Sitting of 28 April 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
ORAL ANSWERS TO QUESTIONS
  ORAL ANSWERS TO QUESTIONS
  Mr. Speaker: I remind the House that long supplementary questions reduce the number of questions that can be called.
  ORAL ANSWERS TO QUESTIONS
    INDUSTRY

      Inmos
      Mr. Gwilym Robertsasked the Secretary of State for Industry when he intends to make a further statement on Inmos.
      Mr. William Hamiltonasked the Secretary of State for Industry if he will make a statement on the future of Inmos.
      The Secretary of State for Industry (Sir Keith Joseph): I have nothing to add to my reply on 24 March to the hon. Member for Newton (Mr. Evans).
      Mr. Roberts: Does the right hon. Gentleman agree that this project is uncertain, to say the least? Does he accept that the real problem is that British industry, generally, is miles behind many of our industrial competitors in the application of chips and chip technology, and that the real need is to concentrate on and plough money into the application area rather than into the production of chips, where we cannot compete?
      Sir K. Joseph: I agree with some of the implications of the hon. Gentleman's supplementary question, but I am not sure what conclusion should be drawn in this case.
      Mr. Hamilton: Will the right hon. Gentleman explain the inordinate delay
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      in coming to a decision, one way or the other, from the beginning of this year until now? Is the reason that the Prime Minister resists the proposition that the Government should intervene further in the matter? In view of the enormous intervention by the Japanese Government and the United States Government, does not the right hon. Gentleman think that it is important to come to a decision soon?
      Sir K. Joseph: I agree with the hon. Gentleman that it is important that a decision by the Government's resolving the issue should be reached as soon as possible, but the issues are very complicated, and have become more so.
      Mr. Archie Hamilton: Is my right hon. Friend aware that there was some question of GEC buying this company and thereby relieving the taxpayer of any further injections of funds? Can my right hon. Friend report to the House on that matter?
      Sir K. Joseph: It has been announced in the press that GEC is interested in some possibility of a connection with this company, but the negotations are obviously confidential.
      Mr. Gordon Wilson: Will the Secretary of State say how much State money has been invested in this project? What has happened to the offers to the development areas with high unemployment that were supposed to be benefiting from it?
      Sir K. Joseph: The question is really for the National Enterprise Board. I believe that about £25 million has either been invested or committed.
      Mr. Les Huckfield: Does the Secretary of State believe that we should have a manufacturing capacity in silicon chip technology, or does he believe that we should import it?
      Sir K. Joseph: The decision is for those who want to manufacture silicon chips in this country. There is taxpayers' money available, under widely understood schemes, of which they can avail themselves if they come within the criteria, but the decision is essentially for them.
      Mr. Budgen: Does my right hon. Friend agree that if a further £25 million is given to this project he will be taking

      947
      a view about whether there should be various forms of silicon chip marketing and production in this country? He will be going into the market place and ceasing to be a politican.
      Sir K. Joseph: My hon. Friend is, as usual, right or nearly right. But an inheritance is involved. There is the National Enterprise Board, which the Government have continued with the purpose of making judgments on a limited but important range of business decisions. It has recommended that a second tranche of this initiative, started by our predecessors, should be given.
      Mr. Speaker: I remind the House that the eight open questions on the Order Paper today were tabled before I made my statement last week, so I will call them.

      Manufacturing Industry
      Woolmerasked the Secretary of State for Industry what annual rate of change he expects for 1980–81 and 1981–82 in productivity, output and jobs in manufacturing industry.
      Sir Keith Joseph: Unknowable: the assumptions made for the Financial Statement and Budget Report were published in them. The outcome will depend on world trade, the effectiveness of management, the co-operation and understanding of their own interests of wage earners—in short, upon our competitiveness.
      Mr. Woolmer: Does not that reply seek to conceal the substantial decline expected in manufacturing industry, in output and in employment? If these forecast falls are judged a success of policy, what would convince the right hon. Gentleman that he is failing? What part is the right hon. Gentleman playing in the discussions with the TUC and the CBI on the future use of North Sea oil revenues for the benefit of industry, and what view does he take upon that important matter?
      Sir K. Joseph: No, the Government are not shirking the publication of some assumptions on which the Budget was based, but the hon. Member goes beyond assumptions and asks for my personal opinion. The margins of error in this area of forecasting are so wide that my personal opinion is not relevant. I do not have a personal opinion on these difficult matters. We have a dopted certain
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      assumptions for the purpose of the Budget. They have been published. There are regular discussions with the CBI and the TUC and others; and next week, at the NEDC, the subject to which the hon. Gentleman refers will inevitably come up.
      Mr. James Lamond: Has the right hon. Gentleman noticed that the disastrous loss of jobs in the textile industry has moved into the textile machinery manufacturing industry and that firms such as Muschamps in Oldham and the even more famous Stone-Platts firm, which has been in Oldham for almost 150 years, are to close at the end of this year? Does he intend to stand by and allow that sort of thing to continue?
      Sir K. Joseph: I know that there are difficulties in a number of parts of the textile machinery industry, but the hon. Member's assumption that the Government can do something about what is essentially the combined effect of management effectiveness and work force cooperation is misplaced.
      Sir Brandon Rhys Williams: In view of the likelihood that people in manufacturing industry, particularly middle management, will have to change their jobs more frequently in coming years, will my right hon. Friend require the Occupational Pensions Board to make recommendations as to the way in which people changing jobs in mid-career can fully protect their pension rights in private schemes?
      Sir K. Joseph: My hon. Friend and I have been dancing a minuet around this difficult subject for nearly 20 years. I shall certainly speak to the relevant Minister about what he has said.
      Mr. John Silkin: Does the right hon. Gentleman maintain that the Government have no part whatever to play in any of these matters—that the high exchange rate, the historically highest interest rate in our history and the rigid reduction in investment imposed by the Government have no effect upon industry? If so, is he not aware that practically every reliable economist today, along with the CBI and the TUC, deeply disagrees with him?
      Sir K. Joseph: An alternative policy which interfered with the exchange rate, which sought to hold down interest rates and which subsidised investment further

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      would make matters worse. The basic fact is that large numbers of individuals are misguidedly pricing themselves and their fellow workers out of jobs.
      Mr. Silkin: Is it possible——
      Mr. Speaker: Order. I had not called the right hon. Gentleman. Mr. Silkin.
      Mr. Silkin: I apologise, Mr. Speaker. I am afraid that I was provoked. Is the Secretary of State saying that things could be worse than they are at the moment? If so, he does not know what is happening to British industry in practically every sector.
      Sir K. Joseph: Yes, things certainly could be worse than they are at present. The adoption of the policies implicit in the statements of the right hon. Gentleman and his right hon. Friends would make inflation, and therefore unemployment and interest rates, much worse.

      Small Businesses
      Mr. Richard Pageasked the Secretary of State for Industry what study his Department has made of the recent report by the Small Businesses Administration in the United States entitled " Government Competition: A Threat To Small Businesses."
      Sir Keith Joseph: This report, prepared by a task group established by the office of the Chief Counsel for Advocacy of the United States Small Business Administration, was published in the United States last month. A copy was obtained by the Department last week and is currently being studied by officials.
      Mr. Page: I thank my right hon. Friend for that reply. When that report is examined, I believe that it will be found to be an indictment of the activities of the American Government in squeezing smaller businesses. Will my right hon. Friend authorise a similar investigation in this country to see whether our small businesses are suffering in exactly the same way?
      Sir K. Joseph: We are already conscious of what is called the " crowding out " effect on small and other businesses of excessive Government spending, borrowing, taxing and regulating. We do not need convincing of that.
      Mr. Campbell-Savours: Does the right hon. Gentleman agree that the biggest threat to small business in this country is the high rate of interest that it is required to pay? Will he study the speech that I made in the House in November last year, when I drew the Government's attention to the need for a regional development bank, under which the rates of interest payable in the regions would be less than in other parts of the country, depending on the level of unemployment?
      Sir K. Joseph: I am interested in the hon. Gentleman's suggestion, but there would be no guarantee that such lower interest rates would not leak into other activities. It is a nice question whether inflation or interest rates are the worst enemy of small businesses at the moment. Certainly our policy is intended to reduce those burdens on small businesses so that they can flourish.

      Small Firms Counselling Service
      Mr. Shersbyasked the Secretary of State for Industry what is the annual cost of the small firms counselling service.
      The Under-Secretary of State for Industry (Mr. David Mitchell): The cost of the counselling service in 1978–79, the last period for which figures are available, was estimated to be about £600,000.
      Mr. Shersby: Is my hon. Friend satisfied with the cost-effectiveness of the service? If so, what areas is the service investigating, what are the guidelines that apply in investigating them and how are counsellors selected or nominated to provide this service?
      Mr. Mitchell: An early independent evaluation of the counselling in the Southwest shows that, in a sample of 65 clients, about 150 jobs were either generated or saved. Now that counselling is well established throughout the country, we intend to commission a further evaluation by independent consultants. I am also introducing a continuous in-house system of monitoring by following up individual cases. As for the help that counsellors can give, their particular value is that many small businesses, and particularly new businesses, lack a whole raft of management techniques, and the assistance of experienced business men can save many

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      small firms which might otherwise go to the wall.
      Mr. Gwilym Roberts: Does the hon. Gentleman accept that small businesses generally are grateful for the management expertise which this service provides? However, there is a problem on which I should be grateful for his comments. I have come across examples—I am sure that many other hon. Members have seen the same thing—of small business men who are unaware of the services offered in this direction. Will he consider methods of improving the general knowledge of these services?
      Mr. Mitchell: The hon. Gentleman has drawn attention to an important matter. We are anxious that these services should be more widely known. We have recently introduced a national Freefone number. Those in trouble or with problems can simply dial 100 and ask for Freefone 2444. I am grateful to the hon. Gentleman for the opportunity to advertise that.
      Mr. Dover: Is my hon. Friend aware that these services are provided by banks and management consultants, who give much better value for money than a counselling service organised on public funds?
      Mr. Mitchell: Perhaps my hon. Friend is not aware of how large a proportion of the work done by the counselling service is concerned with people who are thinking of starting a business. It would be rare to find good value for someone who has not even got a business going in the payment of fees to a management consultant.

      Northern Region
      Mr. Dormandasked the Secretary of State for Industry if he is satisfied with the progress being made in attracting industry to the Northern region; and if he will make a statement.
      The Minister of State, Department of Industry (Mr. Adam Butler): I am confident that the Government's regional and other policies will succeed in promoting industry and employment in the North as elsewhere.
      Mr. Dormand: Is the Minister aware that in spite of all the fine promises during the election campaign last year the rate of unemployment in the Northern
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      region, at 9·5 per cent., is the highest in the country? In those circumstances, will his right hon. Friend reverse his monstrous decision to slash the grant to the North of England Development Council? Is he aware that that was the biggest cut of its kind? When will the Government take the problems of the North seriously?
      Mr. Butler: The hon. Gentleman makes a serious point about unemployment in the Northern region. However, if he is fair he will draw the attention of his constituents to the position as it developed during the final years of the previous Administration. Nevertheless, there is a problem, and that is why, particularly, we have concentrated more development aid potential on the North.
      I think that the hon. Gentleman will know that after 1982 about 90 per cent. of the Northern region will still be anassisted area. That will be the highest concentration of any region in England and will be of immense benefit. I think that the hon. Gentleman has received a letter about the North of England Development Council from my noble friend Lord Trenchard, explaining the circumstances of the Government's attitude. The grant, of course, will continue for at least three years, subject to some agreement on arrangements between the Government and the local authorities.
      Dr. John Cunningham: If the Minister means what he says about the Northern region, why have the Government decided to end the cost escalation scheme for British Shipbuilders, which plays such a crucial part in employment throughout the Northern region? There is no evidence of any opposition from the EEC. France is continuing such a scheme for its merchant fleet. British Shipbuilders has been singled out for a further reduction in assistance. Why was not the Minister more candid about that decision in the debate a few days ago?
      Mr. Butler: I do not think that I was lacking in candour during that debate. The point is that the amount of assistance to the British shipbuilding industry is considerable, as was noted in that debate. The intervention fund is being used to its maximum and the home credit fund is continuing to be used strongly. Therefore, the largest part of assistance is still available to help a situation which is, thank Heaven, improving marginally.
      Mr. Robert C. Brown: If the Minister is not lacking in candour, he has certainly been badly briefed. Is he aware that last week 2,300 redundancies were announced in the Northern region? That is not a phenomenon. It is becoming a regular weekly event. Despite what the Minister might say about what happened during the previous Labour Administration's term of office, the period since last May has been disastrous for employment in the North.
      Mr. Butler: I thought that I had been extremely candid in recognising the seriousness of the problems. Of course they are there. However, they will not be wished away. Some assistance through the regional development grant will develop employment in the region. That will help, particularly, the establishment of new businesses. I am glad to say that in that respect there are encouraging signs in the starting up of small businesses. The position is not entirely bad. The hon. Gentleman will know, I am sure, that new jobs have been created in recent years, thanks to the incentives that are available. The future growth prospects of the region depend upon those new businesses.

      Genetic Engineering
      Mr. Hooleyasked the Secretary of State for Industry whether the National Enterprise Board will be permitted to invest in the field of genetic engineering.
      The Under-Secretary of State for Industry (Mr. Michael Marshall): My right hon. Friend will consider any proposals by the board which require his consent. None has yet been put to him.
      Mr. Hooley: Does the Minister recall that on 19 July last year his right hon. Friend said that it would be sensible to use the NEB to familiarise industry with new technology? Does he agree that biotechnology is one of the most important of the new technologies now developing? Is he aware that unless there is a massive injection of public funds through the NEB this country will miss out on that revolution, as it has on so many in the past?
      Mr. Marshall: I certainly recall the comments of my right hon. Friend on that occasion, and I agree with the hon. Gentleman that this is an important area. I have had the chance to see some of the
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      new technology in the United States. However, problems of this kind are a matter for the NEB.

