential for this kind of approach in Scotland, utilising the undoubted expertise of the Agency and applying the experience of new towns to the inner city problems of Glasgow. I hope that the Agency will now concentrate on those aspects of its role which it is universally agreed have been successful. I refer particularly to factory building, environmental work and the encouragement of inward investment. These functions which have been successful should be further improved and developed, and the Bill provides the opportunity for doing just that.
  8.53 pm
  Mr. Dafydd Wigley: I am glad to catch your eye, Mr. Speaker, not so much to put the point of view of my party—although obviously I shall do that—but because of the major impact that the Bill will have on Wales. I appear to be the only Welsh Member speaking in the debate.
  I intervene with some sadness. As one who was a member of the Standing Committee on the Industry Bill 1975 and the Welsh Development Agency Bill 1975, I regret any dilution of the work of that body and of the National Enterprise Board. I am also sad because I feel that the Industry Act 1972 is being diluted. As one who was in industry before coming to the House, I believe that the 1972 Act is particularly worth while and I would not like to see its powers being eroded. It is one of the better industry measures that have been passed by either Government.
  I fear that we are seeing yet another step in the active withdrawal from regional policy. I say "another step" deliberately because this follows the step taken in 1976 when the regional employment premium was withdrawn by a Labour Government. So the Labour Party does not have entirely clean hands either, but Labour did it under certain pressure from the IMF whereas I suspect the Conservatives are doing it from pleasure.

  337
  Last week we heard of a number of cutbacks that will affect Wales severely. There will be a 25 per cent. cutback in public expenditure on industry, trade and employment in Wales, That will mean a loss of £16 million at a critical time. There will also be a loss of £11 million on road building, which is extremely important for industrial development. I have companies in my constituency which, having suffered job losses as a result of REP withdrawal, now face further setbacks. I have in mind particularly a manufacturing company which probably will not go forward with an investment plan for my constituency because of a change in the regional grants formula. This change of status has a direct effect on areas of high unemployment and it is something that we should deprecate.
  I do not pretend for a moment that the system of grants that exists under the 1972 and 1975 Industry Acts does everything to solve the problems of unemployment and depopulation. But, if we take these powers away, the situation can only get worse. We need more incentive, not less, and more intervention, not less. So far, it has not been opportune to judge these policies in their fullness.
  We have not seen these powers in action at a time of industrial expansion. We have seen them used at a time of depression, which is likely to continue for a further year or two according to what we have heard from the Government Benches. I would like to see the incentives in these Acts given an opportunity to work when there is an upswing in the economy, when we can really judge them.
  However, we need more than incentives. We need incentives together with the industrial infrastructure if we are to have a meaningful regional policy. We need roads, industrial parks, industrial services, training and education, which are necessary for the development of industry in the many areas where new jobs are greatly required. When we have the background of an upswing in the economy and the infrastructure is right, we shall be able to judge whether the incentives are working.
  What we have seen is that in the first cold wind that has bitten South-East England in the last year or two there
  338
  has been a withdrawal from regional policy. A fundamental question for the Secretary of State is one that he has not answered. Does he believe that free market forces can ensure job provision in development areas in Wales, Scotland and North-East England? If he believes that, he is arguing against all the experience of history, unless his solution is to transfer all young people from areas such as Wales to South-East England and for Wales to be repopulated by retiring people.
  If that is not the Secretary of State's belief, the question is whether the Government have a serious policy to reverse the regional imbalance and decline that we have seen. One thing is certain—greater private spending alone will not develop jobs in those areas. What it will do, as we have already seen, is to suck in imports from Japan and elsewhere. It will not solve the employment problems of areas such as Wales, Scotland and North-East England. Does the Secretary of State seriously believe that by weakening the Welsh Development Agency and the NEB, and by reducing the grant structure, he will find an answer to these problems?
  I want to refer very briefly to three matters in relation to the Bill. The first is the disastrous effect of the July announcement about changes in the development status on my area. The status of the Caernarvon and Dwyfor areas is to be changed from that of special development area to development area as from 1 August 1980, yet unemployment in Caernarvon has been between 10 per cent. and 15 per cent. It has been higher in winter and a little lower in summer because of tourism, but that is about the level of unemployment in that area. The unemployment level for men has been substantially and consistently higher in that area than in the Wrexham area, yet the Wrexham area was elevated from development area status to special development area status in the July announcement.
  What are the criteria for deciding which area is a special and which is an ordinary development area? We are told that unemployment is the criterion, but that is patently not so in North Wales. We may be told that the Wrexham area has been elevated because of the impending closure of Shotton steelworks, but I put it to the Minister that if that is so, and unemployment would consequently be expected to

  339
  increase, the same logic should have been applied in the Arfon area, where at Dinorwig we shall shortly be facing the ending of the construction of the electricity pumped storage scheme of the Central Electricity Generating Board, where there are 2,500 people working.
  Ninety per cent, of the hourly paid are from the county of Gwynedd, and when this comes to an end—the rundown will start in 1981—we will have an enormous unemployment problem in my area. Surely this must be a central criterion for deciding which areas are special development areas and which are development areas. We are looking not just at the present static position but at the well-known trends and the certainties—things such as the ending of employment in this scheme. That must be catered for in the decisions that are taken on industrial development incentives.
  The argument is that we are reducing Gwynedd from special development area status to development area status to save money. Regional grants paid to Gwynedd for 1978–79 totalled only £135,000. On that basis the total saving by these changes would be about £50,000 a year. This loss of a major incentive, at so low a cost, is just not acceptable.
  I ask the Government to give an assurance that they will reconsider the position in areas such as Gwynedd where obvious changes are taking place that will materially affect unemployment levels and probably push the figure up to about 20 per cent, if there is no intervention.
  Secondly, I refer briefly to the weaknesses I see in the changes that are to be made in the WDA and the NEB by the Bill. I object greatly to the limitation on share acquisition. One can see that there are mechanics for getting rid of the shares of profitable companies, so why restrict their acquisition? I object to the deletion of powers to help reorganise industry. The WDA has responsibilities for modernising industry, in clause 1(3). Certainly it ought to have powers to reorganise as well as to modernise, because the one and the other must go together.
  I am very concerned about the reduction in selective financial assistance, because this has great flexibility. From my previous experience, I know the value of the flexibility in selective financial
  340
  assistance, and I want an assurance that no development area or special development area in Wales will be worse off in competing with other assisted areas of Europe because of the changes to the Acts.
  We want to see economic planning, particularly at the time of the development of the microprocessor. We also want to see the restrictions on forming bodies corporate by the WDA lifted, and not pressed, as is proposed in the Bill.
  Finally, what are the present Government's strategies for the future? Where is the strategy to ensure that there will be jobs in the development areas? How shall we ensure the right training and the right education to meet the technological revolution? How shall we achieve greater investment when we see steps being taken to send investment overseas and the flight of capital to other areas? What will be the means of ensuring that greater private spending does not go straight into the multinationals and overseas but comes to provide jobs in our areas? How shall we ensure that a geographic balance is ensured over the coming years?
  In what we have heard today there is no glimmer of hope. From our experience, the free-for-all does not provide the answers. For that reason, I shall be voting against the Second Reading of the Bill.
  9.1 pm
  Mr. John Browne: When I look at the Bills which the Government are bringing before the House in the current Session, I am convinced of one thing: the Prime Minister is giving us a new deal. It is a new deal that is just as revolutionary, just as fundamental and will prove to be just as historic as the new deal given to the people of the United States of America by the late President Roosevelt. But whereas President Roosevelt's new deal was in a time of deep recession, this new deal is offered in a time of rampant inflation and of anti-enterprise. I believe, however, that it will be successful, that it will be grasped by industrialists, entrepreneurs and working people in this country, and that it will prove to be historic.
  The Bill is part of this new deal. I particularly welcome the fact that Government expenditure is being held, with the exception of clause 8. I particularly welcome the release under clause 1, and I

  341
  welcome clauses 7, 15 and 16. I believe that the Bill gives freedom for individuals running business. It is absolutely right to allow the private sector to do its correct job as part of the British team.
  With regard to Government expenditure, many opponents, on both sides of the House, of the present Government's policy of stabilisation of Government spending cite the writings and teachings of the great Lord Maynard Keynes, but I wonder whether it is really fair to do this, particularly today, in the last quarter of the twentieth century. Lord Keynes lived and wrote at a time of enterprise and of acute industrial depression. Today we live in a time of rampant inflation, inflation that is more serious than recession, and the spirit of enterprise has become anti-enterprise. I believe that if Lord Keynes were asked today, he would endorse the present Government's plans—plans which do not aim at cutting investment in British industry. On the contrary, the Government's aim is to increase investment, but investment by the private sector, the people whose professional skills fit them for this job. They are people who, unlike the Government, are professional investors, who know how to look for viable long-term projects.
  With regard to the availability of finance, perhaps I may say as an international banker that to my certain knowledge there are vast sums of money in Britain and abroad just fighting for good investment opportunities, trampling over themselves down the yield curve looking for opportunities in which to invest. Let us just take the Eurodollar market itself—just dollars, net dollars. A total of 420,000 million dollars is available for investment. The problem is not lack of funds but lack of viable investment opportunities, where the risks are matched by the returns.
  We must present viable projects to our investors, including trade union pension funds, all over the world. We shall then encounter little difficulty. It has been said that people will pay less when they have not taken the risks in the enterprises now being offered to the public. In fact, of course, this lower risk will be reflected in the price of the shares offered. A viable company gets it capital with much less dilution than does a company in trouble.
  342
  The prime duties of the Government are the provision of defence, the maintenance of law and order and the maintenance of a sound currency. They muse also provide encouragement for vibrant economic enterprise where investment, good management and good work are rewarded. The Government must now, in the twentieth century, also provide sound social welfare for the needy.
  These duties have been almost totally neglected and Governments have been tempted to interfere with, and to control, business investment. They have interfered beyond their duty where they had little or no skill. Private sector investors should be encouraged, therefore, to evaluate new projects and managers must be allowed to practise in an atmosphere which encourages good management. Working people must be encouraged to work for real wages and for real job satisfaction. If we achieve that, we shall create an environment in which jobs are truly protected because we shall satisfy customers all over the world who will long to buy our goods even though we may have an inflated currency. The satisfied customer is the true, long-term protector of our jobs.
  This Bill will reduce politically motivated investment which is often undertaken merely to protect jobs without looking to the future to see whether those jobs are profitable and how long they will be protected. It will give opportunities to those with skills to co-operate in joint enterprise, which alone can raise our real living standards.
  The Bill is part of a new deal. Let us not fail to grasp this opportunity. Most importantly, let it never be said that we in this House, through lack of foresight and willingness to change with the times, prevented the people of our country from seizing a great opportunity.
  9.8 pm
  Mr. D. N. Campbell-Savours: It seems, Mr. Sneaker, that I have two minutes to present the case for the Northern region. That is shocking, because I have sat here for four hours. I feel strongly, because it was the intention of the House, only a matter of days ago, to set up a system whereby hon. Members could speak for only 10 minutes at this time of night. It is deplorable that I should be deprived of my right

  343
  to speak. I have been deprived of that right not only by hon. Members on the Government Benches but equally by hon. Members on the Opposition Benches.
  I agreed to speak in this debate, and it is unfortunate that in 30 seconds I must sit down. Perhaps, Mr. Speaker, you would care to comment on my strictures.
  Mr. Speaker: I accept the hon. Member's invitation. Mr. Deputy Speaker made an appeal for voluntary 10-minute speeches. Immediately following that appeal there was a speech lasting 19 minutes. The next speech lasted 17 minutes, the next 16 minutes, the next 13 minutes and the next 15 minutes. Clearly, the voluntary 10-minute rule does not work. I shall be obliged, in the interests of the House, to use the discretion for compulsory 10-minute speeches which the House vested in me last week.
  9.10 pm
  Mr. Eric G. Varley: In his maiden speech, my hon. Friend the Member for Leigh (Mr. Cunliffe) paid a generous tribute to his predecessor, Mr. Harold Boardman, who was a Member of the House for 34 years. We all remember him with affection and for his kindness and quiet diplomacy.
  My hon. Friend the Member for Leigh is a welcome addition to the House on two counts. First, he is another powerful Labour voice from the North-West. Secondly, he is, like me, a member of the miners' group. His speech illustrated the devastating impact that Government policies will have on his constituency. The people of Leigh are fortunate to have my hon. Friend to fight their cause.
  I must comment on the Secretary of State's extraordinary performance. He spent 42 minutes explaining the Bill without mentioning any of the NEB's major subsidiaries. He mentioned neither British Leyland nor Rolls-Royce. I can imagine the protests had a Labour Minister made a speech on an Industry Bill without mentioning BL or Rolls-Royce. No Conservative Member has mentioned those companies. I hope that the Secretary of State will come to the House soon to explain exactly how he intends to support BL.
  In the six months since the Government have held office, their priorities have
  344
  become increasingly clear. Those priorities are so well known that the Paymaster General has to use all his influence with the obedient Tory press to try to change the people's attitude towards the Government. No planted stories or articles in the Daily Mail, The Daily Telegraph or The Sun can change the reality. This Government's objectives are to add to the wealth of those who are already wealthy, at the expense of the poor and unemployed.
  This miserable Bill is remarkable even when one applies Tory standards. The legislation is designed deliberately to maintain an increase in unemployment. It does that in two ways. First, it does it by meddling in the positive work of the NEB. Secondly, it does it by deliberately reducing incentives for job creation in high unemployment areas in England, Scotland and Wales.
  Not only it is a miserable Bill which promotes unemployment, but it is a strange Bill, as the hon. Member for Bury St. Edmunds (Mr. Griffiths) said in an intervention. The Bill does peculiar things for reasons which are not adequately explained. For example, it sweeps away the register of interests of members of the board of British Shipbuilders and the NEB but, curiously, not of members of the British Aerospace board. When the Industry Bill was going through Parliament in 1975, we were under strong pressure from the official Tory Opposition to include a register of members' interests.
  The Secretary of State said today that this was of no significance. The right hon. Member for Bridgwater (Mr. King), who is now the Minister for Local Government and Environmental Services, was passionate about what he called the answerability of members of the NEB. Tonight he, with other Tories, will troop into the Lobby to overturn something which he demanded on behalf of the official Opposition.
  A theme of the Tory Party has been the need to reduce Government interference in the operation of State boards. The Tory manifesto was explicit about that and said that the Conservative Party would interfere less with management. However, in the very first Bill dealing with a State body the Government have decided to impose their own chief executive on the

  345
  board. In clause 5 the Government substitute their commercial judgment for that of the board.
  I understand doctrinaire Tories insisting that the NEB should be abolished. Indeed, for a brief period the abolition of the NEB was the policy of the Tory Party, as the hon. Member for Wolverhampton, South-West (Mr. Budgen) pointed out. I remember when the right hon. Gentleman who is now the Secretary of State for the Environment said:
  "I tell the House, on behalf of the Conservative Party that we shall repeal this Bill."—[Official Report, 17 February 1975; Vol. 886, c. 965.]
  "The Right Approach" declared in 1976 that the NEB should be abolished. That is wrong-headed, but at least it is consistent. Tory policy may have been violated because the NEB has been kept in existence, but at the same time it is being hampered and harried. It will be obstructed from carrying out not only the task that the Labour Government set it but whatever job the Tories are keeping it in existence for.
  We are told that the Prime Minister's most damaging adjective of condemnation is the word "wet". By her standards, the Secretary of State for Industry must be soaking wet. What a sad disappointment the right hon. Gentleman must be to her as she looks back to the days when he was her monetarist Rasputin.
  There has been no denationalisation of the Post Office, although there has been petty meddling with its manufacturing powers. There has been no denationalisation of British Aerospace, although there is a half-baked scheme to sell off some shares. Subsidies for British Shipbuilders have been given, although not enough to ensure success.
  It is no wonder that the hon. Member for Knutsford (Mr. Bruce-Gardyne) has refused to serve in this sopping wet Government. Nor is it any wonder that he has declared that he will not vote for the Bill and will abstain. In 1972 the hon. Gentleman kept the House up on a Friday night, during a debate on a previous Industry Bill. In that undertaking he was supported by the right hon.
  346
  Member for Oswestry (Mr. Biffen). It is no wonder that the Chief Secretary—whom we all congratulate—has had to seek solace in matrimony.
  The policy of the Secretary of State for Industry on the NEB is unsatisfactory by Tory standards. [AN HON. MEMBER: "Certainly."] The hon. Gentleman who said "Certainly" is with the hon. Member for Knutsford. Is there any advance on two? I assume that the hon. Gentleman will be abstaining with his hon. Friend. The Secretary of State's policy is unsatisfactory by Tory standards and by those of the hon. Member for Knutsford. The Bill does not make that policy any more palatable to the Opposition.
  Mr. Bruce-Gardyne: The right hon. Gentleman referred to my explanation of why I did not feel that I could support the Bill tonight. It ill becomes him to try to take satisfaction from that because when he was Secretary of State for Industry he perpetrated, at least twice, precisely the same evasion of parliamentary responsibility as I am objecting to now.
  Mr. Varley: I did not do anything different from what the right hon. Gentleman has done. I operated with the statutes passed by the House. I recall the 1972 Bill going through the House. On Second Reading—again I was replying for the Opposition—I said that an incoming Labour Government would use that Bill to good effect—and we did.
  The fact that the hon. Member for Knutsford finds the Bill unsatisfactory and cannot support it makes it no more palatable for the Opposition. We gave the NEB the job of trying to assist small companies in the regions, and it made some useful investments which helped companies in difficulties in areas of high unemployment.
  Under this Bill the NEB will no longer have the freedom to get on with that job. Neither will it have the finance. The small businesses that used to get assistance from the NEB, because orthodox City financiers turned them down, realise that they can expect little from the NEB under these new Tory restrictions. I predict that the flow of applicants will thin to a trickle, and I suspect that that is what the Secretary of State wants. That may be good news for several Tory

  347
  Members, but it is extremely bad news for the workers which those companies would have employed.
  We gave the NEB the job of promoting new ventures in high technology. Even the right hon. Gentleman, when he made his statement in July and again this afternoon—though it was not so fulsome today—acknowledged that the NEB had some expertise in this area. Sir Leslie Murphy, in his chairman's statement last year, wisely said:
  'If we stand aside in this country and allow market forces alone to operate we shall be overtaken and displaced by those of our competitors who have learned the skills of forcing the pace of development and seizing market opportunity … Our activities in the field of computers and micro-electronics provide an excellent example of what I am saying. The evidence was that, left to itself, the private sector would not have secured an adequate place for the United Kingdom in this major technical and industrial revolution."
  We have had no assurance from the Secretary of State about the future of Inmos, for which no doubt Tory Members are still pressing their constituency claims. When we were in office, we had dozens of letters from Tory Members saying "Inmos is a very good thing. Will you see to it that it is located in my constituency?" I should think that the Department of Industry is getting similar letters now.
  The forced sale of the NEB's shares in profitable companies, such as Ferranti and ICL, will not only starve the NEB of funds for investment but will expose these companies to the worst practices of City speculators. It is ironic that the management of Ferranti should have asked for the assistance of its shop stewards and trade union representatives in pleading with the Government to prevent an immediate sell-out of the NEB's shareholding en bloc because it is afraid of those who will buy into the company. I should think that the Secretary of State has had representations from Ferranti to the effect "Please do not do it in the way you suggest." It is scandalous that assets created by the taxpayer should be turned into the pickings of City speculators.
  The Secretary of State gave the impression that the NEB will be allowed to take its time. The right hon. Gentleman knows that is not true, because in July he said that it had to contribute £100 million in the current financial year. The
  348
  NEB has until the end of March to make that contribution. Is that the way to have forced sales? Even accepting that the Government are right and can probably get the legislation through the House, is it right that the NEB should be forced to take this action? What sort of prices will it get under that kind of threat? It is no wonder that Mr. Alun Jones, the chief executive of Ferranti, said that
  "If the shares are sold en bloc we would lose our independent identity as a company."
  That is apparently what the Secretary of State wants. It will be forced to sell at a time when every objective financial adviser regards it as wrong.
  The Prime Minister and the Secretary of State for Industry are constantly sermonising about the fact that the Government have no money of their own and that public money is taxpayers' money. That is absolutely right, and they should also remember that it was the taxpayers who made possible the existence and prosperity of ICL. Why is the right hon. Gentleman robbing the taxpayers of their rightful return on the £40 million investment made on their behalf by Mr. Christopher Chataway when he was a Tory Minister? Why is that return being handed over to people who have previously showed no interest in ICL?
  Taxpayers' money made possible the survival and prosperity of Ferranti, and the right hon. Gentleman is robbing the taxpayers of their rightful return on that investment. The workers in Ferranti are fearful that their company will come under the control of outside interests, who will carve it up and strip its assets. What is the right hon. Gentleman doing to prevent that?
  I know that the right hon. Gentleman is tired and does not get much sleep, but I shall immediately give way to him if he will tell us what he is proposing to do about forced sales. He obviously does not want to do so because he knows that I am right. To force companies to sell and to give them a deadline of 1 March is the worst possible way to dispose of public assets.
  When the Labour Government rescued Ferranti, the present Secretary of State for the Environment queried whether profitability could be achieved and whether the unions would help. The work force helped, the company became profitable,

  349
  and now the Government want to fling it to the speculators—and the same applies to Fairey Holdings and Brown Boveri.
  ICL was rescued by the State and is now a major international computer manufacturer which is paying solid dividends to the NEB and the taxpayer. Fairey Holdings was bankrupt under private ownership. It was taken over by the NEB at the request of the management and workers, and it is now secure and increasingly profitable. Ferranti capsized under private ownership. It was rescued by the Labour Government four years ago, and is now buoyant and profitable.
  The Secretary of State for Industry has not told us what he is up to. The House will remember the synthetic fury of the Tory Party when our Industry Bill came before the House last January. The Opposition moved an amendment deploring the presentation of our Bill on what they described as totally inadequate documentary evidence on the performance and prospects of the NEB. The right hon. Gentleman, however, has brought this Bill before the House, radically altering the functions of the NEB, without a single scrap of paper for the House to study. Memories are short, but after the fulminations that we had at that time, last January, from the right hon. Gentleman, he is in need of urgent treatment for amnesia. Looking at him, I would think that he could do with a good night's sleep.
  The Tory Party also made a tremendous fuss about the rate of return to be set for the NEB. That went on right from the time that the right hon. Member for Henley (Mr. Heseltine) said in 1975:
  "We simply do not believe that the NEB will earn an adequate return."—[Official Report, Standing Committee E, 13 March 1975; c. 184.]
  Under the Labour Government, the NEB was well on its way to reaching its financial target of a return of between 15 per cent, and 20 per cent, by 1981. The return last year was 11·3 per cent. Under this Government, that is impossible because the NEB does not know what the rate of return is supposed to be.
  I do not doubt that the NEB has asked the Secretary of State if he will
  350
  impose a rate of return. This afternoon the Secretary of State said that he is thinking about the matter—he does not know. Of course, the NEB will refuse to sell any of its enterprises until it knows the rate of return that will be set by the Secretary of State. If the Secretary of State strips the NEB of its profitable assets there is no way in which it can achieve the rate of return that was set for it by the Labour Government.
  It is even more deplorable, coming from this Government, who occasionally have the arrogance to proclaim that they have all the financial wisdom in the country, that the statement in their manifesto on page 15 promises:
  "We want to see those industries that remain nationalised running more successfully and we will therefore interfere less with their management and set them a clearer financial discipline in which to work."
  Of course, the Secretary of State has set no financial discipline because he does not know what it is.
  It is becoming increasingly difficult for companies in the public and private sectors to achieve a satisfactory rate of return. Sky-high interest rates are depressing investment. The dark picture that was painted last June by the Financial Secretary to the Treasury in the Financial Statement and Budget Report is becoming still darker. The House will recall that the Financial Secretary admitted that, under the Labour Government, total investment in manufacturing rose by about 9 per cent, last year. The House will also recall that, despite the alleged massive incentives that there were going to be in the Budget—the rolling back of the frontiers of the State—the Financial Secretary forecast that economic activity would decline, that domestic demand would be weak as a result of the Budget, and that there would be a fall in the level of output.
  Since then, the position has become markedly worse. Yesterday, the Financial Times survey of business opinion was published. The recent report of the CBI showed that companies are cutting back further on industrial investment. The Financial Times survey referred to the confidence about the prospects for business falling further last month to the lowest point for three years. A few days ago the Financial Weekly announced the appointment of a new executive partner

  351
  in charge of insolvency at the top accountants, Peat, Marwick and Mitchell. It said:
  "Britain's experts in liquidations, receiverships and bankruptcies are predicting a grim increase in their business this winter. … Peat, Marwick, Mitchell is not the only accountancy firm getting itself geared up. … Jan Bond, senior insolvency partner at Deloitte, Haskins and Sells said: '… we are preparing ourselves for a bit of a boom.' John Gillies, senior manager of the national insolvency office at Ernst and Whinney, said: 'We already have a very large insolvency staff … we are looking to strengthen it.' There would be 'a further increase in the number of insolvencies' because of the 'general economic condition'."
  Insolvency is the biggest growth industry in the country. It is the biggest industry that we shall have under this Government in their first few years of office. However, this is the time when the Government decide to lift all exchange control restrictions and allow the outflow of investment funds, such as they are. This is the time when the Chief Secretary announces expenditure cuts which, on his own admission, will increase unemployment by 300,000. This is the time when the Secretary of State brings forward a Bill which will cripple the NEB and reduce regional incentives when they are needed more than ever.
  The Bill is not only a measure that will damage industry and employment; it is a confidence trick. All the sales of solid public assets which the Secretary of State is enforcing will not produce a pennyworth of extra industrial investment. They will not increase profitability by a penny piece. They will not reduce by a single man or woman the queues of unemployed which the staff of Saatchi & Saatchi used to impersonate.
  In six months the Secretary of State for Industry has abandoned his own policies and has found nothing to replace them. In Opposition, he proclaimed that he had all the solutions, yet in Government he does not even know what questions to ask. How can he solve the problems when he shows no sign of understanding what they are—the problems of regional disparity, stimulating investment and bringing new jobs and homes to some of the hard-pressed areas of the country? The Bill offers no solutions. Instead, it makes the real problems harder to solve. That is why we shall vote against it tonight.
  9.35 pm
  The Minister of State, Department of Industry (Mr. Adam Butler): We have had a variety of speakers and speeches. The House will form its own judgment, but I should like to add my tribute to the hon. Member for Leigh (Mr. Cunliffe) on his maiden speech. I have some sympathy with the hon. Gentleman, because he said that his main interests were textiles and mining. The same can be said of my constituency of Bosworth. The hon. Gentleman's experience is in mining, and mine is in textiles, so perhaps in future we shall have some exchanges across the Floor.
  The debate has ranged across the spectrum of politics. My hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) will not mind if I describe him as being somewhere near the Right wing. He made an important point about parliamentary scrutiny of the expenditure of money. We shall have regard to that. However, when he said that he hated all Industry Bills and that this was the best of the bunch, I felt that that was high praise.
  Some good sense has been spoken and some genuine feeling has been expressed about the problems of the regions. I sympathise with the hon. Member for Workington (Mr. Campbell-Savours) in the short time he had to express his views. The most intriguing thing for Conservative Members has been to try to spot the supporters of the right hon. Member for Bristol, South-East (Mr. Benn), and, indeed, the contenders for the title or those who aspire to the label "social democrat". On the contributions to this debate, we judge that Bristol has won by six goals to one.
  The speech of the right hon. Member for Chesterfield (Mr. Varley) was more miserable than any of the other contributions from Labour Members, which were quite ridiculously and exaggeratedly gloomy. We have taken a lot from the right hon. Member in the past, but I do not see how he can reconcile his accusations that apparently we are sopping wet and at the same time deliberately designing to increase unemployment. That is not an accusation that I can stand for. To set out deliberately to create unemployment requires a callousness that I hope is not to be found in this House. What the right hon. Gentleman forgets is that

  353
  as Secretary of State for Industry he presided over the most massive increase in unemployment. He referred to the queues which Saatchi & Saatchi portrayed at the time of the election. They were the queues that the Labour Government had created.
  Most of the debate has revolved around the National Enterprise Board, but I should first like to say something about the English Industrial Estates Corporation. This was particularly welcomed by my hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott), who at least has the benefit of knowing what he is talking about. He referred to the need for small factories in his area as well as for the encouragement of trading estates. He said that that was something for which the Bill provided. He asked several particular questions, and perhaps I can reply by letter because there are many other matters with which I must deal.
  Our policies for the Corporation are typical of the Bill as a whole and of our industrial policy as a whole. This is a way of involving the private sector in the activities of the Corporation, giving the opportunity to tenants to buy their factories and to increase the activity of the Corporation because of the involvement of private sector money. I hope that this will be welcomed. I judge by the absence of criticism from the Opposition Benches of that part of the Bill that that is the case.
  My right hon. Friend the Secretary of State made a statement on regional policy in July. There was some debate at that time. There has been further discussion of the policy from time to time in the House. I do not propose to dwell on the matter for any length of time, although a question was asked about how special development areas could be made more attractive through the present policy. It must be apparent that if one is concentrating aid on a particular area, and the rate of grant remains the same and the concentration exists, that area becomes relatively more attractive.
  The hon. Member for Caernarvon (Mr. Wigley), who appears to have left the Chamber for a moment, attacked the Bill for reducing heavily the regional aid available to Wales. Exaggeration does not pay in presenting an argument. The House will be aware that the reduction
  354
  in the size of population covered by the policy changes in Wales, to be phased in over two years, will reduce the proportion of population covered from 100 per cent, to 94 per cent. That will concentrate the aid where it is most needed.
  The right hon. Member for Deptford (Mr. Silkin) and other hon. Members raised the question of the powers of the Secretary of State. These powers are very similar to those found in other Bills. It is not surprising that if one reduces the financial role of the NEB and thereby the limits of money that one would expect to spend, it is to be expected that one reduces the levels which require the Secretary of State's approval. This may be an increase in the Secretary of State's power, but, at least, he is responsible to Parliament and can answer questions in the House on the expenditure of taxpayers' money. The National Enterprise Board cannot answer questions in the House.
  An important but seemingly technical matter was raised in relation to the power of direction under clause 2 and the possible effect on private companies and partners of the NEB. This is an extension of the existing power under section 7 of the Industry Act 1975 and subject to the same procedural requirements—for instance, prior consultation with the NEB or the Agencies, the laying of the direction before Parliament and its publication in the annual report of the Agencies.
  As a number of Members raised this matter, it may be helpful to inform them that the power to direct transfer of assets will not override private rights—for example, any limitation on share transfers contained in the articles of association of private companies in which the NEB or the Agencies hold shares. Nor will it override any existing agreement between the NEB or Agencies, or their subsidiaries, and companies, restricting the transfer of shares. But, subject to any direction to the contrary, the NEB or Agencies will be under an obligation to seek to renegotiate such agreements if they conflict with the provisions of clause 2. There is no reason for present private partners, or aspiring private partners, of the NEB to have any concern on this point. I hope that hon. Members' queries have been resolved.