      Public Purchasing Policy
      Mr. Leeasked the Secretary of State for Industry what is the status of the current review of public purchasing policy.
      Mr. Michael Marshall: As announced by my right hon. Friend the Prime Minister on 28 February we intend to use the policy on public sector purchasing and research and development to help improve industry's performance.
      Mr. LeeDoes that review include consideration of how small firms might be helped by public purchasing policy?
      Mr. Marshall: Yes, I can confirm that in the review we are looking at small businesses, along with other businesses. I emphasise that this is a continuing review. It is not something that terminates. It goes on.
      Mr. Gordon Wilson: Will the Minister also consider the role of public sector ordering in dealing with unemployment in areas where the rate is very high? Will he consider, in particular, the possibility of advance orders for ships in the public sector, particularly for the Robb Caledon shipyard in my constituency, which is in danger of closure unless help is given by the Government?
      Mr. Marshall: I understand the hon. Gentleman's point. I can only say to him that at present all concerned are fully aware of the implications behind this question. Speaking specifically of defence, I have had the opportunity of travelling around the country with my hon. Friends the Defence Ministers and looking at a range of issues. Wherever help can be given, it will of course, be provided.
      Mr. Dykes: Despite the adherence to absolute non-intervention—which in the modern world is sometimes difficult— will my hon. Friend take up again the question of the Inland Revenue placing with the British computer industry, rather than with overseas industry, the order for what will, I believe, be the largest-ever single computer order when new systems come to be ordered in a year or two?
      Mr. Marshall: No decision has yet been taken on that matter, but I certainly take note of what my hon. Friend has said.
      Mr. Robert C. Brown: I was interested to hear the Minister say that he had had a look around the country with his Defence Department colleagues. Did his visit take him to the Vickers Elswick plant, where in two weeks' time 350 redundancies are to take effect. In this context the Minister has complete control of public purchasing and he could avert these redundancies—the first of 1,600 if he so wishes.
      Mr. Marshall: I have not had an opportunity to visit Vickers, though I hope that an opportunity to do so will present itself. In the meantime, as the hon. Gentleman is well aware, part of the problem there arises directly from the Iranian situation. Some of the problems have arisen in an unexpected and unfortunate way for British industry.
      Mr. Emery: Will my hon. Friend bear in mind, however, the problems that he can create for Government Departments when they refuse to take the best buy by not taking into account the aspects of delivery, quality, reliability of spare parts and the standing of the firm? These aspects are of the greatest importance and if my hon. Friend moves from those it will be a direct subsidy, which may well be to the detriment of British industry rather than to its benefit.
      Mr. Marshall: My hon. Friend has put the matter into perspective. These facts must be borne in mind. What I have said in no way rules out what he has put forward, and I agree with him.

    TUC
    Mr. Barry Jonesasked the Secretary of State for Industry when he proposes next to meet leaders of the Trades Union Congress.
    Mr. Sheermanasked the Secretary of State for Industry when he expects next to meet trade union leaders.
    Sir Keith Joseph: I shall meet representatives of the TUC at the National Economic Development Council on 7 May.
    Mr. Jones: Does the right hon. Gentleman agree with the TUC that the Budget strategy appears to doom Northern Britain to industrial decline and growing unemployment? With these mistaken policies, what hope can the right hon. Gentleman offer to the population of Flint—some 17,000 strong—which is currently enduring the harrowing male unemployment level of 38 per cent.? Surely the right hon. Gentleman's monetarist policies must be reversed.
    Sir K. Joseph: No, I do not agree with the alternative policies adumbrated by the TUC. The purpose of meeting its representatives on the NEDC is so that there can be a continuing dialogue. The hon. Gentleman must now be sadly aware that had the previous Labour Government allowed redundancies to occur earlier in the Shotton area those who then lost their jobs would have been able, more immediately than now, to find alternative employment. At that time the world recession had not occurred. The hon. Gentleman is aware that there are good prospects in his area for new jobs as businesses show increasing interest in the area.
    Sir Anthony Meyer: Will my right hon. Friend make arrangements to estimate the cost of the national day of tomfoolery organised by the TUC for 14 May, and inform the nation of the total amount of wealth lost and what that represents in terms of jobs lost as a result of that action?
    Sir K. Joseph: My hon. Friend is right to point out the damage that will be done to our competitiveness by the so-called day of action and by all the other obstructions to competiveness that flow from the shop floor and the trade union side.
    Mr. Wrigglesworth: Will the right hon. Gentleman seek to justify to the representatives and the leaders of the TUC in the Northern region the cutbacks in regional development grants and all the other cuts that are being made in employment support when unemployment there is rising to proportions unknown in postwar years? Will he look again at the question of regional development grants and restore the cuts that were made this year?
    Sir K. Joseph: No. The regional development grants were withdrawn from areas

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    where unemployment was below the national average and where the economic structure created no especial need for subsidy from the taxpayer. The extra money for which the hon. Gentleman is asking would have to be paid by the taxpayer through additional borrowing or by an increase in taxes. The taxpayer's purchasing power would be reduced and other jobs would be lost elsewhere.
    Mr. Squire: My right hon. Friend has had the opportunity to read the words of the General Secretary of the TUC explaining why the day of inaction has been called. Does he now agree that instead of the grounds being merely weak, as we had previously assumed, they are non-existent?
    Sir. K. Joseph: Yes, Sir.
    Dr. John Cunningham: Was not the Secretary of State's stumbling, rather pathetic defence of his economic philosophy the biggest condemnation of the Government's approach to the economy? Does he agree that company liquidations increased by 66 per cent. in the last quarter over the preceding quarter? Would it not make much more sense to work in cooperation with the trade union movement?
    Sir. K. Joseph: The trade union movement in this country, with exceptions, is encouraging a further loss of jobs through obstruction to competitiveness, including by such manifestations of misunderstanding as the day of so-called action.

    TUC

      Enterprise Zones
      Mr. Adleyasked the Secretary of State for Industry what initiatives he intends to take to attract industry to the enerprise zones.
      Mr. Michael Marshall: The Government announced on 26 March a range of measures which we propose to apply in enterprise zones and which we believe will encourage economic activity. The measures include 100 per cent. capital allowances for industrial and commercial building; the abolition of general rates for industrial and commercial property; and the simplification of planning procedures. Details are available in the Library of the House.
      Mr. Adley: Are not local authorities queueing up to take advantage of this adventurous and exciting opportunity
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      created by the Government's positive intervention through the taxation system? Does my hon. Friend agree that it is essential, once the local authorities concerned have been designated, that industry should take advantage of the opportunities so presented? What steps is my hon. Friend taking, and what steps will he take, to make sure that big and small companies are made aware of those opportunities?
      Mr. Marshall: The scheme has been well received and the indications are that industry is taking a great interest in the matter. My hon. Friend's question has helped to further that process. The consultations that are taking place with local authorities will help to continue the process of alerting industry.
      Mr. James A. Dunn: Will the Government compensate local authorities for the loss of rates revenue?
      Mr. Marshall: Yes, Sir.
      Mr. Lee: Will my hon. Friend comment on early-day motion 590, in my name and those of a number of my hon. Friends, which seeks to request that the clearing banks provide finance for firms in enterprise zones on attractive terms to support the boldness and initiative shown by the Government in the creation of such zones?
      Mr. Marshall: I appreciate a number of the sentiments contained in the motion, and I am sure that the banks concerned will note my hon. Friend's suggestion.
      Mr. Heffer: Has the Minister read the original proposals for this idea by Peter Hall? Does he agree that they were weird ideas, and may we have an assurance that if the Government are going into these strange, mini-Hong Kong schemes, they will not pursue the proposals that Peter Hall put forward, even though Mr. Hall was once a member of the Fabian Society?
      Mr. Marshall: As the hon. Gentleman admits, the source of these suggestions is not unknown to him. I think that I detect on the Opposition Benches a growing reservation of positions as hon. Members become aware that this might become a popular development.
      Mr. Stevens: Will my hon. Friend consult my right hon. Friend the Secretary

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      of State for the Environment to determine whether, under the derelict site procedures, we could attract into metropolitan areas which might also be suitable for enterprise zone grants from the European Community regional fund?
      Mr. Marshall: I shall certainly ensure that that interesting and helpful contribution is made known to my right hon. Friend.
      Mr. Les Huckfield: Can the Minister not understand that the Government's continuing to advance the view that some kind of regional Hong Kong sweat shops can be a genuine solution to a deindustrialised economy is starting to sound like a sick joke? When will he come clean on the myth which he is trying to establish and confirm that there is no evidence on either side of the Atlantic that the net number of jobs created by small firms can in any way replace the much larger number of jobs lost by the closure of big firms?
      Mr. Marshall: The hon. Gentleman will always produce a carping, green-eyed view on any new initiative that he has not put forward. He is, typically, trying to talk in terms of sweat shops, but there are substantial safeguards about environmental pollution and other matters. The hon. Gentleman should judge this proposal as it develops, as I believe the whole House wishes to do.

      Lucas Aerospace
      Mr. Frank Allaunasked the Secretary of State for Industry if he will in future contracts with Lucas Aerospace include a provision that there shall be no victimisation of employees who have taken part in the firm's conversion plans.
      Mr. Michael Marshall: No; these are matters to be settled between management and the recognised representatives of the work force within the established legal framework.
      Mr. Allaun: Is the Minister aware that his Department is still party to the agreement with the company, its 12 plants and the unions to examine alternative product proposals aimed at maintaining the jobs there? Is he aware that one of the men principally involved in that agreement, Ernie Scarbrow, who is chairman of the shop stewards, is under threat of
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      dismissal through having been too active in seeing that that agreement is carried out?
      Mr. Marshall: I understand the hon. Gentleman's point, but I find it difficult to accept the matters in the way that he has put them. Certainly the Department has carried out fully its part of the tripartite agreement of February 1979.
      Mr. Les Huckfield: Does not the Minister understand that Ernie Scarbrow has been disciplined for the same alleged crime as Derek Robinson, in that he was merely trying to communicate with the membership that he represents? Do the Government still believe that trade union leaders and convenors have a right to communicate with their membership?
      Mr. Marshall: The hon. Gentleman perpetually seeks to come in on these matters, and he has reminded the House of his connection with the Red Robbo case. I do not think that that is a good precedent upon which he should argue this matter. These are matters between management and the established trade union channels.

      Black Country Districts
      Mr. Winnickasked the Secretary of State for Industry if he will take steps to promote industry in the Black Country districts of the West Midlands in view of recent closures and redundancies.
      Mr. David Mitchell: The Government's policies are designed to encourage industrial expansion and employment throughout the country.
      Mr. Winnick: Is the Minister aware of the deep concern that continues to exist at the never-ending redundancies in the Black Country? Will his Department show some understanding and recognition of the industrial and employment problems that exist in this part of the West Midlands?
      Mr. Mitchell: The best hope for prosperity in the Black Country, as elsewhere, lies in the measures that the Government are taking to defeat inflation, put the economy on a sound footing and remove the shackles from private enterprise.
      Mr. Adley: Will my hon. Friend confirm that the Black Country is one of the candidate areas for inclusion as an enterprise zone? In view of the apparent

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      schizophrenia on the Opposition Benches. may we know at some time whether the Labour Members of Parliament for those areas which are candidates want the scheme or not?
      Mr. Mitchell: I am not sure whether that question is addressed to me. However, I recently visited Wolverhampton, and I listened with great care to what the people there had to say about their problems. I was fascinated when the Socialist chairman of the planning committee said that he supported the concept of his area being advanced as a potential enterprise zone as the scheme seeks to undo the damage of years of Socialism.

      Small Businesses (Paper Work)
      Mr. Loveridgeasked the Secretary of State for Industry what reductions in forms, and generally unnecessary paper work, his Department has achieved in order to reduce the burden on small businesses.
      Mr. David Mitchell: The Department has already made savings of over 16,000 statistical forms which would have gone to firms this year.
      Mr. Loveridge: I am encouraged by that answer, but is my hon. Friend aware that the accumulation of forms that small traders have to deal with remains a severe deterrent? One woman shopkeeper said to me last week " I cannot bear the thought of filling in another VAT form ". Will my hon. Friend continue to act to cut the number of forms and to cut red tape?
      Mr. Mitchell: I readily accept my hon. Friend's invitation. He will be pleased to learn that decisions taken by all Ministers since the Government took office a year ago have resulted in over 1 million statistical forms being saved. I shall publish details in the Official Report. That is in addition to the saving of 280,000 forms per annum resulting from a review of regular statistical inquiries initiated by the previous Administration and confirmed by this Government. It is still necessary for the Government to collect many kinds of statistical information. However, I believe that our decisions are widely welcomed in the small business sector.
      Mr. Waller: I welcome what has been achieved so far, but is my hon. Friend
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      aware that I hope that he has not put his scythe away and will continue to assess the need for the various forms?
      Mr. Mitchell: I assure my Friend that it will be a continuing process. I shall be glad to hear from him if he has examples of forms that he considers to be unnecessary.
      Mr. Edwin Wainwright: Will the hon. Gentleman accept that, no matter what the Government try to do for small businesses, their policies are failing? Why will the Government not take the actions that we desire? Is he aware that in the Mexborough district, which covers the Dearne, Conisbrough and Denaby, no jobs have been created since it was made a development area? Does he agree that the Government need do more?
      Mr. Mitchell: It is for the Government to create the conditions, and for employers and workers in the area to join in enterprises to produce goods that the consumer wants, at a price that he is prepared to pay. The hon. Gentleman suggests that Government policies are failing. However, it takes longer than the hon. Gentleman expects, and even longer than I expected, for changes in policy to produce results.
      Dr. John Cunningham: Does the hon. Gentleman expect us to believe that the Government are creating the conditions for enterprise, with inflation at 20 per cent., the MLR at 17 per cent., VAT a: 15 per cent. and over-valued sterling?
      Mr. Speaker: That was not a supplementary question related to the main question, whatever else it was.
      Following is the information:
      REDUCTIONS IN STATISTICAL FORMS AS A RESULT OF DECISIONS TAKEN BY THE PRESENT ADMINISTRATION (i)

      Inquiries stopped

      No. of forms saved

      Quarterly export prospects survey

      300 a year

      Annual survey of film distributors

      100 a year

      Monthly manufacturers' stocks

      7,800 a year

      Export prices survey (monthly or quarterly)

      5,000 a year

      Shops inquiry 1981

      150,000 in 1981

      Census of employment for1979 and 1980

      600,000 in each of the 2 years

      Reduction in forms sent out

      Annual survey of retailing

      5,000 a year

      Annual survey of other distributive and service trades

      11,000 a year

      Annual census of construction

      2,200 a year

      1979 purchases inquiry by manufacturers

      1,200 in 1980

      (i) All the inquiries are carried out by the Departments of Industry and Trade except for the census of employment, which is a Department of Employment responsibility.

      Post Office
      Mr. Neubertasked the Secretary of State for industry when he expects next to meet the chairman of the Post Office.
      Mr. Adam Butler: My right hon Friend and I met Sir William Barlow on 23 April.
      Mr. Neubert: If the dispute in the Post Office is not resolved and telephone bills are once again not paid, what contingency plans are there to avoid the serious impact not only on the Post Office's finances but on the Government's economic policy? What action is being taken to reduce the power of relatively few people to cause disproportionate disruption in industry and commerce?
      Mr. Butler: We hope that there will not be a repetition of last year's dispute. However, if bills are not paid on time, extra cost is imposed on the Post Office and the money has to be recovered from somewhere, either through subsidy raised from taxpayers or by an increase in charges.
      The second part of my hon. Friend's question is about problems created by small groups of dissidents who may wish to disrupt the activities of the Post Office. That is a matter for the management. On more than one occasion my right hon. Friend said that if the service to the public is not improved, or if for some internal reason it becomes worse, we shall have to look seriously at the monopoly.
      Mr. Kenneth Baker: Has my hon. Friend seen this morning's article in the Financial Times, on the management of nationalised industries, which floats the idea that those nationalised industries that are making substantial profits should be relieved of cash limits so that the management can make its own commercial decisions, and, if necessary, raise the money from the market?
      Mr. Butler: Yes, I saw the article and found it most interesting. My hon. Friend will also have seen reference to the group set up under Mr. Ryrie's chairmanship, which will be looking into these matters.
      Mr. Les Huckfield: How can the hon. Gentleman tell his hon. Friend the Member for Romford (Mr. Neubert) that the derogation of the Post Office monopoly will assist in the problem that he mentioned? Will the hon. Gentleman accept that the problem is caused not by the Post Office unions, or by small sections of them, but by the Government's tight cash limits? Will he further accept that 60,000 people on the waiting list for telephones for more than six months demonstrates that investment is the problem, not the unions?
      Mr. Butler: I know, and what I hope the hon. Gentleman will agree is that the service provided by the Post Office has fluctuated widely over the past year and has still not regained the position that it should. We therefore have every right to see whether the service can be provided by others.

      Rolls-Royce (1971) Limited
      Mr. Bruce-Gardyneasked the Secretary of State for Industry if he has concluded his review of the financial objectives for Rolls-Royce (1971) Ltd. set by the National Enteprise Board; and if he will make a statement.
      Mr. Adam Butler: I shall publish in the Official Report a statement about the company's present financial position and the Government's intentions towards funding the company in 1980.
      Mr. Bruce-Gardyne: Has my hon. Friend studied the alarming report published last week by the Public Accounts Committee, which suggests that the RB211 may be heading for viability only towards the end of this century? Will it still be in production then? Are we convinced that the target set by the NEB of a 10 per cent. return for 1981 is within the realms of practical possibility?
      Mr. Butler: The company's report and accounts will be published shortly, and my hon. Friend will be able to draw his own conclusions. A written statement will appear in the Official Report, but I tell my hon. Friend that the company's

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      business is expanding strongly, based largely on the RB211. However, with the weakness of the dollar, there will be added cash needs for the company during 1980. The question is how far the company can raise that cash from the private money market.
      Mr. Whitehead: Is the Minister aware that his tribute to the RB211 will be welcomed after his hon. Friend's belittlement of it? Will he accept that the problem for Rolls-Royce is not the earning capacity of the engine—and that capacity has been borne out again today by the £50 million order—but the high exchange rate, which is making it difficult for British industry to sell, particularly in the American market?
      Mr. Butler: I have already said that a reason for increased cash needs during the present year is the weakness of the dollar and the high pound. In its onward trading position the company must take properly into account the strength of the pound. Because of the high technical quality of its products, such as the RB211, it should be able to command better prices for them.
      Following is the information:
      I have considered the Company's five-year forecast for 1980–84 submitted earlier this year and accept it as the basis for short-term financial planning. As a result of the rapid expansion of the company's business and the weakness of the dollar, the company has an additional cash requirement of £180 million in 1980. However, I am satisfied that the company's policies of exploiting the technical successes of the RB211 engine, and aiming for greater commercial profitability, provide a firm basis for long-term viability. The Government accept the company's need to fund the requirement to carry forward its programmes.
      As part of the funding, and subject to parliamentary approval, I intend to issue new equity equivalent to certain loans from the Department to be repaid in 1980 and modify the terms of the levy which the Government charge the company to recover the development finance for the RB211 engine. The modification will be confined to the RB211 engines on order at the end of 1979, and will be varied to reflect the effect of the exchange rate on sales income. The levy would be suspended at current exchange rates. For the balance, given the current constraints on public expenditure, and while I recognise that some further injection of Government finance may be necessary, I have asked the company to examine how much it can secure from the private sector.
      The longer-term funding requirement duty for the establishment of a new financial duty for the company will be considered in the
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      light of the chairman's report to me on the plans for improving the financial prospect of the company, which I expect to receive in the summer.

      Development Area Status (Neath-Resolven)
      Mr. Colemanasked the Secretary of State for Industry whether, in view of the continuing rise in unemployment in the Neath-Resolven travel-to-work area, as shown in the April figures, he will now announce his reversal of his decision to take the areas special development status away.
      Mr. David Mitchell: The assisted area gradings of all those areas affected by the British Steel Corporation's proposals are being reviewed. A decision will be taken as quickly as possible after BSC has given a final decision on the future of its steel making plants, following its consultation with the unions.
      Mr. Coleman: Is the hon. Gentleman aware that the unemployment rate in that travel-to-work area is now 9·3 per cent? Is he further aware that when the area had the status conferred upon it in 1968 the level of unemployment was 5 per cent? It is only since the announcement of his right hon. Friend that the area was to be downgraded that the unemployment rate has crept up. What will he do about it?
      Mr. Mitchell: As soon as the result of BSC's consultations with the unions is made known, we shall review the matter. If that should not result in a steel closure, or if some other change of policy should follow from it, I assure the hon. Gentleman that the relative change in the area of Neath compared with other parts of the country will itself be perfectly good evidence for us to consider a review.

    INDICTABLE OFFENCES (TRIAL DELAYS)
    Mr. Stanbrookasked the Attorney-General what steps are being taken to reduce the length of time between committal and trial for indictable offences.
    The Solicitor-General (Sir Ian Pereival): These intervals are excessive mainly in London and the South-East. The Lord Chancellor has increased the number of judges, and the number of Crown courtrooms. More courtrooms are being provided. In addition more than 50

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    judges from other circuits have agreed to sit for a time in the South-East during this year, to help with the backlog. That is much appreciated, and it is hoped that it will play a significant part.
    Mr. Stanbrook: I recognise my hon. and learned Friend's concern about this matter. Has the idea of courts sitting in two shifts, thus utilising more than four and a half hours in the average working day been considered? As to the supply of judges, is my hon. and learned Friend aware that many recorders are willing to sit for more than the statutory limit of 30 days in the year if called upon to do so?
    The Solicitor-General: The question of double shifts has been considered, and I am informed that so far it has been felt that it is merely a matter of practicability rather than principle. Not only would it need more judges, but more staff to man the courts. One must also consider the availability, not to mention the convenience, of all who are concerned, including the parties, those whom they wish to represent them, solicitors, witnesses, prison staff who bring the prisoners to court, and so on. So far, it has been felt that the combination of those factors has made it impractical.
    As to my hon. Friend's other point, he is wrong in thinking that there is a statutory maximum. There is neither a statutory maximum nor a maximum fixed in practice, but my noble and learned Friend feels that is is wrong for recorders to sit for more than about 50 days.
    Mr. Jeffrey Thomas: Does the hon. and learned Gentleman agree that the delay amounts to a public scandal and a blot on the administration of justice? How big is the present backlog in courts on the South-Eastern circuit? What is the average delay between committal and trial? Will he and his noble Friend bear in mind the principle that justice delayed is justice denied?
    The Solicitor-General: I am not sure whether it was my noble and learned Friend who coined that phrase, but, whether or not he did, he has quoted it as often as anyone, and he feels it just as strongly as anyone can. It is for that reason that he is determined not to leave unused any opportunity to speed things up, because he accepts what the hon. and learned Gentleman has said, namely, that
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    the present delays are unacceptable. As to the periods, I have two tables which I should be happy to put at the disposal of the hon. and learned Gentleman afterwards, if he wishes.

    DIRECTOR OF PUBLIC PROSECUTIONS
    Mr. Whiteheadasked the Attorney-General when he expects next to meet the Director of Public Prosecutions.
    The Solicitor-GeneralWhen he returns from the Commonwealth Law Ministers' conference in Barbados.
    Mr. Whitehead: Will the Solicitor-General inquire of the DPP why it was that crucial evidence in the Lindo case was not made available to the defence until six months after the police and the Director of Appeals knew about it, and four months after the DPP himself was told? As in this case an innocent man stayed in gaol for a year, does the hon. and learned Gentleman agree that there must be a review whereby cases of that kind go immediately to the DPP, and whereby the defence is given all possible access to relevant facts?
    The Solicitor-GeneralMy right hon. and learned Friend shares the sentiments underlying that question just as much as I do. It is a firm and honoured principle in the practice of the law that if information comes to hand that is of use to the defence, it should be made available to it. However, there are two parts to the question. One is the system to ensure that it happens, and the other is the question of precisely how much information should be given. The circumstances of the Lindo case disclosed a need for new rules. The Registrar of the Court of Criminal Appeal has instituted new procedures in his own court. Details of those were given in an answer to the hon. Member for Ormskirk (Mr. Kilroy-Silk) on 23 April.
    Mr. Christopher Price: When the Attorney-General meets the DPP, will he inquire how the DPP is getting on with deciding whether to prefer new charges in the Confait case? The hon. and learned Gentleman will remember that three of my constituents were convicted of that murder in 1972 and were acquitted in 1975 by the appeal court after a reference.

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    If the DPP decides not to prefer any charges, will the right hon. and learned Gentleman refer any information that he has to Sir Henry Fisher, who made prejudicial comments about them, so that, if he wishes, he can revise his findings and at the end of the day at least provide some equity in terms of compensation, which has hitherto been denied to my constituents?
    Several Hon. Members rose—
    Mr. Speaker: Order. We are still only on the second question to the Attorney-General, and we shall not get much further at this rate.
    The Solicitor-General: As to an inquiry, I think that I should confine my answer to the first part of that question. Certainly the Attorney-General and I are very interested in the outcome of the inquiry and we shall keep fully up to date with it.
    Mr. John Morris: In view of the uncertainty prevailing in the courts with regard to jury vetting, will the hon. and learned Gentleman give an instruction to the DPP that there should be no further cases of jury vetting before he makes a full statement to the House? In particular, will he set out the constitutional authority for jury vetting? Would it not be better to wipe the slate clean and rely on debarring from jury service only those whom Parliament, in the Juries Act, decreed should be debarred?
    The Solicitor-General: It would be inappropriate for me to try to answer those important questions in the brief time available. In addition, I am sure that my right hon. and learned Friend, who has been dealing with these matters personally, would like to deal with them himself. I shall draw to his attention what the right hon. and learned Gentleman has said.
    Mr. Wigley: Will the hon. and learned Gentleman make it clear to the DPP that when persons are being held in custody awaiting trial, documents held by the DPP, particularly those in relation to so-called
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    confessions, should in all circumstances be made available to the defence lawyers and not held back in the way that they are being in certain cases in Wales at the present time?
    The Solicitor-General: The hon. Gentleman must appreciate that there is a variety of different situations in which this question might arise. One is on appeal, in which the DPP would not necessarily have any information upon which to act. A second relates to cases with which he is directly concerned, in which case he must, of course, act quickly. The other relates to cases which in the first instance are under the control of other authorities. Here again, all that the DPP can do is to give guidance to them and do his best to see that it is carried out.

    SHOPLIFTING (ELDERLY PERSONS)
    Mr. Adleyasked the Attorney-General what recent representations he has received concerning shoplifting and the elderly: and if he will make a statement.
    The Solicitor-General: None, Sir.
    Mr. Adley: That is a slightly surprising answer, in view of press reports that were to be received from the Association for the Prevention of Thefts in Shops. However, in view of the continuing concern that the increase in self-service trading is the prime cause of shoplifting, and in the light of the stores' unwillingness to implement many of the Home Office proposals, will my hon. and learned Friend seriously consider requiring the stores themselves to undertake prosecutions in shoplifting cases?
    The Solicitor-General: The present position is that by far the majority of prosecutions for shoplifting are conducted as private prosecutions by the stores. I suggest that that is very satisfactory for many of the reasons that my hon. Friend has mentioned, but it would not be possible to direct that all prosecutions should be undertaken in that way.

BRISTOL DISTURBANCES (CHIEF CONSTABLE'S REPORT)
The Secretary of State for the Home Department (Mr. WilliamWhitelaw): With permission, Mr. Speaker, I should like to make a statement on the serious disturbances that occurred in Bristol on 2 April 1980.
I have considered the full and clear report which I have had from the chief constable of the Avon and Somerset constabulary, and I have placed in the Vote Office a memorandum containing an account of the disturbances, of the difficulties that faced the police, and of how they sought to deal with them.
In the light of the memorandum, there will not, I believe, be dispute about the facts. What began as a normal operation into possible criminal offences turned sharply and unexpectedly into serious public disorder. The memorandum also sets out the chief constable's conclusions and recommendations for future arrangements in his force area. A number of important lessons have been learnt from this event. The chief constable has acknowledged frankly that there were points at which decisions might, with hindsight, have been taken differently, but he remains of the opinion that the decision to regroup his officers away from the area of St. Paul's was, in the face of great violence and extensive injuries to the police, a necessary step. In the light of his report, I understand the reasons for that decision, as, I am sure, will the House.
There can be no excuse for the lawlessness that then followed, but we must ensure that, however quickly or fiercely public disorder may occur, the police are able swiftly to restore the peace and enforce the law. We must, therefore, concern ourselves with the more general lessons that must be learnt from these events, not only for the efficiency of policing but for good community relations. There are three ways in which I believe that we can best move forward.
First, in this country we rightly wish the police to maintain order through traditional methods, but, if that is so, police forces must be able to call rapidly on sufficient trained officers. I am, therefore, asking senior officials in my Department and Her Majesty's Chief Inspector
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of Constabulary, in conjunction with the Commissioner of Police of the Metropolis and the Association of Chief Police Officers in England and Wales, to examine thoroughly and urgently the arrangements for handling spontaneous public disorder. I shall publish the results of that review.
But we must not look simply at the policing aspects of these events. We must look much more widely in our search for solutions to the underlying problem. Second, therefore, the Government particularly welcome the decision of the Select Committee on home affairs to look into racial disadvantage and, as a part of that work, to study the St. Paul's area of Bristol. We shall do all that we can to help the Select Committee in this work.
But action at local level is also essential. I welcome the decision of the Avon county council and the Bristol city council to come together to examine how best they can further help in strengthening good community relations in the area. Experts from all the Government Departments concerned will play a full part in this examination.
I am convinced that this threefold approach is the best way to respond positively and constructively to these events.
Mr. Merlyn Rees: I welcome the threefold approach that is to be made to the riots in Bristol on 2 April. The chief constable's report needs further study. In the circumstances, and at a first look, I am inclined to accept the decision to regroup, though I dislike, from my past experience, " no-go " areas, in whatever sense of the term.
With regard to the police study to examine thoroughly and urgently the arrangements for handling public disorder, I welcome the fact that the report is to be published, because the conclusions will be of general application. In my view, while back-up is vital, control should always be in the hands of those who know the local area. In the context of Bristol, will they look at the procedures for ensuring that there is always a close relationship between the police and local community leaders?
With regard to the Select Committee investigation into racial disadvantage, I hope that it will consider the question of