  355
  I judge that there is general agreement on the need for the NEB to continue, at least for the time being, its high technology role, provided that it is both limiting and tapering as private sector participation grows. As my right hon. Friend the Secretary of State said, the climate has not been conducive to the provision of private sector money for high-risk projects.
  When we came to power, the NEB had that role and we judged that it would be sensible for it to continue with that role, but we require that it should dispose of its assets as soon as it is commercially sensible to do so.
  In saying that private money has not been available, I remind hon. Members, as did my hon. Friend the Member for Southampton, Test (Mr. Hill), whom we welcome back as a Member of the House, of the progress of Mullard in giving employment to thousands without the expenditure of a single penny of taxpayers' money. It can be done.
  Mr. Cordon Wilson: I have been listening with interest, but the Minister is not addressing himself to the problem that is materialising in Scotland. With closure after closure, the Scottish economy is facing collapse. If the Government propose to cut back expenditure of public money in industry in Scotland and, with high interest rates, prevent the private market from being able to supply money for industry, what solution will the Government produce for the Scottish economy except that which seems to be in prospect, namely, mass unemployment?
  Mr. Butler: I am not sure whether the hon. Gentleman was in the Chamber when we had an exchange on Scottish matters. If so, he will have heard what was said and the helpful intervention by my hon. Friend the Under-Secretary of State for Scotland. The hon. Gentleman should know that the Scottish Development Agency has more in its budget for this year than it spent last year. That is at least one answer to his question.
  I shall not have time to cover all the points raised in the debate, but I wish to deal with the question of disposals, on which there seems to be considerable confusion among Labour Members.
  356
  The right hon. Member for Chesterfield wondered why the benefit of improving a company's performance should not be felt by the taxpayer. If a company has been improved as the right hon. Gentleman described and there is evidence of growth and profits among NEB subsidiaries, the benefit of that improvement will be taken by the taxpayer when the asset is realised.
  Mr. Varley: It may be the hon. Gentleman's sincere ideological belief that those assets can be disposed of, though we deplore it, but by setting a deadline and requiring that the NEB must dispose of its assets—presumably ICL, Ferranti. Brown Boveri and Fairey—by the end of March, no manoeuvrability is allowed and the disposal of assets will become a forced sale. In those circumstances, the taxpayer will not get a benefit.
  Mr. Butler: The right hon. Gentleman would not appreciate the need to reduce Government expenditure and borrowing. He knows that our wish to meet that need is one of the reasons why we wish the assets to be disposed of. There is no reason why they should not realise a satisfactory market price. Another reason for disposal is that those assets would benefit from a return to the private sector.
  I paid special regard to the speeches of the right hon. Members for Deptford and Bristol, South-East and the self-confessed author of the National Enterprise Board, the hon. Member for Nottingham. Carlton. Here we begin to find exactly what is the alternative strategy. As far as one can establish, it is an extension of the recipe which failed before.
  When we look at the list—
  Mr. Stuart Holland: The Minister referred to the hon. Member for Nottingham, Carlton as co-author of the NEB proposals. I am not sure whether he got the constituency right. If he was referring to my arguments, perhaps he would care to reply to the case.
  Mr. Butler: I apologise to the hon. Member for Vauxhall (Mr. Holland). However, he delayed by 30 seconds or so my reply to his points.
  The solution to our problems would appear to be massive Government involvement and power to direct investment, and if the banks and financial

  357
  institutions are not prepared to direct that investment presumably they will be nationalised; a recipe of import controls; a demand to pull out of the EEC, which is the only hope for our high technology and capital-intensive industries; a need to give greater power to the trade unions; a greater reinforced National Enterprise Board, of course; and then the magic solution of the reintroduction of planning agreements.
  It is inconceivable to the Government how the Opposition could wish to bring back planning agreements. Those agreements were not opposed, as the hon. Member for Vauxhall reminded us, but were subject to negotiation. If the Labour Government had had a great rapport with industry through the strategy, we would have expected a mass of planning agreements to exist now.
  Mr. Campbell-Savours rose—
  Mr. Butler: I do not have time to give way.
  Only two planning agreements were signed. One was a shotgun marriage with Chrysler, which did not have any money. The other was with the National Coal Board. Both agreements lapsed. Yet that is the magic factor that the Opposition say will weld the plan together.
  Mr. Campbell-Savours rose—
  Mr. Butler: If the hon. Member for Workington does not wish to press his question, I shall not give way to anyone else.
  Mr. Speaker: Order. It seems that the Minister was giving way, but changed his mind.
  Mr. Campbell-Savours rose—
  Mr. Speaker: If the Minister does not give way, the hon. Gentleman must resume his seat.
  Mr. Butler: I gave the hon. Member for Workington the opportunity to put a question. He refused to do so.
  Apart from Government interference at all levels in the direction of investment, the policy of the Labour Party adds up to more, more and more money—the expenditure of taxpayers' money in every
  358
  conceivable direction. That overspending, overborrowing and overtaxing brought the country to the state in which the Conservatives found it when they returned to power.
  The Government's industrial policy, some of which is presented in the Bill, is designed to produce a stronger and wider industrial base against the day when North Sea oil runs out. It is we who are concerned with the creation of wealth. Too often—it was apparent from today's speeches—Labour Members are obsessed solely with its distribution, whether it is for education, social service, industrial investment or anything else. Until they learn the simple lesson that wealth has to be created before it can be distributed, they will not make a contribution to bringing this country back to where it ought to belong.
  That wealth will come from the efforts, skills and inventiveness of those who work in industry. [Interruption.] The right hon. Member for Bristol, South-East might well listen to what I have to say. Wealth creation comes from those who work in industry, but it also comes from those who are prepared to put their money behind the skills and efforts of the people in industry. It is, or should be, a partnership of capital and labour in its widest sense.
  Our approach is through incentive—a word that Labour Members do not like—and we have taken steps in that direction through reduction in personal income tax at all levels. It is through freedom from unnecessary Government controls and interference. It is through the encouragement of responsibility, which flows from freedom—the encouragement of responsibility on the part of both management and workers. We need a balance within industry between the forces which operate there. That, in essence, is the Conservative policy, which will bring wealth and prosperity back to this country.
  The Bill represents a major step forward in implementing the Government's industrial policy. In it we are hacking back the jungle of Socialism which has so encroached upon our industrial economy in recent years, stifled prosperity and held back success. The Government were

  359
  elected because people wanted less and not more nationalisation. We were elected because people wanted less taxation and because they did not want their earnings, their savings, their pension funds, to be directed by Labour's national executive into schemes dreamt up by the right hon. Member for Bristol, South-East. Most people share our view that management is best left to the managers and that industry is better off in the hands of industrialists and not in the hands of the Government.
  The curse of Socialism is that it breeds the attitudes and practice of dictatorship, whatever Labour Members may say. They would tell the manufacturer what to produce. They would tell the manufacturer what wages he should pay and what prices he should charge. They would tie his
  hands with planning agreements and other forms of red tape. They would deny to the consumer the choice of what he should buy and of how he should spend his own money, or what is left of it. The Government reject all those things.
  The Bill will lessen the role of the State and its agencies and cut back the public sector. It will reduce the demands of the Government on the taxpayer. It will ensure the more efficient use of resources in the areas of greatest need. Above all, it will promote free enterprise and make for a healthier economy. I therefore commend it to the House.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 307, Noes 250.

  Division No. 94]

  AYES

  [10.00 pm

  Adley, Robert

  Clarke, Kenneth (Rushcliffe)

  Gow, Ian

  Altken, Jonathan

  Clegg, Walter

  Gower, Sir Raymond

  Alexander, Richard

  Cockeram, Eric

  Grant, Anthony (Harrow C)

  Amery, Rt Hon Julian

  Colvin, Michael

  Gray, Hamish

  Ancram, Michael

  Cope, John

  Greenway, Harry

  Arnold, Tom

  Cormack, Patrick

  Grieve, Percy

  Aspinwall, Jack

  Corrie, John

  Griffiths, Eldon (Bury St Edmunds)

  Atkins, Robert (Preston North)

  Costain, A. P.

  Griffiths, Peter (Portsmouth N)

  Atkinson, David (Bournemouth, East)

  Cranborne, Viscount

  Grist, Ian

  Baker, Kenneth (St. Marylebone)

  Critchley, Julian

  Grylls, Michael

  Baker, Nicholas (North Dorset)

  Crouch, David

  Gummer, John Selwyn

  Beaumont-Dark, Anthony

  Dean, Paul (North Somerset)

  Hamilton, Hon Archie (Eps'm&Ew'll)

  Bell, Ronald

  Dickens, Geoffrey

  Hamilton, Michael (Salisbury)

  Bendall, Vivian

  Dorrell, Stephen

  Hampson, Dr Keith

  Benyon, Thomas (Abingdon)

  Douglas-Hamilton, Lord James

  Hannam, John

  Benyon, W. (Buckingham)

  Dover, Denshore

  Haselhurst, Alan

  Best, Keith

  du Cann, Rt Hon Edward

  Hastings, Stephen

  Bevan, David Gilroy

  Dunn, Robert (Dartford)

  Havers, Rt Hon Sir Michael

  Biffen, Rt Hon John

  Durant, Tony

  Hawksley, Warren

  Blackburn, John

  Dykes, Hugh

  Hayhoe, Barney

  Blaker, Peter

  Eden, Rt Hon Sir John

  Heath, Rt Hon Edward

  Bonsor, Sir Nicholas

  Edwards, Rt Hon N. (Pembroke)

  Heddle, John

  Boscawen, Hon Robert

  Eggar, Timothy

  Henderson, Barry

  Bottomley, Peter (Woolwich West)

  Elliott, Sir William

  Heseltine, Rt Hon Michael

  Bowden, Andrew

  Emery, Peter

  Hicks, Robert

  Boyson, Dr Rhodes

  Eyre, Reginald

  Higgins, Rt Hon Terence L.

  Braine, Sir Bernard

  Falrbairn, Nicholas

  Hill, James

  Bright, Graham

  Fairgrieve, Russell

  Holland, Philip (Carlton)

  Brinton, Tim

  Faith, Mrs Sheila

  Hooson, Tom

  Brittan, Leon

  Farr, John

  Howe, Rt Hon Sir Geoffrey

  Brocklebank-Fowler, Christopher

  Fell, Anthony

  Howell, Rt Hon David (Guildford)

  Brooke, Hon Peter

  Fenner, Mrs Peggy

  Howell, Ralph (North Norfolk)

  Brotherton, Michael

  Finsberg, Geoffrey

  Hunt, David (Wirral)

  Brown, Michael (Brigg & Sc'thorpe)

  Fisher, Sir Nigel

  Hunt, John (Ravensbourne)

  Browne, John (Winchester)

  Fletcher, Alexander (Edinburgh N)

  Hurd, Hon Douglas

  Bryan, Sir Paul

  Fletcher-Cooke, Charles

  Irving, Charles (Cheltenham)

  Buchanan-Smith, Hon Alick

  Fookes, Miss Janet

  Jenkin, Rt Hon Patrick

  Buck, Antony

  Forman, Nigel

  Johnson Smith, Geoffrey

  Budgen, Nick

  Fowler, Rt Hon Norman

  Jopling, Rt Hon Michael

  Bulmer, Esmond

  Fox, Marcus

  Joseph, Rt Hon Sir Keith

  Burden, F. A.

  Fraser, Rt Hon H. (Stafford & St)

  Kaberry, Sir Donald

  Butcher, John

  Fraser, Peter (South Angus)

  Kimball, Marcus

  Butler, Hon Adam

  Fry, Peter

  King, Rt Hon Tom

  Cadbury, Jocelyn

  Galbraith, Hon T. G. D.

  Kitson, Sir Timothy

  Carlisle, John (Luton West)

  Gardiner, George (Reigate)

  Knight, Mrs Jill

  Carlisle, Kenneth (Lincoln)

  Gardner, Edward (South Fylde)

  Knox, David

  Carlisle, Rt Hon Mark (Runcorn)

  Garel-Jones, Tristan

  Lamont, Norman

  Channon, Paul

  Gilmour, Rt Hon Sir Ian

  Lang, Ian

  Chapman, Sydney

  Goodhew, Victor

  Langford-Holt, Sir John

  Clark, Hon Alan (Plymouth, Sutton)

  Goodlad, Alastair

  Lawrence Ivan

  Clark, William (Croydon South)

  Gorst, John

  Lawson, Nigel

  Lee, John

  Oppenheim, Rt Hon Mrs Sally

  Squire, Robin

  Lester, Jim (Beeston)

  Osborn, John

  Stanbrook, Ivor

  Lewis, Kenneth (Rutand)

  Page, John (Harrow, West)

  Stanley, John

  Lloyd, Ian (Havant & Waterloo)

  Page, Rt Hon R. Graham (Crosby)

  Steen, Anthony

  Lloyd, Peter (Fareham)

  Parkinson, Cecil

  Stevens, Martin

  Loveridge, John

  Parris, Matthew

  Stewart, Ian (Hitchin)

  Luce, Richard

  Patten, Christopher (Bath)

  Stewart, Allan (East Renfrewshire)

  Lyell, Nicholas

  Patten, John (Oxford)

  Stokes, John

  McAdden, Sir Stephen

  Pattie, Geoffrey

  Stradling Thomas, J.

  McCrindle, Robert

  Pawsey, James

  Tapsell, Peter

  Macfarlane, Neil

  Percival, Sir Ian

  Taylor, Robert (Croydon NW)

  MacGregor, John

  Peyton, Rt Hon John

  Tebbit, Norman

  MacKay, John (Argyll)

  Pink, R. Bonner

  Temple-Morris, Peter

  McNair-Wilson, Michael (Newbury)

  Pollock, Alexander

  Thatcher, Rt Hon Mrs Margaret

  McNair-Wilson, Patrick (New Forest)

  Porter, George

  Thomas, Rt Hon Peter (Hendon S)

  McQuarrie, Albert

  Powell, Rt Hon J. Enoch (S Down)

  Thompson, Donald

  Madel, David

  Prentice, Rt Hon Reg

  Thorne, Neil (Ilford South)

  Major, John

  Price, David (Eastleigh)

  Thornton, Malcolm

  Marland, Paul

  Prior, Rt Hon James

  Townend, John (Bridlington)

  Marlow, Tony

  Proctor, K. Harvey

  Townsend, Cyril D. (Bexleyheath)

  Marshall, Michael (Arundel)

  Pym, Rt Hon Francis

  Trippier, David

  Marten, Neil (Banbury)

  Raison, Timothy

  Trotter, Neville

  Mates, Michael

  Rathbone, Tim

  van Straubenzee, W. R.

  Mather, Carol

  Rees, peter (Dover and Deal)

  Vaughan, Dr Gerard

  Maude, Rt Hon Angus

  Rees-Davies, W. R.

  Viggers, Peter

  Mawby, Ray

  Renton, Tim

  Waddington, David

  Mawhinney, Dr Brian

  Rhodes James, Robert

  Wakeham, John

  Maxwell-Hyslop, Robin

  Ridley, Hon Nicholas

  Waldegrave, Hon. William

  Mayhew, Patrick

  Rifkind, Malcolm

  Walker, Rt Hon peter (Worcester)

  Mellor, David

  Rippon, Rt Hon Geoffrey

  Walker, Bill (Perth & E Perthshire)

  Meyer, Sir Anthony

  Roberts, Michael (Cardiff NW)

  Walker-Smith, Rt Hon Sir Derek

  Miller, Hal (Bromsgrove & Redditch)

  Roberts, Wyn (Conway)

  Wall, Patrick

  Mills, Iain (Meriden)

  Ross, Wm. (Londonderry)

  Waller, Gary

  Mills, Peter (West Devon)

  Rost, Peter

  Walters, Dennis

  Miscampbell, Norman

  Royle, Sir Anthony

  Ward, John

  Mitchell, David (Basingstoke)

  Sainsbury, Hon Timothy

  Watson, John

  Moate, Roger

  St. John-Stevas, Rt Hon Norman

  Wells, John (Maidstone)

  Molyneaux, James

  Scott, Nicholas

  Wells, Bowen (Hert'rd & Stev'nage)

  Monro, Hector

  Shaw, Giles (Pudsey)

  Wheeler, John

  Montgomery, Fergus

  Shaw, Michael (Scarborough)

  Whitney, Raymond

  Moore, John

  Shelton, William (Streatham)

  Wickenden Keith

  Morris, Michael (Northampton, Sth)

  Shepherd, Colin (Hereford)

  Wilkinson, john

  Morrison, Hon Charles (Devizes)

  Shepherd, Richard (Aldridge-Br'hills)

  Williams, Delwyn (Montgomery)

  Morrison, Hon Peter (City of Chester)

  Shersby, Michael

  Winterton, Nicholas

  Mudd, David

  Silvester, Fred

  Wolfson Mark

  Murphy, Christopher

  Sims, Roger

  Young, Sir George (Acton)

  Myles David

  Skeet T. H. H.

  Younger, Rt Hon George

  Neale, Gerrard

  Smith, Dudley (War. and Leam'ton)

  Needham, Richard

  Speed, Keith

  TELLERS FOR THE AYES:

  Nelson, Anthony

  Speller, Tony

  Neubert, Michael

  Spence, John

  Mr. Spencer Le Marchant and

  Newton, Tony

  Spicer, Michael (S Worcestershire)

  Mr. Anthony Berry.

  Nott, Rt Hon John

  Sproat, Iain

  NOES

  Abse, Leo

  Canavan, Dennis

  Dobson, Frank

  Adams, Allen

  Cant, R. B.

  Dormand, Jack

  Allaun, Frank

  Carmichael, Neil

  Douglas, Dick

  Alton, David

  Cartwright, John

  Douglas-Mann, Bruce

  Anderson, Donald

  Clark, David (South Shields)

  Dubs, Alfred

  Archer, Rt Hon Peter

  Cocks, Rt Hon Michael (Bristol S)

  Duffy, A. E. P.

  Armstrong, Rt Hon Ernest

  Cohen, Stanley

  Dunn, James A. (Liverpool, Kirkdale)

  Ashley, Rt Hon Jack

  Coleman, Donald

  Dunnett, Jack

  Ashton, Joe

  Concannon, Rt Hon J. D.

  Dunwoody, Mrs Gwyneth

  Barnett, Guy (Greenwich)

  Conlan, Bernard

  Eadie, Alex

  Barnett, Rt Hon Joel (Heywood)

  Cook, Robin F.

  Eastham, Ken

  Beith, A. J.

  Cowans, Harry

  Ellis, Raymond (NE Derbyshire)

  Benn, Rt Hon Anthony Wedgwood

  Craigen, J. M. (Glasgow, Maryhill)

  Ellis, Tom (Wrexham)

  Bennett, Andrew (Stockport N)

  Crowther, J. S.

  English, Michael

  Bidwell, Sydney

  Cryer, Bob

  Ennals, Rt Hon David

  Booth, Rt Hon Albert

  Cunliffe, Lawrence

  Evans, Ioan (Aberdare)

  Boothroyd, Miss Betty

  Cunningham, George (Islington S)

  Evans, John (Newton)

  Bottomley, Rt Hon Arthur (M'brough)

  Cunningham, Dr John (Whitehaven)

  Ewing, Harry

  Bradley, Tom

  Dalyell, Tam

  Field, Frank

  Bray, Dr Jeremy

  Davidson, Arthur

  Fitch, Alan

  Brown, Hugh D. (Provan)

  Davies, Rt Hon Denzil (Llanelli)

  Flannery, Martin

  Brown, Robert C. (Newcastle W)

  Davies, Ifor (Gower)

  Fletcher, L. R. (Ilkeston)

  Brown, Ronald W. (Hackney S)

  Davis, Clinton (Hackney Central)

  Fletcher, Ted (Darlington)

  Brown, Ron (Edinburgh, Leith)

  Davis, Terry (B'rm'ham, Stechford)

  Ford, Ben

  Buchan, Norman

  Deakins, Eric

  Forrester, John

  Callaghan, Rt Hon J. (Cardiff SE)

  Dean, Joseph (Leeds West)

  Foster, Derek

  Callaghan, Jim (Middleton & P)

  Dempsey, James

  Foulkes, George

  Campbell, Ian

  Dewar, Donald

  Fraser, John (Lambeth, Norwood)

  Campbell-Savours, Dale

  Dixon, Donald

  Freeson, Rt Hon Reginald

  362

  363

  Garrett, John (Norwich S)

  McKelvey, William

  Sandelson, Neville

  Garrett, W. E. (Wallsend)

  MacKenzie, Rt Hon Gregor

  Sever, John

  George, Bruce

  Maclennan, Robert

  Sheerman, Barry

  Gilbert, RI Hon Dr John

  McMillan, Tom (Glasgow, Central)

  Sheldon, Rt Hon Robert (A' ton-u-L)

  Ginsburg, David

  McNally, Thomas

  Shore, Rt Hon Peter (Step and Pop)

  Gourlay, Harry

  McNamara, Kevin

  Short, Mrs Renée

  Graham, Ted

  McWilliam, John

  Silkin, Rt Hon John (Deptford)

  Grant, George (Morpeth)

  Magee, Bryan

  Silkin, Rt Hon S.C. (Dulwich)

  Grant, John (Islington C)

  Marks, Kenneth

  Silverman, Julius

  Hamilton, James (Bothwell)

  Marshall, David (Gl'sgow, Shettles'n)

  Skinner, Dennis

  Hamilton, W. W. (Central Fife)

  Marshall, Dr Edmund (Goole)

  Smith, Cyril (Rochdale)

  Harrison, Rt Hon Walter

  Marshall, Jim (Leicester South)

  Snape, Peter

  Hart, Rt Hon Dame Judith

  Mason, Rt Hon Roy

  Soley, Clive

  Hattersley, Rt Hon Roy

  Maxton, John

  Spearing, Nigel

  Haynes, Frank

  Meacher, Michael

  Spriggs, Leslie

  Healey, Rt Hon Denis

  Mellish, Rt Hon Robert

  Stallard, A. W.

  Heffer, Eric S.

  Mikardo, Ian

  Stewart, Rt Hon Donald (W Isles)

  Hogg, Norman (E Dunbartonshire)

  Millan, Rt Hon Bruce

  Stott, Roger

  Holland, Stuart (L'beth, Vauxhall)

  Mitchell, Austin (Grimsby)

  Strang, Gavin

  Home Robertson, John

  Mitchell, R. C. (Soton, Itchen)

  Straw, Jack

  Homewood, William

  Morris, Rt Hon Alfred (Wythenshawe)

  Summerskill, Hon Dr Shirley

  Hooley, Frank

  Morris, Rt Hon Charles (Openshaw)

  Taylor, Mrs Ann (Bolton West)

  Horam, John

  Morris, Rt Hon John (Aberavon)

  Thomas, Jeffrey (Abertillery)

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

  Moyle, Rt Hon Roland

  Thomas, Mike (Newcastle East)

  Howells, Geraint

  Newens, Stanley

  Thomas, Dr Roger Carmarthen)

  Huckfield, Les

  Oakes, Rt Hon Gordon

  Thorne, Stan (Preston South)

  Hughes, Mark (Durham)

  Ogden, Eric

  Tilley, John

  Hughes, Robert (Aberdeen North)

  O'Halloran, Michael

  Torney, Tom

  Hughes, Roy (Newport)

  O'Neill, Martin

  Variey, Rt Hon Eric G.

  Janner, Hon Greville

  Orme, Rt Hon Stanley

  Wainwright, Edwin (Dearne Valley)

  Jay, Rt Hon Douglas

  Palmer, Arthur

  Wainwright, Richard (Colne Valley)

  John, Brynmor

  Park, George

  Walker, Rt Hon Harold (Doncaster)

  Johnson, James (Hull West)

  Parker, John

  Watkins, David

  Johnson, Walter (Derby South)

  Parry, Robert

  Weetch, Ken

  Johnston, Russell (Inverness)

  Pavitt, Laurie

  Wellbeloved, James

  Jones, Barry (East Flint)

  Pendry, Tom

  Welsh, Michael

  Jones, Dan (Burnley)

  Penhaligon, David

  White, Frank R. (Bury & Radcliffe)

  Kaufman, Rt Hon Gerald

  Powell, Raymond (Ogmore)

  White, James (Glasgow, Pollok)

  Kerr, Russell

  Prescott, John

  Whitlock, William

  Kilfedder, James A.

  Price, Christopher (Lewisham West)

  Wigley, Dafydd

  Kilroy-Silk, Robert

  Race, Reg

  Willey, Rt Hon Frederick

  Kinnock, Neil

  Radice, Giles

  Williams, Rt Hon Alan (Swansea W)

  Lambie, David

  Rees, Rt Hon Merlyn (Leeds South)

  Williams, Sir Thomas (Warrington)

  Lamborn, Harry

  Richardson, Miss Jo

  Wilson, Gordon (Dundee East)

  Lamond, James

  Roberts, Albert (Normanton)

  Wilson, Rt Hon Sir Harold (Huyton)

  Leadbitter, Ted

  Roberts, Allan (Bootle)

  Wilson, William (Coventry SE)

  Leighton, Ronald

  Roberts, Ernest (Hackney North)

  Winnick, David

  Lestor, Miss Joan (Elton & Slough)

  Roberts, Gwilym (Cannock)

  Woolmer, Kenneth

  Lewis, Ron (Carlisle)

  Robertson, George

  Wrigglesworth, Ian

  Lltherland, Robert

  Robinson, Geoffrey (Coventry NW)

  Wright, Shella

  Lofthouse, Geoffrey

  Rodgers, Rt Hon William

  Young, David (Bolton East)

  Lyon, Alexander (York)

  Rooker, J. W.

  McCartney, Hugh

  Ross, Ernest (Dundee West)

  ELLERS FOR THF NO

  McDonald, Dr Oonagh

  Ross, Stephen (Isle of Wight)

  Mr. James Tinn and

  McGuire, Michael (Ince)

  Rowlands, Ted

  Mr. George Morton.

  McKay, Allen (Penistone)

  Ryman, John

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

  INDUSTRY [MONEY]
  Queen's Recommendation having been signified—
  Ordered,
  That, for the purposes of any Act of the present Session to make further provision in relation to the National Enterprise Board, the Scottish Development Agency, the Welsh Development Agency and the English Industrial Estates Corporation, and to amend the Industry Act 1972 and the Industry Act 1975, it is
  364
  expedient to authorise the payment out of money provided by Parliament of—

  (a) any expenditure incurred by the Secretary of State in respect of the acquisition of property by him or a nominee of his from, or from a subsidiary of, the National Enterprise Board, the Scottish Development Agency or the Welsh Development Agency;

  (b) any increase in the sums payable out of money provided by Parliament under the Local Employment Act 1972 which is attributable to provisions of the said Act of the present Session relating to the English Industrial Estates Corporation; and

  (c) any increase in the sums so payable under the Industry Act 1972 which is attributable to provisions of the said Act of the present Session relating to the limits on the financial assistance that may be given by the Secretary of State under section 8 of the Industry Act 1972;

  and the payment of any sums into the Consolidated Fund.—[Mr. Wakeham.]

  ISLE OF MAN BILL
  Ordered,

  That, in respect of the Isle of Man Bill, notices of amendments, new clauses and new schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a Second time.—[Mr. Wakeham.]

  TEXTILE INDUSTRY
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wakeham]
  10.17 pm
  Mr. Geoffrey Dickens: My constituency of Huddersfield and the surrounding district provide the finest wool-worsted materials in the world and have done so for generations. The textile and related clothing industries together represent one of Britain's major industrial sectors. With sales of over £8,000 million a year, they are a vital branch of our manufacturing industry. Their exports total over £2,000 million a year. These two industries employ 750,000 people—more than the British Steel Corporation and the National Coal Board added together.
  The industry has undergone a major degree of restructuring, and includes the largest fibre and textile company in the world and four of the six largest textile companies in the European Economic Community, in addition to several thousand small firms.
  Employment in the textile and clothing industries is important in most areas of the country, but is particularly concentrated in several regions and towns. In some of these areas, such as Huddersfield, these industries are the largest employers. A number also suffer from above-average unemployment, so the role of the textile and clothing firms is of particular significance to them. Sixty per cent. of all those employed in the industry are women.
  The textile industry has an excellent record of innovation. It is exploring new ways of promoting effective use of design in very competitive markets. Its research establishments have a worldwide reputation and the Industry has developed new high technology uses for textiles.
  For most of the past decade, productivity in textiles has grown much faster than it has in British manufacturing industry as a whole, reflecting constructive co-operation between management and the trade unions. Large sums have been ploughed back into investment by textile and clothing companies—over £2,100 million since 1970. Recently one of the most modern spinning plants in the world came
  368
  into production, and in Huddersfield confidence has been expressed by many extensions to local mills.
  In industrial policy, the British textile industry has played a major role through the European Textile Association in influencing the European Commission's thinking. However, growth of exports to many markets is stifled by high tariffs, import surcharges and import bans. While the Tokyo round of the GATT multilateral trade negotiations will bring about some gradual reduction in the high tariffs of the United States of America, these will remain in many cases two to three times higher than our own. Exchange rate uncertainties do not help.
  Britain, together with other member States of the EEC, provides by far the largest market for textiles and clothing from developing countries. Like almost every industrialised country, the EEC has found it necessary to control the growth of these imports in order to prevent severe damage to its textile and clothing industries. Industrialised countries have made clear their belief that their economic, social and strategic structures would be irreparably harmed by the disappearance of these industries.
  The United Kingdom has been a major influence in establishing a system for promoting the orderly growth of developing countries' textile and clothing exports to the EEC. This is the GATT multifibre arrangement, known as the MFA, which began in 1974 and was renewed in 1978. Experience has shown that, without effective application of such an instrument, disorder in world textile production and trade results.
  Mr. Barry Sheerman: Does not the hon. Gentleman accept that, although one might have an orderly international community on the face of it, with rules and agreements, some countries in Europe and elsewhere interpret the rules in a less than gentlemanly way? As Britain is a member of the European Community, it always worries me that, although we read of rules by which all member States have agreed to abide, when it comes to the application of the spirit of those rules we see a very different kind of practice. My hon. Friend the Member for Batley and Morley (Mr. Woolmer) has said elsewhere today that in this matter some people

  369
  seem to be playing cricket while others are playing rugby league. When we—
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The hon. Gentleman cannot make a speech on this subject. He is intervening.
  Mr. Sheerman: I was intervening, Mr. Deputy Speaker, to point out that the hon. Gentleman is quite right when he talks about a system of rules, but where he is wrong is in not recognising, perhaps, that these rules are being interpreted in a different spirit elsewhere in the Common Market, and we are not getting a fair deal when it comes to the relationship that counts. When we try to export—
  Mr. Deputy Speaker: Order. Mr. Dickens.
  Mr. Dickens: I accept that rules are interpreted differently. Under the MFA, particularly favourable treatment is given by the EEC to imports from the poorest developing countries. They are also assisted by the fact that a considerable proportion of their textiles and clothing are allowed to enter the EEC duty-free—a privilege that no other country in the world allows on such a scale.
  What has the industry the right to expect from a British Government? We must try to ensure that the Government do not allow the EEC Commission to deviate from the stated conviction about the economic, social and regional importance of the textile and clothing industries. The EEC must make clear its determination not only to renew the MFA when it expires at the end of 1981 but also to continue its present policies based on effective application of the MFA.
  The textile industry is looking for continued Government support in ensuring that Community application of the present MFA and GATT rules is firm and consistent. The industry looks for Government support in attacking the unjustified barriers which are closing many overseas markets. Negotiations for the entry of Spain, Greece, and Portugal to the Community must not encourage these countries to run away with their textile ambitions in Europe, supported by their Government aids which give them unfair advantages.
  370
  When companies from another country are suspected of dumping cheap goods in the United Kingdom, we must consider the immediate suspension of the textile imports from that nation while investigation takes place Other countries do this, but our investigations go on for months while the dumping is accelerated, thus undermining our industries. We must also be on our guard against misleading origin descriptions and not hesitate to detain goods at the docks whenever cheating is suspected.
  We have the quality in the United Kingdom textile industry to compete with the rest of the world, but only if that competition is on fair and equal terms. I call for a full-scale debate on the future of the textile industry.
  10.27 pm
  Mr. Ben Ford: I congratulate the hon. Member for Huddersfield, West (Mr. Dickens) on having secured an Adjournment debate on this serious and important matter. I join him in urging the Government to provide time for a fuller debate, because there are many complex aspects of the problem which need to be discussed in public.
  The wool textile industry is in a serious situation. More than 7,000 jobs have been lost in the industry this year. However, I wish to emphasise that the position is not irrecoverable. The Government should renounce the attitudes emanating from the EEC Commission which seem to indicate that the textile industry in the Community is expendable. It is not expendable. I hope that the Government will state their intention to maintain a viable textile industry and particularly a viable wool textile industry.
  The Government should encourage a drive to modernise the clothing industry. It can be done. The wool industry's research association has run pilot projects with model factories. In one case, an 80 per cent. increase in productivity was achieved.
  I believe that the Government can encourage this modernisation by tax remissions on productivity schemes. They would be of great help in encouraging the home clothing industry to use British cloth. The Government should restore regional assistance to those parts of West Yorkshire which lost them recently.
  Mr. Bob Cryer: I endorse my hon. Friend's argument. My area has been downgraded from intermediate area status. He and I know that the Conservative-controlled Bradford authority has made strong representations, with other local authorities, for regional aid to be maintained at its maximum because of the textile industry's difficulties.
  Mr. Ford: The industry, the trade unions, local authorities and Members of Parliament are united in wishing the Government to assist the textile industry. This is a strategic industry. It must not be allowed to fail because of unfair competition or lack of Government support.
  10.31 pm
  The Under-Secretary of State for Industry (Mr. David Mitchell): I congratulate my hon. Friend the Member for Huddersfield, West (Mr. Dickens) on securing the Adjournment debate. He argued the views of his constituents and the industry in a forthright manner. His prime interest is in the wool industry. He has made vigorous representations elsewhere to me about it. He has given me the opportunity to deal with the textile industry as a whole. There are understandable anxieties about the future of that industry.
  I hope that I can put the issues into perspective and answer some of the questions raised by hon. Members. I have no working knowledge of the textile industry, but I have made it my business to visit some of the textile areas and to seek to understand the problems. I have visited Bradford, Rossendale and garment manufacturing areas in Birkenhead.
  The textile and clothing industry has a total labour force of about 800,000. It is our largest production industry after engineering and construction. However one measures the industry—by employment, output or exports—it is among the most important for our economy. Its role is proportionately larger in those areas where it is concentrated, particularly in Northern Ireland, Lancashire and Yorkshire.
  In recent years industries in the United Kingdom have had to adapt to inevitable changes. Difficulties in the textile industry include the impact of the growing use of man-made fibres, changing production techniques, capital re-equipment, increase-
  372
  ing efficiency of machinery—although I have been disappointed on my tours to see the relatively small amount of British-made machinery—the loss of export markets, the rapid expansion of competing industries abroad and the general economic climate.
  In spite of those difficulties, the textile and clothing industry remains a major contributor to our net United Kingdom output. Last year its turnover was £9,300 million and exports totalled over £2,000 million. The industry should be congratulated on that achievement in view of the difficult trading conditions.
  In a time of difficulty such as our textile industry is experiencing, it is important to apply all the available resources effectively to achieve the best possible results. The commercial and marketing policies required to solve the problems and to take advantage of opportunities can be exercised only by individual firms. The Government's aim is to provide, as far as possible, the right economic and trading conditions to enable firms to make the best use of their resources and to operate profitably.
  I am alive to the importance of the wool textile industry to the economy. As part of the textile industry it provides employment for about 70,000 people, the majority of whom are in West Yorkshire, and this year it expects to make exports of £400 million out of a production of £1,000 million.
  The importance attached to this industry has been clearly emphasised in recent weeks by members of local authorities in West Yorkshire and trade associations of the industry, actively supported by Members of Parliament representing their constituencies, a number of whom have come to see me.
  I have recently spent some time in Bradford and Rossendale looking, learning and listening. I have been learning about the industry and the difficulties facing it. I recognise that its labour force has been falling and the size of its home market has been reduced by changing patterns of demand from the traditional wool fabrics to lighter fabrics of cotton and man-made fibres. The changes in the style of clothing in recent years away from the worsted suit and flannel trousers have also led to a substantial contraction of the industry's principal outlets in the clothing industry. Import penetration in