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a replacement of section 11 of the 1966 Act. Labour's Bill to replace this was not welcomed by the the then Opposition, just a year ago. Perhaps in government they will be more positive on this matter, because section 11 is now out of date, and it may even be that some of the moneys spent are being spent ultra vires.
With regard to the local investigation by Avon county council and Bristol city council, I hope that their report will also be published and that the Commission for Racial Equality, the Home Office and the Department of the Environment involvement will be such that it, too, will be of use in other parts of the country.
Mr. Whitelaw: I am grateful to the right hon. Gentleman. He raises three points. From his experience, he makes a major point about " no-go " areas. So do I from my own experience. I am not prepared, and in no circumstances will be prepared, to contemplate " no-go " areas in any part of this country or of the United Kingdom. It is very important to say that, to be heard to say it, and for it to be realised that that will not happen in the future.
Secondly, on the procedure of the police study, it is important to examine the police's procedure and their relationship with local community leaders. It is important that the chief inspector—I think I am right in saying—of the police, who was responsible for community relations in that area had established a very considerable position with the local community. It is very sad, in the circumstances, that his great efforts did not meet with greater success; but they should be recognised.
As for any reports from the Select Committe, that must be a matter for the Committee. I hope that the local authorities' investigation will be very wide and will include all the bodies that the right hon. Gentleman mentioned.
Mr. Waldegrave: Will my right hon. Friend accept that Bristol Members are grateful for the speed and efficiency with which he and his colleagues in the Department have responded, including the sending of the Minister of State to the scene within 24 hours, and maintaining close communications with us?
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Will my right hon. Friend accept that most of us consider it right to have avoided the setting up of a great circus of a public inquiry, which would have wasted time and would probably not have clarified anything very much? Will my right hon. Friend accept that we are grateful for the promise of publication of the results of the investigation into policing methods, but will he also assure the House that the very welcome local inquiry that has been set up by the local authorities will have at its disposal the full resources of his Department and, if necessary, of other Departments of State, so that it can complete its inquiry in the best possible way?
Mr. Whitelaw: I am grateful to my hon. Friend. On the day after these serious events took place I thought it right that my hon. Friend the Minister of State should go immediately to Bristol. I am grateful to him for having done so. His investigation on the spot did much to help us in subsequent investigations. I am keen to learn lessons for the future. If we are to do that, we should involve all those who are especially concerned— for example, the police, the race relations representatives, the people of Bristol, and their elected representatives. That is why I think it right to proceed in the way that I have described. I can give a positive assurance that the local inquiry will have the full resources of any Government Departments that are involved.
Mr. Benn: Is the right hon. Gentleman aware that there is great pressure for a public inquiry, especially from those who want to bring out fully the fact that unemployment, urban deprivation and the operation of laws such as the " sus " law lie behind some of the difficulties? Is he able to give an assurance that he will extend full co-operation to any local inquiries that might be instituted by the ethnic communities, the trades councils or any other organisation, so that the people themselves can speak for themselves? Does he agree that in the long run it is not really fair to ask the police to try to deal with problems that are fundamentally political and economic in character? For example, if the expansion of the special patrol group were to be recommended to deal with this problem. that would not constitute a proper answer.
Mr. Whitelaw: I think that the right hon. Gentleman underlines the approach that I am taking. I realise that there are pressures for a full and comprehensive public inquiry. However, I believe that to proceed in a threefold way will help to meet some of the points that the right hon. Gentleman made. I am most anxious that the Select Committee should have the chance to examine some of the matters that he mentioned, based on the authority of the House. I hope that we shall be able to do everything possible to give assistance to that end.
I accept at once that the police have an important role to play. I also accept that we cannot place too much stress and reliance on them. There are other underlying causes that we have to recognise and meet, and I think that we can do that through the Select Committee and, more importantly, through the conference of the local authorities involved. The authorities have been elected to take responsibility within their areas. I am anxious to hear their views. They will be given careful consideration by the Government. I appreciate all that the right hon. Gentleman said.
Mr. Colvin: I thank my right hon. Friend for his statement and congratulate him on the wisdom of going for the threefold inquiry that he has described. I welcome the fact that Bristol city council and Avon county council are prepared to work together, thereby burying, perhaps, the party political hatchet. I hope that that can prevail eleswhere and that we shall get an all-party approach to the problem.
May I remind my right hon. Friend that such disturbances as we had in St. Paul's have a spin-oft effect? Is he aware that on the very night after the St. Paul's disturbances there was a similar occurrence in the Southmead area of my constituency? Will the inquiries that he has instigated encompass the whole of the city, and, therefore, take in the disturbances to which I referred, which took place in Bristol, North-West?
Mr. Whitelaw: I note what my hon. Friend says and am grateful to him for his comments. It will be open to the Select Committee to consider any aspects of disadvantage that come within its investigation. I mentioned the St. Paul's area
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because that is where the problem lay. If the Select Committee wishes to consider a wider prespective, that will be for it to decide. There are wide lessons to be learnt for the police. They include not only this disturbance but others that have occurred elsewhere.
Mr. Palmer: As the Member of Parliament for much of the area affected, may I welcome the right hon. Gentleman's statement and ask him two questions? Will be give an undertaking, as far as he can give one, that all those who wish or are required to give evidence to any of the inquiries will be able to do so without fear or favour? Secondly, is he aware that the desire of those in the district concerned, which I know very well, is for the area to return to normality as soon as possible? Therefore, will he make available to the traders who lost stock and property during the riots some form of credit, at low interest rates, so that they may build up their stocks and return to normal trading?
Mr. Whitelaw: I am grateful to the hon. Gentleman. I realise his close personal involvement with the area concerned over a great many years. Obviously I hope that those who give evidence will be able to do so without fear or favour. I hope that that will be respected. Neither the hon. Gentleman nor I can guarantee that, but we can say that we very much hope that that will be the position. As for the traders, in the first instance there must be claims under the Riot (Damages) Act 1866. I understand that these will be directed to the police authority in the first instance. I note what the hon. Gentleman says on that score. If there is anything that can be done to help in that regard, I shall consider it.
Sir Graham Page: Will my right hon. Friend join with me in expressing admiration for the 50 policemen who stuck it out for two and a half hours against a violent group of hundreds of youths? The police stuck it out until 49 of them had been injured—22 seriously—and until six police cars had been burnt out and 15 others seriously damaged. Was it not right at that stage for the chief constable to withdraw his injured men and to seek reinforcements from neighbouring forces? Does my right hon. Friend agree that the only fault that can be seen is that the

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machinery for calling in reinforcements from neighbouring forces is far too slow?
Mr. Whitelaw: I do not wish to comment at this stage—nor would the House think it wise for me to do so—on matters that will be the subject of further investigations. My right hon. Friend referred to the loyalty, courage and dedication of the police officers. Their actions were in the highest traditions of police service. Whatever criticisms people may have of the police in various areas, there can be no doubt that individual police officers perform their duties with dedication to the service of this country. That should be recognised and I hope that it will be accepted. The other matters that my right hon. Friend raised will have to be considered carefully by the inquiry, which I hope will be extensive. I hope that it will give us lessons for the future rather than rake over the problems of the past.
Mr. Alton: In the memorandum that the right hon. Gentleman has placed in the Vote Office the local chief constable observes that the problem of policing multi-racial areas requires great understanding and sensitivity. Will the right hon. Gentleman give an undertaking that in all our cities he will stop the further closure of small local neighbourhood police stations and press even harder for the return of more policemen to the beat so that the police will not be alienated from the communities that they serve?
Mr. Whitelaw: I think that it would be improper for me to comment on the decisions of local chief constables, who take their decisions in the light of operational responsibility. It must be said that the substantial increase in the number of recruits coming into the service in the past year is bound to have a considerable and good effect in bringing more policemen, or bobbies, on the beat.
Mr. Eldon Griffiths: May I congratulate my right hon. Friend on a thorough and careful approach, which I am sure will be welcomed within the service? I congratulate him especially as he has avoided pitfalls by recognising that public inquiries can do more harm than good and by not endorsing the view that these matters arise solely from social and economic problems and that the only solution is to throw money at them. May I congratulate him on his sensible approach?
Mr. Whitelaw: I am grateful to my hon. Friend. We have now to see what the investigations produce. It is important that we consider carefully the lessons to be learnt from what must be accepted as an unfortunate occurrence in Britain's history.
Mr. Speaker: Order. I propose to call those hon. Members who have been rising. I hope that they will be brief, as there is another statement to be made.
Mr. Freeson: At the risk of disturbing some of the equanimity of these exchanges, may I ask whether the right hon. Gentleman is aware that some of us are not not too happy about the tone of his statement? There may be other lessons that need to be learnt. Is the right hon. Gentleman aware that extensive studies have already been made into social and economic problems and those of national and local government administration and policy in our urban areas? Those studies have been carried out in a whole range of cities. Although we look forward to receiving the reports to which the right hon. Gentleman has referred, action should now be taken to restore resources and to improve action in inner Bristol and at least 20 other inner city areas where the same problems may well occur.
Mr. Whitelaw: The right hon. Gentleman has considerable experience in these matters and he will be the first to know that a great deal of public money has been put into the St. Paul's area of Bristol. It has not been put solely into the area for which he was responsible. A great deal of money has been put into that area, and it is worth recognising that fact.
Mr. Maxwell-Hyslop: Inorder that discussion may be as informed as possible, will my right hon. Friend make a statement at the earliest opportunity, answering three questions? What is the legal status of a police officer who has been called in from an outside area and who is not a constable of the locality involved? Secondly, which police authority is responsible for the actions of those who are called in to assist in an area for which it is not normally responsible? Thirdly, when outside forces give such assistance, is the financial cost borne by the lending police authority or by the borrowing authority?
Mr. Whitelaw: All those are questions to which I do not know the answer. I shall be pleased to investigate them all. No doubt many of those questions will arise in the investigation that the police officers and my Department will conduct.
Mr. Clinton Davis: Having regard to the important lessons that may be learnt by many inner city areas, not least inner London, will the right hon. Gentleman have urgent talks with his right hon. Friend the Secretary of State for the Environment about the decline in the resources being made available to areas such as my own, where similar problems may arise? Secondly, has he addressed his mind further to the question that I asked him on a previous occasion when he made a statement? I asked then whether he would consider extending the time scale for making applications for compensation under the Riot (Damages) Act. In the final analysis the right hon. Gentleman has the right to extend the inadequate time scale. That would give great encouragement to those who have just filed claims.
Mr. Whitelaw: I shall consider the hon. Gentleman's second point as sympathetically as possible. He has made an important point from his considerable knowledge and experience, and I respond to it. As for his first question, it is important to recognise that considerable sums of money have already been allocated to that area. That is a very important factor.
Mr. Stanbrook: Is it not true that the main reason why the local police failed to deal adequately with the disturbances was that pitifully few reserves were available at the critical moment? Should we not give greater consideration—in advance of any expert inquiry—into the strength and establishment of our police forces in all urban areas? Should we not also consider the possibility of mobile reserves on the pattern of the special patrol group?
Mr. Whitelaw: These matters will have to be carefully considered by the police investigation. The considerable increase in police recruitment and the fact that many forces are up to establishment are important factors in meeting my hon. Friend's point. I hope that all hon. Members will await the result of the police investigation.
Mr. Christopher Price: Does the Home Secretary accept that one source of the problems that arise between the police and the immigrant community is that the police are reluctantly forced to act as guardians on marches that are held by National Front thugs? Such events can be seen on television, and occurred last week in my constituency. Is the right hon. Gentleman aware that Thursday's Green Paper represents a welcome development, as it introduces other criteria, such as cost, disruption and affront to the community, in addition to the breakdown of public order? What progress does he expect as a result of that Green Paper, and when does he expect legislation to be introduced?
Mr. Whitelaw: I should very much like to discuss and debate many of those issues. However, in the interest of the House these questions should be discussed on another occasion, as they do not arise from the statement.
Sir Ronald Bell: Were not these terrible events in Bristol a fearful condemnation of the demographic policy and drift of the past 25 years? What does my right hon. Friend have in mind to deal with that aspect? As for the mechanics of maintaining public order, does he know of anything better than cold water for cooling these episodes? Why is it not used?
Mr. Whitelaw: I have suggested how such issues might be considered. I do not think that it would be right if I responded to my hon. and learned Friend in general terms. As I said in my statement, we are proud of our traditional methods of community policing. My hon. and learned Friend's suggestion would lead to a painful and difficult departure from those methods. I doubt whether it would be wise to make such a departure.
Mr. Dubs: Does the Home Secretary accept that for many years people have said that we should tackle urgently the problems of alienated young blacks in our society? Beyond hoping that the Select Committee will come up with something, the Home Secretary said nothing positive about a problem that has faced him and his predecessors for many years. Is not the time for talking over? Does not the right hon. Gentleman accept that it is time that the Government took urgent

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action so that young blacks who are unemployed and who suffer educational disadvantages can be helped to become members of our society?
Mr. Whitelaw: These are important matters. However, a Select Committee is engaging in exactly such an investigation, and in the interests of the House we should let it do its work. Of course, the Government will respond to its suggestions.
Mr. Budgen: Will my right hon. Friend explain to my constituents and to those who live in areas of a similar racial and social composition to that of St. Paul's what specific action—as opposed to discussion—is anticipated within the next year to ensure that there will be no repetition of events in their areas?
Mr. Whitelaw: First, we seek to ensure good community relations. Secondly, we need good policing and increased recruitment. The Government have certainly provided that. If the communities involved adopt a sensible attitude, that will prove to be the way forward. All three must march together.

TENERIFE AIR CRASH
The Secretary of State for Trade (Mr. John Nott): With permission Mr. Speaker, I shall make a statement on the Tenerife air crash.
The House will be aware that on Friday last a Boeing 727 operated by Dan-Air Services Ltd. from Manchester to Tenerife crashed about 10 miles from its destination and all the 146 passengers and crew on board were killed. I am sure that all sides of the House will wish to join me in expressing Parliament's great distress at this tragic accident and our greatest sympathy to the relations and friends of all those who were killed.
The accident occurred after the crew had reported when the aircraft was at 6,000 ft over a radio beacon at Los Rodeos airport on the northern end of Tenerife island, 19 minutes after 1 o'clock in the afternoon, GMT. It was then cleared by air traffic control to descend to 5,000 ft and carry out an approach procedure to the runway, but this message was not acknowledged by the aircraft and it is believed to have crashed very shortly afterwards. The accident site is about 10 miles south-west of the airport and just over 5,000 ft above sea level. The aircraft had completely disintegrated.
The Spanish authorities have begun an investigation into the circumstances and causes of the accident and a team of investigators from the accidents investigation branch of my Department arrived at 6.30 on Saturday morning and have been participating in the Spanish investigation in accordance with established international practice. The flight data and cockpit voice recorder have been recovered from the aircraft and will be carefully examined and read out in the next few days. Similarly, the recording of the radio communications will also be subject to detailed analysis. I will give more information to the House as soon as it is available. There remains much work of investigation to be done and it is expected that it will be some time before the final report of the investigation will be completed. By international agreement, a copy of the report will be passed to the State of registry of the aircraft that is, this country.
The House will wish to know that the Spanish authorities have treated this

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tragedy with the greatest sympathy and consideration and memorial services are being held in Tenerife today. British consular officials and members of the Dan-Air Company are doing everything in their power to assist the official services in Tenerife with their work.
Mr. John Smith: I thank the Secretary of State for making an early statement. On behalf of the Opposition, I express our sympathy with the families and relatives of those who lost their lives in this appalling tragedy. Is the right hon. Gentleman aware that both the House and the public will wish the inquiry to be searching, and include consideration of the safety of the aircraft and of the air traffic control system and landing procedures at the airport?
Is the right hon. Gentleman also aware that there appear to have been some premature and very confusing statements about the cause of the accident, some apparently by the airline concerned as to where the aircraft was heading at the time of the accident, and others about pilot error, which must be far too premature? Will he ensure that the inquiry will cover all these matters?
I note that the Secretary of State said that the final report could not be expected for several months. That will take us to near the end of the holiday season. As a large number of British citizens are likely to travel to this airport, will the right hon. Gentleman examine the possibility of the report being completed at an earlier date, or of some interim report being made available so that some conclusions might be drawn in order to ensure that paramount consideration— the safety of the air passengers?
Mr. Nott: I agree with the right hon. Gentleman that the report needs to be of a searching character. There were, understandably, a number of rather confusing statements made in various quarters when news of the accident first came through. That is not entirely surprising.
It is true that the formal report will take some time to prepare and to be made available, but I undertake that we will keep the House informed by a statement as soon as we have additional information which is of great interest and concern to both sides of the House.
Mr. Montgomery: I am sure that my right hon. Friend expresses the sympathy of every hon. Member over this terrible tragedy. Has he noticed the reports that have emanated from the Spanish authorities putting the blame on the pilot? As this man was an extremely experienced pilot, and as he is not here to defend himself, will my right hon. Friend agree that it would be a great deal better if people waited until after the full investigation before starting recriminations?
Mr. Nott: I agree that this was a very experienced crew. The pilot knew the airfield very well and had had more than 14,000 hours' flying experience. None of us questions the competence of the crew. I certainly agree that it would be much better to await further facts before making any further statements.
Mr. Alfred Morris: As a Manchester Member whose constituency adjoins Manchester airport, may I extend my deep condolences to the relatives of all who lost their lives in the disaster?
The Secretary of State said that the flight data and cockpit voice recorders would be read out in the next few days. How soon afterwards will we be told what those read-outs reveal? If, as the right hon. Gentleman said, it is a matter of some months before the final report of the investigation is completed, may we have an interim report after the flight data and cockpit voice recorders are read out?
Finally, may I thank the Secretary of State for his prompt action in sending a team of investigators to the island and in taking the earliest possible opportunity to make a statement to the House?
Mr. Nott: The right hon. Gentleman is quite right. The flight data and cockpit voice recorders have both been recovered. The flight data recorder will be read out for the first time fairly shortly and I will make sure that in so far as I can provide relevant and soundly-based information to the House I shall do so, Obviously, I do not wish to commit myself to any time scale, but there is no reason to conceal anything from the House or the country as soon as we have factually-based information which we can put forward.
Mr. Churchill: May I join my right hon. Friend in expressing my deepest sympathy to the families of the passengers

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and crew were lost in this tragic accident, no fewer than five of whom were my constituents?
Is my right hon. Friend aware of the pitiful inadequacy of non-directional beacons, especially in the mountainous terrain and in poor weather? Will he make most strenuous and urgent representations to the Spanish civil aviation authorities to the effect that it is quite inexcusable that on an airport that is used by countless hundreds of thousands of British holiday-makers each year there should have been no airport surveillance radar, either at the airport or on Mount Teide itself? Will he further undertake to publish a safety league table in due course covering all scheduled and charter airlines operating in and from this country?
Mr. Nott: There were radio navigation aids at the airport, including a main VHF beacon, and three medium—frequency beacons of low power, together with an instrument landing system. There is surveillance radar at Las Palmas covering the whole island, but there is no local radar at the northern airfield. This is not dissimilar to the situation in many airports throughout the world which take scheduled passengers. In that respect, I do not think that my hon. Friend's criticism of the Spanish authorities is correct or valid. I shall look into the matter, but I do not think that a safety league table would really be of any help to the House or the country.
Mr. Charles R. Morris: I thank the Secretary of State for the speed with which he has made a statement about this tragic event. I express my condolences to those who have been so tragically bereaved, particularly the families of my constituents who were involved in this tragic accident.
Bearing in mind the history of the air tragedies and disasters which have taken place at Los Rodeos airport, would the right hon. Gentleman be justified in discouraging charter companies from using this airport, at least until we see the interim report?
Mr. Nott: Los Rodeos remains an approved airport and has a very long runway which, when used in the proper circumstances, is as safe as any other. The accident site lies between the two airports and not within the approach pattern to the northern airport. Of course,
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I am aware of the major accident that occurred on the ground at that airport a few years ago, but it is an approved airport and, if properly approached, there is no reason why there should be any danger at all.
Several Hon. Members rose—Several Hon. Members rose—
Mr. Speaker: Order. I propose to call the four hon. Members on the Government Benches and the two hon. Members on the Opposition Benches who have been rising in their places since the beginning of supplementary questions.
Mr. Onslow: I endorse my right hon. Friend's expression of sympathy for the relatives of all those involved in the tragedy, and welcome his rejection of the rather superficial suggestion of the publication of some safety league table, which most of us recognise would be irrelevant.
Is my right hon. Friend satisfied that there will be full scope for the participation of British experts at all stages in the technical investigation? Can he tell us what scope there is in Spanish procedures for British participation in the formal inquiry itself?
Mr. Nott: British experts are, of course, present now, and they are assisting the Spanish authorities with their investigation. I am sure that my hon. Friend, having had responsibility for such matters on earlier occasions, appreciates that the prime responsibility rests with the country in whose jurisdiction the accident occurred. However, there are well established international rules which set out the means by which other countries involved may participate. Indeed, the country that manufactured the aircraft also has a part to play in the investigations, in accordance with the rules. The Spanish authorities will, I know, follow international rules in this regard.
Mr. Stephen Ross: May I, on behalf of my right hon. and hon. Friends, associate myself with the messages of sympathy that have been expressed about the disaster? It has been reported in the press that the black box has been removed and has been sent to Madrid. May we assume that the Minister's officials will be present in Madrid to hear the recording? Is it not also a fact that Los Rodeos airport will be used rather less in the future? Apparently, it has been reported that this was

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the last flight to use that airport and that in future the southern aerodrome will be used more extensively. Will the Secretary of State confirm that?
Mr. Nott: The flight data recorder will be read in Madrid, and officials from my Department will be present. A decision will be made tomorrow about whether the cockpit voice recorder will be read in Madrid or be sent direct to my accidents investigation branch in Farnborough, to be read first in the United Kingdom.
As the House will know, there is a new airfield on the southern side of Tenerife which no doubt will be used increasingly. However, I understand that it is still intended that Los Rodeos, the northern airfield, will remain in full use. As I have said, it is an approved airport.
Mr. McCrindle: I echo that last point, but is it not a fact that the new airport on the south side of Tenerife is reputed to be safer by international standards than Los Rodeos? Can the Secretary of State give any indication, therefore, of the date after which most of the charter flights from this country will be likely to use the new airport, because it appears that most of the difficulties that have occurred in the past in Tenerife have occurred at the older airport?
Mr. Nott: I do not think that I am sufficiently qualified to make judgments on the quality of one airport compared with another. We can only ensure that airports that are used by British scheduled aircraft and by British passengers are approved airports under the existing rules. I cannot say whether the southern airfield is better than the northern airfield, although I have read reports that it is. However, that is surmise, and I cannot confirm it or otherwise.
Mr. Dalyell: The Secretary of State pointed out, legitimately, that the facilities at Los Rodes are not very different from those of many other airports in the world. I had the unpleasant experience some years ago of being caught there in bad weather. Extremely delicate, difficult micro-climates result from Mount Teide rising from the sea in unusual geological conditions. Is it not unsatisfactory that here, of all places, there should be primitive equipment such as VHF beacons, and is there not a case for
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special equipment, in view of the fact that, as my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) pointed out, a huge number of British holidaymakers now visit Tenerife?
Mr. Nott: As I indicated in my statement, as far as we can judge, the aircraft was not on its approach to the airport. I do not think it is entirely true to say that the VHF beacon is primitive. It is a system which is in use in many parts of the world.
I cannot recall the earlier point made by the hon. Gentleman, for which I apologise.
Mr. Dalyell: Given the special nature of the climatic conditions and the microclimates at this airport, is there not a case for special provision?
Mr. Nott: The accident took place when the weather in the area was variable, with a south-easterly wind of 14 knots and a visibility of 6 km in drizzle. I understand that the airport has an elevation of just over 2,000 ft above sea level. Consequently, as cloud drifts over the high ground the visibility tends to change quickly and sometimes one end of the runway is obscured while the other end is clear.
I am sure that the hon. Gentleman will agree that there are many airports in the world where difficult conditions exist. I do not deny that it is said by pilots that this airport is difficult in some respects.
Mr. Mellor: I thank my right hon. Friend for his statement, and for the proper caution that he has shown in discussing the various implications of the accident. I hope to show equally proper caution in my question. Do not the records of my right hon. Friend's Department show that this is the third major air disaster affecting aircraft of this airline to be recorded since 1977? Do not his records also show that this is a far worse record than that of any other British airline, and, so far as can be seen, of any other comparable Western European airline? Does not this raise the implication that there should perhaps be a wider investigation into the operations of this airline?
Mr. Nott: There have been two fatal accidents in which this airline has been

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involved in the last five years—one at Sumburgh and the other at Lusaka. There have been five other minor technical accidents. The safety standards of an airline are regulated by the Civil Aviation Authority, through the issue of an air operator's certificate. Those are the standard procedures, and I see no reason to change them.
Mr. Colvin: I heartily endorse the words of my right hon. Friend and other right hon. and hon. Members this afternoon about the tragic accident. Does my right hon. Friend agree that had this aeroplane been carrying a ground proximity warning system the accident may well have been averted? Does he not also agree that for the sake of a couple of thousand pounds—which is all that these instruments cost—it is high time that moves were made to make compulsory the carrying of such instruments on civil airlines, both nationally and internationally?
Mr. Nott: This aircraft was carrying a ground proximity warning system, and there were no known defects in it when it departed from Manchester.
Mr. Clinton Davis: Ground proximity warning systems were made mandatory in 1977 in this country for British aircraft.
May I ask the Secretary of State whether the Spanish authorities have indicated that they are agreeable to the publication of an interim report, as is the clear desire of the House? If they have not so indicated, will the Secretary of State encourage them to do so?
In view of the conflicting reports, is the Secretary of State able to say, without prejudice to any question of liability, whether the aircraft had been diverted from the north to the new airport? That matter is evidently causing considerable concern.
There have been reports that a number of people—I can only describe them as ghouls—have been busy collecting pieces of the aircraft as mementoes, which can
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only impair the quality of the forensic investigation that has to be undertaken. Is the right hon. Gentleman satisfied that the Spanish police authorities have now taken appropriate action to avoid a repetition of that?
Is the Secretary of State aware that deep concern has been expressed for many years by BALPA and the International Federation of Airline Pilots about the antiquated nature of air traffic control systems, not simply in Spain, but throughout Europe and elsewhere? Will he, therefore, use the best endeavours of his Department to ensure that this matter is more thoroughly and urgently investigated, and that action is taken wherever possible to make sure that deficiencies are put right?
Mr. Nott: I did not say that I would be able to publish an interim report. I indicated that I would certainly do my best to provide, as soon as possible, whatever information I could. That is not quite the same as an interim report, which is something to be cleared with the Spanish authorities. Certainly I shall encourage the Spanish authorities to allow us to provide here as much information as possible as soon as reasonably possible.
On the question about the diversion of the aircraft, the recording of radio communications contains no instruction to the aircraft from air traffic control to divert. Nor does it include any statement by the pilot that he intended to divert. Certainly no instructions were given.
I have noted what the hon. Gentleman said about the position on the ground. It is a matter for the Spanish police authorities and I will look into the hon. Gentleman's comments.
The hon. Gentleman is right in saying that air traffic control systems all over the world probably need to be brought up to date. I share his concern in that respect. We can do no more than bring ours up to date and encourage everyone else to take similar action. Of course, we shall do our best to play a leading part in that regard.

BIRKENHEAD (UNEMPLOYMENT)
Mr. Field: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
" the unemployment situation in Birkenhead "
I wrote to you on Friday, Mr. Speaker, indicating that I would seek to move the Adjournment of the House to discuss the long-term future of shipbuilding on the Mersey, which has been put in doubt following the cancellation on Friday of Cammell Laird's only merchant ship building order.
My constituents have only once known what it is like to have full employment. As Britain's war effort got under way, Birkenhead went back to work, or perhaps I should more accurately say that some of my constituents went to work for the first time. During the war, Birkenhead did not fail this country. On average, we built two ships every three months.
Now Birkenhead needs the country's help. Hon. Members will know that the unemployment rate for Liverpool is twice the national average. For the country as a whole, we now have one in four of the unemployed classified as long-term unemployed, that is, being without work for more than a year. That rate is equal to the long-term unemployment rate of the peak year of the 1930s.
My constituency has a long-term unemployment rate of 34 per cent. About 8,000 people are waiting for work and there are only 300 vacancies. If shipbuilding is allowed to collapse, as I fear it might following the cancellation of the order on Friday, unemployment will rise still further.
Unemployment should not rise further, because a year ago the Government came to the House and sought agreement for a shipbuilding plan. That plan, which was agreed, had two parts. The first was that we should continue to run down the size of our shipbuilding industry. That has been, and is being, done. In Birkenhead, for every five men who were employed in shipbuilding a year ago, only four remain.
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The men have fulfilled their part of the bargain to the letter and spirit of the agreement.
The second part of the plan was that British Shipbuilders would seek merchant shipbuilding orders, as it has been trying to do, and that we would bring forward public orders. In Birkenhead, we hoped to get orders—[Interruption.]
Mr. Speaker: Order. The reaction of the House has been caused by the fact that the hon. Member should not make the speech that he would make if his application were granted but should merely stress why it ought to be granted.
Mr. Field: There should be a debate now, because we have lost the hoped-for order for fleet oilers and on Friday we lost our merchant shipbuilding order. I seek the Adjournment of the House so that we may discuss what may be happening to Birkenhead. I want to express much more fully the anxiety of my constituents about the prospect of unemployment rising still further and I wish to argue that the Government could, and should, do something to prevent more than the present 8,000 unemployed in my constituency being without work.
Mr. Speaker: The hon. Member for Birkenhead (Mr. Field) asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
" the unemployment situation in Birkenhead ".
As the House knows, under Standing Order No. 9, I am directed to take account of the several factors set out in the Order, but to give no reasons for my decision.
The hon. Member will be aware that I decide not whether this matter is to be debated but merely whether it should be given priority over the business set down for today and tomorrow. I have given careful consideration to the representations that the hon. Member has made, but I have to rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

IRAN
Mr. Winnick: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
" the possibility of further United States military intervention in Iran and the danger to world peace ".
The matter is specific because it relates to the situation in Iran and arises from what has already occurred by way of military force. The matter is of considerable importance, because further military action has not been ruled out by the United States authorities. Any such action could have the more fearful consequences, as well as having a great bearing on the maintenance, or otherwise, of world peace.
The urgency of the matter is, I submit, self-evident. The crisis over Iran could escalate again at any time and it is essential that the House should have an opportunity of debating the matter and, in such a debate, to express its view on the situation.
I would hope that in such a debate the House could hear the views of those of us who believe that military action should not be taken and that economic sanctions should not be enforced, but that continued efforts should be made through diplomacy
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—and only diplomacy—to secure the release of the hostages. For those reasons, I believe that the debate should be held as quickly as possible.
Mr. Speaker: The hon. Member for Walsall, North (Mr. Winnick) gave me notice before noon today that he would seek leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he believes should have urgent consideration, namely,
" the possibility of further United States military intervention in Iran and the danger to world peace ".
The hon. Member has brought to our attention an important matter. I listened carefully to the arguments that he advanced. As the House knows, it has instructed me to give no reasons for my decision when I rule on such an application.
I have to rule that the hon. Member's submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

WELSH AFFAIRS
Ordered,
That the matter of the Effect of the Budget on Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. Cope.]