  373
  both clothing and fabrics has increased, and that has had its effect on making the industry's home markets so much more difficult and competitive.
  We are discussing an industry which is described as being in dire straits and in need of assistance which, it is suggested, should come from the Government to solve all its problems. I do not believe that that is entirely the right role for the Government. The causes of many of the problems are outside Government control and certainly outside their competence. Where the industry brings to our attention difficulties which are proper matters for the Government to deal with, we shall consider them fully and seriously in order to see whether we can assist.
  Mr. K. J. Woolmer: Will the hon. Gentleman give way?
  Mr. Mitchell: If I do not cover the point before I have finished, I will give way to the hon. Gentleman if there is time. Where the industry brings to our attention difficulties which are proper matters for the Government to deal with, we shall consider fully and seriously how we can and should assist. But many of the questions raised relate to commercial problems, and it is for the industry and individual companies to adapt to changing commercial conditions and to produce commercial solutions.
  The industry starts from a sound base with £100 million invested in response to £23 million from two section 8 schemes on rationalisation, plant, buildings and machinery. All that has helped production.
  I was glad that my hon. Friend the Member for Huddersfield, West drew attention to the co-operative nature of the work force in the industry. Indeed, on my visits I have been impressed by the good industrial relations which exist, particularly in the firms I visited in the wool industry.
  Mr. Sheerman: £45 a week?
  Mr. Mitchell: I suggest that, if it had not been for the high degree of worker interest and participation in the success of the companies for which they work, the industry would not be in the relatively sound position that it is in today. I
  374
  regret very much the reduction in jobs—
  Mr. James Lamond: The industry has had no help from the Government.
  Mr. Mitchell: The industry has spent £100 million on modernisation and rationalisation as a result of the Government putting in £23 million under section 8 of the Industry Act.
  We regret the necessary reduction in jobs over the last 10 years, but the industry has recognised that either it produces more with fewer people or the industry itself with all the jobs in it is at risk.
  The industry believes that, as a result of this investment, its plants are as modern and well-equipped as those of its main competitors. It also has what are probably some of the lowest labour costs in Europe. A recent survey of total labour costs per operator hour in the textile industries of the EEC put French costs at between 10 per cent. and 20 per cent. higher than those in the United Kingdom, Italian labour costs 42 per cent. higher and German, Belgian and Dutch costs more than double. The industry should therefore be well placed to compete in home and export markets. One factor that has to be taken into account is the productivity that can be achieved with modern machinery and equipment, and the industry is now much better placed in that regard. I echo the robust statement on the quality and reputation of the industry made by my hon. Friend the Member for Huddersheld, West.
  I know that trading conditions are difficult and that there is a decline in demand as changes in customer preference work through. We need to see a new emphasis on marketing and salesmanship, as well as on production.
  Competition is of two basic kinds—fair and unfair. In fair competition we should win, and if we lose on grounds of higher productivity, better marketing or quicker change in response to fashion elsewhere, that is not a matter for the Government. The Government have a role in seeking to create the industrial climate in which industry will be able, and have the incentive, to respond more quickly to market changes and forces.

  375
  That is why we had the substantial changes in the Budget earlier this year, which were designed to get rid of the tax sickness from which much of our economy has been suffering. The industry in conditions of fair competition could, should and, I repeat, can, hold its own.
  All competition is not automatically unfair, and we must take a balanced view. For the convenience of the House, I divide unfair competiton into that from developing countries outside the EEC and that from within. If there is unfair competition from developing countries outside the EEC, there is the machinery for protection via the MFA.
  Mr. Cryer: It is not working.
  Mr. Mitchell: I share the concern of hon. Members at the lack of speed with which the Community reacts. We have made our concern known to the Commission. When cases of dumping are brought to our attention, they can be countered by provisional anti-dumping duties.
  Regarding unfair competition from within the EEC, the Prato enterprise has caused considerable concern. As chairman of the all-party committee, the hon. Member for Bradford, North (Mr. Ford) has expressed concern. Action can be taken with the competition directorate of the Commission. In this case, we have taken the case of Prato to the Commission and it is being investigated. The industry produced evidence in some detail to show that the pricing policies of certain manufacturers in the Prato region needed explanation. It appeared to be a case which, in former times, would have been a good candidate for antidumping investigation. As the concept of dumping does not exist in a customs union, the matter was put before the Commission.
  We are pressing for the examination to be carried out urgently and we look for suitable action from the Community to deal with any breaches of the Treaty which are revealed. I understand that some manufacturers in Prato have let their United Kingdom customers down this year by failing to maintain delivery dates. Some of our woollen manufacturers have been able to step into the breach successfully and it is hoped that
  376
  the United Kingdom woollen manufacturers will be able to exploit that competitive weakness to their commercial advantage in the future. If, in other cases of unfair competition, we are given good evidence, we will be prepared to take that to the appropriate quarter to seek redress. We cannot proceed on the basis of hearsay.
  My hon. Friend expressed concern about the new members to the EEC. He mentioned Greece, Spain and Portugal. I understand that concern and I appreciate the problems. In co-operation with other States we shall seek to secure safeguards. We have some safeguards as regards Greece in the five-year transitional period. We expect at least comparable safeguards in relation to Spain and Portugal and we shall seek to avoid disruption to the trade as a result of their joining the Community
  My hon. Friend raised the important point about barriers to our exports. We cannot be too protectionist if we wish to avoid other countries in their turn erecting barriers to our trade. World trade opportunities are not in our gift but, as an objective in our discussions on the pattern of orderly marketing to follow the current MFA, we will bear the matter in mind. I know that it is very much in the minds of hon. Members.
  Mr. Nicholas Winterton: What about the United States?
  Mr. Mitchell: I am trying to cover all the points, and if I was not interrupted so often I would have the opportunity to deal with more of them.
  My hon. Friend raised the problem of origin, referring to misleading information in that connection. If that information is in the form of labels on cloth, for example "Made in Huddersfield, Japan", which misleads the consumer, or if it is by way of wrong description of mixed wool and other—
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at thirteen minutes to Eleven o'clock.

  LANARKSHIRE
  LANARKSHIRE
  PRIME MINISTER (ENGAGEMENTS)
  PRIME MINISTER (ENGAGEMENTS)
  TUC
  TUC
  ORMSKIRK
  ORMSKIRK
  WASHINGTON NEW TOWN
  WASHINGTON NEW TOWN
  WINSTON CHURCHILL MEMORIAL LECTURE
  WINSTON CHURCHILL MEMORIAL LECTURE
  INDUSTRIAL DEVELOPMENT
  INDUSTRIAL DEVELOPMENT
  TUC AND CBI
  TUC AND CBI
  ARMED SERVICES
  ARMED SERVICES
  AILSA CRAIG
  AILSA CRAIG
  CBI
  CBI
  BABY MILK (OVERSEAS SALES)
  BABY MILK (OVERSEAS SALES)
  FRANCE (IMPORTS/EXPORTS)
  FRANCE (IMPORTS/EXPORTS)
HOME DEPARTMENT
  Demonstrations (Police Costs)
  Demonstrations (Police Costs)
  Prisoners (Dependent Relatives)
  Prisoners (Dependent Relatives)
  Custodial Sentences (Peterborough)
  Custodial Sentences (Peterborough)
  Prisoners (Employment Histories)
  Prisoners (Employment Histories)
  Metropolitan Police (Burglar Alarm Inspectorate)
  Metropolitan Police (Burglar Alarm Inspectorate)
  Penal Reform
  Penal Reform
  Commission for Racial Equality
  Commission for Racial Equality
  Bail Act
  Bail Act
  Detention Centres
  Detention Centres
  Speeding Prosecutions
  Speeding Prosecutions
  Equal Opportunities Commission
  Equal Opportunities Commission
  Fires
  Fires
  Criminal Cases (Annulment)
  Criminal Cases (Annulment)
  Police (Cambridgeshire)
  Police (Cambridgeshire)
  Animals (Experiments)
  Animals (Experiments)
  Immigration
  Immigration
  LEGAL AID (TRIBUNAL CASES)
  LEGAL AID (TRIBUNAL CASES)
ENERGY
  Electrical Goods (Labelling)
  Electrical Goods (Labelling)
  Coking Coal
  Coking Coal
  Oil Licences (Seventh Round)
  Oil Licences (Seventh Round)
  Energy Demand
  Energy Demand
  Uranium
  Uranium
  Purchasing Contracts
  Purchasing Contracts
EDUCATION AND SCIENCE
  Nursery School Children
  Nursery School Children
  Grammar Schools
  Grammar Schools
  Purchasing Contracts
  Purchasing Contracts
  A-level Passes
  A-level Passes
  Kirklees and Oldham
  Kirklees and Oldham
NATIONAL FINANCE
  Expenditure (Unemployment Forecasts)
  Expenditure (Unemployment Forecasts)
  Tax Demands (Delivery)
  Tax Demands (Delivery)
  Metal-Using Industries
  Metal-Using Industries
  Taxes (International Comparisons)
  Taxes (International Comparisons)
  Officials (Powers of Entry)
  Officials (Powers of Entry)
  British Petroleum
  British Petroleum
  Exchequer and Audit Act
  Exchequer and Audit Act
  Value Added Tax (Charitable Organisations)
  Value Added Tax (Charitable Organisations)
  Industry Act (Forecasts)
  Industry Act (Forecasts)
  Exchange Control Act 1947
  Exchange Control Act 1947
  Inland Revenue (Special Offices)
  Inland Revenue (Special Offices)
  European Community Budget
  European Community Budget
  National Land Fund
  National Land Fund
TRADE
  Stansted Airport
  Stansted Airport
  South Africa
  South Africa
  Baby Milk (Overseas Sales)
  Baby Milk (Overseas Sales)
OVERSEAS DEVELOPMENT
  Stop Polio Campaign
  Stop Polio Campaign
FOREIGN AND COMMONWEALTH AFFAIRS
  Cyprus
  Cyprus
  Northern Ireland (Information)
  Northern Ireland (Information)
  Chile
  Chile
EMPLOYMENT
  Picketing
  Picketing
  Preston
  Preston
  Trades Union Congress
  Trades Union Congress
  West Midlands
  West Midlands
  Old Skills
  Old Skills
  Unemployment (Statistics)
  Unemployment (Statistics)
  Mexborough and Wombwell
  Mexborough and Wombwell
  Postal Ballots
  Postal Ballots
  Stockport
  Stockport
  Advisory, Conciliation and Arbitration Service
  Advisory, Conciliation and Arbitration Service
  Manpower Services Commission
  Manpower Services Commission
  Skillcentres
  Skillcentres
  North-West England
  North-West England
  Homeworkers
  Homeworkers
  Trades Union Legislation
  Trades Union Legislation
EMPLOYMENT
  Northern Region
  Northern Region
  Industrial Tribunals
  Industrial Tribunals
  Operation Decoration Scheme (Rossendale)
  Operation Decoration Scheme (Rossendale)
  Disabled Persons
  Disabled Persons
  Electrical Equipment (Approval Service)
  Electrical Equipment (Approval Service)
  Closed Shop
  Closed Shop
  Weekly Earnings
  Weekly Earnings
  Temporary Employment Programme
  Temporary Employment Programme
  Industrial Disputes (Ballots)
  Industrial Disputes (Ballots)
  Purchasing Contracts
  Purchasing Contracts
  Engineering Dispute (Lost-Days)
  Engineering Dispute (Lost-Days)
  Redundancy Payments
  Redundancy Payments
  Unemployed Persons
  Unemployed Persons
DEFENCE
  Anzio Camp, Episkopi (Refugees)
  Anzio Camp, Episkopi (Refugees)
  USSR (Strategic Nuclear Weapons)
  USSR (Strategic Nuclear Weapons)
  USSR (Backfire Bombers)
  USSR (Backfire Bombers)
  Eastern Mediterranean
  Eastern Mediterranean
  Royal Air Force (14 Maintenance Unit)
  Royal Air Force (14 Maintenance Unit)
  Missiles (Siting)
  Missiles (Siting)
  Airfields (Protection)
  Airfields (Protection)
  Gibraltar Military Base (Maintenance Costs)
  Gibraltar Military Base (Maintenance Costs)
  Hydrographic Survey Vessels
  Hydrographic Survey Vessels
  Blast-Proof Shelters (Aircraft)
  Blast-Proof Shelters (Aircraft)
SCOTLAND
  Redundancies (Dundee)
  Redundancies (Dundee)
  Teachers (Salaries)
  Teachers (Salaries)
  Dyslexia
  Dyslexia
  Housing Management Policies
  Housing Management Policies
  School Leavers
  School Leavers
  Council Houses (Sale)
  Council Houses (Sale)
  Employment (Dundee)
  Employment (Dundee)
  Disabled Persons
  Disabled Persons
  Otters
  Otters
  Parliamentary Boundary Commission
  Parliamentary Boundary Commission
INDUSTRY
  Investment
  Investment
  Microelectronics
  Microelectronics
  Regional Development Grant
  Regional Development Grant
  Shipbuilding
  Shipbuilding
TRANSPORT
  Trunk Road Schemes
  Trunk Road Schemes
  Motor Cycle Accidents
  Motor Cycle Accidents
  Severn Bridge
  Severn Bridge
  Driving Tests
  Driving Tests
  Channel Tunnel
  Channel Tunnel
  Noise Insulation (Cheadle Heath)
  Noise Insulation (Cheadle Heath)
  M6
  M6
ENVIRONMENT
  Local Authority (Capital Grant Payments)
  Local Authority (Capital Grant Payments)
  Oil Storage (Security)
  Oil Storage (Security)
  Planning Approvals and Completion Orders
  Planning Approvals and Completion Orders
  Local Authorities (Spending)
  Local Authorities (Spending)
  Non-Metropolitan Areas
  Non-Metropolitan Areas
  Rate Support Grant
  Rate Support Grant
  Employment Transfer Scheme
  Employment Transfer Scheme
  Palace of Westminster (Central Heating)
  Palace of Westminster (Central Heating)
  Horses
  Horses
  Housing Revenue Accounts
  Housing Revenue Accounts
  Hypermarkets
  Hypermarkets
  Plutonium
  Plutonium
  Housing Programme
  Housing Programme
AGRICULTURE, FISHERIES AND FOOD
  Inshore Fisheries
  Inshore Fisheries
  Common Fisheries Policy
  Common Fisheries Policy
  Fisheries (Vessel Licensing)
  Fisheries (Vessel Licensing)
  Zander
  Zander
NORTHERN IRELAND
  Bus Shelters
  Bus Shelters
  Departmental Staff (Powers of Entry)
  Departmental Staff (Powers of Entry)
WALES
  Hospital Locums
  Hospital Locums
  Health Service
  Health Service
  National Health Service
  National Health Service
  Hospital Service (Staff Ratios)
  Hospital Service (Staff Ratios)
  Teachers
  Teachers
  Rural Schools (Closures)
  Rural Schools (Closures)
  School Meals
  School Meals
  Disabled Persons
  Disabled Persons
  Area Health Authorities
  Area Health Authorities
  Industry Act 1972
  Industry Act 1972
  Social Surveys
  Social Surveys
  Fuel Supplies (Rural Areas)
  Fuel Supplies (Rural Areas)
  Parliamentary Boundaries
  Parliamentary Boundaries
SOCIAL SERVICES
  Cervical Screening
  Cervical Screening
  Family Doctor Deputising Service (Ashfield)
  Family Doctor Deputising Service (Ashfield)
  New Dwellings
  New Dwellings
  Social Benefits (EEC Residents)
  Social Benefits (EEC Residents)
  Dental Care Services (Central Nottinghamshire)
  Dental Care Services (Central Nottinghamshire)
  Health Unions (Pay Award)
  Health Unions (Pay Award)
  Powdered Milk
  Powdered Milk
  Benefits (Uprating)
  Benefits (Uprating)
  Family Allowance (International Comparisons)
  Family Allowance (International Comparisons)
  Hospital Treatment (Pension Reductions)
  Hospital Treatment (Pension Reductions)
  Disabled Persons
  Disabled Persons
  Voluntary Organisations
  Voluntary Organisations
  Retirement Pension
  Retirement Pension
  Model 70 Trike
  Model 70 Trike
  Community Psychiatric Nursing
  Community Psychiatric Nursing
  Breast Cancer (Screening)
  Breast Cancer (Screening)
  Family Practitioner Committees (Investigations)
  Family Practitioner Committees (Investigations)
  Northern Region Health Authority
  Northern Region Health Authority
  Common Waiting Lists
  Common Waiting Lists
  Regional Health Authority Works Departments
  Regional Health Authority Works Departments
  National Health Service (Parliamentary Commissioner)
  National Health Service (Parliamentary Commissioner)
  Central Nursing Council
  Central Nursing Council
  Consultants (Wales)
  Consultants (Wales)
  Supplementary Benefits Commission (Report)
  Supplementary Benefits Commission (Report)

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

INSULATION IN FACTORIES
Baroness VICKERS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what savings in energy consumption and expenditure they would expect to arise from a programme of insulation of factories equivalent to the incentives relating to private sector housing under the Homes Insulation Act 1978.
The MINISTER of STATE, MINISTRY of DEFENCE (Lord Strathcona and Mount Royal): My Lords, the Homes Insulation Scheme provides for the payment of percentage grants subject to a maximum related to the cost of installing basic insulation in an average dwelling. An equivalent scheme for factories is therefore not a real option, in view of the great diversity of both size and construction among industrial buildings. As I am sure the noble Baroness knows, grants for insulating industrial and commercial premises are already available under the Energy Conservation Scheme.
Baroness VICKERS: My Lords, while I thank my noble friend for that reply, I should like to ask how the factories are progressing and whether they are taking advantage of this scheme. It seems to me that it would be very advantageous in more ways than one to have more factories using this scheme.
Lord STRATHCONA and MOUNT ROYAL: My Lords, total grants of the order of £1 million have been made under this scheme and the estimated savings run at about £1.6 million a year.

LITTER PREVENTION: BEVERAGE CONTAINERS
2.40 p.m.
Viscount MOUNTGARRET: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in order to discourage continual litter particularly in the countryside and to stop waste, they will take action to ensure that all ciders, beers, soft drinks and mineral waters are sold only in bottles and that those bottles carry a 50 pence returnable deposit on them.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT OF THE ENVIRONMENT (Lord Bellwin): My Lords, a detailed study into all aspects of the beverage container question is at present being undertaken by the Packaging and Containers Working Group of the Waste Management Advisory Council. The Government await the group's report, which they hope to receive early next year.
Viscount MOUNTGARRET: My Lords, I am grateful to my noble friend for that reply. Is he aware of the potential hazard caused primarily to livestock, to say nothing of the hazard of fire, by bottles which are left lying around in the countryside by picnickers and the like who would have been more likely to return those bottles if a sizeable deposit had been charged? Is he further aware that, on the Continent and in America in particular, the deposits charged are substantial, with the result that there is considerably less litter than exists in this country?
Lord BELLWIN: My Lords, yes, indeed; and that is precisely why a study is taking place at present and why we await the results of that study with such interest.
Lord LEATHERLAND: My Lords, do I understand from the Minister's reply that a Quango has been set up to consider the question of empty beer bottles?
Lord BELLWIN: My Lords, if a Quango was set up—and if a Quango it

697
is—it was set up under the previous Administration.
Baroness STEDMAN: My Lords, can the noble Lord tell us whether the Government are giving any encouragement to local authorities to set up schemes for collecting bottles? I know that I argued from his side of the Dispatch Box that it was not economic so to do. However, there is a danger. There are a great many of such bottles around now and some authorities are starting to collect bottles and establish bottle banks. What encouragement is the department giving them?
Lord BELLWIN: My Lords, I think that I can best answer by saying that this Government, in the same way as did the previous Government, are encouraging the "Keep Britain Tidy" campaign by making what might be considered a rather substantial contribution to the funds for doing that. Indeed, one hopes that we shall continue not only to give such support but to see that it is extended all the way round, because the problem is indeed one that ought to receive much consideration.
Lord WIGG: My Lords, would not the Minister consider that it would be in tune with current Conservative thinking if they asked schoolchildren to collect the bottles in exchange for their midday meal?

MULTI-FIBRE ARRANGEMENT QUOTAS
3.44 p.m.
Baroness HORNSBY-SMITH: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to ensure that quota levels entered into under the multi-fibre agreement are honoured and what representations they have made regarding the over-running of such quotas which in some categories amount to over 100 per cent. above the agreed limits.
Lord TREFGARNE: My Lords, quotas established under the Multi-fibre Arrangement are enforced through the issue of import licences, and when the quota limit is reached no further licences are issued. My noble friend is therefore mistaken in her suggestion that some quotas have been exceeded.
Baroness HORNSBY-SMITH: My Lords, while thanking the noble Lord for that reply, may I ask whether he is aware that when the multi-fibre agreement was renewed in December 1977 very firm assurances were given to industry that, although the total package fell short of its requirements, the quota levels negotiated—including the ability to implement the basket extractor mechanism which gives rise to these appallingly over-excessive quotas—would be considered under the renewal? Is the noble Lord further aware that Poland exceeded its quotas by 109 per cent. in certain categories; Taiwan by 114 per cent. and Hungary by 90 per cent.? When will the obligations given under that renewal agreement operate and the controls made effective?
Lord TREFGARNE: My Lords, I am not certain whether the noble Baroness heard my original Answer. I said that no quotas have been exceeded, and that is the case.

THE ASTIN REPORT: GOVERNMENT ACTION
2.44p.m.
Lord HYLTON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what are their reactions to the recommendations of the Astin Committee on the management of schools in Northern Ireland; how far the process of consultation has progressed and when they expect to publish their own proposals on this subject.
The PARLIAMENTARY UNDERSECRETARY of STATE, NORTHERN IRELAND OFFICE (Lord Elton): My Lords, the report of the Astin

699
Working Party was published on 28th June 1979 and interested organisations have been invited to submit their views on that report not later than 1st January 1980. The Government will take no decisions on the recommendations in the report until all the views received have been fully considered.
Lord HYLTON: My Lords, I am grateful to my noble friend for his reply, which I realise can be only an interim one. Will he accept that there is a considerable body of opinion, which is pressing, and which succeeded in convincing Professor Astin's working party of the need for change and improvement in the present system?
Lord ELTON: My Lords, the pressure to which my noble friend refers is, of course, evidenced in the report itself. I have asked all the interested bodies to comment on the report by the beginning of next year. We have sent out 52 copies of the report and a further 750 copies have been sold by Her Majesty's Stationery Office to interested parties. Therefore, an interest is being taken in the contents of the report, which I hope will be reflected before the end of the year in submissions to my department and myself.
Lord MELCHETT: My Lords, will the noble Lord agree that there has been some feeling in Northern Ireland that to some extent the report has been shelved? Despite the very satisfactory number of copies of the report which have been circulated, will the noble Lord go a little further than he did in his original Answer and say whether the Government consider the present arrangements for managing schools in Northern Ireland to be satisfactory, or whether, when they have heard everybody's comments, they would like to make some changes?
Lord ELTON: My Lords, the working party was in fact set up under the aegis of the noble Lord, and I share his interest that the management of schools in Northern Ireland should be of the best possible form. I can only repeat that on numerous occasions, both through the media and at this Dispatch Box, I have said that I wish to have comments on the report's recommendations from
700
those parties—and they are many—who have an intimate concern with this, before I consider the report. When I consider it, it will be in the light of those comments.

BAIL ETC. (SCOTLAND) BILL
2.46 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield): My Lords, I beg to move that this Bill be now read a second time. The Bail etc. (Scotland) Bill forms an essential part of the major reform of Scottish criminal justice which the Government propose for this Session. The Government intend before the end of the year to introduce the substantial measure on Scottish criminal justice which was promised in Her Majesty's gracious Speech. However, we have brought forward as a matter of urgency this short but much-needed measure—the Bail etc. (Scotland) Bill—to deal with the acute staffing problems associated with Saturday courts and to reform the bail system.
The association of these two items may not be immediately obvious. The abolition of mandatory court sittings on Saturdays will lead to substantial savings in money and other resources but, as it could by itself lead to more people spending time in custody over the weekend if arrested on a Friday, it is clearly desirable to legislate at the same time on the system of release on bail in Scotland which the Government had in any case intended to reform substantially and in a way which should greatly reduce the numbers of those held unnecessarily in custody awaiting trial on a first appearance in court. I should stress that while the need to abolish mandatory Saturday courts was the reason for our promoting this Bill in advance of the more comprehensive criminal justice package, it is the reform of the bail system in Scotland which is significant.
This Bill therefore is modest in scope, but we believe that it will greatly improve the working of the criminal justice system in Scotland, making it more efficient and humane. Although some misgivings have been expressed about how some provisions in the Bill might operate in practice, it has generally been welcomed and,

701
indeed, when the previous Government addressed themselves to the same problems in their own Criminal Justice (Scotland) Bill, very similar provisions were proposed.
The very full and thorough reports of the Committee on Criminal Procedure in Scotland under the chairmanship of the late Lord Thomson provide the basis for the reform of criminal justice in Scotland, and this Bill draws very heavily on the recommendations of that committee, although we have taken the opportunity to reflect on and, I believe, even improve on its recommendations.
The Government believe that our present system of bail in Scotland is most unsatisfactory, in that it does not fully achieve its principal aim of avoiding unnecessary pre-trial imprisonment. Clauses 1 to 9 of the Bill therefore provide for the abolition of money bail and the institution of a new system of release on conditions. Only in exceptional circumstances—where the court is satisfied that it is appropriate to the special circumstances of the case in question—can a deposit of money be required as a condition of hail. I should stress the significance of this to those who are more expert in the criminal law of England. Indeed, in parenthesis to those noble Lords who may be accustomed to sitting on the benches of the magistrates' courts in England, may I say that this Bill is a fascinating little cameo of the different conditions and indeed philosophy of the Scottish legal system compared to that which obtains in England.
In Scotland the only way of obtaining release on bail at present (assuming that the court has granted bail in principle) has been to pay over the sum of money fixed by the court. It is not possible to obtain release on the promise to pay if the accused fails to appear, nor on a surety being offered by a third party. This Bill will change all that and a system of conditions—but not recognizances—will become the basis of release on bail in Scotland. Failure to appear at any diet of which the accused is given due notice and breach of any conditions are to be statutory offences. At present in Scotland the only penalty for failure to appear is the loss of the comparatively small sum paid into court to secure release. The new Bill is therefore intended to make
702
the bail system more humane by making bail more accessible to those who are granted it. It is also intended to make it more effective by providing more severe punishments for those who do breach bail.
The Thomson Committee's conclusion was that the accused's need to find money bail prevents his being released in many cases, at least in the first instance; and has no significant effect on the likelihood of his appearing at subsequent proceedings. Moreover, a very great deal of work is involved for the courts in collecting and accounting for the money involved. The conclusions reached by the committee were underlined by a Scottish Office Social Research Study on Pre-Trial Bail and Custody, which was published in 1976. That study drew on information about bail which was granted between February 1972 and January 1973 but there is nothing to suggest that the passage of time has cast doubt on its general conclusions. In that period the most common amount set for bail was £10 although there was a range extending from 50p to £1,000. The average amount fixed as bail was only about £14. Even in the period of the study these sums were relatively small, but more than a quarter (that is, 27 per cent.) of those granted bail were unable to deposit the money required immediately and were held in custody for at least part of the time between the grant of bail and the eventual trial. Nearly 2 per cent. of those granted bail could not find the money at all and spent the full time before the trial in custody.
This extension of imprisonment might arguably be justified if the money deposited was a guarantee that the accused would turn up in court, but the study also found that the amount of bail fixed appeared to have no significant effect in deterring those granted bail from absconding. I would remind the House that loss of bail money is the only penalty at present for breach of bail. The most common amount fixed for those who subsequently absconded—that is £10—was exactly the same as that for those who did not. Moreover, there was no more than a marginal and statistically insignificant difference between the average amount of bail fixed for those who subsequently absconded and the average amount fixed for those who neither absconded nor re-offended while on bail.