DEFENCE ESTIMATES 1980
4.30 pm
The Secretary of State for Defence (Mr. Francis Pym): I beg to move,
That this House approves the Statement on the Defence Estimates 1980, contained in Cmnd. 7826.
Mr. Speaker: I have selected the amendment in the names of the right hon. Member for Cardiff, South-East (Mr. Callaghan) and his right hon. and hon. Friends.
Mr. Pym: I open by drawing attention to one sentence that I have written in the statement on the Defence Estimates:
" The decade ahead will be a testing one for the Western democracies in many ways ".
I do not think that any hon. Member here today could accuse me of having made that point lightly, or as pure rhetoric, or seriously disagree that the world has darkened still further since those words were written.
This is the first defence debate in this Parliament, and the events of recent weeks and days add a peculiar poignancy to its timing and importance. We are facing not only a testing decade but testing months and testing days for the security of our country and the Western world as a whole. It is our responsibility to recognise that fact and to see the world as it actually is, and not as we might have preferred it to be; there is no safety in self-deception. It is also our responsibility—with resolution and with all the foresight and ingenuity we can muster— to find ways of meeting the potential threats to our own and Western interests so that we can steer our country safely through the difficult times that lie ahead. These tasks face us at a time when Britain and Europe have other pressing problems and preoccupations—inflation, rising energy costs and a poor outlook for world trade—all related to the economic events of the free world.
In our case, our strategy for economic recovery involves severe restrictions on public spending, but—in contrast to the previous Government—we are prepared to put defence at the top of our priorities, not because we like it but because the realities of the international situation make it necessary. As the White Paper emphasises at every turn, we shall make
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the most thoughtful and effective use we can of every resource at our disposal, whether it be money or material or the excellent qualities of the men and women in our Services.
The Labour Party, when in government, decided to support the NATO aim of a 3 per cent. increase in defence spending. From their amendment, which we expect them to move later, it appears that the Opposition are now going back on that. But I hope that by the end of the debate they will remain true to their previous decision, which we believe was right. Incidentally, may I say how pleased we are that my predecessor, the right hon. Member for Sheffield, Park (Mr. Mulley) is making such a good recovery after his recent illness?
The repercussions of events in Iran, the taking of the United States hostages and the Soviet invasion of Afghanistan have placed a strain on the North Atlantic Alliance, both on the relations between its European members and on their relations with the Government of the United States. I see nothing wrong in stating that fact, because strategic and political crises of such a magnitude will of course place strains on all Governments who have to deal with them. In so far as the challenges are new in kind, the strains also will be of an unfamiliar kind and will require new solutions, to be found perhaps by new methods. But it is the business of an alliance, and of individual allies, not only to be able to accept the strains and pressures but to overcome them successfully.
The prescription for meeting this challenge is, to my mind, clear. With our allies and friends in Europe and beyond we must preserve our solidarity and cohesion —our basic sense of interdependence— within Europe, across the Atlantic, and all round the world. It is, in the end, upon that cohesion and co-operation that the security of the free world depends. We must work with the methods that interdependence requires. That means full discussions together, not shying away from the difficulties, and sharing our viewpoints and judgments. We must decide upon courses of action that emphasise and enhance our common purpose. The effect of a common front is not only to consolidate the Alliance itself but to present the most effective deterrent.

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None of this can be taken for granted; it has to be worked for. It will not be easy to find a solution to the Iranian problem that meets the United States' very proper concern for the safety and freedom of its citizens—and who could not feel a profound sympathy for the hostages and the American people—and at the same time avoids any further destabilisation and conflict in the Gulf. Indeed, that region is one of the most important regions of all in the world, and our primary objective must be to restore stability there. We shall have to draw on all our experience if we are to respond adequately and successfully to the risks and dangers that obviously exist.
Mr. Tam Dalyell: Can the right hon. Gentleman clear up a matter of fact? I refer to the statement in The Times today that the British base or the American-British base at Diego Garcia was used in the American effort that resulted in the desert calamity. Was it or was it not used? If we are to have full discussions together, to borrow the right hon. Gentleman's phrase, was there any discussion on this kind of use?
Mr. Pym: As the hon. Gentleman knows, there was no discussion. But, as I think my right hon. Friend the Lord Privy Seal told the House on Friday, there wore indications of the possibility of some action. The facts, of course, are still emerging. If the hon. Gentleman will allow me, I shall continue with my speech because there is a great deal that I want to say in a debate covering the whole range of this subject. I do not know the answer to his question. I cannot go beyond what my right hon. Friend the Lord Privy Seal said on Friday.
We shall have to draw on all our experience if we are to respond adequately to these risks. It will not be easy— perhaps not even possible—to persuade the Soviet Union that its aggression and enforced rule in Afghanistan is unacceptable to world opinion. How are we to deter it from using its massive military strength for other similar acts of agression elsewhere? I shall be saying more later about our perception of the Soviet global threat and how we can help to meet it. But the harder the task, the harder we have to work to tackle it. The greater the strains, the stronger the alliance will be when it successfully over
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comes them—as I personally am convinced it will.
Britain's reaction to the major crises of today has reflected this resolve and this confidence. We have played a notable part in reasserting the partnership with the United States and the principles of co-operation on which the Western Alliance is founded; we have promoted constructive solutions at every turn; we have taken our share of the measures— not always popular, and never without cost—that are needed to give practical expression to our principles. That is the way this Government match up to their responsibilities, and it is the way we shall go on working.
Military force will not provide us with any short cuts or any easy way to a more stable world order. It should not be—and it certainly is not—our first recourse. Indeed, it is the very last recourse—to be avoided at almost any cost.
The effectiveness of military force depends profoundly on our appreciation of political and social forces, both in those countries whose security we are seeking to maintain and in the West as a whole, for it is those political and social forces that determine decisively the outcome of the use of military force or its threatened use.
We have to retain the will and the imagination to understand the perceptions of countries whose ideology and traditions differ from ours, even to an extent at which they become hostile to us. We have to do so without in any way compromising our own beliefs and values, or becoming untrue to the heritage of parliamentary democracy and freedom to which we are the heirs. That is the way to strengthen the resolve of our friends and ourselves to work for a better world. The maintenance of adequate defences and the proper use of military power are a regrettable but inescapable precondition of successful political action.
If I turn now to a more detailed discussion of that, it is not because I am in any sense—as some have recently been tempted to pretend—some kind of warmonger. I believe most profoundly and passionately in the paradox that we have to possess military forces to avoid their employment; we have to possess the most horrific weapons precisely so as not to use them. The ultimate objective of Her Majesty's Government—and of every hon.

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Member—is less defence and fewer arms, not more. We believe in a fruitful dialogue with all other countries to achieve this end. We hope profoundly that the process of detente, of negotiations about arms control and of talks about the reduction in the size of forces and armaments, will continue.
We are playing our full part and making every endeavour here. Whatever the setbacks, our effort in this matter will be unremitting. But we also know that we must be realistic about it—that the facts will not disappear if, ostrich-like, we choose to bury our heads in the sand. There is no room for wishful thinking. If we bury our heads in the sand we are, surely, condemning the citizens of this country and the citizens of many other countries to a fearful future.
Mr. Eric S. Heffer: I should like to go back to the point raised by my hon. Friend the Member for West Lothian (Mr. Dalyell) about Iran. The Lord Privy Seal said the other day that the Government knew that it was one of the options, or one of the possible options. The right hon. Gentleman did not know what was to happen, but what was the response of the Government to the Americans over that option? Did they say anything about it? Did they shrug their shoulders? Did they advise the Americans not to go ahead with that attempt? What was their attitude? That is crucial in relation to the point made by my hon. Friend.
Mr. Pym: There was no consultation or discussion. As my right hon. Friend made clear on Friday, there was only an indication, of which I was unaware, of some possibility. I cannot add to that statement. I have no knowledge to add to it.
The defence White Paper starts, as any sound defence policy must start——
Mr. Dalyell rose—Mr. Dalyell rose—
Mr. Pym: I hope that the hon. Gentleman will forgive me. I have a lot to say on the whole area of defence and I have indicated——
Mr. Dalyell rose—Mr. Dalyell rose—
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. The hon. Gentleman knows perfectly well that in
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the House only one person has the Floor at a time.
Mr. Pym: I have responded, or sought to respond——
Mr. Dalyell: On a point of clarification——
Mr. Pym: I have answered the hon. Gentleman and the hon. Member for Liverpool, Walton (Mr. Heffer).
Mr. Deputy Speaker: Order. Unless the right hon. Gentleman gives way there is no way in which the hon. Gentleman can remain on his feet.
Mr. Pym: The defence White Paper starts, as any sound defence policy must start, from an analysis of the threats, but, as I have said already, such threats are political as well as military. If I concentrate now, as I think would be right, on the military aspects, it is very much within the general political context.
A military assessment of the threat has to be made, and kept up to date. It must be as exact as possible, but of course it cannot be reduced to a set of precise mathematical sums. Nor should the use of the term be misinterpreted, as it is sometimes, as indicating any belligerency of intention. There are a wide difference in attitudes of mind and outlooks between Warsaw Pact and NATO countries and a dangerous inadequacy of understanding of each other's intentions. The disparity comes not only from our different way of looking at life, the different ways in which we construct our societies, but also—and most fundamentally—from the deliberate check on communication exercised by the Soviet leadership. The most malicious expression of this is the misrepresentation to the Soviet people of the nature and intentions of the democracies of the West.
It is our strength in this country, even if it sometimes gives rise to temporary difficulties, that ours is a free, tolerant and open society. The Soviet leaders can get across their views to every individual in my constituency, and to every individual in every other hon. Member's constituency, but there is no reverse process. It is a one-way street. What I say in this House—what is said in this debate—will be reported to the man and woman in the Soviet street only so far as the Soviet Government chooses—only

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in a way that the Soviet Government judge fit. It is the concealment—the blindness that derives from this—that constitutes perhaps the greatest danger of all facing the world today.
The facts about the military threat are clear enough, as are the inferences that we should draw from them—even if there continue to be those who refuse to look at them. I have done my best to present a full analysis in chapter 1 of the White Paper. We, with our allies, are confronted by an immense and constantly growing Soviet military build-up, in both quantity and quality. Events in South-West Asia have reminded us that this build-up is not just for show. The capability is vast; the resources put into it are enormous and increasing; and it supports a strategy that is not defensive as is ours in the West but is designed to be offensive and war-winning.
The White Paper explains our assessment and the basis upon which it is made. By way of illustration, I pick out one or two points and ask the House to ponder them. On average, one new SS20 mobile missile system, with three new warheads, is being deployed by the Soviet Union every week. Over the last 10 years, the number of Soviet Union's tanks has grown by 35 per cent., its artillery by 40 per cent., its armoured personnel carriers by 80 per cent. and its fixed-wing tactical aircraft by 20 per cent. The Warsaw Pact currently outnumbers NATO in Central Europe by about 3 to 1 in main battle tanks and artillery, and by more than 2 to 1 in tactical aircraft.
In the eastern Atlantic, in the same 10 years, Soviet submarines have increased by 8 per cent., fixed-wing maritime aircraft by 30 per cent., and surface ships by 38 per cent. In 1979, the Soviet Union produced about 250 intercontinental ballistic missiles, 40,000 surface-to-air missiles, 1,800 combat aircraft, more than 3,000 tanks and 5 major surface warships. These facts require contemplation. It is not only the sheer size of this build-up that is so striking; it is the enormous qualitative improvement that is being secured.
I take a few examples. Now in service is the Soviet T72 tank, better gunned and better armoured than previous tanks, and comparing all too favourably with those in NATO. Then, there is the Back fire bomber,which has no Western
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equivalent, and the Alpha class submarine, which travels at high speed and has a hull of titanium alloy enabling it to dive very deep.
It was a distinguished former leader of my party to whom was attributed the well-known remark about
" Lies, damned lies, and statistics. "
The array of statistics on the Soviet military programme adds up to a literally horrifying totality. We face a potential threat from military forces of huge size and scope— forces that could be used directly in a military confrontation with NATO or indirectly to challenge the West's broader political and economic interests worldwide. The size and reach of these forces makes them a potent political weapon, which, if it is not counterbalanced, could be exploited to bring an unwelcome influence or even blackmail on the domestic and foreign policies of any country that is weaker. It is against this threat that between us all, with our allies, we must have the will and the means to defend ourselves.
Our main defence is, and must be, the North Atlantic Alliance. Our security is based on our membership of NATO. NATO strategy, the extent of its forces and the extent of our own contribution to these forces are also, I hope, spelt out clearly in the statement. No British Government, and no member of one holding the office I do, could ever be entirely satisfied with the Alliance as an effective instrument. It inevitably has the weakness that any large multinational organisation has, it is exposed to the same strains, and, although I think that it is better than most at overcoming these difficulties, it is not, and never can be, as good as any Defence Minister would wish. There is absolutely no room for any complaceny.
The Alliance needs to become more cohesive, quicker to reach decisions and sharper in its thinking if it is to give effective direction and support to the military forces at its disposal. We must secure these improvements. We are determined to do so. No British Government could, or should, do other than make every effort to fortify the Alliance, and I am determined that we should work with our partners to ensure that the Alliance is a shield strong enough for all its members.
The demand that this makes on our resources of money, manpower, industry, imagination and will is very large, but it