703
A court is concerned with protecting the public and safeguarding the interests of justice from any undesirable consequences of an accused person being at large, and not merely with preventing the accused absconding before trial or avoiding his unnecessary detention. Under the present system of bail in Scotland, the fairly small amounts of bail set are designed only to ensure that the accused presents himself for trial when required. This Bill provides however that the conditions which may be imposed should be such as to seek to ensure not only that the accused appears at diets of which he is given due notice but also that he does not commit an offence while on bail; that he does not interfere with witnesses or obstruct the course of justice in his own case or anyone else's; and that he makes himself available for any necessary inquiries. It is therefore a much more subtle and effective instrument for securing the aims of justice while the accused is at liberty pending trial. The Bill itself does not lay down the conditions which the court may impose to achieve these ends; nor is it the practice in Scotland for the Crown or the Government to attempt to give guidance of this sort to judges. We might however reasonably imagine that a court might require an accused to hand over his passport or stay away from a particular area, place or person.
As I have said the only penalty for breach of bail at present is the loss of the relatively trivial sum paid into court. This Bill will make much more severe penalties available for the relatively serious offence of failure to turn up or breach of bail conditions. Thus an accused who absconds or breaches the conditions imposed on bail will be liable to a fine of up to £200; and to imprisonment for a period not exceeding 60 days where he is tried in a district court, or up to three months when he appears before a sheriff or in the High Court. In view of the considerable expense and inconvenience arising from the failure of an accused to turn up for trial under solemn proceedings, the penalties in such a case are even more severe. An accused granted bail in relation to solemn proceedings who fails without reasonable excuse to appear at any solemn diet of which he has been given due notice will be liable on con
704
viction on indictment to a fine of unlimited amount and a period of imprisonment of up to two years, in addition to any penalty he may have incurred for his original offence.
The more extensive and yet specific aims of bail set out in the Bill and the power to impose conditions with enhanced penalties for breach of the law should give courts much more confidence that bail will not be abused. The Bill will, we hope, therefore lead to courts using bail more readily to release the accused before trial. Similar arguments apply also to police liberation and this should reduce the number of people who, though later acquitted or given non-custodial sentences, nevertheless at present spend some time in custody before they are tried. In any event, and we attach the greatest importance to this, the abolition of money bail is likely to lead to a reduction of over 2,000 a year in the number of needless committals to custody from the sheriff courts alone. I would emphasise that this minimal figure only includes those held in custody after bail has been granted until they deposit the sum of money required, and only from sheriff courts.
Our only significant departure from the Thomson Committee recommendations is that we are leaving open the possibility of the courts' requiring a deposit of money as a condition of bail in very special circumstances. Even the committee did not go so far as to suggest that there were no circumstances in which a requirement to deposit money would be useful and we believe there are cases where such a requirement might be appropriate. We have therefore included that option for the courts, although not for police liberation. The sort of cases we have in mind are, for example, major frauds, offences against fishing regulations by foreign skippers where large amounts of money are at issue and offences by people with substantial financial assets who lack strong roots in this country.
As I have said, only the courts will have the power to impose a requirement for a deposit of money, and only then if they are satisfied that the imposition of that condition is appropriate to the special circumstances of the case. I should also stress that any requirement to deposit money will be imposed as one of the conditions of release and will thus fit

705
into the framework of the new system. In particular, such a requirement, like any other condition of bail, would be subject to appeal by both Crown and accused. We do not expect, therefore, that this power will be used often and never, we would hope, for small amounts of money. I can understand the fears of those who argue that the essential conservatism of the legal system will lead to continuation of money bail under a new name but I am sure that these fears are unfounded. This Bill simply leaves open the option of requiring a deposit of money where this is peculiarly appropriate, and we are confident that it will not be abused.
Another important aspect of the bail package is that the power of the police to release on interim liberation is being extended. At present the police may only liberate on the deposit of money and that is being abolished in parallel with the abolition of bail money itself. Moreover, the police are being given power to liberate those charged with any offence triable in the summary courts where at present they are only entitled to liberate those charged with offences triable in the district court, a much more restricted category.
Noble Lords might find it helpful if I were to outline the purpose served by the various clauses in the Bill. However, bearing in mind that the only noble and learned Lord down to speak is the noble and learned Lord, Lord McCluskey, I feel that I can shorten my remarks to that extent, because he will appreciate perfectly well, I have no doubt, what the clauses mean.
In conclusion, I should say a little about the provision on court sittings. Clause 10 provides that courts are no longer under a statutory obligation to sit on Saturdays. There are now acute difficulties in persuading court and fiscal support staff to work the unsocial hours which are necessary if Saturday court sittings are held. There are also problems over recruitment, given that most comparable clerical and typing jobs enjoy a five-day week. It is for these very practical reasons that the Government have concluded that Saturday courts should not in future be mandatory.
It will however be possible for courts to sit on a Saturday or, as is not the case
706
at present, on a Sunday if this is deemed necessary, for example, after a riot at a football match. This introduces a desirable element of flexibility. It is, however, not expected that courts will sit on these days other than very infrequently. As I said earlier, the Government believe that the measures being adopted in Clauses 1 to 9 on the reform of bail and in particular the widening of the discretion of the police to grant interim liberation should obviate the risk that the abolition of mandatory Saturday courts might cause an increase in the number of those held in custody before trial.
I believe the Bill is a well thought out and useful contribution to the continuing improvement of criminal justice and procedure in Scotland. I hope it will enjoy the support of noble Lords on all sides of the House. My Lords, I beg to move.
Moved, That the Bill be now read 2a.—(The Earl of Mansfield.)
3.2 p.m.
Lord McCLUSKEY: My Lords, since time immemorial noble Ministers of State at the Scottish Office have risen to their feet at the Government Dispatch Box here to move the Second Reading of a Scottish Bill only to be dismayed and disheartened to see noble Lords rise in their hundreds from all parts of the House and pour out of the Chamber as if they had suddenly remembered that they had some pressing engagement elsewhere, and I fear something similar happened today. This phenomenon is not produced by any lack of eloquence or lucidity in the Ministers concerned. They have all been lucid and eloquent, none more so than the noble Earl. It derives, rather, from the comparative lack of interest here in domestic Scottish legal matters.
Lord DERWENT: My Lords, may I interrupt the noble and learned Lord to tell him that it is simply because of the fright we have of the Scots?
Lord McCLUSKEY: There must be more than one reason for everything, my Lords. I believe the irony of the whole situation is that the apathy of

707
noble Lords about such matters has been matched only by their passion in opposing proposals we introduced in the last Parliament to ensure that such questions were debated not here but by Scots assemblymen in Scotland. None the less, the House will wish me to thank the noble Earl for his careful and helpful exposition of the principles and content of the Bill.
Indeed, my pleasure in hearing the noble Earl introducing the Bill is tempered only by my regret that the Government did not give his noble and learned colleague, the Lord Advocate, this excellent opportunity to break his long silence, but we must curb our impatience and hope he will soon have an opportunity to give the House the benefit of his wise advice. Perhaps I should also add that I regret to see from the list of speakers that no one will speak from the Liberal Benches. Now the Liberals are an important party in Scotland and care about these matters, and perhaps the remedy there lies in having a Scottish Liberal lawyer on the Liberal Benches in this House.
The Bill itself deserves, I believe, a modest welcome. It has respectable antecedents because it was largely conceived by my colleagues and myself in the last Government. We did a lot of work over a period of years in selecting and drafting a set of proposals for the reform and improvement of criminal justice and procedure in Scotland. But owing to the necessary pressures of the Parliamentary timetable, we had to cannibalise our proposals two Sessions ago and bring forward a small part of them only in the shape of the Community Service by Offenders (Scotland) Bill; that was regarded as urgent. Then our own Criminal Justice Bill, which itself was formed as the result of selecting from several hundred different proposals, fell victim last Session to the General Election. Now the Government have cannibalised another small part of that same Bill and incorporated that in this modest little Bill. One of these days we shall no doubt see the Government's own Criminal Justice Bill for Scotland and I eagerly await some authoritative announcement as to its contents. Indeed, I have put down a Question for Written Answer in the hope of discovering what is proposed.
708
Perhaps I may be allowed to say that I am told that the BBC and the Scottish Press announced in the last few days that. I was an opponent of the Government's. Criminal Justice Bill and would lead, jointly with someone else, a campaign against it. That is not true. I have said no such thing and given no authority for any such statement. In so far as the Government's proposed Bill borrows from the measure which we introduced, I shall support it and invite my colleagues to do the same. In so far as the Government's proposals differ from what we decided upon, I shall examine the new proposals and form my view on their merits. If, for example, the Government should propose to give the police much greater powers than we proposed they should have, then we shall scrutinise these powers carefully, trying to balance the interests of the criminal authorities and the legitimate interests of the citizen. If the Government should propose to reduce the size of the criminal jury in Scotland from 15 to 12, I shall certainly oppose that piece of nonsense, as I did when I was in office. If the Government seek to reintroduce corporal punishment as the present Solicitor-General for Scotland did with the assistance of the present Under-Secretary of State, Mr. Rifkind, earlier this year, I shall certainly oppose that barbarous proposal. But I will not turn coat and oppose proposals of the kind which I myself would have supported had it been my privilege and responsibility to introduce a Criminal Justice Bill in this House.
Let me say by way of comfort to the Government in relation to this Bill that one of the problems of preparing a comprehensive Bill is the problem of striking the right balance between measures designed to ensure the easier conviction of the truly guilty and measures designed to protect the legitimate interests of the accused and of those who fall to be punished for their guilt. One result of this process of cannibalisation of which I have spoken is that by the time we come to consider the Criminal Justice Bill which the Government will introduce we shall already have enacted I believe—in this Bill and in the Community Service by Offenders Bill—some of the measures which were conceived in the interests of accused persons. And it would be quite wrong for me or for anyone else to leave

709
that out of account in assessing the overall balance of the forthcoming Bill. All three measures must be looked at together as part of one package in order to see whether or not the proper balance has been achieved.
This Bill has our general support. Money bail in Scotland without conditions has, we believe, outlived its usefulness. My colleagues in another place opposed the retention in this Bill of a form of money bail—your Lordships will find it in Clause 1(3). I will not ask the Government to abandon this provision altogether; it has the support of Her Majesty's judges in Scotland and of a majority in the other place, and I acknowledge that there is a reasoned argument in favour of it. But I will ask the noble Earl, as I do now, to think again about the wording of the last four lines of Clause 1(3). I think this wording will make it too easy for the old-fashioned money bail to survive in cases where it is not now intended to survive.
The noble Earl referred to the three situations where he envisaged that money bail might continue to be used, and I do not dispute that it would make quite a useful contribution to the courts' techniques in relation to such cases, but I think there is a danger that if the words are not sufficiently tight, other cases may be drawn in. I shall ask the Government to consider adding other words or altering the existing words so that in that subsection something of this sort might appear:
"but only where the court, or as the case may be, the Lord Advocate, is satisfied that the imposition of such condition is the only course appropriate to the special circumstances of the case, and the accused agrees to the requirement".
Such wording would, I believe, restrict this requirement to the kind of case the noble Earl mentioned and the kind of case the Government have in mind, and effectively prevent the courts from slipping back into the too ready requirement of money bail.
Secondly, I believe that the penalty of two years' imprisonment—and let me repeat that: two years' imprisonment—introduced by paragraph (b) of Clause 3(3) of the Bill is quite unnecessarily severe. I have read with care the defence of that provision by the Under-Secretary of State for Scotland, Mr. Rifkind, at the First Scottish Standing Committee on 10th July
710
1979, and I do not agree with it. If by absconding and thus failing to turn up on the morning of his trial an accused person attempts to defeat the ends of justice, I think that he should be charged with that crime. From my reading of Scots law I am quite certain that if a person deliberately sought to defeat the ends of justice by failing to turn up on the morning of his trial—perhaps in order to allow much time to pass, witnesses' recollections to fail, witnesses to die, or evidence otherwise to be lost—he could be charged at common law with that crime. Then the whole circumstances, including his motives, could be gone into.
But what we are doing in this Bill is saying that if a person fails to turn up for a jury trial on the morning of the trial, the court—and that includes the sheriff—may impose two years' imprisonment in respect of that failure. So we leap from the present situation where he forfeits £10 or £14 to a sentence of two years' imprisonment, which of course is a maximum, and I think that this really goes too far. In approaching the matter in this way the Bill would give the sheriff in Scotland a power to send a man to prison for four years: two years in respect of the crime of which he was convicted, and two years in addition in respect of his failure to turn up for the trial on the first occasion. I do not believe that that is right.
In the discussions on the previous Bill there was a proposal put forward on behalf of the Opposition (as they then were) to extend the sentencing powers of the sheriff. There are arguments both ways on that particular question, and I believe that these arguments ought to be looked at carefully, and perhaps we shall look at them carefully in the context of the new Criminal Justice Bill. But to deal with this by a side door is, I consider, quite wrong. I hope that if noble Lords opposite, who hear or read what I say, believe that it is a danger to give a sheriff power to impose four years' imprisonment where he can now impose only two, they will perhaps speak to the noble Earl and ask him to modify this proposal which was not in our Bill and does not derive from the Thomson Committee on Criminal Procedure. I hope to return to this matter at the Committee stage.

711
Clause 10, to which the noble Earl referred, enshrines what I see as a regrettable necessity. At the moment a court in Scotland may, and does, sit on a Saturday morning in order to deal with people who have been detained in custody since some time on Friday. This clause means the virtual end of Saturday sittings for dealing with persons detained in custody after falling foul of the law on a Friday night. Friday night is pay night. For many it is the end of the working week, and it is the night when people are most likely to get into trouble. As a result of this provision such people are unlikely to be released before Monday. They certainly could not apply before Monday to a court for release. However, I concede that we cannot hope to go on imposing the burden of Saturday courts on sheriffs, procurators fiscal, court staff and the police, and this clause must therefore stand.
But let me draw your Lordships' attention to the latter parts of the same clause—Clause 10. One sees from that that it is possible to have the courts shut for three consecutive days; that is to say, where there is a public holiday on Monday preceded by Saturday and Sunday, or indeed where there is a holiday on Friday followed by Saturday and Sunday. I wonder whether this does not perhaps go a little too far. Is it not possible to avoid the result that someone who is detained on a Friday cannot appear before the court until the following Tuesday morning?
In Scotland we have always prided ourselves—rightly, I believe—on bringing the accused before the court very swiftly. Would the noble Earl not consider a new subsection? Again, I cannot hope to draft as carefully as I might when we come to this matter at the Committee stage, but would he not consider a clause along the following lines:
"Where a court holiday occurs on a Friday or a Monday with the result that persons arrested on a Thursday or Friday respectively would have to wait three days before the next lawful day, the court shall sit at least once during such three days to entertain applications from such persons for interim liberation"?
That would mean that on the rare occasion—perhaps only once or twice a year—when there was liable to be a three days' vacation, as it were, of the court, special arrangements would be made.
712
What the Government have done in introducing the Bill—and I fully understand and sympathise with them—is to treat as separable and urgent a few of the more technical and less controversial parts of the Criminal Justice Bill that we introduced. I regret, however, that they did not see it possible to go a little further and introduce at this stage the proposals to modify slightly the 110-day rule. As the noble Earl will know, our proposals were contained in Clause 20 of our Bill, and the modification was to allow the 110 days to run to the start of the trial, not to its conclusion. I should explain to those of your Lordships who are not familiar with the provision that we have an excellent provision that works in Scotland, yet I believe hardly anywhere else in the world, providing that if a person is detained in custody, he must be brought to trial, and his trial concluded, within 110 days of his being committed fully into custody. That is a summary of the provision and there are many modifications, but in essence it means that, however serious the charge, no person can be detained for more than about 3½ months.
The trouble is that in a number of modern cases, whereas a trial has started within 110 days, there have been great difficulties in getting it finished within that time. Accordingly, we introduced a proposal to have the 110 days run to the beginning of the trial, not to the end of it. That was not a controversial proposal; it was not opposed in the other place. I consider that it is fairly urgent because any week now another such case might come up despite the vigilance of the Crown Office and the procurators fiscal. So I believe that that is a matter which should have been attended to at this stage, and I ask the noble Earl whether it is too late to introduce this desirable reform, which was not opposed in another place and which I would hope would go through without controversy?
I have a number of criticisms of points of detail which I hope can be considered at the Committee stage, but I believe that the principles of the Bill are sound. It is a small but useful Bill, and I trust that your Lordships will give it your support. Subject to the points that I have made, and which I hope noble Lords will think about and perhaps speak to the noble

713
Earl about, I would ask your Lordships to support the Second Reading of the Bill.
3.18 p.m.
The Earl of MANSFIELD: My Lords, I wish to thank the noble and learned Lord, Lord McCluskey, for his muted but nevertheless genuine welcome for this modest measure. I detected in his speech a great many references to what we know, or hope, will be a forthcoming Criminal Justice Bill. I am the first to sympathise with his very natural apprehension—and I must be careful with my metaphors here—that the legal child which he conceived is to be brought forth possibly in a form which may be slightly, or even materially, different from what he thought it might be. I do not propose to say any more about the Criminal Justice Bill; the noble and learned Lord must contain himself until it sees the light of day. I am aware that he has put down a Question for Written Answer, and that will be answered as expeditiously and as compendiously as possible, but I repeat that we must wait until the Bill sees the light of day before we can draw our conclusions.
One of the strange matters that a lawyer who practises in England—I was going to say "an English lawyer", but again I must be careful—finds is the curious distrust that the noble and learned Lord and his honourable friends in another place have for both the prosecuting authorities and the judiciary. When one peruses the Official Report of the proceedings as this Bill went through the other place one sees time after time this mistrust for what could happen if either sheriffs or procurators fiscal took the wrong view of their duty and used the powers which the Bill gives them in such a way that it would be onerous, if not actually unjust, to accused persons. That is something which I am bound to say I found rather surprising, and, if I may say so, the first point which the noble and learned Lord made as to the residuary requirement for money bail illustrates precisely this point. I would prefer to think that the courts will use this residuary discretion (if I may so call it) in a way which will, as it were, provide complete protection for accused persons, as is the whole design of the Bill, but which, on the other hand, will ensure the attendance
714
at court of people who otherwise might not turn up if they did not have to deposit what will probably be very large sums of money to see that they do. This is something which I have no doubt we can go into in Committee, but at the moment, speaking for myself, I am satisfied that the provision is fair and at the same time reasonable.
Lord McCLUSKEY: My Lords, perhaps the noble Earl will allow me to say that I do not mistrust either the judges in Scotland or the prosecuting authorities in Scotland, but I am human enough to know that people make mistakes. It is possible—and there have been examples of it in the past—that a sheriff might get out of bed on the wrong side one morning and do something quite extraordinary. This kind of thing happens from time to time. The second point is that the judges, in construing the subsection to which I made reference, cannot look at Hansard to see the three cases which the noble Earl has in mind; they must look at the wording. I seek to achieve precisely the same object as the noble Earl, by tightening up the wording to ensure that the circumstances are, as he said in his speech, very special, and not, as the Bill says, simply special.
The Earl of MANSFIELD: My Lords, even I, as an honorary sheriff, made a mistake once, I believe, but it was put right on appeal, and there are full rights of appeal in this Bill which persons who find themselves in such unfortunate circumstances can invoke and pray in aid. As to the point which the noble and learned Lord made about my noble and learned friend the Lord Advocate, may I say that he is reserving his power for just such an occasion as the Criminal Justice Bill, when I, for one, shall be very glad of a 15-pounder alongside me.
The next matter which the noble and learned Lord raised was the maximum period of imprisonment which could be imposed by a court—that is, two years' imprisonment—if somebody (putting the matter colloquially) failed to turn up for their trial. The first thing I should like to say is that only when somebody fails to attend court are they liable to this rather more severe penalty. The second matter is that the court which sentences them has to be satisfied that they have

715
failed to attend, in the words of the subsection, "without reasonable excuse"; so there is no question that they are not allowed to say a word in their defence, or that they will not be heard. They have to have failed to appear "without reasonable excuse". In other cases, of course, the maximum is far less; it is only three months. Let us realise that in ordinary circumstances a sheriff is entitled to impose a sentence of imprisonment of two years, so this is neither more nor less than the sheriff can customarily impose. Fourthly, and once more, my Lords, there is a provision that a person who has been so sentenced may appeal.
So, as I suggest, this is a provision to deal with somebody who quite obviously, by his absence from the court, has seriously interfered with the carriage of justice so far as he or she is concerned. For myself, I think it would be a thoroughly cumbersome way of going about things to make a new substantive offence, and to say, "You, John Bloggs, are now going to be charged with failing to attend '', as opposed, as it were, to wiping the slate clean at the conclusion of the trial, or whenever he happens to be apprehended. Again, that is a matter which we can come to in Committee if the noble and learned Lord thinks fit. The other matter to which the noble and learned Lord turned his attention was Saturday courts. I fully appreciate that, at first blush, if somebody were so foolish as to misbehave on a Friday night and Christmas or New Year fell on the Monday, they could languish in prison for no less than three days.
Lord MURRAY of GRAVESEND: My Lords, would the noble Earl give way at that point? Is it not the case that, in 1981, 1st January falls on a Thursday and that 2nd January is a Bank Holiday in Scotland, so it could be that he would be languishing in jail for four days?
The Earl of MANSFIELD: No, my Lords; Scottish courts sit on 2nd January, so 1981 is going to be all right. What I want to say is this, that the whole point of Clause 8 of this Bill—in other words, interim liberation (a splendid word that!) by the police—is designed for just this sort of occasion. That is to say, where it
716
is not necessary, and indeed will not be desirable, for somebody to languish in prison, then it will be up to the police, in far wider circumstances than they have ever been empowered to do before, to admit somebody to bail. Because, as I said in my opening remarks, up till now the only conditions under which the police have been allowed to liberate persons who have been arrested are those in cases which would fall to be determined possibly by a district court; and if I illustrate that by saying that the maximum amount of money at stake in the case of theft is £20, noble Lords will see just how poor, if I may use that expression, just how puny, the jurisdiction of the district courts happens to be.
So, my Lords, I am not convinced at the moment that the noble and learned Lord's point that Clause 10 will of necessity cause people to be kept in prison for longer than they need is necessarily a good one. But I repeat what I said in my previous remarks, that if, for instance—and I am not going to be like the Solicitor-General for Scotland and illustrate what sort of commotion I have in mind—there is likely to be some sort of riot on a Saturday evening, there is no reason why the sheriff principal should not make prior arrangements for a court to sit on a Sunday (which has not been empowered before) so that, again, persons should not suffer incarceration longer than they have to without at any rate the opportunity to apply for bail.
Finally, the noble and learned Lord asks why we have not taken the opportunity in this particular Bill to further modify and indeed improve the reforming of Scottish law, and he mentioned the 110-day rule. My answer to that is that really the Government cannot win. On Thursday, when I was in your Lordships' House finishing off the Law Reform (Miscellaneous Provisions) (Scotland) Bill, the noble and learned Lord's noble and learned friend Lord Elwyn-Jones referred to my modest measure as "a rag bag". On the Tuesday, when I come forward with a small but nevertheless coherent and well-shaped package, I am then again criticised for not having gone further and turned it into a rag bag. But I can assure the noble and learned Lord that if he waits until our Criminal Justice Bill sees

717
the light of day, then we can discuss all these matters fully, and no doubt at considerable length, and improve the law as best we can.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

MINISTRY OF OVERSEAS DEVELOPMENT (DISSOLUTION) ORDER 1979
3.29 p.m.
Lord TREFGARNE Lord TREFGARNE rose to move, That an humble Address be presented to Her Majesty praying that the Ministry of Overseas Development (Dissolution) Order 1979 be made in the form of the draft laid before the House on 25th October. The noble Lord said: My Lords, I beg to move that an humble Address to presented to Her Majesty, praying that the Ministry of Overseas Development (Dissolution) Order 1979 be made in the form of a draft laid before this House on 25th October. May I start by saying how much I regret the absence today of the noble Lord, Lord Brockway. Your Lordships may have heard that the noble Lord—whom I should like to call "my noble friend"—suffered an accident over the weekend and is in hospital. I am sure that we all wish him a speedy and full recovery.
I think it is my duty to give your Lordships a full explanation of the procedure we propose to follow with this order, together with a description of the practical consequences which will flow from it. I also propose, with your Lordships' permission, to make some observations on our approach to overseas aid generally, particularly in the light of the public expenditure White Paper published last week.
We propose that this order should be made under Section 1 of the Ministers of the Crown Act 1975. Section 1 of the Act gives Her Majesty power exercisable by Order in Council to provide for the dissolution of a Government Department in the charge of any Minister of the Crown and for the transfer of the functions previously exercisable by that Minister to any other Minister. By virtue of Section 5(I) of the Act, no Order in Council which provides for the dissolution of a Govern
718
ment Department shall be made under the Act unless copies of it are first laid in draft before both Houses of Parliament and each House presents an Address to Her Majesty praying that the order be made. I should perhaps tell your Lordships that the other place agreed a Motion in identical terms to this one on Tuesday of last week.
Upon his appointment, my noble friend the Foreign and Commonwealth Secretary assumed full responsibility for overseas aid and development, and the Ministry of Overseas Development became an Overseas Development Administration within the Foreign and Commonwealth Office. My noble friend's full title is thus Secretary of State for Foreign and Commonwealth Affairs and Minister of Overseas Development. These arrangements have already been put into effect administratively, in so far as is possible. However, this order is necessary to make formal provision for the dissolution of the Ministry of Overseas Development and for the transfer to the Secretary of State of the functions of that Ministry.
As part of the new arrangements, my honourable friend Mr Marten, the Member for Banbury, was appointed to be responsible to my noble friend for aid and development matters within the Foreign aid Commonwealth Office, and to be in charge of the Overseas Development Administration. He was given the title of Minister for Overseas Development. These arrangements stand. They have had, and will continue to have, a number of consequences. When development matters are considered among Ministers, they are handled by my noble friend in consultation with my honourable friend Mr Marten. That is the background to this order. May I now turn to what I believe to be the main advantages of the new arrangements.
I am sure your Lordships will agree that it is particularly appropriate to have the Foreign and Commonwealth Secretary in charge of both the Government's foreign policy and their aid programme. This will ensure that all our dealings with oversea nations are conducted with consistency and, above all, represented in the Cabinet at the highest level.
The Government have responded speedily and effectively to the appalling

719
plight of the refugees who were forced to leave Vietnam, and now to the threat of famine in Kampuchea. In Rhodesia, the future health and welfare of the people—all the people—has been in the forefront of our thinking.
As my noble friend moves to re-establish the position of Great Britain in world affairs, he will be able to ensure, within the compass of his own responsibilities, that our aid programme and our foreign policy are administered hand in hand, and that all the relevant considerations, including our ability to find the money, are brought together, co-ordinated, and finally implemented with efficiency and compassion.
It has been suggested that this order will have an adverse effect upon the reputation of our aid administration overseas. I reject that assertion completely. If the reputation of those administering our aid programme stands high in the eyes of the developing countries and of countries which share with us our responsibilities in the Third World—as I know it does—then henceforward that reputation will be enhanced. This Government have the greatest possible concern to ensure that public money is properly spent and those responsible for this task in the Overseas Development Administration will continue their former duties. The new procedures which this Government have introduced and which will be formalised by this order differ from the old mainly in that liaison between the two wings of the Foreign and Commonwealth Office will be closer. The experienced staff formerly of the Ministry of Overseas Development, who have been widely praised, will continue to contribute their expertise.
I have explained what I believe to be the major advantages of this order and I have, I hope, allayed any doubts which may have arisen. I should like in conclusion to emphasise that the new order in no way implies any reduction in the importance attached by this Government to the problems of the Third World. We remain committed in principle to the achievement of the target set by the United Nations that the developed countries should provide 0·7 per cent. of GNP as official development assistance——
The Earl of LONGFORD: My Lords, is the noble Lord prepared to tell us what
720
proportion is provided at the present time?
Lord TREFGARNE: No, my Lords, I am not. I repeat that we remain committed to the principle of contributing 7 per cent. as official development assistance, although, like the previous Government, we are not yet able to set a date for achieving it. We give full weight to development considerations in our aid programme. We are at present reviewing aid policy, but I can assure your Lordships that we shall continue to take account of the needs of the poorest.
We have had to limit the planned increase in the aid programme below the rate that the previous Government had intended, but the reductions are no more than appropriate to those we have had to make in nearly all public expenditure programmes. I must say quite firmly that the plans of our predecessors could not have been sustained. The Shadow Chancellor, Mr. Healey, has recently admitted that, had he remained at the Treasury, some cut-backs would have been necessary. Indeed, he did prune the aid programme in 1976, when he proposed reductions for the years 1977–78 and 1978–79. The amount of those cuts substanitally exceeded in percentage terms the changes we have recently announced. There will still be a very substantial and important programme—we are planning to spend around £843 million this year on aid, of which £790 million is new money, the balance being recycled from the repayment of old loans.
This order is intended to improve administrative arrangements, not to change policies radically, We are certainly not reversing the policies of our predecessors. We have already demonstrated our commitment to the relief of suffering in the case of Cambodia and, within our present restraints, we shall see that a fair share is allocated to meeting such needs in the future. We are also concerned to ensure that our policies are efficiently integrated and, accordingly, I ask your Lordships to agree to the Motion standing in my name. I beg to move.
Moved, That an humble Address be presented to Her Majesty praying that the Ministry of Overseas Development (Dis-

721
solution) Order 1979 be made in the form of the draft laid before the House on 25th October.—(Lord Trefgarne.)
3.39 p.m.
Lord HATCH of LUSBY: My Lords, I should like to begin by thanking the noble Lord, Lord Trefgarne, for his kind words about my noble friend Lord Brockway, whom we all miss today, who would have been speaking in this debate and who has certainly done as much as or more than any other living Britisher for the cause of the Third World. I should also like to express my sympathy with the noble Lord opposite. He has the thankless task of answering for a number of departments. Although I believe he is based at the Foreign Office, he was not responsible for the decision which we are debating on this order this afternoon. I understand from the Minister concerned that that decision was taken on May 4th or 5th; in other words, it was taken within a few hours of the General Election results being known.
We are debating the fate of what was the Overseas Development Ministry and what is now the Overseas Development Administration. This was set up in 1964 under the very inspiring leadership of Sir Andrew Cohen and with a Minister, Barbara Castle, who was at that time in the Cabinet. It was an expression of the British contribution to the concept of internationalism, of a world of justice, and it was supported in its objectives by members of all and of no party. It was indeed a reflection of the fact that members of all communities in this country recognise the emotional and mental unease that we feel at a time when we in this country are living in a state of relative affluence while for every minute that this debate takes place 25 people somewhere in the world are dying, simply through malnutrition. The particular importance of this Ministry was that it was based upon the concept of the British contribution to development and, as a consequence, members of the Conservative Party, the Liberal Party, the Labour Party and members of no party supported its pioneering efforts in providing our contribution to a world of greater equity and justice.
Its special importance was that it was independent of other Ministries; it was
722
seen to be independent and, as it grew and as its influence extended throughout the world, this independence became of extreme importance and has been imitated in other countries. It therefore had an international reputation as a Ministry. When one adds to that the work often done on its behalf by the British Council, and the work done by the World Service of the BBC, this formed a unique triumvirate of British participation in international affairs.
One can contrast the independence which the Ministry had, the ability which it had, to push for the needs of people poorer than ourselves in this country. One contrasts the example to be seen in the United States, with its disastrous record of linking overseas aid with foreign policy; and perhaps above all with France, the culmination of whose disasters has been seen very recently in the kind of support that they have been giving to the former Emperor Bokassa and other tyrants of that kind, because French foreign policy and aid policy were inextricably linked together.
Fortunately, we are now able to see that the United States has learned its lesson. The United States is moving the opposite way from this Government. The United States has now set up an international development corporation separate from the State Department, very largely because it has learned the lessons of failure in linking aid with foreign policy. The party of which the noble Lord is a member at one time believed this. Their White Paper in 1970 said that the Conservative Government recognised that the management of overseas aid is a function distinct from the general conduct of foreign affairs. Apparently they have changed their minds since those days. We have not.
Secondly, I should like to pay tribute to the work of this Ministry over the past two or three years. I believe it began, under the distinguished leadership of the right honourable Judith Hart, to add an extra dimension to the simple issue of aid as a charity. It had begun to do what the Select Committee of the other place had proposed and pushed it to do: to link overseas aid with domestic economic policy. This is of tremendous importance to the future of this country and of equal importance to the peoples of

723/>
the Third World. It was then able to see that through the Ministry of Overseas Development the infrastructure could be built with overseas investment to enable the development of better standards of living with greater purchasing power and, therefore, with the greater opportunity to buy the goods of our country and the other countries in the developed world. Twenty-five per cent. of our exports today go to developing countries. The aid programme itself is linked directly to the domestic economy of our country by providing, according to the latest reckoning, 40,000 jobs in this country.
I hope that the noble Lord will not tell us that the Government should like to do a great deal more in the provision of overseas aid when our economy is in a stronger position. That is not the point. That is missing the point which I have been trying to make in this House ever since I entered it. The aid that goes to overseas countries is not dependent upon economic growth in this country; it is in itself the seeds of that growth. Instead of talking—as many noble Lords opposite do—about pruning the trees in the hope that they will grow higher, do they not realise that they are cutting the roots of those trees that can supply the sap of our own growth?
We are told that the Ministry is to be absorbed into the Foreign Office. This is a measure which I greatly deplore. We have seen—and I am sure the noble Lord will be the first to agree with me on this—a dedicated group of civil servants in that Ministry. In the applications for Civil Service posts a very large percentage of young people specify the Ministry of Overseas Development as their first preference. This is a sign of the dedication of the young to the contribution of this country to the concept of one world.
Lord SOMERS: My Lords, may I interrupt the noble Lord? Would he not agree that there is something in the old adage that charity begins at home, that there are many causes in our own country that are quite as urgently in need of help as those of overseas countries?
Lord HATCH of LUSBY: My Lords, my answer to that is very simple: we are a trading country; we cannot look parochially to the economy of this country as though it were surrounded by a wall.
724
In our own interests, and in the interests of solving our own social and economic problems, it is essential that we look to the market, which consists of half the world, that today is unable to buy our products.
What I should like to say to the noble Lord about what is really an apologia—and remember, my Lords, that this issue was considered to be sufficiently important in the other House for there to be a debate lasting between four and five hours —so far as the inclusion of the Ministry of Overseas Development into the Foreign Office is concerned, is that I believe that to be not just a blow to the morale of the staff of the Ministry of Overseas Development, although it is—it is much more important than that.
I wish that the noble Lord the Foreign Secretary had been able to be with us this afternoon, as he took the decision. It is a decision of policy and certain consequences flow from that policy. We now have foreign policy dominating our policy on overseas aid, and I believe that it is a bad thing. There should be tensions; often in the past there have been tensions. The noble Lord spoke about the cuts that had been made by a previous Chancellor of the Exchequer. Let me remind him that they were restored, and that when cuts were made the Ministry of Overseas Development was given very special treatment. Let me remind him also that the last Government had already pledged themselves to make, and had made the budgeting arrangements for, a 6 per cent. increase in real terms in the Ministry budget over the next four years.
Lord TREFGARNE: My Lords, I am obliged to the noble Lord for having given way to me. I think that his right honourable friend Mr. Healey has said since he went into Opposition that the programme that was foreseen by the then Government at the time of the election could not have been sustained. I do not really think that a 6 per cent. increase, which was certainly in the last Government's original programme, would have stood the light of day.
Lord HATCH of LUSBY: My Lords. that may be the opinion of the noble Lord: it is not my opinion, and it is not my opinion according to experience. As I have just pointed out, when cuts have been