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has to be met. I described to the House on 24 January the requirements of NATO stategy, the part that nuclear weapons played in that stategy, and Britains own role. I know that the House will recall that debate, even if some commentators seem to have forgotten it. I do not propose to go over the same ground again, but I know that there are two nuclear decisions that are of particular interest to the House and the public. These are the questions of a successor to Polaris and where in the United Kingdom the American cruise missiles should be based.
I told the Select Committee recently that I hoped to be able to announce a decision on cruise missile basing during the summer. I hope that that will be the early summer, but it is not possible to give a precise date. I assure the House that I shall make a full statement at the earliest possible moment.
I should also mention, on the subject of cruise missiles, the question of operational control. As my right hon. Friend the Prime Minister and I have made clear on a number of occasions, the use by United States forces of the bases concerned in the United Kingdom would be a matter for joint decision between Her Majesty's Government and the Government of the United States in the light of the circumstances prevailing at the time. The bases may not be used without such joint decision.
Mr. Cranley Onslow: Before my right hon. Friend moves on to Polaris, may I ask him about a matter that is not mentioned in the White Paper but that came up in his evidence to the Select Committee, namely, the defence of the United States Air Force bases in this country and the need for the Americans to acquire the Rapier surface-to-air missile system? Has there been any movement forward on this? I understand that the Senate Armed Services Committee has given a favourable opinion on this. Can he confirm that?
Mr. Pym: Yes. I think that the prospect is promising. The House of Representatives Armed Services Committee has authorised $100 million of expenditure in the financial year 1980–81 and the Senate Armed Services Committee is understood
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to be recommending $50 million, so the prospect is reasonably promising.
On the Polaris successor, no decision has yet been taken, and, if that fact indicates the thoroughness and care that the Government are taking in approaching that decision, I hope that it will be some reassurance to the House. I want to say something in a moment about publishing a document on the subject, but the essential judgment to be made about the existence of nuclear weapons, and therefore about the United Kingdom's possession of a strategic deterrent, is whether such possession is more, or less, likely to help keep the peace; or whether it is not material to that objective. Views on this vary, and it is for that reason that I have tried to do all I possibly can to encourage discussion and informed debate on the subject.
The Government are clear that if we want to maintain the peace that Europe has enjoyed now for 35 years, NATO has no responsible alternative for the foreseeable future but to continue to base its strategy of deterrence in part on the possession of such weapons. We are clear also that it is right for Britain to continue to make its own distinctive contribution in this field. It is a contribution which in practice no other Alliance member can make; it is one that we have made now for a quarter of a century; and surely it would be a strange judgment that held that today's world was so much safer a place that we could now conveniently, almost comfortably, plan to let the contribution lapse.
Mr. Douglas Hogg: Although I support what my right hon. Friend is saying, may I put it to him that our possession of the nuclear deterrent is less effective as a deterrent if it is not associated with a credible civil defence policy? The two lock together. If possession of the deterrent is to deter a potential aggressor, that aggressor must believe that we would be prepared to use it, and that involves an effective civil defence programme.
Mr. Pym: I acknowledge my hon. Friend's point that there is that connection, although he will appreciate that it is outwith the scope of the White Paper and not my direct responsibility. However, I accept that that connection exists.

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I have already explained to the House that large though the capital cost of any successor system will be in absolute terms over a limited period, it is not unmanageable in scale or of an order likely to emasculate our defence effort in other directions. It is very important that it should not do so, and I am personally determined that it should not do so. On all these issues I have set out the argument in the debate in January and in the White Paper, to an extent and with a frankness that I do not think has been done on this subject for some time.
I am doubtful whether there is anything I can usefully add to what I have already said on the fundamental policy involved, but I shall of course listen to what is said during this debate.
Mr. Heffer rose—Mr. Heffer rose—
Mr. Pym: I hope that the hon. Gentleman will allow me to get on with my speech, because there are many other aspects of this subject on which I wish to touch. I normally give way a great deal, but I have much to say today, and he will have an opportunity to speak if he catches your eye, Mr. Deputy Speaker.
I make no apology for the fact that we have not yet published an account of our thinking on what specific system might be chosen to replace Polaris. This is a highly complex and technical matter, and I am sure the House understands the difficulties that would arise from publishing an official paper relating to a major matter of national security in advance of a decision. I do not believe that the idea of a Green Paper, the desire for which I entirely understand and on which my hon. Friend the Member for Aldershot (Mr. Critchley) has tabled a motion, is either sensible or appropriate. I cannot recall any precedent for such a procedure on an issue of major defence provision. The right and normal course, in line with our whole constitutional practice, is for the Government to take their decision and then to explain it and defend it before Parliament.
I want to give an assurance now that the explanation that I shall give will be a full one. I willingly and gladly undertake that Parliament will be informed in depth of the factors bearing on the decision how to maintain the effective
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ness of the British strategic nuclear deterrent. I intend to do this as soon as the Government have been able to announce their conclusion, and I have it in mind to publish a substantial document giving the fullest possible account of all the considerations involved.
There are problems due to the requirements of national security. I regard those requirements as overriding. There will be some relevant facts that we shall not be able to disclose, but I shall not take general refuge behind that problem; I intend to lay open the Government's thinking to the greatest possible extent, and I hope that the forthright nature of this White Paper, if hon. Members believe that to be its characteristic, will be taken as an earnest of that intent.
Mr. Robert Maclennan: Before the right hon. Gentleman leaves the subject of the successor to Polaris—and while one recognises that he cannot go much further today in advance of his White Paper—will he at least assure us that he will publish in the White Paper the Government's strategic reasons for believing not merely that we must possess a successor to Polaris but that we could find it necessary to use it ourselves and not as member of NATO? This is not purely a technical question of what is the most appropriate technical successor to Polaris; it is a question whether there are any circumstances in which Britain on its own would need such a successor.
Mr. Pym: It was at my initiation and subsequent insistence that we had a full debate on the nuclear issue when I set the arguments of principle before the House in the most forthright way that I could.
I turn to other issues in the White Paper In doing so I and my hon. Friends who will also be speaking in this debate will try to take account of the points made by the Select Committee in the comprehensive report that it has made, with, if I may say so, remarkable speed.
The present international situation— which I see as one of great peril—requires us to look outside Europe with fresh intensity. Increasingly, our European partners realise that the vital interests of all of us are affected by what goes on in the rest of the world, and are accepting

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the need for us all to work together. We all have different histories and differing international obligations. So the parts that we play will therefore differ. But they must be complementary, and they must be geared to a common defence of common interests. Our resources need to be flexible enough, and our strategic thinking comprehensive enough, to confront whatever challenge is offered. Her Majesty's Government are resolved to meet these needs to the maximum of our ability and for as long as may be necessary.
The single largest threat to our interests is posed by the activities of the Soviet Union and its allies and surrogates. The White Paper explains how their growing naval and air strength has enabled the Russians to project their influence around the globe. Time and again they have been able to exploit instability and conflict to their own ends against the Western interest, by means which include political intimidation and subversion as well as the direct use of force.
The Russian leaders are constantly reaffirming, through their words and deeds, their loyalty to the teachings and objectives of Lenin. The essence of that objective is the unremitting extension of influence by means both fair and foul, exploiting any cracks they may detect in their opponents' armour and any signs of political or moral weakness. The aggression in South-West Asia is a blatant example of Soviet willingness to use force in pursuit of their interests in the developing world.
We must be as hard-headed in our planning in relation to our response to the true meaning of this event as we are in the assessment of the threat itself. First— and most obviously—we must take account of our available resources and what particular capabilities and experience we can muster for use outside NATO.
Even if we had unlimited forces, it would not follow that military means were the only or even the best means available to meet the threat. We must work with other nations for the peaceful settlement of disputes, in line with the United Nations Charter. We can use the diplomatic and economic means, as we have done in the case of Afganistan, to seek to convince the Russians that aggressive actions
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do not pay and that if detente is to bring them any benefits they must accept that it must be global and reciprocal. We can also achieve much by providing the development aid and technical expertise that the Third world so desperately needs and that the Soviet Union has shown itself so significantly unwilling and unable to provide.
But military capability lends itself to a number of uses, and there are at least three different levels at which a defence involvement can help to protect our interests and those of our friends. The first level is that of military aid to friendly States, to help them in their self-defence and thus deter any attempt at outside interference from the outset. We achieve this through the provision of military training assistance in several forms, such as training on courses in the United Kingdom and the provision of loan Service personnel, and through a carefully tempered defence sales policy.
The second level is to maintain our presence and use our experience outside Europe by means of training exercises and deployments. Deployments like those of the annual Royal Naval task group usually include visits to friendly countries and joint exercises with their forces. Exercises carried out by the Army and Royal Air Force often also include a collaborative element.
Thirdly, there is the possibility of deploying armed forces to help maintain stability and protect our interests in a threatened area. In spite of the competing demands on our resources, we retain a capacity to respond flexibly to such needs, and the White Paper mentions some steps to enhance this that I know some of my hon. Friends are enthusiastic about and that we are presently examining.
Mr. Cyril D. Townsend: In view of my right hon. Friend's encouraging words, will he explain why South Africa does not feature in the White Paper?
Mr. Pym: I thought that the White Paper was fairly comprehensive without mentioning all the countries that might possibly be added.
None of these efforts is to the detriment of our commitment to NATO. On the contrary, by allowing us to play our part in defending the wider interests which

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many of our allies share, they strengthen the concept of joint deterrence on which our whole Alliance rests. The invasion of Afghanistan has brought at least this one benefit. It has opened a great many people's eyes to the true character and global nature of the threat. It has awakened interest—just in time, I might add—in the scope and need for defence co-operation beyond NATO boundaries. All the activities that I have mentioned above lend themselves admirably to the co-ordination of effort, and we shall be working with our allies precisely to that end. When one has planned for 12 different contingencies, it will always be the thirteenth that actually arises.
I should like to leave this topic with a reference to one specific instance of our defence involvement overseas. It is unique in history and had it been mooted, say, a year ago it would probably have been greeted with general disbelief. Who would have thought that British troops would fly into Rhodesia as part of a peacekeeping monitoring operation, and that they could have an absolutely key role to play in the orderly transition to independence?
Our Service men from Britain and the Commonwealth were promptly on the spot. Widely dispersed in small numbers, they carried out their role and conducted themselves with exemplary efficiency, courage, and good humour and, when their work was ended, they left without fuss or ceremony.
There could be no clearer example of the constructive use to which our military resources can be put outside NATO. There could be no clearer argument for our retaining the flexibility to act, if not as a world Power in the traditional sense, at least as active and highly responsible citizens of the world. This operation demonstrated, as does their continuing service in Northern Ireland, the quality, the common sense and the professionalism of the men and women of our Armed Forces.
A realistic defence programme, to support a realistic defence policy costs money —a lot of money. The Defence Estimates for this year total well over £10 billion. This allows for an increase, in real terms of 3½ per cent. over spending last year. For each of the following three years, we are planning further real increases of 3
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per cent. By 1983–84,we plan that defencespending at 1979 survey prices should be £1 billion higher than in 1979–80.
That is a very substantial increase by any standard, and it is one that is unfortunately necessary. It comes at an awkward time, when the Government are determined to reduce total public expenditure, and it follows logically that other programmes have had to be reduced more than would otherwise have been necessary to allow room for extra defence spending.
Neither I nor the Government take any pleasure from this melancholy fact, but while we cannot take pleasure from it we can at least take some reassurance, which is quite a different thing. As I have said, the Government remain fully committed to arms control negotiations, but these must result in balanced and verifiable limitations, which enhance our security. I fear that I can see little prospect at present—I hope that I am proved to be wrong—of achieving significant savings in expenditure as a result of such limitations.
The plans that we have made mean that we are aiming to meet NATO's target of 3 per cent. growth. There can be no doubt that under this Government the United Kingdom will pull her full weight in the Alliance. The 3 per cent. is not a figure plucked from thin air and erected as a totem pole; it reflects a sober and realistic appreciation of what balance can best be struck between what is necessary to meet the ever-growing threat, which I have tried to make clear to the House and the country, and what can be afforded at a time when the economies of most NATO members—and particularly our own— are under strain. Three per cent. was the figure decided upon after much consideration by NATO. It had the support of the last Government, and I hope that the Opposition will continue to give it that support.
Mr. Ernie Ross: Before the Secretary of State leaves this point, may I say that I have studied both White Papers carefully and I fail to see any arms control initiatives contained in the White Paper? Will the right hon. Gentleman say where in the White Paper we shall see mention of them?
Mr. Pym: I have referred to arms control initiatives. The Alliance has made initiatives and the United States in particular has made a major initiative, which

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has not received any response. We are sitting down with the countries of Eastern Europe in Vienna and Geneva and playing our full part, as I have sought to make clear.
There are those who argue that we ought to do more and those who argue that we ought to do less. I wish we could do more. We have a long way to catch up, and the need is self-evident. But there is a limit to the pace at which spending priorities can be changed.
This Government are straining every sinew to get the economy right, and cutting public expenditure is a necessary, it painful, condition for restoring economic health. Once economic growth is reestablished, it will be easier to increase real defence spending if that should unhappily become necessary. In an important sense, therefore, the strength of our defences is in the long run a function of the strength of the economy.
Even with the very large sums of money described in the White Paper, it will not be easy to manage the defence programme. I want to say a few words about it now. My hon. Friend the Under-Secretary for Defence for the Royal Navy will speak more fully about manpower tomorrow. Some desirable equipment plans and projects may have to wait; others may have to be reappraised. At any one time, more desirable projects will exist than the resources to sustain them. There is nothing exceptional about that, and it does not imply any failings in professional judgments. But defence cannot have, and never has had, a blank cheque.
My responsibility is to construct a sustainable programme that reflects the up-to-date military assessment of the Chiefs of Staff and an equally up-to-date intelligence assessment of the threat. What I have to do is to establish a clear, and correct, order of priorities. This must be done on a broad overall defence basis, and I am involving myself personally in an examination of the allocation of resources with my principal advisers, the Chief of the Defence Staff, my accounting officers, and the chief scientific adviser.
In looking ahead 10 to 20 years, we have to try to assess what technological advances may be made by the Warsaw
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Pact forces and then to devise how we can match or outmatch these advances with our own technology. Such assessments can require profound and difficult judgements. If the nature and complexity of the technologies are demanding—like, for instance, those underlying electronic warfare, which will play perhaps a decisive part in any future conflict—that requires a significant part of our procurement expenditure to be devoted to research and development. The proportion is slightly over 30 per cent. in the coming year. The remaining 70 per cent. comprises, first, the production of new equipment, which reflects the successful completion of developments begun in the last decade—the most prominent example currently is the Tornado aircraft—and, secondly, the purchase of spares and the continuation of orders of equipment already in service.
The management of the defence programme, in all its aspects, places a major responsibility upon my Ministers and me. We have to pursue a sound defence policy and ensure that we spend what we must, but no more than we must. We have to see that we use our resources of men, money, and expertise where they areneeded and not anywhere, or in any way, where this would not be justified. There must be a conscious effort in my Department to achieve, within all the constraints, more accountable management and a sharper awareness of the way in which our decisions and actions use up scarce resources.
Since last May, I have conducted a sustained drive to achieve greater efficiency in the way in which Service men and civilians carry out their work. The Ministry of Defence, like everyone else, lives and works in a society where the price of labour and services is high, and will get higher.
Mr. Winston Churchill: Bearing in mind the extreme gravity of the international situation, which my right hon. Friend has so frankly put before the House, and the momentum and scope of the Soviet military build-up, is he satisfied that an increase of 3 per cent. or 3½ per cent. is all that we need to safeguard ourfuture? Is it not time that we stepped up our contribution on defence to something more approximating that of our French and German allies, who are