725
made in public expenditure in the past by a Labour Government, the Ministry of Overseas Development has been given special preference in——
Lord TREFGARNE: My Lords, not in. 1976. When the noble Lord and his noble and right honourable friends were in power, as I said in my opening remarks, Mr. Healey in 1976 announced cuts for the years 1977–78 and 1978–79 which were of the order of 9 or 10 per cent.
Lord HATCH of LUSBY: Indeed, my Lords; and I have already answered that point. Those cuts were restored, and from this year, 1978–79, the budget of the Ministry of Overseas Development was increased by 6 per cent. in real terms and it was planned to be increased by 6 per cent. in real terms over the next four years.
I want to come to the crucial point of what are the consequences of the control of the Foreign Office over overseas aid. We have already seen them; we have had six months' experience. As the noble Lord said, this administrative action was taken last May. I understand—I believe this is not denied, and I would not stand pat completely on this figure—that the programme to India is to be cut by 40 per cent. This has not been denied; but when you talk about maintaining the principle of aid to the poorest, I would point out that the per capita income of an Indian is roughly 150 dollars. The per capita income of a Turk is 1,000 dollars. Out of the reduced budget on overseas aid, this Government have managed to find £15 million for the Turkish Government. It seems to me that this is surprisingly close to a foreign policy directive that because Turkey is an important area for NATO the Ministry is ordered by the politicians in the Foreign Office to use its aid in support of Turkey, while it is being cut to many countries such as India.
One can refer to the Home Secretary's announcement that the programme for refugees in Latin America is to be wound up. One can refer to the fact that it is now admitted that the aid that has gone to Kampuchea is being hindered at least by the fact that the Foreign Office insists on continuing to recognise the Government of Pol Pot. As we see the aid programme now coming under the aegis
726
of the Foreign Office, so that programme itself and the size of that programme come within the whole of the Foreign Office aegis. I suggest that already discrimination is being seen, Whereas we had budgeted for a 6 per cent. real increase in the aid programme this year, the present Government have budgeted for what comes down in real terms to a reduction of 5 per cent. We have seen the proposed cuts in the BBC World Service, and I need to say little more about that because so much concern has already been shown.
Let me come to the operations of the British Council, which has worked closely with the Ministry of Overseas Development, often as its agent. I understand that the British Council has been told to cut its budget this year by 11·5 per cent.: that is for the coming financial year. This, I understand, in fact, through redundancy payments and the like, is a real cut of 15 per cent. Yet the British Council is responsible for the provision of cultural opportunities and for the spreading of British culture—are we ashamed of spreading British culture?—among people who want to hear about how our institutions work. They are responsible for the teaching of the English language, of extreme value to British businessmen; for the educational services which have been provided for bringing overseas students into this country, training them, helping them to go back and again assisting them in the development of the British connection, which is so important to our overseas trade. I do not think we should neglect the fact that the British Council has also been responsible for the dissemination of the various art forms that are indigenous to this country to other parts of the world.
Finally, I want to come to a matter which is very close to my heart and which I must summarise very quickly: the running down and probable eventual extinction of the development educational programme. I asked the noble Lord in question last week whether he had read the Schlackman Report. He did not answer but I hope he has by now, because that Report shows that 64 per cent. of the people of this country believe that this country is too poor to help overseas countries, but when those people are told the amount of aid then their opinion changes. There is a great belief in this

727
country that we just pour out aid willy-nilly, and when the facts are known opinion changes. That is the job of development education. I would remind the noble Lord also that when the Report of the Committee on Development Education was drawn up, it was approved not just by the Ministry of Overseas Development but by the Treasury, the Foreign Office, the Department of Education, the Northern Ireland Office, the Welsh Office and the Scottish Office. I would ask him whether those other Ministries were consulted before the decision was taken to run down to a minimal amount the involvement of the Government in development education. I would remind him also that his Prime Minister signed a document in Lusaka which included this phrase:
"… to improving the public understanding of the need for change in the countries participating in the interdependent international system".
I would remind him, too, that the Minister he has referred to, Mr. Marten, said in another place just last week that,
"It is important that people in Britain should understand the problems of development and the extent of our interdependence with the Third world".—[Official Report, Commons, 30/10/79; col. 1181.]
Really, this is either a hyprocritical statement or an ignorant one when, at the very same time, the same man is closing down the Advisory Committee on Development Education and running down the involvement of the Government in development education, which is essential to underpin the overseas aid programme of this country and the concept of the people of this country of the rest of the world. I can tell the noble Lord that we shall continue to press for the renewal of that involvement, and I hope that many noble Lords on the other side of the House will do so, because it is already evident that every major Church and every major voluntary organisation in this country, which the Conservative Party was so anxious to support in its Manifesto, has protested against the running down of the development education programme as a disservice to this country.
Morally, this order is wrong. I do not believe that noble Lords will support a philosophy which gives massive tax rebates on the one hand, and cuts down aid to starving people on the other.
728
Economically, it is wrong. It is a distraction from our opportunity to restructure the industry of this country, and to associate it in an expanding trade programme with the peoples of the world who today are unable to buy our products, but on whom we depend for many of the materials essential to this country and on whom we also depend for an expanding economy.
Politically, it is wrong. The noble Lord spoke of the efforts to re-establish the power of Great Britain, the British Isles. I do not want to re-establish that kind of power, but I believe that we have a much greater power—the power of influence—and that influence can be seen when we practise what we preach, when we see and recognise our neighbours as world citizens and when we get away from the philosophy which, at a time of professed stringency, will add 3 per cent. to our arms budget and take away 5 per cent. from our overseas aid programme.
So I hope the time will come when, having reviewed the effects of this order, the Government will return to an independent, internationally recognised Ministry, able to re-establish its reputation in this country and throughout the world. I also hope that there will be Members on the other side of the House, as there were in another place, who will support this attempt to persuade the Government that they are wrong now and that they must reverse the effects of this order.
4.3 p.m.
Lord BANKS: My Lords, I should like to join with the two noble Lords who have already spoken in expressing the hope that the noble Lord, Lord Brockway, will soon be restored to full health and to his place in this House. I should like also to thank the noble Lord, Lord Trefgarne, for his very clear explanation of the purpose of this order, even although, like the noble Lord, Lord Hatch, I am unable to approve that purpose. It seems to me that this order is an example of one of the least satisfactory characteristics of British politics at the present time. It is an example of the way in which an incoming Government undoes the work of its predecessor.
The Ministry of Overseas Development was set up by the Labour Government of

729
1964–70, it was abolished by the Conservative Government of 1970–74, it was reestablished by the last Labour Government and now the present Conservative Government want to abolish it again. These seesaw politics must inevitably be very unsettling and disturbing, and surely what was required was a period of continuity rather than yet another about turn. But there are other and substantial reasons why we on these Benches oppose this change.
We oppose the dissolution of the Ministry of Overseas Development, first, because we think it is wrong in principle to bring aid under the Foreign Office. Aid, we think, should not be seen as an arm of foreign policy and we feel that it is easier for Third World countries to deal with a specific aid Ministry, than to deal with the Foreign Office. Also, the principle of aid for the poorest which is supposed to underlie our aid programme may not always accord with quite understandable and legitimate Foreign Office priorities.
Secondly, we feel that there is a need for a Minister, backed by an independent Ministry, to stand up for the aid programme within the Government. We also believe that a stouter defence of that programme will be made by a Minister who has sole responsibility for it, than by a Minister who, quite rightly, is preoccupied with East-West confrontation and with the future of Zimbabwe-Rhodesia. We think that relations with the Third World are so important that this Minister with sole responsibility should be in the Cabinet.
Thirdly, we think it unwise to abandon a Ministry which has established so high a reputation as the Ministry of Overseas Development has. It is not in the interests of Britain to do that. Our fourth objection is this. The aid programme has been cut. It has been suggested by the noble Lord, Lord Hatch, that the cut is 5 per cent. in real terms, and he has referred also to the cuts in the services of the British Council and in the development education programme. I know—and the noble Lord, Lord Trefgarne, has made this point—that it is not the first time that aid has been cut. But there are suspicions—they may be very unfair—that the present Government are less enthusiastic about aid than their predecessors, and the dissolution of the Ministry of Overseas Development
730
will tend to confirm people overseas in that opinion.
Of course, I agree that the Foreign Office must take an interest in aid, but they have to take an interest also in the overseas activities of many other Government Departments. They have to take an interest in trade, but we do not have the department responsible for trade as part of the Foreign Office. It has been argued in another place that the Foreign Office have a clearer idea of where British interests lie. But overseas aid is not primarily concerned with British interests, though of course those responsible for administering it cannot ignore them. But that is not the primary aim and the primary responsibility. So, for all those reasons, my noble friends and I are unable to express support for this order.
4.8 p.m.
Lord ALPORT: My Lords, I wish to intervene very quickly and shortly in this debate, simply because I should like to advance a different version of the history behind this Ministry of Overseas Development from that which has been advanced from the Benches opposite. In fact, the Ministry of Overseas Development developed from the ideas that were put forward by the Commonwealth Relations Office in about 1960, when Mr. Duncan Sandys was Secretary of State and Mr. Harold Macmillan was Prime Minister. It seemed to the Commonwealth Office at that time that it was most important that the political factor in aid should be removed, both in relation to the Colonies and in relation to foreign countries—and I suppose, as well, in relation to the increasing number of Commonwealth countries that were coming into being at that time. We felt it was wrong that the aid effort of this country should be regarded by sensitive public opinion in Third World countries, as I suppose we would now call them, as being part of the political effort of the United Kingdom. My noble friend the Minister said that one of the objects of this action was to advance the position of Great Britain in world affairs. We did not think at that time that aid was a way in which you advanced politically the position of this country anywhere. Indeed, we felt that it was one of the ways in which we could produce something

731
which cost us a good deal of money and which was politically counterproductive.
Quite recently there has been a very good example of this. The noble Lord, Lord Hatch of Lusby, mentioned the United States and their policies. Not very long ago, and apparently in protest against the belief that the Pakistan Government were developing some form of nuclear weapon, the United States cut off overnight the whole of their aid programme—not only their military aid but also their peaceful aid. This has caused such resentment in Pakistan towards the United States Government and the American people generally that I am sure it has hardened any opinion that there may be in favour of the development of nuclear energy in Pakistan. So far as the United Kingdom was concerned, this was one of the dangers that we felt the use of aid for political purposes might run us into.
I say "we" because I was present at that particular time and my experience bears out a good deal of what has been said by the noble Lord, Lord Hatch of Lusby, and by the Liberal speaker. Certainly it was the Conservative view then, and so far as I personally am concerned it is my view at the present time. Our idea was not particularly original. I think the first country which tried to separate aid from politics was Canada. The Canadians had an organisation which administered the aid the Canadian people were giving to developing countries separately from their Ministry of External Affairs. When the proposal came from the CRO to the Prime Minister, and presumably to the Cabinet, it was agreed, and it was from the germ of that idea that the present Ministry developed. It should be realised, if only from the point of view of accurate history, that this was not a Labour Party idea or a Liberal Party idea. It came from the Conservative Government of Mr. Macmillan in 1960.
I suppose—and I regret it—that idealism and sensitiveness to the feelings of overseas countries has somewhat declined in this country over the last few years. The intervention of my noble friend—that charity begins at home—reflects the sort of attitude which I fear too many people have in their minds now. So far as I am concerned—and I believe that there are many people in all parties, and certainly
732
in the Conservative party, who share this view—I do not regard this country as a pauper. I do not regard this country as ceasing to have a role—idealistic, no doubt, but important— in the world which enables us to go to the aid of people who desperately require that aid.
I am sorry, therefore, that this decision has been taken. I know very well that the Foreign Office have always resented the removal of their control over aid which existed before 1960. Now they have got it back. The CRO has gone, the Colonial Office has gone and now the Ministry of Overseas Development has gone, and we have the Foreign Office. I have the greatest admiration for the Foreign Office but I am not sure that it is always the most sensitive organisation for dealing with problems which in the past, I always thought, were rather well dealt with by other Ministries.
Lord SOMERS: My Lords, in view of what the noble Lord has said, may I say that I had no intention of conveying the idea that our home interests are the only ones which matter. Certainly aid to countries which need it is most important; I agree wholeheartedly with that. However, there is a school of thought in this country that foreign aid is the only aid which matters. Nevertheless, there are a good many things at home which also matter.
Lord ALPORT: My Lords, I know perfectly well the kindheartedness of my noble friend, and I would not in any way wish to criticise him. However, his intervention has given me the opportunity to say that this debate has gone on rather longer than I expected. I had not intended to take part in it. As I have to leave at half-past four, I hope that the House and the Minister will not regard me as being unduly discourteous if I leave then.
4.15 p.m.
Lord SOPER: My Lords, once again we are surely talking about a matter far greater and more significant than administrative changes. Last week we discussed a reduction in public services to miserable and helpless alcoholics. Yesterday, in another place, there was a fiery debate on the reduction of services in the realm of education. The debate this afternoon is about the reduction of services. I am

733
deeply disturbed and begin to wonder how much longer the Government may be able to maintain the argument that it is necessary, in the interests of economics and other matters associated with economics, to practise what does increasingly appear to a great many people to be a form of moral barbarism. I use that word advisedly. I think that in the process we are becoming uncivilised, and I intensely regret that process.
It is perfectly true that the dissolution of this particular administration does not in itself prevent the achievement of those aims which first caused it to be put into operation, and I appreciate the difficulties and problems which have already been ventilated. I speak in the presence of my forthcoming Archbishop and I think that makes a quorum. So we can say that we are united in our belief that this whole attitude towards a reduction in the public services, particularly to those who are least capable of helping themselves, is a retrograde step and that no economic condition can finally justify it. I do not believe, for instance, even on the ground of economic convenience, that it would be a disaster if these services were increased. I share with my noble friend Lord Hatch of Lusby the belief that to raise the standards of help to those now impoverished in the economic field may be to our advantage as well as to theirs.
However, it is not to that that I would venture to address my remarks. I would venture to speak about the British Council. The evidence of the general trend of Government proposals is already clear. The British Council has been reduced very largely in its opportunities, and the present depredations will increase next year and the year after. May I adduce two of the areas in which I believe this is disastrous.
I share with the noble Lord opposite the view that this country has a very great deal to contribute. I do not believe that we are down and out. I think that there are many who look with envious eyes at the achievements we have already attained in the field of democratic and institutional Government. I was much encouraged when the British Council found a way of penetrating the Iron Curtain by means of its production of artistic and other shows which were presented behind that Iron Curtain, for this seemed to me to be the
734
only way, in many cases, in which people living in that Cloud Cuckoo Land would be able to appreciate something of the qualities of this country, despite its economic conditions and despite the propaganda so frequently and, in my judgment, malevolently directed against our own condition. That will go. I have evidence, with which I shall not delay the House but which seems to me to be unequivocal, that the reduction of 15 to 20 per cent. will mean that that kind of overseas communication in places where I believe it is most needed, and the kind of qualities which we should cherish and of which we should be proud, will cease.
I am even more concerned about the educational facilities, for the British Council has been able to prosper in places like Rhodesia. Here we are the inheritors of the churchmanship which provided primary and secondary education for thousands of black and white Rhodesians hitherto. It is the British Council which has been able to supplement that elementary education with opportunities for further education in which at this very moment 2,000 of the inhabitants of that beleaguered country are able to acquire the kind of dispassionate education with which I believe they can contribute to its ultimate emancipation from the troubles which now beset it.
But principally, my Lords, I cannot but register my own entire and increasing disapproval at the disagreeable and, to me, quite inhuman attitude which not consciously but inevitably categorises a government which believes that to get itself out of its economic necessities it is necessary to reduce its commitments in the civilised world in which I believe it has the most finally to contribute. Therefore, I join with my noble friend Lord Hatch and others in repudiating the underlying principle which governs this particular measure, and hoping that even at the last this Government will see the error of their ways. It would not disturb me too much if public opinion unseated them. What does disturb me is that while they are here they are, in my judgment, creating an impression throughout the rest of the world which is not conducive to their own merit and certainly does not produce the kind of advantages which even economic stringency of a most required type would demand. It is in that sense that I venture to intervene this afternoon and to hope

735
that this kind of barbarism will cease and in its place we shall learn to be a civilised community, believing, as I do, that what is morally right in the end can never be politically wrong.
4.22 p.m.
Lord HANKEY: My Lords, having been one of the delegates who was responsible for organising the foundation of OECD, with its great interest in development, and having subsequently served on the Development Aid Group of OECD, I agree with a great deal of the regret which has been expressed about the inevitable cutting down of development aid. But I underline the adjective "inevitable". It is always tempting to attack any particular section of expenditure on which reductions have to be made. The bald fact is that this country has been going down hill for years, and unless public expenditure is cut it will continue to go down hill and in 20 years we shall be a real slum. I am afraid it is inevitable. I regret it as much as anybody but it is inevitable that there should be cuts right across the board. The Foreign Office is having to make some and I think that cuts in development aid (among other things) right across the board are inevitable.
But from what has been said in this debate anyone would think that aid was being turned off altogether. It is not. The Ministry of Development Aid may not be called the Ministry but there will he an administration. I know from personal experience, because I co-operated with it closely, that the Development Aid Administration in the early 70's was extremely efficient, very hard working, and forward looking. I have no doubt that a great part of it will continue and I am sure that will continue to be equally efficient and equally sensitive.
I do not think it is fair to suggest, as my noble friend Lord Alport did—I am sorry that he is not in his place—that the Foreign Service may be less sensitive to the needs of foreign countries. In my experience they are extremely sensitive. Our embassies and legations are often teased by their fellows in our service for becoming so closely associated with the countries in which they work, and I know
736
that it will be extremely good for them to be more closely connected with aid questions.
It is a good thing that we should look at aid against the whole background of our foreign policy requirements. By that I do not mean that we should be really tough about it. I agree with the noble Lord, Lord Hatch, that there have been certain developments in the United States of America which have been deplorable. I do not think they have treated Turkey very well. I could give any number of examples, but they have been extremely generous over the whole field and I see no reason why the United Kingdom should become unduly tough in its relations with other countries simply because we are going to have this extremely able department under the overall control of the Foreign Secretary. It is going to have a Minister of its own, and I am sure that he will have influence with our very able Foreign Secretary.
Finally, my Lords, there have been some happenings which have been hard to explain. I do not want to prolong the length of this debate, so I will give just one example. A year last August we gave an interest-free loan to Mozambique of £10 million and no repayment was going to take place until, mainly, the 'nineties. I think some repayment was going to take place in the 'eighties, but nothing very much. This was at a time when they were supporting Marxist guerrillas armed and financed by the Russians and the guerrillas were murdering nuns and school teachers, some of whom no doubt had had help from the British Council in the past. It did not seem to make any sense to give that loan. I was unable to get any explanation in this House. It went through, I think without any proper discussion here. That is just an example. I welcome the measures which are now being taken and I think the Government have been very reasonable about the matter.
Lord HATCH of LUSBY: My Lords, before the noble Lord sits down, may I just answer the point that he has made about the loan to Mozambique. In fact, the loan to Mozambique was a loan to a friendly country, a country which had just emerged from many years of colonial rule. It was a loan for development and

737
it has been used for development, but, so far as the harbouring of guerrillas was concerned, those guerrillas who were being assisted by the Mozambique Government were in fact fighting against the rebels who were against the Queen.
4.27 p.m.
Lord TAYLOR of GRYFE: My Lords, I spend a good deal of my time travelling around the world financing industrial development, and that travelling includes frequent visits to the developing countries, and I want to ask the noble Lord just what the impact of the administrative changes will be on the excellent liaison which exists between the Department of Industry and the Overseas Development Ministry at the present time. Most countries which are engaged in financing international contracts, particularly in the Third World, have very substantial subvention from their aid programmes. It is a matter of vital importance to British industry that the continued relationship between the Department of Industry, which sometimes influences aid expenditure, should be continued, because in many parts of the world British contracts are lost on account of the element of aid that is built into the bids of other competitive countries. That is a matter which I should like to see clarified under the new arrangements.
The other point is this. I am filled with admiration for the work of the Ministry which is now to be absorbed into the Foreign Office, but I must say, too, that I try to be fair about this matter. I read the report of the debate in the other place, and I recognise that during the period of office of the last Government there were times of tension between that department and the Foreign Office. There were occasions when the policies were not entirely consistent. I have also listened to the argument today and, while I would prefer to see a degree of consistency between foreign policy and aid policy, I am afraid that the transfer of the department to the Foreign Office will mean that instead of consistency there could be domination by the Foreign Office. That would be unfortunate, although, as I say, in the light of my own experience I can see something in the argument. The debate today has gone well beyond the area of administrative
738
change; it has developed into a debate on the whole subject of aid. Perhaps that might be more appropriate for a future occasion when we have more time to expand on this very important issue.
I must say that I cannot support a Government which is concerned with the defence of democracy and proceeds to interpret that defence in terms of increased military expenditure while cutting back on aid programmes, because democracy will survive not because of the strength of its arms but because of the power of its ideas. I believe we gain a great deal more from being charitable and generous and compassionate, and showing that we are that kind of society, than by engaging in the continued expansion of armament expenditure.
I hope that the Government will think twice about cutting aid in any form. We talk about the commitment to 0.7 per cent. of GNP, and I was delighted to hear the Minister's commitment to that as a long-term aim. But, you know, at the end of the war, when this country had been bombed, when many of our resources were depleted, this country committed itself to 1 per cent. of its GNP for reconstruction and aid to people who were less fortunate than we were. This country committed itself to 1 per cent. of its GNP to the United Nations Relief and Rehabilitation Administration, and we were morally better people and we felt better for it. I would hope that our contribution to aid will make us more proud of our demorcatic society.
Lord NOEL-BAKER: My Lords, may I ask my noble friend to recall that after the 1 per cent. given by this country to UNRRA had been exhausted in constructive and most valuable work, a second 1 per cent. was voted by Parliament for that purpose within a year of the termination of the first expenditure.
4.33 p.m.
Lord HUNT: My Lords, the noble Lord, Lord Trefgarne, who is to reply, has heard an almost unanimous chorus of dissent and disapproval and regret at the Government's intention to dissolve the Ministry of Overseas Development and absorb it into the Foreign Office. I am sorry to have to add another voice to the regret, but I feel that I must stand up and do so.

739
I had experience of the Ministry of Overseas Development in the 'sixties, and again with the administration when it was taken into the Foreign Office in the Heath Administration, and more recently when it was recreated a Ministry. I am in no position to say with proof that as an ODA, as district from an ODM, the ODA was notably swayed and influenced by Foreign Office policy when it came within the Foreign Office. What I am able to say with personal conviction is that as a Ministry, independent and separate from the Foreign Office, it was seen by the outside world to be administering aid to countries which, despite our own difficulties, were and are in greater difficulties, and doing so in an open and even-handed and impartial way. I think that a great deal of loss is incurred when that being seen to be independent and impartial ceases to be the case.
I have only one other point to make; namely, that my connection with the Overseas Development Ministry in. the `sixties came about through my being president of the Council for Volunteers Overseas. That council and the bodies which worked under its umbrella—VSO, UNA, IVS and the Catholic Institute for International Relations and other volunteer-sending bodies—recieved support and financial help from the Ministry. One thing I can say with absolute certainty is that the young people in this country who volunteer their help to countries and individuals in those countries who need help, do not do so because they are interested in British foreign policy. They are interested in the intrinsic troubles and needs which they hear about and in regard to which they have a basic urge to go and help.
I should like the Minister when he comes to reply to assure this House—as I hope he will be able to do—that the Council for Volunteers Overseas and its constituent bodies will continue to receive such help as the Government feel able to give, quite irrespective of the turns and twists of policies of the Foreign Office, and only on grounds of meeting that wish of young people to help other people overseas.
4.36 p.m.
The Lord Bishop of St. ALBANS: My Lords, I came this afternoon to listen and not to speak, but I am provoked to
740
intervene briefly because Lord Hatch mentioned the anxiety of all the Christian Churches about this move to wind up the ODM, which has been such a friend to many of the more progressive movements, and for the international awareness of the Churches, and also because Lord Soper has testified to the degree of Christian unity that is felt on these issues.
It is a fact that the bishops of the Church of England, associated with some other bishops of the Anglican Communion, after considerable thought and some research, took the trouble to write a letter to Her Majesty's Government during the summer appealing for the Development Education Fund, a small sum of money but of considerable significance in the generation of understanding in this nation of voluntary aid development. We also associated that with a letter written about overseas students, a matter which is in a whole constellation of issues about which there is anxiety in the Christian conscience of this country. I have to say that we do not feel that representations of this kind have been treated with the seriousness they deserve. In my own immediate experience the Development Education Fund has created a network of centres around this country and has spawned a number of projects, of quite small dimension but of that voluntary character which should presumably appeal to the commendable attitude of the Government towards people taking responsibility for their conscience. This fund seems to have been lost with the department or else seems to have been terminated.
Secondly, in order to broaden out the question, I should like to say that in the early part of this year I spent three months in Eastern Europe, and in meeting young people, particularly in the universities, one was conscious of the extent to which there was present there a group from the Third World, from developing countries, with no money problems, receiving a great deal of hospitality and real priority to their education. Along with that, one could not help noticing that when Governments spoke to visiting prelates about matters they found unsatisfactory in one's country they rated highly what they might regard as "distortion" on the BBC. I was impressed to discover that an investment in truth is still something of which this country may be proud.

741
Apart from that, at the type of peace conference which is promoted in Eastern Europe the question often asked is: "How much is being done to educate the people of your country, as we do in our democratic society, about the needs of the poor of the world; and how far are you able to break out of the type of charmed circle of the converted as regards international awareness?" One had a card that one could play in such difficult debates. They were prepared to listen to that point and to turn off some of the denunciations of colonialism, Zionism and capitalism because it seemed to be a valid point and one which we had some experience in developing.
Therefore, it is a great disappointment to return to this country and discover that the Christian conscience must fight for these things now and in the years ahead.
4.42 p.m.
Lord RITCHIE-CALDER: My Lords, I commiserate with the noble Lord, Lord Trefgarne, in his now recognisable role as the receiver in political bankruptcy. He was the spokesman on the question of the World Service of the BBC. He had to defend an indefensible case. Today once again, he is the spokesman and the present Government have abandoned any attempt to appeal to heart and mind —they have abolished the mind by withdrawing access to it and they have forgotten the heart. This is a matter that I find most regrettable, not just as regards the high moral level to which my noble friend, the right reverend Prelate, Lord Soper, and many other speakers referred. In a sense it is much more than that because that would be unreal unless we meant what we said—that is, unless we backed it up by positive policies.
Like my noble friend Lord Taylor of Gryfe, I have travelled a great deal in the Third world and I happen to know a great deal about the mistakes which have been made by multilateral and indeed our own aid programmes. However, we have learned something very profound. I wish to point out to the noble Lord, Lord Somers, that his intervention showed once again how completely we misunderstand what we are talking about. This is not charity. I am not derogating charity. This is investment in the future
742
of the world. It is investment in the future of Britain; and investment in all the high objectives for which any Government should be standing. We are now deliberately saying—and I have said it with great emphasis when I have travelled around, and it has been demonstrated by the right honourable Judith Hart—that we did know what we were doing. We knew what we were doing—but no longer. We are blundering once again into that utterly crazy world which we have helped to produce and as regards which our motives are the wrong motives. Aid should be a positive input or transfusion into the debilitated systems of the world. If we are to put that in the hands of a foreign policy which will manipulate SALT treaties on the one hand and buy Turkey on the other, then we shall destroy not only the people for whom we have withdrawn aid, but the credibility of this country totally. We have lived on that credibility and we have benefited from that credibility.
The noble Lord, Lord Soper, said that we do not, in fact, think that this country is down and out; it just looks like that because like the noble Lord over here we keep on saying that we are down and out. We are not down and out. We are a very rich country, but the use of our riches is misdirected. That is something that we must recognise beyond peradventure. Like what happened in a recent debate on the World Service of the BBC, what is happening today is that this country, this empire, is not going out with a bang; it is not going out with a whisper. Now it is going out with a whimper.
Lord HANKEY: My Lords, before the noble Lord sits down, I should like to say that I did not say that this country was down and out. I said that it had been going downhill for years. That is not quite the same thing. I share the noble Lord's view that this country is not down and out. On the other hand, I am sorry that he seems to imply that the Foreign Service cannot be trusted to deal with aid responsibly.
Lord RITCHIE-CALDER: My Lords, of course not. What we are talking about here should be basically a disinterested service—a disinterested recognition that we must invest in order to recover on these investments. That can only happen

743
in a real world of development. What we are doing now is to say that we are not interested and that we shall demonstrate that aid is nothing else but the manipulation of foreign policy.
Lord MILVERTON: My Lords, I should like to say how much I agree with those who have expressed their concern. Many Church people and others would be most concerned if overseas aid was likely to become less; in any way weaker; or not so effective. The people of Chippenham—the area in which I live—sent a petition asking that, if anything, overseas aid should be increased. Many of us believe that we can give moral and spiritual aid and we must presumably trust that so far as possible overseas aid will be used for good rather than (shall I say?) "not good" things. As the noble Lord, Lord Soper, and the right reverend Prelate have said, many Church people will be concerned if this link—because that is what it is—becomes weaker and less.
4.49 p.m.
Lord GLADWYN: My Lords, before the noble Lord replies I should like to make one point and I shall take only two minutes. I do not think that anyone —the noble Lord, Lord Trefgarne, or the Government generally—can have any doubt as to the unpopularity, in this House at any rate, of the proposal to wind-up the Ministry of Overseas Development and to absorb it into the Foreign Office. There may be, as he says, a logical reason for doing so, and I would not dispute that. But it certainly will not be a popular move. The fact is that they have decided to do it. It is going to be done, and although people here may protest we must grin and bear it. If we do not like it, it is something that is over the bridge and we must recognise that it is going to be done.
I should like to point out that two years ago we had a debate on the Berrill Report, and we criticised to a large extent what the Think-Tank were proposing should be done in regard to the Foreign Service. But we disagreed totally with them on their proposals regarding the overseas programme of the BBC, and equally totally on their proposals for economies in regard to the British
744
Council. Recently in this House we had a very good debate on the Overseas Services of the BBC. I do not know whether it was as a result of feeling in this House, but when the White Paper was published we noticed that the Government had had second thoughts and did not propose to cut the Overseas Services of the BBC by £4 million but only by £2·57 million. I believe that it is even conceivable that, due to the considerably greater uproar in another place, they may have second thoughts and not cut the Overseas Services of the BBC at all.
But as yet in this House we have had no debate on the very substantial proposed cuts that the Government want to make in the British Council's vote. think it was the noble Lord, Lord Hatch of Lusby, who said that effectively it was a cut of 15 per cent., which would have a very severe effect on the Council's activities. As I must relate this in some way to aid, I should like to know to what extent this very large cut will, for instance, affect the aid which is being organised and administered by the British Council. Can we be assured that this proposed cut of 15 per cent. will in no way affect the aid programme of the Government?
Finally, I should like to inquire when, if at all, we shall be able to discuss the proposed cut in the British Council vote in the same way as we recently discussed the proposed cuts in the Overseas Services of the BBC. I hope that when the Minister replies he will be able to give me some assurance on that point.
4.52 p.m.
Lord UNDERHILL: My Lords, it was my intention to intervene in this debate at the start and raise the matter of the British Council, but in view of a number of speeches that have been made I decided not to say anything. However, in the light of the debate I still believe that the Minister must tell us precisely what will happen as regards the British Council. It is not only a question of the educational work that the British Council performs; it is not only a question of the image which it gives of this country, the achievements of this country and the background of this country; but, even from the narrow angle of dealing with our friends in the world and letting them know precisely where we stand and of our own interest

745
in creating the right atmosphere for our trade and services, one would have thought that the work of the British Council would have continued. As has rightly been said, following on projected cuts in the BBC External Services, this seems to be the height of folly. First, it is the best way to lose possible friends and, secondly, it is the best way to lose possible trade. I hope that the Minister will give us some assurance that this matter will be reconsidered.
4.53 p.m.
Lord TREFGARNE: My Lords, the order before the House this afternoon in no way relates to the total quantity of aid. It does not relate to how much money we should give to this or to that country; nor does it have anything to do with the matter so close to the heart of the noble Lord, Lord Hatch of Lusby, and indeed to the heart of the right reverend Prelate the Bishop of Saint Albans—development education.
The change which we seek to formalise by this order before your Lordships this afternoon is an adminstrative change. As I said in my opening remarks, there has been no reversal of policy upon the advent of this Government. The main thrust of overseas aid will proceed in the same direction as it did under our predecessors. Yes, we have had to review some of the figures that were put before us when we came to office, but so indeed would the other party if they had won the General Election. The noble Lord, Lord Hatch, disagreed with the figures which I have put before your Lordships, but my information is that the cuts which were made by his right honourable friend Mr. Healey were largely sustained, although I agree that a small percentage of the figure for the 1977–78 cuts was later restored—£25 million-worth of it.
Much has been made of the fact that under the previous Administration there was a separate, special Ministry for this purpose—as indeed there was—and we were led to believe that the Minister in charge of that Department, Dame Judith Hart as she now is, was a Cabinet Minister of high rank. I should not wish for one moment to decry her skill or her performance—certainly not from this Box. She was not in the Cabinet or, if she was, it was only for a short time. She was
746
ultimately a Minister of State, in theory responsible to Dr. David Owen, who was then the Foreign Secretary. The present arrangement is that Mr. Neil Marten is a Minister of State responsible to my noble friend.
Complaint has been made that we shall now be associating our foreign policy too closely with our aid decisions. I believe that under the other Adminstration it went the other way. Your Lordships may recall that our predecessors undertook to supply ships to Vietnam. If ever there was a case of aid policy departing too far from foreign policy—because those ships were supplied under concessional terms—that was surely it.
One noble Lord referred to aid to Cambodia. It is perhaps right that I should tell your Lordships that there are two programmes of aid to Cambodia with which we are directly concerned. First, there is EEC aid. There is now a total —and I am compressing the figures before me—of 29 units of account being made available by the EEC for food and other supplies to Cambodia. We also have our own bilateral programme. We are making a bilateral gift of the equivalent of 5,000 tonnes of wheat in the form of 1,800 tonnes of rice; I am advised that rice is more nutritious for people in that part of the world and so one does not have to supply so much to provide the same nutritional value. We also have an aircraft which has been based in Bangkok for the last few weeks and which will remain there for a while yet.
Several noble Lords raised the matter of the British Council. The interests of the Foreign and Commonwealth Office and of the Overseas Development Administration in the work of the British Council are rather different. The former is concerned with the Council's cultural and information work abroad and the latter is concerned with its educational and training aspects. For that reason, as your Lordships will appreciate, the British Council receives grants from both the overseas representation and the aid votes; and the Overseas Development Administration within the Foreign and Commonwealth Office will continue to have direct dealings with the British Council. I cannot pretend that the British Council will be exempt from consideration in the cuts which we are

747
making, but we shall certainly do our best to ensure that the effect of those cuts is kept to a minimum.
The noble Lord, Lord Taylor of Gryfe, asked about relations or, if I can put it another way, the interface between the Department of Industry and the Overseas Development Administration. The new arrangements will not jeopardise the already excellent relationship which exists between the DOI and the ODA within the Foreign Office. As I said earlier, we are reviewing aid matters generally and, if we identify ways of improving the relationship we shall certainly implement them.
The noble Lord, Lord Hunt, also asked me about volunteers overseas. Again, I am not sure that that is directly related to this order, but I shall try to help him if I can. The Government fully recognise the invaluable contribution made by the Council and by the voluntary agencies generally. I can assure noble Lords that the help for such activities will continue to have priority. As I said at the outset of these closing remarks, this order is not about the total quantity of aid, nor even about our aid policies; it is about an administrative arrangement within the Government. For that reason, I hope that your Lordships will agree to it.
5 p.m.
Lord HATCH of LUSBY: My Lords, before the noble Lord sits down, may I ask him three specific questions arising out of his answer. First, he tried to convince us that there was no change in the policy of the new Administration so far as aid is concerned. Will he tell us whether or not the present Government believe in direct Government monetary support for development education? Secondly, he said that this was simply an administrative matter and suggested that there was no policy difference. Then he gave the instance of the ships to Vietnam, and commented on that that this was surely a big gap between the aid policy and the foreign policy. Does not this then imply that in future it will be foreign policy that decides what aid policy shall be?
Thirdly, in his reference to the British Council, he somewhat unctuously mentioned that he would try to keep the cuts to the British Council to a minimum. Is it not the case that the present cut to the British Council is 11.5 per cent., which
748
may very well be in real terms next year 15 per cent., whereas the cut to the Foreign Office itself is a mere 3 per cent.?
Lord TREFGARNE: My Lords, I think that the noble Lord is stretching the rules of order somewhat to ask for those points "before I sit down". However, I shall do my best. May I take up the point of development education because the noble Lord, Lord Hatch, was not the only noble Lord to refer to this matter, and I know his interest in it. Of course it is important that people in Britain should understand the problems of development and the extent of our interdependence with the Third World.
The voluntary agencies, and many individuals, have for long led the way in explaining these issues, and we hope that they will continue to do so. What is in question, however, is how far this work should be boosted by Government funds. These must come from an aid programme which cannot be exempted from the general restraints that we must impose on public spending. Every pound spent on development education in Britain means one less pound available for direct spending upon aid overseas. We believe that most people would agree that our ability to provide direct help, whether for long-term development or short-term emergency relief, must come first. The previous Administration had ambitious plans to spend something like £9 million on development education over the next few years. These could not have been sustained. Our own spending will be over £600,000 this year. While I cannot say what will happen thereafter, we intend to provide enough over the next two years to allow existing schemes to come to fruition.
The noble Lord went on to complain about my reference to the ships for Vietnam. We maintain quite strongly that the decision taken by our predecessors to provide concessional facilities for the purchase of those ships by the Vietnamese Government was a mistake, and way out of line with our then foreign policy interests. The noble Lord also asked me about the British Council. I am afraid that I am not in a position to go further than what I have said already, except to say and re-emphasise that we shall do our best to see that the cuts which may inevitably have to be made in the budget of the British Council are kept to a minimum. I beg to move.
On Question, Motion agreed to:
Ordered that the said Address be presented to Her Majesty by the Lords with White Staves.

ECC 10th REPORT: PASSPORT UNION
5.4 p.m.
Lord GREENWOOD of ROSSENDALE Lord GREENWOOD of ROSSENDALE rose to move, That this House takes note of the Tenth Report of the European Communities Committee on a passport union in the European Community (R/1874/75) (H.L. 58). The noble Lord said: My Lords, there has been for me a certain irony in the debate we have just listened to because when I made my maiden speech in your Lordships' House nine years ago it was in opposition to the order amalgamating the old Overseas Development Ministry into the Overseas Development Administration. I thought that it was a mistake then, and nothing I have heard this afternoon has made me change my point of view. I say it with the greatest respect and affection for the Minister who is to reply to this debate. In my early days in another place I was frequently not wholly in harmony with the policies pursued by Mr. Ernest Bevin, but my heart was lifted when, on one occasion, he was asked the aim of his foreign policy and he said,
"It is to go to Victoria Station, get a railway ticket, and go where the hell I like without a passport or anything else".
It looked to me at that time as though the promised land was just around the corner, but it was not. The Cold War flourished, espionage became more intense, and terrorism began to acquire something akin to respectability. And the abolition of the passport became more and more a pipedream.
With those optimistic beginnings, I should never have expected that I should be speaking in your Lordships' House about the difficulties and dangers of getting rid of the passport system. But I am quite certain that all noble Lords who sat on the Select Committee and who studied this problem with care are fully seized of the difficulties and dangers that are involved. I should like to thank all noble Lords in the House who helped us to prepare the report; to wish the noble Lord, Lord Fairfax of Cameron, good
750
luck when he comes to make his maiden speech in a few minutes' time; to thank our officials, the Government departments, and the other bodies who gave evidence to us; and also to thank the Lord President of the Council whose advice was absolutely invaluable to us in our early days.
We decided broadly that proof of identity will be needed so long as countries have to combat crime, including terrorism, or to control immigration, or to carry out deportations, or to conduct health checks. We must not fall into the trap of not appreciating that this country is not typical of most of our partners in the Community. We have a long island frontier; the points of entry are fairly easy to control; and if we did not have that advantage there would have to be a great deal more police supervision than I think would be generally acceptable to the people of this country.
The proposals that we studied originated in the Commission in 1974, and they were twofold. The first was that all Community nationals should have a uniform passport. That is to say, a passport which would show the country from which they came but would also include the fact that that country was a member of the Community. The second aspect was that passport control at internal frontiers should be abolished. The second possibility was quickly abandoned by the Community, and I shall therefore confine myself to the former proposal which is, I think, one which is at any rate superficially attractive.
Your committee would welcome a change, but—and I hope that this does not sound too Irish, if I dare use the adjective—only if it is a change of form and not of substance. We say that because the authority of passports differs from one country to another; the issuing power inside the country differs; the scope of the protection they give differs as well. I do not think that any of us would want to surrender anything which we regarded as being a specifically British characteristic, or benefit, in the passport that we carry.
But that does not mean, of course, that we should not adapt our passports so that in using them travellers would be symbolising a new growth in internationalism as well as proclaiming their national pride in their own land, and we

751
summed up our general view in paragraph 26 of the report:
"The Committee support the proposal for a uniform European passport, as a modest symbol of the Community's identity, provided that passports retain their national character. The Committee strongly urge Her Majesty's Government to take a constructive part in any discussions on this proposal".
I think there would be a great deal of support for that point of view, and in my view it reflects very badly on the Community that they have not made more rapid progress in that direction.
Some of the objections that have come up in the course of discussions have been almost too trivial for words. On page 16 in the statement provided for us by the Foreign and Commonwealth Office there is a section entitled:
"Obstacles to agreement on a standard European passport".
It says:
"1. There is disagreement between Germany and the United Kingdom over the use of languages in the passport, and over the form of the outside cover.
2. The United Kingdom favours the use of the national language plus either English or French. The Germans favour the use of all six official Community languages plus Irish. With regard to the front cover, the United Kingdom favours the name of the issuing state to appear above the words ' European Community ': The Germans would prefer the words ' European Community' at the top".
That really seems so trivial that I think it appalling that it should have been necessary for us to receive evidence on a matter of that kind. I am fairly sure, and I believe most of my noble friends on the committee are fairly sure, that this passport will come, but not yet, and I was greatly encouraged to discover that Commissioner Davignan, that most urbane and civilised of men, took the same view as we did and seemed to have high hopes of something being achieved, even if in the not too near future.
In the meantime we must do whatever else we can to ease the traveller's way, and I think the most promising aid to facilitate travel, and one worthy of study is the machine readable passport, a project which has been greatly helped by the interest of the noble Lord, Lord Soames, and certainly it appealed to every one of us who sat on the Select Committee. In paragraph 23 we used a sentence of which we were rather proud:
752
"At the turn of the twentieth century the passport came to terms with the camera; now is the time to bring it to terms with the computer".
In so doing, we moved the Select Committee, as it were, into the computer age because the machine readable passport is one which can be scanned by a machine and its details checked by computer. It would probably look like an existing passport with a machine readable section, rather like a credit card let into the cover. It would be readable by the human eye as well as by the machine; the information it absorbed would be quickly processed in the computer and basically it would have a number of advantages. It would be very quick; we have every reason to suppose it would be very accurate; it would be much less burdensome for the traveller; it would put less pressure on immigration officials; criminals could be more readily spotted and we could avoid those horrible black looks from which so many of us must have suffered at one time or another.
The initiative in promoting a machine-readable passport came from the International Civil Aviation Organisation, and the European Community have not entered this field. We were told by the Home Office that they were taking a leading role in international discussions about the standardisation of passports, but without any obvious results. Certainly we on the Committee were unanimous in supporting the principle of a machine-readable passport, and we should appreciate hearing from the Government what plans they have in this respect and what help they are giving to the necessary research.
There is one other suggestion we make which I should bring to your Lordships' attention which should make travel easier, and it comes towards the end of our report. There we suggest that as long as travellers are obliged to carry identity documents there might be a case for adding extra information on a purely voluntary basis. I emphasise that we were determined that it must be on a purely voluntary basis and that nobody should have to have this additional information on unless it was at their own request. It would be possible to include details, for example, of the holder's blood group, it could give his National Health Service number or his status under other national health regulations. If one's passport, one's

753
machine readable passport, included items of information of that kind it would probably be much more effective in ensuring that anyone taken ill abroad got the right treatment, and it would probably save them a great deal of expense as well. We found that when we put this to the Commission they were sympathetic to it and we hope it will not be lost sight of in the discussions which we hope will be restarting once again.
The standard European passport has the committee's support but it is probably not a project which is worth undertaking on its own. If, on the other hand, it were part of a general campaign to make travel easier and was linked with the adoption of machine readable passports, it could do much more for the average individual in the European Community than at least some of the Directives and regulations with which the committee is usually concerned. My Lords, I beg to move.
Moved, That this House takes note of the Tenth Report of the European Communities Committee on a passport union in the European Community (R/1874/75) (H.L. 58).—(Lord Greenwood of Rossendale.)
5.18 p.m.
Baroness ROBSON of KIDDINGTON: My Lords, I was delighted when I was invited by the noble Lord, Lord Greenwood, to join this Committee to examine the possibilities of introducing a European passport. I must say at once that unfortunately, because of many other commitments I had, I was not able to be present at all the Committee meetings, for which I am deeply sorry, but I attended some of them.
I accept every word the noble Lord, Lord Greenwood, said about the possibilities of moving towards a European passport or a European passport union. I am slightly sad that we should have to come to your Lordships' House with such a limited recommendation at the end of our deliberations. Paragraph 15 says:
"The Committee were therefore glad to learn from Commissioner Davignan that he considers this part of the proposals dead".
That is the part dealing with the passport union. I may be too much of an idealist, but I would say it was an over-statement to say I am glad the proposal is dead.
754
I am one who believed that the creation of a European passport union would be instrumental in welding together the different peoples of the Community, and making a whole of it; so I cannot say that I am glad that the proposal is dead.
I accept that the difficulties that exist at the moment are such that we cannot proceed along those lines. As has already been mentioned by the noble Lord, Lord Greenwood, one of the saddest difficulties and greatest obstacles to the creation of a European passport union is the increase in terrorism that has taken place ever since the idea of the abolition of internal frontiers was first mooted. This I believe is a terrible indictment of modern society and an enormous threat to the democratic way of life in which all members of the Community believe; and this is what makes it so tragic.
In the report we also refer to the passport unions that exist in certain parts of the Community, such as the Nordic Union. We state—and it is true—that it is obviously easier to create a union among a small number of peoples of not very large populations, and of a very homogeneous way of life. I still believe that we can learn something from the way in which they are working their kind of union. I have made some inquiries, and it seems to me that the Nordic Passport Union works without the immigration laws and the terrorist laws being identical in all the countries. This is an interesting point. Immigration into the Nordic States is purely by work permit. If an immigrant enters illegally through Denmark, for instance, and he does not have a work permit, he then makes his way to Sweden and is discovered there without a work permit. On his passport it will be clearly stated that he entered through the Danish border. There is an agreement between the four Nordic nations that a person of that kind is immediately returned to Denmark because it is that country's responsibility to deal with that illegal immigrant. I believe that that kind of arrangement could be extended to an area greater than the four Nordic countries. Unfortunately the tourist arrangement in the Nordic Union is identical to that of many other countries among our European partners, under which a person has a permission to stay for three months and as he books in, a hotel is forced to register the fact that it has a foreign visitor

755
staying—something which we in this country do not believe is the right kind of thing for us.
One objection contained in evidence given to us in the committee came from the British Airports Authority and it related to the problem of what would happen about duty-free drinks if there was a passport union. The Airports Authority claimed that it made enough on duty-free drinks to enable it to keep airport charges at a reasonable level. I inquired about what happens in Scandinavia. Although they have a complete passport union, if one travels between Sweden and Denmark, for instance, and one is in Denmark for more than 24 hours, one is entitled to take duty-free drinks back from that country to Sweden. Your Lordships may ask how does this happen if one does not have a passport and one has free access; it happens on one's return ticket. It is possible, I believe, to work systems of that kind.
We should not assume that a passport union in the Community is dead for ever. If we do, we are abrogating our belief in the Community as a whole. I accept that it is not feasible at the moment. Nevertheless, I am sad that we have to come to the House and give your Lordships that advice.
The noble Lord, Lord Greenwood, mentioned one other point related to the computerised passport, particularly with reference to health information being stated on a passport, and I agree with him a hundred per cent. that this should be voluntary, not compulsory. I wonder whether even before we have a European passport Her Majesty's Government would look into the matter so as to help people who are having problems with Form E 111. If nationals of this country voluntarily ask to have health information put on their British passports at the moment, would that not be helpful to the people of this country? I join with the noble Lord, Lord Greenwood, in sincerely hoping that the Government will do their best to further this first step towards a uniform European passport.
5.26 p.m.
Lord FAIRFAX of CAMERON: My Lords, I understand that a maiden speech in your Lordships' House should preferably be short and uncontentious, and
756
should be delivered on a subject of which the novice knows something. Of these criteria I can promise to fulfil the first, and I do not expect to infringe the second, for I hope that it would not be presumptions to say that at the beginning of its deliberations the committee found the question wholly uncontentious. This was a subject not to inflame passions, but to be approached with an open mind. There were no strong partisan views. For that reason it is perhaps a particularly appropriate subject for a maiden speech. So far as the third condition is concerned, I should like, first, to thank the noble Lord, Lord Greenwood of Rossendale, for having given me the opportunity to acquire some expertise on this subject. It is an opportunity for which I am particularly grateful. So, although I do not pretend to speak with any great expertise on the subject, nevertheless I can come before your Lordships feeling less like David before Goliath than I otherwise might have done.
Turning now to the substance of the report, let me say at first that I shall try not to cover any of the ground that has been covered in previous speeches. There are two distinct limbs to the report. The first concerns the question of introducing a uniform passport. The second is the much more ambitious concept of establishing a passport union, a free travel area. It was thought that within such an area the citizen, whether or not from a member country, would be able to roam freely without check or hindrance. It is a grand idea, and it is entirely consistent with the ethos of the Treaty of Rome and its provision for freedom of movement. Proponents of such a scheme could point —as the noble Baroness has done—to the Nordic travel area and the special arrangements that at present exist between the United Kingdom and Ireland. But unfortunately the problems posed and the hurdles to be vaulted are enormous.
Both the schemes that I have mentioned depend upon a far greater homogeneity of policy and law than exists at the moment between, for instance, the United Kingdom and either Italy or Germany. The implications for immigration of both humans and animals, security, and the control of terrorism and crime are vast, and in my view are undoubtedly unacceptable to member Governments, given the state of our nations at the

757
beginning of the 1980s. For instance, the obvious trick for someone wanting illicitly to get himself, his cat, or his cocaine to a particular place within the Community would be to enter the Community at a slack point and from there he could expect to travel as freely as a bird throughout the countries within the Community It seems fairly clear to me, then, that attractive though the concept of a Common European Community free travel area may be, at the moment it is not a viable proposition.
Furthermore, given that the aim is to make travel not only easier but swifter, it is difficult to see how passport union, standing by itself, could achieve this without the simultaneous abolition of other checks at frontiers which are not based on the passport. I am thinking of things like Customs and health checks. For example, I understand the preoccupation with preventing the arrival on our shores of rabies. These checks clearly cannot go, but they certainly hold the traveller up; and the time it generally takes to go through passport control fades into insignificance in comparison with the time it takes a juggernaut driver to clear all his documentation with the relevant authority at a frontier, or for an airline passenger to retrieve his luggage, if he can find it at all. It is not for nothing that a cynical slogan for modern air travel may be, "Breakfast in Brussels, lunch in London, luggage in Los Angeles". With substantial problems like these, to abolish passport control within the Community would, I feel, be misguided, would help little and would simply open up Pandora's box.
However, as your Lordships have heard, there are two limbs to this question which the Committee has studied in its report, and realistic prospects of progress look brighter on the second limb, which is that of introducing a standard-form European passport for use by citizens of European Community countries. In the first place, I feel it would be a tangible symbol of European unity. At the same time, I recognise that, particularly in this country, there may he a fervent reluctance to use a document which could be seen as yet another token of the subjugation of this country's individuality and identity to Europeanism. Without doubt a passport is something which people really feel
758
represents, not a nationality but also nationalism and patriotism. For that reason, I do not think that the possibility of strong, popular reaction against the possibility of introducing a common-form European passport should be underestimated.
On the other hand, standardisation would offer a useful opportunity to incorporate into the passport some of the new innovations about which we have heard this evening. In the first place, it seems worth while looking into the question of making passports machine-readable. This would mean that passports could be scanned electronically by a machine, which would itself be linked to a central data bank. It is clear that a method like that would be much more efficient in, for instance, detecting those people who in the normal course of events would be refused entry into a country, such as, fugitive offenders. There would be no need to have those massive lists of names, the size of telephone directories, which you find at some ports of entry, where you have the hapless passport authorities flicking through them. With a machine-readable passport, the name would trigger the base in the data bank, and somebody who was not meant to enter the country could quickly be detected far more efficiently. Therefore, I would hope that not only would a machine-readable passport be more efficient but it might also be quicker, which is really, I suppose, the essence of what we are talking about.
Secondly, there has been talk of including in the passport data relating to health. It seems to me that the bearer's blood group could very usefully be included, and those further details which at the moment are supposed to be included on Form E111. Before I sat on this Committee I certainly had not heard of Form E111, and I do not think anybody else had; but, simultaneously, there appeared in the papers several advertisements explaining its use to the readers of those papers. I think the substance of it is that if you fill in this form you are entitled to a certain amount of reciprocal, free medical attention in those countries within the European Community where it is applicable. I was unfortunate enough to be involved in a car accident in France this summer, and I know that none of the people on board who were injured—

759
and, luckily, that did not include me—was armed with this E111; and they were therefore denied the opportunity of being afforded medical aid on a free basis, to which they might otherwise have been entitled if they had been armed with E111s. If that sort of information could be included in the passport, I feel that would be a very worthwhile innovation.
In conclusion, my Lords, I feel that, superficially, a free travel area probably holds enormous appeal. It is a delightful thought, that you could skip within the European Community from one country to another without having to show any form of identification at the frontiers; and it would be the essential test, I suppose, of a European Community which had the attribute of a single country. But, of course, in practice it is totally unattainable; and it could not be achieved simply by abolishing passport checks, as I have tried to show. There are other checks which simply cannot go, so abolishing passport control would not help at all.
Conversely, what is possibly attainable —namely, the introduction of a common-form European passport, which would be a tangible symbol of European unity—might, I feel, attract universal derision, almost, from those citizens of the European Community, and particularly people in this country, who would feel that it was a token of the further erosion of their national identity; and I feel that there might be a strong reaction against any mooted idea of introducing such passports. But if a new passport like that could be shown to have proper advantages, incorporating the innovations of which I have talked—more efficiency, more speed to the traveller—then it may be an appropriate moment to attempt to launch a common-form European passport in the continuing interest of European unity and harmony.
5.37 p.m.
Lord MURRAY of GRAVESEND: My Lords, this is the first opportunity I have had in your Lordships' House to congratulate a maiden speaker, and I should like to do so most sincerely for a very lucid, articulate and concise speech. The only thing I found missing was the controversy. However, I thought that, in his opening, t0he noble Lord, Lord Fairfax of Cameron, also felt that controversy
760
might be in order on another occasion, perhaps, and I am certain that he will enter into any controversies which arise in this House. On behalf of your Lordships, I should like to thank him for his maiden speech.
This is a very welcome and very thorough report, and I found that it was a mine of useful information. One of the things that is happening in this country is that when we talk about the European Community we all get obsessed with sheepmeat, wine lakes and beef mountains, and in many ways we begin to lose sight of what perhaps we should be doing in Europe, and of what we are perhaps not doing. Because I believe that people in this country feel that they are not part of the European Community, and that they are no more part of it than they were on the day of accession——1st January, 1973. I think that this House and the other place, and politicians generally, ought to be doing more, rather than just talking about the problems of sheepmeat. We know that those problems are serious, but rather than talking about all the economic difficulties I think we ought to talk about some of the wider things that we can be doing in Europe—and a uniform passport is one of the ways in which we can move in that direction.
The noble Lord, Lord Greenwood of Rossendale, quoted Ernie Bevin over 30 years ago, when he spoke of how he would like to see people moving all over the world without the necessity of passports. The problem, I think, is that when Ernie Bevin said that it was in the time when Lancaster aircraft were converted to carry eight people and they were using old-fashioned York and Hastings aircraft, not when they were carrying 31 million passengers in and out of Britain, as they did in 1978. I think that is one of the problems: it is the sheer volume. In the late 1940s, during the term of office of the first Labour Government after the war, I do not think anybody believed that there would be the rush, the bustle, the movement of people that there now is every day of the week, every week of the year. That has partially made the difference. It is easy for a PLO terrorist to get on a plane from the Middle East and to be in London within half a day and for terrorists, of whatever sort, to be moving all over the world, threatening

761
people wherever they go, because the world has shrunk in terms of passenger travel.
I think that some of the suggestions in the report for removing some of the difficulties of travel ought to be investigated by the Government—outside, in a way, the European Community and the way we handle this question within the Commission. We have to remember that the Commission set up a working party which has done absolutely nothing for the last two years. It may be that this Government ought to give some impetus on the problems of obtaining and using uniform passports. There is no doubt that one of the problems about travel arises when people arrive at their destination: the difficulty is the time that people sometimes have to spend in waiting to clear through immigration and customs and in waiting for their baggage which, as the noble Lord, Lord Fairfax, has said, may be in Los Angeles while they are in London.
I think that the question raised in the report about the machine-readable passport ought to be seriously considered. Perhaps we have some problems at London Airport when we arrive, but I do not think our problems are anything like the problems of arrival in New York when they go through the book that they have to check you out, or check your visa. You may be waiting in the queue for almost an hour to get through immigration control. Certainly, the US, which prides itself on its computerisation, ought to be looking at this as seriously as we are.
One of the things which is noticeable when travelling by car in Europe—apart from the controls in London and Brussels—is that for the rest of the time, you easily can sail across, or motor across, borders between Germany and Luxembourg and Luxembourg and France without (unless a terrorist check is on) much let or hindrance. That is noticeable because we happen to be on the external frontier.
On the question of a uniform passport, I may say that I was fortunate to be one of the delegated Members to the European Parliament for three years. Members of that Parliament had what was to all intents and purposes a uniform passport. They insist on calling it a Laissez-passer. Nevertheless, it was a uniform passport.
762
I never used mine when I came into Britain. Some of my colleagues did so and had great difficulty in getting past immigration with that uniform passport. I did not use mine because the officials had to read through everything before they decided whether one was allowed in. But it was a uniform passport.
I never heard of any difficulty which was occasioned by the order in which the languages were used on the European passport. This one, starts in Danish and ends in Dutch. Nobody, as far as I know, argued in the European Parliament about whether their language was first, second, third, fourth or fifth. Certainly, the German objection is a rather strange one, in terms of the number of languages, in wanting the addition of Irish. In the European Parliament itself none of the documents is in Irish. They have the standard languages but they do not distribute documents in Irish. I found it strange that the Germans wanted suddenly to introduce Irish on to the passport.
There was one thing in the report which I was hoping it would bring out further, but it did not. I understand the Committee went to London Airport and talked with immigration officers. I wish there had been in the report some written evidence from them as to their views on the introduction of a uniform passport or the relaxation of passport rules.
One of the other things which I think the Government should think about—again it is outside this report—is the question of Form E 111. I think it is serious because we are told that citizens from all over the world can come to this country and receive medical treatment. There are people who say that it is abused. I do not believe it is. I do not think that somebody who comes to this country on holiday or business and who suddenly falls ill should have to worry about whether they can pay the sum of x, y or z.
It seems to me that the Government should be working on reciprocity, certainly within the Community, without the bother of E 111. I would take the view that the production of a British passport, without any documentation, ought to be all that is necessary to receive medical treatment. The document raises the question of how many people apply for form

763
E 111. I did so before I went on holiday. I think it is another burden, in a sense, on the National Insurance offices. They have to do this job, to issue these documents, have them filled in and arrange the necessary signatures and stamping. I see no reason why, if you are a British subject, and there is a reciprocal arrangement with some European country, you should not use your passport as proof; and that that is all that is needed.
I think that one of the other anomalies that I was disturbed about in the report —again it is outside the terms of reference of the report—was the letter from Shelton Orsborn on the question of fuel importation into Europe. I found it ludicrous that coaches with parties of tourists going to France were being stopped and having the diesel fuel in the tanks measured and, if it was over 100 litres, they were fined on the spot and had all sorts of problems. Not only that, but a Mr. Gilby, who wrote the letter, said that they could be going along the road after leaving the port and be stopped again and fined again. And they had the same problem in crossing the German border. I do not think that we ought to accept that. It is in the report and I think if it is true—and I have no reason to doubt it—the Government should be doing something about that outside the Community purely on the basis of some reciprocal arrangement. I understand that the same thing does not apply when French or German coaches come to this country. Regarded from those points of view alone, it is a valuable report.
One of the other things I should like to do is to congratulate the Passport Office on their work over the past 10 years. From the figures given in the report, we learn that they issued this year half a million more passports than they did 10 years ago; and the staffing figure is only nine above what it was 10 years ago. That is remarkable. We hear a lot of criticism in Parliament, in this House, in the other place and outside, of civil servants; and the criticism in very many cases we know is unjust. We ought to congratulate the Passport Office on their work.
It is a very valuable report. I think that if the Government do not act on the uniform passport—and I realise the diffi-
764
culties; and the report outlines the difficulties—certainly some of the points raised in this report ought to be raised outside the Commission and the European Assembly and dealt with fairly quickly by this Government.
5.49 p.m.
Viscount AMORY: My Lords, I should like with enthusiasm to support the congratulations which the noble Lord, Lord Murray, offered my noble friend Lord Fairfax of Cameron on his excellent maiden speech. I do so with added enthusiasm because, 70 years ago, either the noble Lord's grandfather or his great-grandfather took me out shooting. That was 70 years ago, when I was 9¾ years old. I do not want my noble friend Lord Fairfax to interrupt me at this point, for he will probably say: "No, it was my great-great-grandfather who took you out shooting."
I agree entirely with the observations that our chairman, the noble Lord, Lord Greenwood of Rossendale, has made and the excellent exposition he made, which means that there is very little I need say. Also, I agree with the excellent points made by my noble friend Lord Fairfax of Cameron. I hope that anything I say will be treated with reverence because, as I told the committee, my first passport—and, for all I know, the passport I am still using—begins: "I, George Nathaniel Marquess Curzon …" which shows that it is now quite a dated document.
There are many burning issues in the EEC now; but from the evidence the committee received, the passport union does not seem to be among them, either in the United Kingdom or in other EEC countries, as things stand at present. Anything approaching passion was notably absent from the evidence that we received. As the noble Lord, Lord Greenwood, said, the original proposal for the passport union seemed attractive and in line with EEC philosophy. In the five years since then, as the report said, discussions have been desultory and progress minimal. The original proposals, the noble Lord, Lord Greenwood, said, involved two practical steps: a common form of passport, and the termination of internal and external checks.
It seems astonishing, so far as the first goes, that four or five years' discussions at official levels should not have produced

765
an agreed common form. Active interest, support and prodding at ministerial level does not seem to have taken place. What we are talking about is, of course, as the noble Lord, Lord Greenwood, said, a change of form and no great change of substance. It is difficult to believe that, if Ministers had exerted pressure on their officials, the relatively simple matter of devising a common form would not have been solved by now. It must be remembered of course that the passport that results must be usable for all countries and not only for EEC travel. In passing, I should like to say how much I agree with the tribute that the noble Lord, Lord Murray of Gravesend, paid to the officials of the passport office. It is very well deserved indeed.
As regards the other aim, of the removal of checks, the practical difficulties are obviously much more formidable. Sadly, it needs saying that today the needs of security and even immigration control seem greater than ever, and the police forces in every country have a hard enough job to do at present with security. It is clear the possession of some means of identification for people crossing frontiers, both external and internal, is going to continue to be necessary in present conditions. So unfortunately the laudable aim of the late Ernest Bevin for absolutely free, documentless travel is not at present realisable.
As the committee say in paragraph 26 of their report, since passport control cannot be ended, the object must be to make control as light and quick as possible This seems an eminently sensible approach. I agree with the noble Lord, Lord Greenwood, that one way in which the committee were impressed was with the possibility of devising a machine-readable passport which would also be capable of course of being read by the human eye. This we were told was probably technically feasible and therefore should be practically considered. Another was by the incorporation on a standard passport of certain additional information relating to health requirements. The noble Lord, Lord Murray, doubts whether they would be needed as an addition. If they were, and if they are, then the question should be considered whether they could not be incorporated in a single passport.
We were not, however, optimistic about
766
progress being made even with these limited objectives unless Ministers took a renewed interest in these questions and provided an impetus. Vicomte Davignon seemed alone to have retained a degree of hopeful optimism. There are some issues of course about which, in spite of lack of progress, one can feel comforted by what one of our distinguished predecessors called the "inevitability of gradualness". In this case, there is no such inevitability of progress with the number of pressing problems which the EEC has. I believe that the committee are right in the report which has been prepared under the beneficent and wise chairmanship of the noble Lord, Lord Greenwood, to urge Her Majesty's Government to press forward with a limited number of improvements and simplifications which seem to the committee to be well within the field of practicability.
5.57 p.m.
Lord PLANT: My Lords, may I too pay tribute to the excellent speech of the noble Lord, Lord Fairfax of Cameron. I hope that we shall hear more from him. I want also to pay tribute to the excellent chairmanship of my noble friend Lord Greenwood, who gave us a very wide brief and helped us to prepare a document which I think will be of some value to the Government in pressing ahead with the issues that we have before us. When Ernest Bevin made his statement I agree that there was not the flow of passengers and travellers that there is today. We have to accept that it is not possible to do what he thought could be achieved even during his tenure as Foreign Secretary. Terrorism and other issues mean that the passport has to be retained.
However, if we have to retain the passport and we are members of the European Economic Community the Government must make things more flexible and thus give less cause for irritation to visitors to the United Kingdom and to citizens of the United Kingdom visiting other parts of the EEC. While it is true that generally the United Kingdom immigration service investigate outward and inward travellers more thoroughly than most other countries, they certainly give an air of great efficiency and a complete absence of official or bureaucratic rudeness—something that I have encountered in other countries. Some travellers seem afraid of immigration

767
and customs formalities; probably they have read too many novels. If therefore we can not only speed the flow, but also reduce personal confrontation, we shall do much to help travellers. So I believe that a further review by the Commission may lead to some harmonisation of passport laws. That is surely not too difficult if we are to make steady progress to further integration. A machine-readable passport clearly has to come. The committee are right in pressing the Commission to study seriously machine-readable passports and brush aside the many difficulties which will be suggested. The present leader of the House told us that he was very much in favour of the machine-readable passport, and if your Lordships read page 41 of the report you will see what he had to say.
Like my noble friend Lord Murray of Gravesend, I accept that too many of us think of ourselves as within the EEC but still not part of it. It would help towards further integration and a feeling of unity if we had a common passport. It should be of the same colour and the same format but retaining distinguishing sovereign marks, probably on the cover. I, too, am greatly in favour of some health statistics in the passport and of using it in some way to help travellers with the problems of form E 111. I think the suggestions made by the noble Baroness, Lady Robson, and my noble friend Lord Murray should be considered by the Government.
The committee have done well to urge further consideration of the whole issue and I believe they have given some impetus to the Government and, I hope, to the Commission to review these problems with alacrity. Like my noble friend Lord Murray, I had a laissez-passer when I was a member of the governing body of the International Labour Organisation. I certainly never used it to get into the United Kingdom—it would only have delayd matters—but it was accepted very freely in Switzerland and in France.
My noble friend Lord Greenwood has emphasised some of the objections we encountered. Many of them, as he said, were trivial but they were a demonstration of national pride, and if the European Economic Community means anything for the future it is that some national traditions have gradually to dis-
768
appear. I believe that the acceptance of this report by your Lordships will give a much needed impetus to the Commission urgently to consider the many problems which clearly have to be solved.
6.3 p.m.
Viscount ULLSWATER: My Lords, I should very much like to add my congratulations to those of others before me on the maiden speech of my noble friend Lord Fairfax. He has shown us a glimpse of his agile brain and, with his barrister's mind, he will be able to enlighten your Lordships on divers subjects in the future. I am sure we would welcome that. I am most grateful to the noble Lord, Lord Greenwood of Rossendale, for putting down the Motion before us tonight. The noble Lord has put the case for acceptance of this report most succinctly and has picked out really all the salient points the committee discussed from the report. I had the honour to be a member of that committee and I think it came to the only conclusion that was possible. I would just go over one or two of the opinions they gave.
In the first instance, there is still a need for an identity paper of some kind, and the passport is the internationally recognised one. It provides a check on the movement of criminals and terrorists, and I would venture to say that the last few days have shown how difficult it is to take men like Jacques Mesrine or to apprehend an escaped convict like Michael O'Rourke, who must have passed out of one country and into another undetected. I do not think it is fair to the public at large to allow such men to wander around Europe unchallenged, and so a passport is needed to check undesirables. Immigration control is another stumbling block for the free movement of people from one country to another and, while these controls remain, a passport showing the nationality of the holder will be required.
The committee went on to press for a machine-readable passport. In my own mind, it will not significantly speed up the traveller because the time spent on passport control is not as great as that spent on the baggage claim area for a holiday or business journey. Immigration control will always take a certain length of time which an EEC passport, as opposed to a national passport, will not

769
alter. However, on the plus side, a machine-readable passport will allow the provision of a greater number of ingress or egress points controlled by a supervisor and, where baggage is not involved, a faster passage through frontiers.
Perhaps the most important improvement to present-day passports, which has been mentioned once or twice before, would be the inclusion of the health status of the holder: by that I mean not only the current vaccination certificates needed for travel all over the world but, perhaps more importantly, with the harmonisation of health controls among Member States, the provision of free hospitalisation and medical attention for United Kingdom passport holders in the eight, and soon to be 11, other countries of the EEC—thereby overcoming the necessity of filling in form E 111 before the journey is started. The foregoing matters led the committee to their conclusion as pointed in the report. It is a conclusion with which I concur, and I hope Her Majesty's Government take note of this report and are more prepared than their predecessors to see the move continued.
I should like just to ask your Lordships to cast your minds forward to the reasonably near future—say in five years, or 1984. I think there will be a demand for greater information and the compiling of more statistics to control a more mobile world, with improved communications. Government bodies will be looking to monitor more closely the shifts in population, and their make-up on an age pattern, in order to provide the educational and welfare facilities that will then be needed. I believe we must take a pragmatic view of what life may be like in the future, and I think it is unreasonable to believe that the freedom of movement which we think of as being a possibility now will not in fact become possible. It may prove difficult to accommodate those from the poorer parts of the North of England, Southern Italy, parts of Spain and Portugal or the Greek islands who migrate to well-paid jobs in Germany, Belgium or the South-East of England. It would put a great strain on the social and welfare provisions of these relatively small areas, and the setting up of so-called "ghetto labour-forces" which upset all the local inhabitants. This touches also on immigration and its control. I believe that the integration of different ethnic popula-
770
tions will not take place if there are too many migrants to be swallowed into a native population. I do not discount, either, the added pressure of colour integration.
My prediction, if it should be spoken of in that way, is of a world of even greater violence—not from the general breakdown of law and order but from the upsurge of more vociferous minority groups, each with its own interpretation of freedom. Crime, or the detection of crime, is increasing and criminals have a tendency to resort to greater violence to achieve their unhealthy aims. Community responsibility is diminished by the onslaught of so much collective State intervention. This intervention is the root of documentation and, because of this need for increased documentation, it will be necessary for us all to carry a form of identification permanently with us. I think that George Orwell has come uncomfortably close to the truth. Between now and 1984, however, the move towards common citizenship in Europe may be apparent, and I urge Her Majesty's Government to reflect on the content of this report and to support the conclusion that the Select Committee reached.
6.11 p.m.
Lord INGLEWOOD: My Lords, I should first like to add my congratulations to the noble Lord, Lord Fairfax of Cameron. I think he made a good choice of subject for a maiden speech, and it certainly was a good maiden speech. I shall try not to repeat the points that have already been made in this debate, but it will be difficult to keep entirely to new matter. First, I shall mention Mr. Bevin, because when passports are talked about his remark often comes to the fore, and I do not think he is by any means the only one among us who has had that romantic view. Certainly, many people to whom I have talked since this committee was sitting echoed his wishes, and felt that probably those in charge of the different systems of control that we have at frontiers are altogether too bureaucratic. We in the committee did not find that at all, but I think that the general public believes it.
It is no good being romantic today. One hundred years ago there was much less travelling abroad and a passport was

771
not strictly necessary. But over the last 50 years there has been a great increase in travel by all classes. People are now travelling more often, they are travelling farther, they are travelling faster, there is an increase in crime—not just terrorism, but serious crime and minor crime—and there is greater awareness of health hazards. All this points to the fact that we must have some form of checks—identity documents—and checkpoints where documents are examined.
What we in Parliament, and Governments, have to do is to search for a fair balance between a too tight bureaucratic system of control, and a system that is so lax that it is ineffective. We, of course, are members of the European Community but we are not always so ready to notice that we are in a different position from other countries because we are an island. That means, in particular, that our controls at points of entry on the frontier can be very different from what there would be if we had nothing but land frontiers. Also, as a country we have a great dislike of identity cards, such as is not shared by other members of the Community who find them of great use.
Not so long ago a German police officer of some seniority, who was on a course in this country, said to me, "What the English fail to see when they criticise the German system of identity cards is that in Germany there are far fewer arrests on the streets and far fewer nights spent in detention at police stations, because we have a much better system of identification and more knowledge of people's permanent place of abode". That hardly comes within this debate, but it shows that some of the things that happen on the Continent which we dismiss may not necessarily have all the disadvantages that we are apt to suppose. What we want is a system that is acceptable and that is not extravagant in manpower.
One suggestion, which has not yet been mentioned this evening, is: Why can we not have passports examined on boat trains, such as between the Channel ports and London? It happens on the Continent. Surely that would save a great deal of time here. I knew a British police officer who, some time ago, was on official attachment to a Continental force and who found that part of his duties on
772
the other side of the Channel was examining passports on trains. He told me that one should not run away with the idea that such a check can be other than a very simple examination, because if you have some slight suspicion that some detail has been scratched out and something else written in, you can hardly do much in a railway compartment in poor light to check with six or more passengers very close to you. Further, unless you maintain a certain speed in going down the train, the chances are that the train arrives at the station where many of the passengers will get out without their passports having been examined at all.
All the same, I am sure that we are right to work towards a passport that is, in part, readable by machine. Such a passport could still be read in the ordinary way by control staff, because there are not many countries which would find it worth their while, at the start at least, to make a very big investment in the equipment for reading such documents, which has to be the same all over the world. There is just one other point about the passport that is machine-readable, which has not been mentioned. There will be some number or code embodied in it, which the owner of the passport would know but which no thief could read. The owner of the passport would push it into a slot and would tap out a code. If the code that he typed out was the same as the invisible code on the passport he would get a green light and go through. If it was not, then a red light would come on—I am speaking figuratively—and some official down the line who was checking at the barrier would see that there was something wrong and would go and see for himself.
But none of these checks that we are talking about is any real defence against incompetence or sheer awkwardness. I went to Czechoslovakia on business only about a month ago, and on my return the staff were just pure awkward. It was very easy going in, and my colleague was even asked why a Member of your Lordships' House did not have a special passport and should be travelling on an ordinary passport. So much for the classless Communist Eastern Europe! But on the way back I was held up for a very long time, for no good reason that I could see, except that the men at the barrier wandered into

773
a vineyard alongside to pick grapes. A machine-readable passport is no defence against that kind of mentality.
I am glad that the EEC have given up the idea of checks at internal frontiers. It would be placing an impossible task on the staff checking documents on the perimeter. Even if, in theory, we harmonised the immigration rules of the different members of the Community, there would frequently still be special regulations dealing with health and so on. The amount of knowledge and information that would have to be in the heads of those checking passports at the perimeter is beyond what one could expect of any official.
There is one other point that has not been mentioned. Although we talk of other countries having identity cards and, to some extent, duplicating the system by having both a passport and an identity card, we in this country issue a so-called Visitor's Passport as well as the normal one. I heard not long ago of the case of a man charged with drug offences, who when his passport had run out had obtained a Visitor's Passport and had since been travelling about the Mediterranean. I thought it was worth going to a main post office this morning to find out whether I could get one too. I got an application form and found that if I signed only once at the bottom—a false declaration—I could have a Visitor's Passport handed to me across the counter. There was no reason for this application to be countersigned by anyone else, and by making just one false declaration, saying that I did not hold another valid passport, it would have been given to me and I could have shown it to your Lordships here this afternoon. This is something that we ought to look into.
I have also been told by a friend in the police that, having got the second document, I could go abroad on it with my real passport in my pocket. I could then give my real passport to some friend who might like to come to this country, but who would rank as an illegal immigrant and come back on any Visitor's Passport. With my real passport he could then unpick it and fake it in various ways. Tam asking whether the existence of these Visitors' Passports may well contribute to the number of real passports falling into wrong hands. I must not expand on
774
that, but I thought that the point was worth making.
Viscount AMORY: My Lords, I think that the point made by my noble friend is very well worth making, and I hope he will pursue it further. What he told me about the ease with which you can get these Visitors' Passports really horrified me.
Lord INGLEWOOD: My Lords, it horrified me, too, and that is why I went to a post office to check. There is, perhaps, a perfectly good reason and purpose behind it, but it seems to me that it is all too easy to get something which is called a passport and which has the same validity when travelling around the countries which are listed in it. When the noble Lord winds up, no doubt he will be able to say something about all this. I do not want to exaggerate or give the wrong impression, but I do think that the present position invites cheating.
If we have common rules for the issue of passports within the Community, we ought also to work towards common rules for refusing passports and for taking them away in the very rare cases where this should happen. All this supports the case of the noble Lo: that at the present time the best thing that we can all do in our several countries is to work towards a passport part of which is machine-readable. We must move step by step.
One speaker mentioned that after a long period very little progress had been made by the Commission and their officials. I hope that this debate will encourage all those concerned to look again at this whole question and to take some steps forward, even if they cannot take all the steps forward that we feel are desirable at this time.
6.21 p.m.
Lord BRUCE of DONINGTON: My Lords, we on this side of the House and I am sure all noble Lords wish to congratulate the noble Lord, Lord Greenwood of Rossendale, and his committee on the production of yet another excellent report. Despite its slimness, this report is encyclopaedic when one considers the extent of the information that it contains. After reading through it, one is bound

775
to know a very great deal indeed about the underlying reasons for bringing forward proposals for some kind of passport union in Europe and also about some of the facts which have a bearing upon it.
I should also like to congratulate the noble Lord, Lord Fairfax of Cameron, on his maiden speech. Bearing in mind that it was non-controversial, it displayed a degree of virtuosity. We look forward very much indeed to being informed by him when, as is inevitable after the passage of time, he adopts a more controversial role.
Turning to the points which have been made by the noble Lord, Lord Inglewood, I do not propose to deal with them myself. However, I hope that the noble Lord, Lord Trefgarne, will be able to comment upon the remarks that were made by the noble Lord during the latter part of his speech.
Today we are considering a report produced by the Select Committee on the European Communities, of which we are invited to take note. It has arisen from a communiqué issued at the European Summit meeting held in Paris in 1974. This provided for a working party which, among other things would—
"study the possibility of establishing a Passport Union and, in anticipation of this, the introduction of a uniform passport.… It will, in particular, provide for stage-by-stage harmonization of legislation affecting aliens and for the abolition of passport control within the Community".
If there is one thing which has emerged from the report and, indeed, from the contributions of your Lordships this evening, it is that the question of the abolition of passport control is not, in the words of Commissioner Davignon himself, for mature consideration at the present time. This is putting it at its mildest. So it is not perhaps surprising that much of this afternoon's debate has centred around whether there should or should not be a European passport. This implies, I suggest, although it has not been directly stated, that so far as we in the United Kingdom are concerned a European passport should be in substitution for a British passport. It has to be considered, I think, in that context.
I gathered the impression this afternoon that many noble Lords regard the British passport as very little more than a travel
776
document. The report makes it quite clear that it is much more than that. Indeed, this is implicit in the words which appear on the front of every passport:
"Her Britannic Majesty's Principal Secretary of State for Foreign and Commonwealth Affairs requires, in the name of Her Majesty, all those whom it may concern to allow the bearer to pass freely without let or hindrance and to afford the bearer such assistance and protection as may he necessary".
The words "requests" and "requires" are of some significance because they imply to the holder of the passport, in so far as this can be perceived, appreciated and understood by those in other countries, that the whole power of the unitary State is behind it. As the report states at paragraph 6:
"A passport has more than Community significance. It provides prima facie evidence of the nationality of the bearer from which the possibility of protection by the issuing State may flow".
Indeed, this is why most people in the United Kingdom are quite proud of their British passport. It is evidence of nationality and it carries with it the implication that if the holder gets into difficulty the power and influence of the United Kingdom, in so far as this is apprehended in the other states concerned, is placed at their disposal. For example, if one is in difficulty abroad one may with confidence take one's United Kingdom passport to the Embassy, and one does receive such assistance as the Embassy is able to provide. It is therefore a document of some value.
It has been suggested that it would be better if we had a European Economic Community passport. Of course, this would be a different document, because it would not be issued by a unitary State; it would not be issued on behalf of a coherent body having a coherent body of laws; and it would not have the same degree of united implication that the ordinary national passport has. Indeed, it is nowhere suggested in the report that the issue of a European passport would make it any easier for anybody to go through the existing passport controls. It has not been shown in any part of the evidence that travel delays would be minimised. However, the point has been made by my noble friend Lord Murray of Gravesend and, indeed, by others that the issue of a European passport and its accepted use would somehow be taken as a symbol of

777
our commitment to European untyi. Those are the main grounds upon which the adoption of a European passport has been commended this afternoon to your Lordships.
I venture to put forward the idea that we may have got it the wrong way round. Perhaps it would be better to work for practical unity within Europe and for the closer coming together of the Member States of Europe to a point where it would be possible progressively to abandon some of the internal controls. Then, when that was done, a European passport would in fact symbolise a practical unity that had been achieved and would mean something.
So I think there is a danger that we might support the idea of a European passport purely as a symbol, because there is a point where a symbol can become a gimmick. I have ventured to make the point many times not only in your Lordships' House but also in Europe that the great difficulty about securing progress in the European Economic Community is that from time to time—in fact almost perpetually—Commissioners and others invite our eyes to contemplate distant vistas and to devote a tremendous amount of time to debating things like economic and monetary union which, as we know, cannot be achieved for some considerable time yet, instead of getting down to the practical problems which arise from our membership of the Community in order to promote a far greater unity in Europe than there is at the moment.
As and when we do achieve that, as I sincerely hope we shall, we may then be able to have a European passport that really means something; that is a symbol of an existing unity in which people may then have confidence, rather than being symbolic of something that may be achieved later. The greatest danger in these matters is always that we may take the achievement of a symbol as being the substitute for hard and constructive work, building bit by bit the Europe that we hope to see. With that contribution, my Lords, I hope your Lordships will be pleased to note the report of the Select Committee and will regard it as something on which future progress will be made.
6.33 p.m.
Lord TREFGARNE: My Lords, the noble Lord, Lord Fairfax of Cameron,
778
made a quite remarkable and excellent maiden speech, which I am sure all your Lordships appreciated. I hope that my noble friend will intervene again in your Lordships' affairs, soon and often. The report before us this evening is a most helpful one and the Government greatly welcome it. We agree with its general interest in removing restrictions on travel between the countries of the European Community. We also agree that a political will is needed if we are to make progress in this direction. The British Government certainly have the will to make a success of our Community membership. The Prime Minister has made it clear that there are certain important problems—notably the size of our net contribution to the budget—which we are determined to resolve at an early stage. This is our priority and pressing concern. But it is only one side of the coin. The Community has positive goals and aspirations. The Government want to pursue these in the interests of people in Britain and in the Community as a whole. It is in this spirit that we approach the proposals for passport union which are the subject of the debate today.
As other noble Lords have said, the apparently simple phrase "passport union" can have a number of different meanings. One of the many values of the report which we are debating today is that it provides a clear and thoughtful analysis. Anybody concerned with this subject in the future will I believe regard the report as a basic document. It first makes the distinction between passport union in the sense of a standard European passport and passport union in the sense of abolition of frontier controls within the area of the Community.
Perhaps I can deal first with the more fundamental question of frontier controls within the EEC and it may be helpful if I say a little about our current system. Our immigration control has two broad purposes. First, to deny entry to certain individuals (essentially criminals and terrorists); secondly, to control classes of people coming here for long-term purposes such as employment or settlement in accordance with the Government's economic and social policies. Membership of the Community means that controls of the second kind have little application to Community nationals who are broadly

779
free to come and go in accordance with their rights under the Community treaties. The immigration control at the ports for EEC nationals is therefore largely concerned with identifying a tiny minority in the context of controlling crime and terrorism. It is therefore a much simpler procedure than that which applies to other nationalities.
EEC nationals arriving at our major ports are therefore dealt with separately. Our system of "channelling" has the great advantage of dealing quickly with the large number of people who can be passed through the control with minimal formality rather than making them wait behind those who require closer examination. The principle is exactly the same as that which leads our banks to have special quick service counters and supermarkets to have special check-out points for people with only a very small number of purchases: those of us who, when wanting, to cash a cheque, have found ourselves behind someone paying in the week's takings in coin or making some complex international transaction will readily understand the common sense of such an arrangement.
EEC nationals do not have to produce a passport on arrival. A valid national identity card is sufficient. We propose at the end of the year further to reduce formalities for EEC nationals. They will no longer be required, as a matter of routine, to complete a landing card and an embarkation card on arriving and departing. This change demonstrates, I believe, our readiness to look afresh at long-established formalities and retain them only if they genuinely serve a necessary purpose.
The Committee pointed out in its report that the advantages of abolishing immigration control are slim. But the consequences of abolition are potentially dangerous. So far as EEC nationals themselves are concerned, the abolition of all checks would, as I have said, make it easier for criminals and terrorists to enter this country. But the concept of completely free movement within the perimeter of the Community could also mean that anyone from outside the Community, once admitted to a Member State, would be free to travel without further formality to any other Member
780
State. This would have serious consequences for immigration control. So long as there are different immigration procedures in different Member States, an immigration officer in any Member State would have to master all the details of procedures in all the other States. As an island, our system relies heavily upon control at the port of entry, whereas some other Member States place greater emphasis on internal police controls. The Committee was very much against this here, and rightly so. The abolition of all controls within the Community would enable a person to enter where controls were least stringent and then to travel freely to any other Member State.
The noble Baroness, Lady Robson of Kiddington, referred to the arrangements which apply in the Nordic countries and I think the distinct difference between those procedures and the ones we have is the degree of police surveillance which takes place after travellers have entered the country in question. We prefer to exercise our controls at the border. Your Committee rightly recognises the risk of such an arrangement not only to immigration control but in such matters as prevention of terrorism. The Government therefore agree with the views of the Committee that the right course is to concentrate on simplifying the procedures at ports for EEC nationals rather than to abolish all immigration controls within the Community.
Turning to the more specific issue of the format of passports themselves, I was interested to note the connection which the Committee saw between this and the proposal for a machine-readable passport or card. There is indeed a link between the two. On the first, the Committee considers that the proposals for a uniform passport offer a potential modest boost to the ordinary man's sense of being part of the European Community. The question of the uniform European passport has been dormant for some time. Work has, however, continued under the auspices of the International Civil Aviation Organisation on a machine readable passport. A panel of experts was asked to study the question and their report is now being considered by the Air Transport Committee of ICAO. We and our Community partners have taken an active part in these studies and we support the principle of a

781
machine-readable passport. These studies are well advanced.
There is a substantial measure of agreement within the panel of experts on the basic specification required to produce the machine readable capability. Indeed, we did prepare a specimen in accordance with what has so far achieved a pretty good consensus in ICAO, although I must tell your Lordships that this is not yet the formal position of the Government. The machine-readable card—I have one here—is about twice the size of the average credit card, but in other respects is rather similar; it is made of a similar sort of material, but the card itself can be interrogated by machine where that equipment is available.
Already some of our EEC partners are moving towards the introduction of a machine readable identity card that would meet the specifications, and it is very likely that such cards will be presented at British ports and airports within the next year or so. There is, of course, no suggestion of introducing compulsory identity cards in the United Kingdom.
We hope that the work being carried out by ICAO will lead to agreement to introduce machine readable passports by many countries, not only in Europe. This work adds a new element to the discussion on a common format passport for the Community. A common format passport which also provided the advantages of the machine readable passport has attractions. It should give the traveller the practical benefit of less delay at points of entry. It would also give people a greater sense of belonging to the European Community. And it would help to show to the rest of the world that the Community has its own political identity.
I should perhaps take up one of the points made by the noble Lord, Lord Bruce of Donington. I think he was under the impression that these passports will be centrally issued within the Community. That is not so. The present proposal is that these passports should continue to be issued by individual States to their nationals but in accordance with a common format.
The Committee suggested that passports might fulfil a greater number of functions; for example, they could include health details. While seeing the attraction of
782
these arguments, we should perhaps tread cautiously. We do not want to complicate the task of securing international harmonisation by trying to achieve too much with one document. We also have to be very careful about the requirements of privacy. We should not compel people to have on the passport personal information which is not strictly necessary. But I recognise that the Committee were anxious that the inclusion of medical information should be on a strictly voluntary basis.
Perhaps I can refer to a related point at the same time, and that is the question of the E 111 form which several noble Lords raised. Under present arrangements, if one is to travel to a country within the EEC and one imagines one may wish to take advantage of reciprocal medical arrangements, one must apply in advance for one of these forms. Unfortunately, the entitlement to these benefits is not uniform throughout the Community, and, although one may well be entitled to the benefit of the National Health Service here in the United Kingdom, it does not necessarily apply that one is so entitled in other EEC countries. Indeed, one's entitlement may vary from year to year because it depends upon, among other things, whether one is self-employed or paying contributions, or what one's contribution record is. For that reason, bearing in mind the fact that passports may often be valid for 10 years, we are in some difficulty about using the passport to convey information concerning the eligibility for benefits at the present time. We recognise that the present E 111 form arrangement is not perfect. We are hoping to extend the range of benefits that can be obtained within EEC countries so that the eligibility scale is more in line with that of the United Kingdom. But for the moment we are obliged to continue with the present arrangement.
Machine readable passports do not mean the disappearance of a national passport. Of course, the machine readable data would have to be standardised in the passports of all the countries which adopted this type of document, to avoid the need for a multiplicity of machines to read them. But this does not mean that there must be total uniformity of every feature of a machine readable passport or card.

783
Your Lordships may already know from the public announcement on 26th July that we have produced a specimen machine readable passport made out, for some extraordinary reason, to Sir Walter Scott. This comprises a machine readable card, which incorporates a photograph and the data presently contained in the first few pages of the current passport. This might go in a hard cover booklet which would look very much the same as our present passport and which would also have conventional pages for visa endorsements. Although this is only one of many possible arrangements, the format of the card itself accords with specifications recommended by ICAO, and it can be assumed that an internationally agreed machine readable travel document will generally have the layout of this specimen. But it will still be possible for each country's travel documents to have a national identity and a European dimension (taking the shape, for example, of a distinctive common format) in the passports of all members of the Community if this is what we all in the end decide upon.
We have also prepared a specimen of what the common format of a European passport might look like. As your Lordships can see, it looks on the face of it very much the same as the present British passport. We hope it will have provision for the machine readable card to which I referred, and it certainly contains those fine words inside the cover which the noble Lord, Lord Bruce of Donington, read out to us. I must emphasise, however, that, if proposals for a common Community format were implemented, the prerogative to issue passports would, of course, remain with member States.
There are one or two other points that perhaps I could deal with. The noble Lord, Lord Inglewood, asked about the British Visitor's Passport. It is indeed true that British Visitor's Passports valid for a limited number of countries can be obtained comparatively easily from any post office. It is a popular document with the public; over 1 million are issued annually. If it were abandoned a great strain would be placed on the resources of the Passport Office, and I can offer no assurance at this time that we will be able to withdraw it in the foreseeable
784
future. However, we are well aware of the abuses to which they are subject. For example, a person who obtains a British Visitor's Passport to which he is not entitled and uses it to travel abroad and return to the United Kingdom does not thereby gain legal residence here. I must assure your Lordships that in our consideration of machine readable passports we will bear in mind the comments on British Visitor's Passports which have been made here this evening.
The noble Lord, Lord Murray of Gravesend, asked me a specific point about the dipping of tanks of coaches and other vehicles arriving in EEC countries, particularly from here. I have no detailed knowledge of that difficulty before me at the moment, but, if I may, I will look into the matter and write to the noble Lord.
My Lords, I am sure that the Committee were right to conclude that it is along this path that we should proceed if we are to make progress on a European dimension for the national passports of Members of the Community. When the proposals are further advanced, the Government will look at them with sympathy.
6.50 p.m.
Lord GREENWOOD of ROSSENDALE: My Lords, I should like briefly to express my appreciation of all the speeches which have been made in this short debate, from that by the noble Baroness, Lady Robson of Kiddington, to the one which we have just heard by the Minister. They were all most kind in their references to the work of the Committee and they were all extremely solid and constructive contributions.
I should like specially to pause to say thank you to the noble Lord, Lord Fairfax of Cameron, for what I thought was a model maiden speech which was characterised by grace and a warm sympathy with the problems. I know that it bodes well for the future. It is not easy to make demands upon the young Members of this House who have the obligations of bringing up families, developing their careers and involving themselves in professions. When we do put these additional burdens upon them, we should be particularly grateful to them for accepting the responsibility and being prepared to help the House in that way. Your Lordships

785
would not expect me, with my background, to be an uncritical admirer of the hereditary principle, but every day in this Chamber I look around and I ask myself where the young men would be if it were not that they were here because of the hereditary principle. They make a contribution and the noble Lord, Lord Fairfax, has given us striking evidence of that.
I should like to make one point. We should not be too defeatist about the possibility of matters speeding up. I am not over-optimistic, but one remembers that, when Commissioner Davignon told us that he was optimistic about future progress, he told the Committee that one reason which had led to recent inactivity was the wish of the British Government not to complicate plans to introduce direct elections. I am looking to the new Government to find some other source of embarrassment which they can use in order to galvanise the Commission and make it more positively forward-looking than it has been in the past.
Finally, I should like to thank the noble Lord, Lord Inglewood, very much indeed for the practical work that he has done. Indeed, I am prepared to offer a small prize to the noble Lord who will get to the noble Lord, Lord Inglewood's post office first thing in the morning and bring the noble Viscount, Lord Amory, up to date. With those few words, I ask leave to withdraw the Motion.
Motion, by leave, withdrawn.

BRITISH AIRWAYS' FUTURE STRATEGY
6.53 p.m.
The Earl of KIMBERLEY The Earl of KIMBERLEY rose to ask Her Majesty's Government whether they are satisfied that the future strategy of British Airways is adequate to meet the problems facing the industry. The noble Earl said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In view of the proposed forthcoming sale of shares in British Airways to the public, I feel that it may well clear the air if tonight I raise a few controversial points, even at the risk of unpopularity in certain areas. I also hope that, under its new status, certain strategic errors with which British Airways seems
786
plagued, will be able to be rectified, and as such I hope that my criticisms will be accepted in a constructive manner.
The object of the BOAC/BEA merger was to create a world airline through existing manpower and resources. It was to be more flexible and competitive, while simultaneously reducing wasteful duplicate administration. However, because of the entrenched attitude of key management, problems have arisen which have caused a marked decline of confidence in the upper echelon of management by those of more humble status, be they captains or cleaners. That has resulted in a lowering of morale to an alarming level. The two pyramids which should have integrated themselves into one are still side by side, and they sit with a third and very bureaucratic one sitting on top of them.
British Airways is top-heavy in administration and over-manned by perhaps 7,000 or 10,000 in those areas the merger was supposed to reduce. For example, a directive to reduce manning leaves the boardroom, it goes to the top echelons and is passed to middle management where this directive is most necessary. But middle management then puts the axe in at the level which can least afford it—engineers, pilots, loaders, and traffic handlers. The former Chairman. Sir Frank McFadzean, a tough and experienced industralist, tried to streamline the operation but even he could not cope with all the in-fighting. The amorphous mass of British Airways administration remains much the same, and the only sufferer is the passenger through insufficient tarmac-level personnel, which means that the airline fails to meet its schedules.
British Airways, like other large organisations, suffers from a lack of communication inside itself. However, that could be off-set by management's determination to promote good relations with its work force. Your Lordships may be surprised to know that BEA employed a consultant psychiatrist, Mr. Russel Smith, who advocated a policy of confrontation as the most efficient way to obtain the maxi mum productivity. Unfortunately, that policy appears still to be maintained at most levels and has had a disastrous effect on industrial relations. Management is despised; getting people to work becomes a problem; responsibility is not re-

787
warded, and leadership is not encouraged. A reluctant workforce with little pride in the company, which resorts to restrictive union practices, combined with over-manning and under-utilisation practices leads only to inefficiency and a waste of money.
British Airways accountancy is run on a mini-budget system employing several thousand accountants. The system causes constant "Who pays for what?" bickering; massive over-charging for key equipment, which has even resulted in its standing idle because nobody knows who will pay for it. For example, British Air Tours once asked the European Division for a quote for handling 707s at Lisbon. The quote was rejected in favour of that of TAP which was less. However, if that is rationalised, money left the company, and even if the European Division's quote was far higher, it would still have been cheaper than paying out money to TAP.
Very often the aircrew and tarmac level personnel exist in shabby surroundings of litter and peeling paint. It could well pay some of the accountants to step out of their pristine offices and see conditions at the coal face at first hand.
British Airways is desperately short of aircraft. The buying policy of the European Division has resulted in inadequate capacity in the medium range caused by the Trident fiasco. Whatever British Airways may say, there has been an unbelievable lack of forward planning, and I have said that in your Lordships' House on several occasions in the past. British Airways has naturally denied that charge, but this lack of foresight means that British Airways has to react to events instead of anticipating them. As a result, it is often too little, too late, as well as probably being the wrong aircraft. This then leads to wholesale cancellation of services, and to sub-chartering. To lose revenue in that way is both inexcusable and commercially disastrous.
Comparisons are odious, but British. Airways staff productivity on short haul is about 25 per cent. of the best United States carriers. For instance, on the London-Glasgow run the wages cost per passenger is about £8 on a 344-mile route. On a similar route in California by
788
Pacific South-West, it is about £4 and the American staff are paid twice a much. British Airways on short haul carries about 760 passengers per employee, and its equivalent in the United States, like South-West Texas or Pacific South-West, is 2,800 passengers per employee. Unfortunately, the baggage handling produces the same sad story. Over here it is about eight bags a minute and in America about 16 bags a minute.
Regarding maintenance, the aircraft are adequately maintained but are often inadequately cleaned inside and out. The last results in lower performance and increased fuel consumption. When a new aircraft is ordered the research and development section insists on a "bespoke tailor" requirement. This not only delays service entry, but also reduces operational flexibility. The buying policy leaves no buffer for unexpected expansion of demand. Even allowing British Airways the benefit of the doubt that the 737 is more suitable for its needs than the 1–11, the decision to purchase the 757 paper aeroplane instead of the airbus seems very odd. One wonders why there is this urgency for British Airways to buy American, and in particular Boeing, unless there are some other influences of which the public and T are unaware. Here it is perhaps pertinent to note that the following European airlines have all ordered the airbus in one or other form: SAS, Lufthansa, Hapag-Lloyd, Air France, Air Inter, British Caledonian and Laker, K LM and Martin-Air, Iberia, Alitalia, Sabena, Austrian Airlines, Olympic Airlines and Swissair.
Not long ago in this House I asked the question, "Can all these airlines be wrong?" At the moment the only two contenders for the 757 are British Airways and Eastern Airlines in America, and even Eastern uses the A300 on its shuttle services from New York. I am told that British Airways intends to cram about 223 passengers into the 757 at a full fare whereas Laker puts about 215 into an airbus at a cheap rate. So the excursion passenger will travel both in more comfort and at less expense.
I believe that British Airways does more damage to British industry and our balance of payments deficit than any other company in the United Kingdom. For two decades it has actively pursued a policy of not buying British unless under

789
Government persuasion. It has then derided the aircraft, and the Government have usually had to subsidise the operation —for instance, as in the case of the VC.10, the 1–11 and Concorde. It cannot deride the airbus because it has not ordered any, but should it find itself in the position of having to, there will be a very long wait for delivery, as it will be at the bottom of the customers' list.
On page 52 of the annual report of British Airways it states:
"A substantial proportion of the fleet commitments is payable in US dollars, and approximately 20 per cent. thereof is covered by contracts for forward purchases of US dollars over the next two years at various rates of exchange".
Capital expenditure commitments are £950·7 million, which must be getting on for 50 per cent. of our balance of payments deficit for this year. In fact, since writing this down I have discovered that from January to August 1979 our balance of payments deficit was £443 million in US dollars—that is in eight months.
However, on the credit side British Airways has championed Rolls-Royce and has even paid for having that company's engines fitted to 747s. But perhaps to the cynic this could be due to the numerous malfunctions of the Pratt and Whitney JT9Ds which have caused many passengers to be delayed, sometimes for days, thus necessitating British Airways doling out free drinks, meals and hotel rooms. The service is creditable, but at what cost in lost revenue, and transporting spare engines. Page 15 of the annual report devotes four paragraphs to the Trident fiasco, but virtually only two small throw-away sentences on the problems of the 747 and the TriStar.
Lord TREFGARNE: My Lords, can my noble friend tell me what he is talking about when he refers to the "Trident fiasco"?
The Earl of KIMBERLEY: My Lords, certainly. In saying that I refer to the cracks in the wings which put the entire Trident fleet out of service for a certain period of time. Further on on the same page there is a profound statement about the EEC:
"Until recently British Airways has scarcely been affected by the British membership of the EEC. It is now clear, however, that air transport will be of increasing interest to the Commission,
790
and we have taken steps to ensure that we are kept closely in touch with and influence what is happening in Brussels".
About time too, for there are two factors which will affect British Airways after 1980. One is the EEC regulations which will require open tendering from all European countries for equipment, and the second is the new routes within Europe which will be open to independent airlines. I am sure that Her Majesty's Government will give strong backing for British Caledonian and our great entrepreneur, Sir Freddie Laker, in their campaign to extend their routes.
On 23rd October last, in another place, during the Second Reading debate on the Competition Bill, at column 272 in Hansard the Minister for Consumer Affairs, Mrs. Sally Oppenheim, said:
"But we believe that competition is a potent weapon, both in the fight against inflation and in the establishment of consumer sovereignty".
I agree with her. In fact, it could be very desirable for the CAA to alter the licensing obligations, thereby encouraging greater competition which would lower the air fares on British airlines. The announcement or leak that British Airways wants to get rid of 26 unprofitable routes and that four independent airlines are keen to compete for them must only be good.
Reverting to the merger, this produced operating problems of procedure on the flight deck. The European and overseas divisions have been working towards a common operating procedure, but it is still some way from fruition. For instance in the European division TriStar is approved by the CAA for landing in extremely foggy weather whereas the same aeroplane in the overseas division is not. However, as in many ways the merger appears to have been more of a take-over by BOAC, there appears little urgency at the moment to bring the overseas division up to the same standard.
Divisions in the pilot work force at union level seem to be deliberately unresolved by the company for industrial reasons. The matter is further complicated by retaining flight engineers in the overseas division. I believe that there are many progressive airlines which use the European division operating procedures and which have no flight engineers. British Airways co-pilots have morale problems due to the absence of a career

791
structure—for instance, in aircraft expectation. Many co-pilots have been in the same type of aircraft for over 10 years. Other airlines consider this to be a dangerous practice and retrain their co-pilots at five or six year intervals, thus giving added benefit and experience for command. In other words, the basic problem is long haul v. short haul. There is no common seniority system. If a Trident captain wants to transfer to the overseas division, he has to start right at the bottom again.
I now give some praise. British Airways' ground engineers are superb at all levels. They are perhaps the company's real strength. But there seems to be a curious reluctance to pay them the going engineering rate and as a result key men are often lost after a great deal of time and money has been spent on training them. British Airways should perhaps pay more than their competitors, otherwise the engineers vote with their feet. Hundreds left last year over a £3 pay dispute. Disenchantment leads to restrictive practices affecting the flexibility of aircraft. European division engineers will not service an aircraft standing on an overseas division hard standing. Page 20 of the annual report states that:
"Engineering management is at long last nearly unified".
But how long is "at long last"?
Congestion is the bane of all airlines and as such is one of British Airways most serious problems. Flights at peak periods are subject to anything up to three-quarters of an hour airfield delay. This delay is naturally compounded when the aircraft is turned round at the other end for its return journey.
We are still considering a third London airport, but we have two perfectly adequate and good ones at Gatwick and Stansted, but both need two operational runways. Should there be any disagreement, not from your Lordships' House but outside, I would humbly suggest that the person who disagrees obviously never flies with the European division of British Airways at peak times. It is true that air congestion was partially solved by the wide-bodied jumbos on long hauls. But the proliferation of short-haul mini aeroplanes is threatening disruption on a far larger scale. This is why British Airways should rethink its aircraft procurement
792
policy. It seems uncommercial for British Airways to fly three-engined TriStars to Paris when Air France flies two-engined airbuses to London. Is there not supposed to be a worldwide fuel shortage?
Air travel is international. British Airways' thinking tends at best to be national and I cannot even praise its domestic routes and services. British Airways must formulate an international policy if it is to make some sort of order out of the impending chaos resulting from narrow concepts, narrow minds and narrow-bodied aircraft. There is still time before it is too late for British Airways to re-think its forward planning needs. I can only hope that by selling off part of British Airways to the private sector—if anybody will buy it—this may prove to be the catalyst to make the airline fully competitive again in the world market, so that once again we may fly the flag and arrive on time.
7.11 p.m.
Lord HAYTER: My Lords, the noble Lord, Lord Trefgarne, has had a tremendous ear-bashing today in a variety of different contexts, and I hope that I shall be very gentle and not disturb him at all. I am obliged to the noble Earl, Lord Kimberley, for asking this Question, because I rise, although it may not look like it, like a phoenix from the ashes. My little Quango has been disbanded. I was chairman of the Little Neddy which looked after international freight movement, and it would therefore be on my conscience if I did not speak on this Question in the context of air cargo.
That is fair enough because we are talking about the problems of the industry. We are also, in a way, talking about the problems of industry, and the air cargo side has been perhaps not as widely recognised as it ought to be in various circles. For example, last week you may have seen a large article in the Financial Times about the "Civil Aviation Authority's Unenviable Challenge". There was not one word about cargo in it. Yet another article on Monday; "British Aviation Changes Course". Again not one word about cargo. And yet, as these wide-bodied aircraft come into use all over the world, this further subordinates cargo policies to passengers.

793
I hope you will take it from me that nearly one-fifth of imports into this country by value come in by air, and nearly one-fifth of the exports of this country by value go out by air. So you have a tremendous impetus here for the export and import business of this country. Now all this serves to emphasise British Airways' traditional role as the national carrier, and it speaks for the industry in many contexts, particularly with the International Air Transport Association and with Government. It is therefore all the more important to make sure that cargo is playing its relevant part in their considerations.
I understand that there is not a single director on the board responsible for, or knowledgeable of, air cargo. This seems to me quite astonishing. Secondly, I understand that the board as a whole is rather slow to react to the changing demands of the international air freight industry—and they change very quickly these days. Thirdly, there is a failure to maintain the competitive service standards —and that is a common problem for national airlines. They are rather inclined to rely on their own reputations. Fourthly, how important it is for the board to have genuine consultation at top level with the other major interests in their context: the freight forwarders; the customs; and this computerised cargo-processing system.
However, all is not lost. I am a little more optimistic than the noble Earl who put forward this Question, for at senior cargo management level quite a lot of things are happening. There is the new commercial rating policy; they are consulting more with the bodies that they should be consulting with; and they played a significant part in the development of a project called the freight forwarders bond at Heathrow. It was developed as a result of my Little Neddy. It really is the facility at Heathrow which enables cargo to come in there from the various airlines, he sorted out by the freight forwarders, and then to find its proper destination elsewhere, maybe in Europe. It is so successful that it has been generally agreed that it has to be expanded 200 per cent. But there are many complications, and I cannot quite see, now that my Little Neddy has been disbanded,
794
who is going to come to some of those conclusions. I shall come back to that in a moment.
I shall now plunge into future strategy. It has been said that one could not be satisfied with the British Airways' future strategy about cargo because nobody has ever heard of it. There is a certain element of commercial secrecy behind which they take shelter. But a lot would be gained if we could see, particularly in the new context, the appointment of a cargo product director to the main board. I happen to know that there is a very sizeable and quite expensive research programme going on, and that should be directed by one of the top people in the organisation.
Secondly, one would hope that there would be a strengthening and a stabilising of cargo management, and in particular the establishment of a better cargo career structure so that young men going in would know that their future was reasonably assured in the light of their own ability. These things would provide leadership and confidence in the workforce, and they improve the terminal handling, and as a result both British Airways and the United Kingdom industry as a whole would benefit.
Today's rapid development and the high competition in air cargo requires national strategic planning, and that is where, to the extent that the Government share in the responsibility for British Airways, they must take a part. So I get back to the beginning. We have to meet the problems of the industry in competition with the other airways in Europe. We have to meet the problems of industry to ensure that the goods can flow as freely, as quickly, and as efficiently as possible. It is a pity that my Little Neddy is no longer there to help, because some of these things cannot be done by British Airways alone. Take that freight forwarders bond area. There are endless complications there which I shall just outline in a few words: the unions; the customs; the International Trade Procedures Board; the freight forwarders industry; industry itself as represented by the CBI. All these have to be drawn together if it is going to be a success.
Until there is a change of heart towards air cargo in British Airways as a whole, I

795
think the only possibility of bringing some of these projects to fruition will be the British Overseas Trade Board, for which the Government are in part responsible, together with that famous organisation to me, though maybe not to you, called SITPRO, which stands for the Simplification of International Trade Procedures—vital to all of us in industry mixed up with exports and imports. But it is not only in this area of the freight forwarders bond but in the general furtherance of air cargo expansion against our competitors in Europe, who are very alive to many of these projects, that I hone that British strategy from the British Airways' point of view will become clear, and that the Government will be backing them to the best of their ability.
7.18 p.m.
Lord PONSONBY of SHULBREDE: My Lords, I sometimes feel that we expect perfection of some of our national institutions and that we enjoy attacking the Post Office, British Rail, or British Airways. Perhaps this is because we all have our own personal experiences of where things have gone wrong. The noble Earl, Lord Kimberley, certainly enjoyed himself this afternoon. He raised the important question of whether British Airways' strategy was adequate for meeting the problems facing the industry.
Certainly the major problems which one sees air transport facing in the 1980s and beyond are the continuing demand of the leisure traveller. The tourist industry sees the demand for travel increasing, and that in fact in the course of time the leisure traveller will become more and more important for airways vis-à-vis the business traveller. Another problem in the air transport industry which it is facing acutely at the present time is the question of escalating fuel costs. In the USA they have been up 72 per cent. in the last nine months, with a consequent pressure on the earning capabilities of United States' airlines. We know that during the first nine months of this year profits were down some 50 per cent on last year. These pressures will make British Airways think very carefully about the type of aircraft it flies, the routes it operates and the fare structures it has.
On the question of the type of aircraft, this was dealt with to a considerable extent
796
by the noble Earl, who informed your Lordships that British Airways are going for the Boeing 757, whose operating costs, if powered by the RB 211 engine, British Airways believe will be between 5 and 10 per cent. lower than those of any other comparable aircraft. Lord Kimberley criticised this decision on a number of counts, but perhaps to some extent on the basis that all the other European airlines which had ordered the Airbus could not be wrong. It should be said that at the time the order was placed for the 757s, the Airbus was not available with an RB 211 engine, and that this availability apparently came about only during this summer. On all counts, it was and is a fair decision to have decided to purchase the 757.
The other problem I mentioned was competition for the custom of the leisure traveller. This has led to intensive fares competition, as witnessed by the present applications before the Civil Aviation Authority. Application has been made by Laker Airways to operate 666 routes and, perhaps rather more reasonably, by British Caledonian to operate 20 routes. It is ludicrous to think that Laker actually intend to operate 666 routes in Europe when one considers that the biggest of America's airlines, United, operates only 400 routes throughout the United States. Whatever the outcome of the applications and whether European fares are slashed or not, everything will depend very much on the attitude of the receiving nations, and I understand, to mention only a few, that the Swiss, Germans and French are against any considerable dropping in fares. As an article in the Financial Times pointed out last Friday:
"If anybody is looking for an early breakthrough in cheaper fares in Western Europe, he is likely to have to wait some time. In the meantime, British Airways, with its partner flag-carriers of other European nations, will continue with its own steady erosion of air fares, offering cuts wherever it can on a bilateral basis".
It is well known that British Airways is able to, and does continually, offer an increasing range of special types of lower fare which people can avail themselves of in special situations.
One of the other main prongs of Lord Kimberley's attack on British Airways was criticism of the internal working of the airline, and there was considerable validity in his remarks. Certainly the

797
productivity of British Airways per employee is below that of other comparable world airlines, and this is recognised by British Airways. It could of course be that British Airways, with 60,000 employees and possibly 10,000 too many—Lord Kimberley gave a slightly lower figure—is too big to be able to weld into a single corporate whole. But they are trying to do something about this internally and I understand are currently involved in operation QARP, which stands for Quality and Reliability Plan, which is aimed at motivating the staff to remember that passengers are the reason for the airlines' business. What Lord Kimberley said with regard to middle managers needing more support from the top is also a criticism which I have heard.
It is not right for us this evening to consider whether the decision to merge British European Airways and BOAC was or was not right, but it is certainly the case that the proposal at the time by Sir Ronald Edwards in his report on the British Air Transport Industry in the 'seventies, which proposed a federation, might have been more successful, as then one would have had a situation similar to that which, in a sense, is now crystallising, as mentioned by Lord Kimberley, in that the work of British Airways is breaking down more and more into activities on long and short-haul routes. I doubt whether the other issues about British Airways which we are not discussing this evening—and I would refer to the sale of the shares of British Airways —will affect these issues at all; I think it is largely one for internal management.
The problems which noble Lords have discussed this evening and the problem of freight as raised by the noble Lord, Lord Hayter, are matters of concern, and we are surely all concerned to see that our national airline enjoys the prestige which we would wish it to have. Having flown on airlines other than British airlines, one can understand the point of some of these attacks, but I hope, and I am sure all noble Lords will hope, that the prestige of British airlines can be enhanced. I look forward to hearing the reply of the noble Lord, Lord Trefgarne, and I congratulate him on his stamina this afternoon in having dissolved the ODM, introduced machine readable passports and now perhaps saved British Airways.
7.28 p.m.
Lord TREFGARNE: Two down and one to go, my Lords! The noble Earl, Lord Kimberley, has displayed a commendable sense of timing in raising this Question. We have all had cause recently to cast our eyes both backwards and forwards in relation to British Airways. The look backwards was occasioned by the 60th anniversary of the airline's first regular international scheduled service. It was on 25th August 1919 that a converted bomber left Hounslow for Le Bourget under the flag of Air Transport and Travel Limited, a forerunner of what is now British Airways. The flight took two and a half hours, and it is a measure of the airline's progress when we consider that Concorde takes little more than that to cross the Atlantic. The forward look came with the publication last week of the Government's Civil Aviation Bill, which provides for a major change in the status of our national airline from a nationalised industry to a private sector company in which a proportion of the shares will be held by the general public.
There have been many changes in between these two events, including the various stages of State ownership which culminated in the creation of the British Airways Board in 1972. This was a crucial development designed to fuse together the operations and resources of the erstwhile air corporations and thus provide a single entity offering worldwide services, and to reap the economies to be gained from a large, integrated organisation. The merger was a mammoth task and it took a considerable time to be implemented properly. I take this opportunity to pay tribute to those throughout the airline whose efforts have enabled the merger to be carried through successfully.
Amidst all the changes which have occurred over these last 60 years, British Airways—in whatever form—has shown itself capable of meeting successfully the challenges of a growing, innovative and increasingly competitive industry. A few brief facts will illustrate that success. British Airways' route network is the largest in the world. The airline serves around 180 cities in 80 countries. In 1978–79 it carried nearly 16 million passengers and clocked up 36,000 million revenue passenger kilometres. Cargo and mail amounted to well over 1,000 million

799
tonne kilometres. Total turnover was £1,640 million, on which the profit for the year was £110 million.
As well as operating scheduled air services, the British Airways Group undertakes a wide range of other activities, for example, British Airtours operates in the charter and holiday markets and British Airways Helicopters has established itself firmly in the North Sea offshore market. In addition, there are the highly successful International Aeradio Limited, and numerous other subsidiaries operating in industries related to the airline, such as hotels, holidays, and engine overhaul. It will be obvious from what I have said that British Airways has grown over the years into a large and diverse organisation.
I referred briefly to the constantly changing environment in which British Airways, in common with all airlines, has to operate. Some of these changes have been foreseeable, but others have come quite by surprise. For example, the massive and unforeseen increase in fuel prices in the early 1970s came at a time when the newly created British Airways Board had hardly had time to get on its feet. Although this resulted in two loss-making years in 1974–75 and 1975–76, the airline made an admirable recovery thereafter for which all concerned can take credit. Over the past year or so fuel prices have again caused serious problems, and I will return to this later.
Another example of the changing airline world is the pressure for low fares, about which we have heard an increasing amount over the past couple of years, and which is very much in the news today in this country. British Airways has this factor uppermost in mind in its strategic thinking, and is already closely associated with the trend towards low fares.
My noble friend Lord Kimberley has not spared us the details of the problems which all airlines face in the future, and in this he is quite right. British Airways has been among the first of the world's airlines to address itself squarely to the problems and challenges which lie ahead. Before formulating its present corporate strategy, British Airways set its sights to the mid-'eighties to try to make reasonable assumptions about what the international airline industry would look like then and
800
the sort of service it would have to provide in order to continue to compete successfully. Nineteen Eighty-Six—just after all the old aircraft which do not meet modern noise standards would have to be phased out—was taken as a representative year. British Airways saw continued growth of the market combined with a major increase in the proportion of that market represented by leisure travel, and a fall in the real level of fares, and decided that the only recipe for success was to continue to serve all segments of the market and to grow in order to maintain its total market share.
At the same time, the airline has set itself a financial objective which may be expressed as follows:
"To generate a cash flow that will pay interest on loans and currently payable tax, pay an appropriate dividend on public dividend capital, and fund an asset replacement programme at current cost and a reasonable proportion of capital expenditure on assets needed for expansion".
That objective is a testing one, and is reflected in British Airways' current statutory financial target of an average annual return on net assets of 6 per cent. in real terms.
In order to remain a market leader, weather the future changes in the industry and achieve its financial objective, British Airways has developed a strategic plan to adapt its products and to reduce costs. The main elements in this plan are a redesign of the product range, a rationalisation and complete modernisation of the aircraft fleet and a substantial increase in staff productivity. The first of these items involves a better recognition of the different needs of business and leisure traffic. Business travellers and others paying full fares have increasingly complained that they are not getting a fair deal from the airline in comparison with those travelling on various kinds of dis-counted fares. The new strategy is designed to eliminate these complaints and at the same time to produce an attractive, but simpler, service for leisure passengers which will be financially and competitively successful.
The second element—rationalisation of the fleet—involves a policy which will give British Airways a highly competitive four-type fleet in a few years' time. Future operations will he based mainly

801
on the Boeing 737, the Boeing 757, the Lockheed TriStar, and the Boeing 747. These fleet plans require a very large capital investment programme. In addition, British Airways will of course continue to operate Concorde at the top end of the market. Your Lordships will be aware that the airline are to acquire a sixth British-built Concorde for the supersonic fleet, and it is open to them to make proposals to the Government regarding the seventh such aircraft if they wish. Concorde operations by foreign airlines have been facilitated in conjunction with British Airways, and it is clear that Concorde services by any airline other than British Airways or Air France can be a practical proposition only with extensive support from either of these two main carriers. British Airways is therefore continuing to play its full part in the pioneering of supersonic civil air travel.
The rationalisation of the fleet will have many cost advantages for British Airways and is a major feature in progress towards the low cost targets which the airline has set for itself. The new fleet will be more fuel efficient and quieter than current operations. It will fully meet the new noise regulations due to be applied in the United Kingdom from 1st January 1986. As regards energy consumption, the position is put into stark perspective if I quote British Airways' own estimate that by 1986 the airline's total traffic will have doubled with an increase of only 25 per cent. in fuel consumption.
The right fleet will therefore make a substantial contribution to the success of British Airways' strategy, and I should like to make a brief reference here to an important, related point. Your Lordships House has in the past, and again tonight, heard criticisms that British Airways' fleet plans are too heavily dependent on American aircraft rather than British or European aircraft. I can understand the sentiments of those who express such views, but in the prevailing environment of the civil aviation market it is essential for an airline to be able to choose the aircraft which is best suited to its own particular route pattern. Flying the right aircraft on the right routes can make all the difference between profit and loss, and the Government firmly believe that it is the management of British Airways who are best placed to decide which aircraft
802
will produce the best results on their route network and that they should therefore be free to exercise their own commercial judgment in this respect. British Airways' preferences for certain aircraft types imply no criticism of competing aircraft from a different source, but simply reflect what they consider to be best for their own circumstances. The airline's preference for Rolls-Royce engines which already power its TriStar fleet, part of the 747 fleet, and will power the 757s, is similarly based upon commercial considerations.
Several noble Lords were particularly critical of British Airways' choice of the 757. Again, that choice was a purely commercial decision, based upon the airline's particular requirements. We could no doubt have a very long and inconclusive debate on the merits of that decision, but we are not here to do the management's job. Mr. Ross Stainton, the chairman, has stated recently that the developing fuel crisis emphatically underlines the commercial rightness of their decision to buy this aircraft, and that the airline's calculations show it will burn between 30 and 40 per cent. less fuel per passenger than the Trident 3. He has also pointed out that, because it is smaller than its rivals, the 757 represents flexibility in deployment, which British Airways consider a valuable commercial plus factor in the fiercely competitive environment they expect to face. With respect, I would suggest that there is nobody in your Lordships' House with sufficient knowledge of British Airways and its particular commercial requirements to say that the airline's decision is wrong, and that they should be acquiring an alternative type of aircraft. The best service the Government can render British Airways is to give its management the freedom to exercise its commercial judgment in matters such as this, because they are the people best placed to make those decisions.
Returning to the details of British Airways' overall strategy for the future, the third element I mentioned is the need to increase staff productivity. This is vital. The right product combined with the right aircraft will not be sufficient to ensure the success of the airline's strategy without a significant contribution to cost reduction from better productivity. This is not to say that productivity has stood

803
still in the airline. Over the past 10 years, available tonne kilometres produced per employee has risen from just over 78,000 to almost 135,000. But this trend has to be continually and more rapidly improved if British Airways' costs are to be contained at a level which will enable the airline to continue to compete successfully in the future. The required improvement in productivity is one of the management's priority objectives in British Airways' overall strategy, and particular efforts have been made over the past couple of years to secure the necessary increases, both by normal managerial action throughout the airline and by the linking of increased pay with increased productivity. Steady progress has been made, and the airline's employees at all levels are to be congratulated on this. However, the momentum has to be increased. The need is simply illustrated by British Airways' forecast that by 1986 the doubling of the airline's traffic will be achieved with fewer staff than are currently employed.
A related and important factor is the quality of the airline's service. I have no doubt that many noble Lords could provide examples of individual complaints about flight punctuality, baggage handling, et cetera, and it is no use denying that there are such cases. British Airways are fully aware of this and are making strenuous efforts to improve their performance with a quality and reliability campaign which covers the whole airline. They realise it is no good having the right product at the right price if it cannot be delivered in reliable working order on time.
These, then, are the essential elements of the strategy, but, in formulating it, British Airways recognise that there are a number of external constraints over which they have little or no direct control. These include the speed and manner in which the world moves towards deregulation, the problems of United Kingdom airport capacity, the problems of air traffic control congestion, the position regarding aviation fuel supplies and their desire for freedom to acquire the aircraft of their choice. I have already dealt briefly with the last point, but noble Lords will be aware that over the past months another of the items mentioned —aviation fuel supplies—has had a
804
dramatic impact on all airlines. Fuel price increases over the past year have placed a large, additional and unavoidable burden on airline costs, including those of British Airways. The magnitude was illustrated by Mr. Ross Stainton when, on the publication earlier this year of the airline's 1978–79 report and accounts, he indicated that British Airways' previous forecasts of the future nature of the airline industry had assumed that by 1986 crude oil prices would have risen by 15 to 20 per cent. in real terms. He then went on to say—and I quote:
"As far as fuel prices are concerned the 1986 in our prediction has already come and gone".
British Airways have also suffered recently from another factor over which they have no control—the strength of sterling. While this represents some advantage in respect of the airline's dollar-priced expenditure, such as oil and aircraft, it has precisely the opposite effect on revenues. The proportion of British Airways' revenues earned abroad is approaching two-thirds, and a strong pound means a fall in the sterling value of overseas receipts from ticket sales when they come back across the exchanges. Despite a growth in traffic higher than forecast, these factors are combining to create an extremely difficult year for British Airways, as noble Lords may have read from recent Press accounts. The airline is therefore engaged in a cost-cutting exercise to preserve, so far as possible, the level of profitability necessary for its large investment programme.
One aspect of cost-cutting which has recently received much public attention is the decision to withdraw from a number of United Kingdom domestic routes. I do not propose to go into this question in great detail, because it is a commercial decision by the British Airways Board, and they have fully explained their reasons for it: that is, that the relatively small number of routes in question are loss-making, could not be turned round to make a profit and could not justify the investment in new aircraft to replace the aging Viscounts. Given the competitive climate in which British Airways have to operate, it is essential that they should be free to take and implement decisions such as this without interference. In this particular case your Lordships will have noted that other United Kingdom airlines have applied to take over the

805
routes, and thus the interests of the travelling public should not be adversely affected, It is an imperative for any business to concentrate its resources, and not to fritter them away or under-employ them. It would, however, he wrong for Ministers to dictate to British Airways how that principle should be implemented.
The question of freedom brings me conveniently to another major aspect, without reference to which my answer to the noble Earl would be incomplete. I refer, of course, to the Government's plans to change the status of British Airways from that of a nationalised industry to a private sector company in which the general public holds a proportion of the shares. The Bill which provides the framework for this has been published, and your Lordships will have the opportunity to debate it in due course. The essential policy intention as regards British Airways is to release the airline from the existing régime of Government controls which are applied to any nationalised industry. British Airways are by no means a monopoly, and have to operate on a commercial basis. The Government's proposals recognise this, and, when implemented, will free the airline from controls imposed by the Government on important matters, such as borrowing powers, cash limits and financial targets, and controls of investment. Controls of this nature will be replaced by the disciplines of the commercial and financial markets, which, in the Government's view, is an infinitely preferable arrangement given the airline's particular circumstances, and one which will enable the management to plan ahead without fear of intervention, such as cuts being imposed on financing for its capital investment programme because of the Government's wider public expenditure considerations. Thus, in future, the airline's success will depend entirely on its own efforts, and the Government believe such freedom will be essential for British Airways to face successfully the challenges which lie ahead.
My Lords, I have taken some time to reach the answer to the Question asked by my noble friend Lord Kimberley, but that Question was widely drawn and a proper understanding of the background is almost as important as the answer itself. Like any large organisation, British
806
Airways throw up individual matters which can be criticised, and indeed are. In this repect, they know their weaknesses and are making every effort to improve where necessary. But it is all too easy to concentrate on the particular, and my noble friend's Question requires us to stand back from what I might call day-to-day matters and look at British Airways more broadly, and at the plans they are making for the future. As I have indicated, those plans are based on realistic assumptions which boil down to the simple fact that life for all airlines is going to become more difficult, and only the fittest will survive. British Airways have identified what they need to do, not only to survive but to do so successfully. Although the problems have been increased by recent events largely beyond British Airways' control, their central strategy and determination remain. Nobody pretends that the road ahead is easy or that the mere existence of a plan is enough in itself, but the Government's firm answer to my noble friend's Question is, Yes, we are satisfied that British Airways' strategy can meet the problems facing the industry, and I am sure your Lordships will join me in wishing all those who work in the airline every success in their efforts.

CITY OF LONDON (VARIOUS POWERS) BILL GREATER LONDON COUNCIL (GENERAL POWERS) BILL GREATER LONDON COUNCIL (MONEY) BILL
Examiner's Certificate that no further Standing Order is applicable, read and ordered to lie on the Table.
  HEATHROW AIRPORT: TEMPORARY ADMISSION AND DETENTION STATISTICS
  HEATHROW AIRPORT: TEMPORARY ADMISSION AND DETENTION STATISTICS
  TRUNK ROAD INQUIRIES
  TRUNK ROAD INQUIRIES
  ROAD SCHEMES AND PETROL PRICE FORECASTS
  ROAD SCHEMES AND PETROL PRICE FORECASTS
  TECHNICAL TRAFFIC ISSUES: INDEPENDENT EXAMINATION
  TECHNICAL TRAFFIC ISSUES: INDEPENDENT EXAMINATION
  THE GRANGE, NORTHINGTON
  THE GRANGE, NORTHINGTON
  SOFT TISSUE LESIONS: TREATMENT
  SOFT TISSUE LESIONS: TREATMENT