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spending at least 20 per cent. more than we are, on a per capita basis?
Mr. Pym: As my hon. Friend knows, there are various yardsticks that can be used. I wish that we could do more, because, unfortunately, at the moment the need is self-evident. However, we must strike a balance, and it is the view of our NATO Allies at the moment that the figure that we have chosen is the right one. Of course, 3 per cent., maintained year on year, would after five years make a substantial increase. That in no way prevents us reviewing the matter if circumstances alter. It is the Government's view that at the moment that aim is appropriate and one that we fully intend to fulfil.
I want to return finally to the people who man and maintain our defences. It is a matter of morale—there can be fully effective defences only if morale is high, and in all the decisions it falls to me to take I keep the morale of the Services uppermost in my mind. Winston Churchill, as he then was, speaking of the Army, said:
"The Army is not like a limited liability company to be reconstructed, remodelled, liquidated and refloated from week to week as the money market fluctuates. It is not an inanimate thing, like a house, to be pulled down or enlarged or structurally altered at the caprice of the tenant or owner; it is a living thing. If it is bullied, it sulks; if it is unhappy it pines; if it is harried it gets feverish; if it is sufficiently disturbed, it will wither and dwindle and almost die; and when it comes to this last serious condition, it is only revived by lots of time and lots of money."
What Churchill said 75 years ago is as true now as it was then. It applies to all three Services, and also to the Ministry's civilian employees, who work so loyally and so hard in support of our national security. It is true of the foot soldier on patrol in a Belfast street, of the sailor manning a patrol craft in Hong Kong, and of the airman putting all his skill and courage into testing a complicated new aircraft. It is true of the worker on the shop floor of the ordnance factory at Patricroft, of the scientist working at Aldermaston, and of all those civil servants who work for the Department in many different jobs. It is true of those who give up their weekends and other spare time to serve in the reserves.
What all these people seek from the Government is not that they should have
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easy options or unduly generous material rewards, or that they should be employed in larger numbers or in ways other than those the nation can afford in such difficult times. What they ask of me—and I think that they are right to ask of me —is that there should be a real commitment to defence and to a stability and continuity of defence policy which will make it possible for each man and each woman to do his or her job in the consciousness that it will produce results and help build a securer future. My ministerial colleagues in the Department and I, and the whole Government, are acutely aware of our responsibilities towards our Service men and women, and our civilian work force. They are the essential component, the very heart of our defence policy.
We need to offer them—and the whole House needs to give them—a real sense of purpose. That is the way to harness this vast resource and enable our country to be ready to respond to the challenges that we face. It is for this critically important national purpose that I ask the House, by its vote—if there is one on the conclusion of this debate—to give a clear endorsement and an unmistakable verdict that the Government should accord to our defences a real and continuing priority, and a total commitment.
Mr. Deputy Speaker: Mr. Speaker has selected the amendment standing in the name of the Leader of the Opposition.
5.18 pm
Mr. William Rodgers: I beg to move, to leave out from " House " to the end of the Question and to add instead thereof:
" reaffirms its commitment to the proper defence of Britain through membership of NATO, and pays tribute to the men and women who serve in the armed forces and to their civilian counterparts, but declines to approve the Statement on the Defence Estimates 1980 (Cmnd 7826) in that it fails to set out clear priorities for Britain's defence during the 1980s; commits Her Majesty's Government to increases in defence expenditure far in excess of forecasts for the growth of the economy; and offers no new initiatives towards multilateral mutual disarmament in the nuclear and conventional fields ".
May I say, first, how much I appreciate, as I am sure the whole House does, the Secretary of State's kind remarks about my right hon. Friend the Member for Sheffield, Park (Mr. Mulley). We have

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missed him here. We miss him in this debate, and we hope that he will be able to join us again soon.
As the Secretary of State said, this debate could hardly be taking place at a more sobering time. The events of the past week cast a long shadow over us all. We are passing through a period of acute crisis. It was my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) who said on Friday—and I think that he put it very well—that over the weekend the world would be " holding its breath." In those circumstances, it is natural that we should speculate about the consequences of what has happened in Iran and Afghanistan. However, I believe that it is much too soon to reach firm conclusions and dangerous to seek simple solutions to highly complex economic, social and political problems.
Over many years, and despite their differences, members of NATO and of the Warsaw Pact, particularly the United States and the Soviet Union, have learnt the advantages of stability. There were understood rules and assumptions about crisis management. Suddenly the rules are being broken, and there is a great deal of clumsiness about the way in which a new and unforeseen situation is being handled.
In Afghanistan, the Soviet Union committed a serious act of aggression, failing accurately to judge its unacceptability to world opinion and to measure the prospect of a debilitating, long-term struggle. In Iran, the United States and her allies, including successive British Governments, failed to recognise the unique social and religious pressures that were bringing the Shah's reign to an abrupt end.
For the moment, the outcome of both those events is that the West is weak. On the one hand, there is lack of a consistent and cool lead from the United States. On the other, there is confusion and uncertainty among her allies. Within the West there is no great confidence in political leadership at the highest level. Outside, in the rest of the world, there is a loss of faith in the capacity of the West to measure up to an unexpected crisis.
In due course, and in this case sooner rather than later, there must be a long, cool look at the question of consultation between the United States and her allies, which is directly and immediately relevant
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to NATO and to Britain's primary interest in the European theatre. I share the great sense of unease about how the question of consultation has been handled in recent months. However, beyond that, we must resist the temptation to allow events in South-West Asia to throw into disarray all the assumptions that we have made about the role of NATO, the resources required for it and about detente as our long-term aim. That will not be easy. If the West is seen to be weak, it will be argued that a further increase in defence spending is the way to make us strong. If our interests are threatened in South-West Asia, it will be said that NATO must extend its geographical spread.
I am profoundly sceptical about such conclusions. No one can say that the collapse of Iran was the result of inadequate defence planning. On the contrary, if the West had sent fewer arms salesmen and more observers of social change to Iran, it is possible that we should have received warning of what was about to happen.
I also find it impossible to see how a greater preparedness on the part of the United States and her allies could have prevented the Soviet invasion of Afghanistan unless the United States had been ready to threaten war and to mean it. There is no way to ensure the security of the Gulf except with the active and full consent of the Gulf States.
The members of NATO cannot separate their relations with each other in NATO from their relations with each other on wider issues outside. Their interests in Europe—and this particularly applies to the United States—cannot be viewed in isolation from their interests in the world at large. However, NATO has had a remarkable record as an effective alliance over more than 30 years. It has done a great deal to preserve peace in Europe. Membership of NATO is, and must remain, the cornerstone of British defence policy. The first task of Her Majesty's Government at present—the task of the right hon. Gentleman and his right hon. Friends—is to steady NATO and help to bring it through the present turbulence intact and still on course. From what the right hon. Gentleman said, I take it that he accepts that role.
As for the White Paper, I welcome the changes made by way of presentation. I

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do not grudge the increase in public expenditure for colour printing, two volumes in improvements in the lay-out. I congratulate the Secretary of State on his boldness in increasing the price of the White Paper from £2 last year to £850 for two volumes, which majestically exceeds even the rate of inflation induced by the right hon. Gentleman's Government elsewhere. I hope that the White Paper will be widely read. I recognise the duty of the Government to set these issues before the public.
My congratulations to the Secretary of State do not go much further. It is hard to find in the White Paper anything that is new, and impossible to find anything that is challenging. There is a total absence of discussion of the great defence issues facing this country. I do not believe that the Secretary of State is bland; he is much too intelligent for that. However, his White Paper is very bland indeed.
The two greatest defence issues in the 1980s are what level of defence spending our economy can sustain, and what are the major priorities that can be accommodated within it. In my view, on present trends, Britain simply cannot sustain an increase in defence spending of 3 per cent. a year until 1986. Even if she can, and even if the Secretary of State stays on course, it will not be possible to maintain unchanged her commitment to the three conventional roles—in the central region, particularly with 55,000 men in BAOR, to the Eastern Atlantic and the Channel and to the defence of the United Kingdom—and an independent nuclear role. Something will have to give. That is the question to which the White Paper should have addressed itself. I am glad that the Select Committee refers to that in paragraph 7 of its report. Like the Secretary of State, I, too, am glad that the Select Committee has been able to produce so soon a report of a kind.
Mr. James Lamond: I am trying to follow my right hon. Friend's argument as carefully as I can. However, I am surprised to hear him say that he doubts whether our economy can sustain an increase in defence spending of 3 per cent. My right hon. Friend the Leader of the Opposition went to Washington just before the special session of the United Nations and made the agreement
1018
to increase spending by 3 per cent. for the following years.
Mr. Rodgers: Iam glad that my hon. Friend has listened carefully so far. If he listens to the remainder of my speech with the same care, he will find an answer to his argument.
Mr. Churchill: Will the right hon. Gentleman give way?
Mr. Rodgers: No, not for the moment.
The two major decisions for 1980 are not announced in this White Paper at all. The level of spending, the commitment to 3 per cent. beyond 1980–81—and I ask my hon. Friend to listen to this—was set out in the public expenditure White Paper Cmnd. 7841, and is merely confirmed as the Government's intention up to 1986 in paragraph 803 of the defence White Paper.
As for the Polaris replacement, the Secretary of State offers a single sentence in paragraph 211 of the White Paper. For a bland sentence in a bland White Paper it is hard to beat. It says this of the Polaris force:
" The Government is considering possible systems to replace it thereafter and a decision will be taken soon."
That is all that the White Paper says about that very important decision. Frankly, the right hon. Gentleman added little of substance today.
Mr. Anthony Nelson: The right hon. Gentleman appears to criticise my right hon. Friend for not disclosing more information about the replacement programme, which clearly my right hon. Friend felt would not be in the national interest. In order to clarify the Opposition's attitude, will the right hon. Gentleman confirm that a good deal of the work on Chevaline—on the improvement of our existing system—was done during the period of office of the Labour Administration, and there was no mention of that in the White Paper?
Mr. Rodgers: With respect, the hon. Gentleman is quite wrong. As a junior Minister responsible for certain matters at that time, I frequently answered questions in the House which made it plain to those who wanted to follow these matters precisely what was happening. We were maintaining the effect of the deterrent, but we made clear that we were not seeking to have a replacement for Polaris.

1019
As I have said, there is no hint in the White Paper of the implications of the decisions which will be made—whichever way—on Polaris replacement and the fact that it will produce the sharpest controversy. There is strong opposition, which should be faced, to the idea of moving towards a new generation of nuclear weapons as a successor to Polaris. It is certainly the case that we should explore with our allies the best course for Britain. I am alarmed that any attempt to pursue a continuing independent nuclear role beyond the 1990s will have grave consequences for our capacity to contribute to the Alliance in other ways.
Britain's membership of NATO is crucial, and our defence priorities must be determined by what matters most within the Alliance. I should like an assurance from the Secretary of State—he did not appear to give one today—that the view which the Alliance takes on this matter, within the resources available to this country for spending on defence, will be decisive when the moment comes.
Meanwhile, unlike the right hon. Gentleman, I welcome the terms of early-day motion 508, standing in the name of the hon. Member for Aldershot (Mr. Critchley) and a number of his hon. Friends, about the need for a Green Paper. I assume that that would cover not only the technical aspects of alternatives to Polaris but also the matters that I have raised, such as the price which would have to be paid in terms of the country's conventional role. I thought that the remarks in this respect of my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan) were relevant. I do not take the right hon. Gentleman's view that it is not possible to publish a Green Paper on this matter. He is proposing to explain after the event why the Government have reached their decision. I do not believe that there is any argument on precedent or any argument on security which would make it impossible to publish such a Green Paper, which in turn would enable an authoritative public discussion to take place before the decision was made. I ask the right hon. Gentleman and his right hon. Friends to think again about this important matter.
Mr. Neville Trotter: Can the right hon. Gentleman explain what consultation occurred during the period of office of the Labour Government about the modernisation of the warheads of the existing Polaris missiles? Was that matter fully debated in the House?
Mr. Rodgers: The hon. Gentleman shows rather less knowledge of these matters than I normally expect from him. He understands fully that the updating of Polaris did not raise questions as fundamental in every way as a decision to replace Polaris in the 1990s. That is plainly the case. But even if it were argued—I do not know whether the hon. Gentleman is so arguing—that a Green Paper should have been published at that time, I would perhaps agree with him. I am certainly willing to learn from experience. If the hon. Gentleman argues that it should have been done then, let it be done now in respect of this much larger decision which is about to be made.
Mr. Trotter rose—Mr. Trotter rose—
Mr. Rodgers: I should like to proceed.
Mr. Robin F. Cook: Surely my right hon. Friend will draw the attention of Ministers to the fact that project Chevaline was initiated in 1972, when the Labour Administration were not in power. If anyone was responsible for issuing a Green Paper on that, it was their own previous Government.
Mr. Rodgers: My hon. Friend is very helpful, and I appreciate his intervention. However, in no way would I wish to evade such responsibility as I and my right hon. Friends had at the time.
I hope that the hon. Member for Aldershot will not be too embarrassed—he can leave the Chamber if he prefers to do so—if I quote from his interesting article in The Times on 22 April. He said:
"Conservative MPs are told next to nothing about defence but we are supposed to care a good deal about it ".
I can well believe that, because the whole House is told next to nothing. He added:
" Mr. Francis Pym, who talks on occasion about the future of the deterrent, takes care to say nothing".

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That is only too true, on this occasion today as on previous occasions. He went on:
" It is incontrovertible that, in defence terms, Britain is living far above its station ".
That is precisely what the Opposition say in their amendment. He concluded:
" Were we to purchase Trident it would only be done at the expense of losing a major British defence commitment, the abandonment of which would seriously weaken the NATO alliance ".
That is the crucial consideration upon which the White Paper fails even to comment.
I have quoted the words of the hon. Member for Aldershot, which I believe are more widely shared than hon. Members might choose to say at this moment. I hope that the Government will not dismiss the hon. Gentleman's views—it may be tempting to do so—on the ground that he is a clever fellow but somewhat eccentric with dangerous views in more than one direction. The anxieties that he has expressed on this occasion are widely shared by many who are deeply committed to NATO. If those issues are discussed elsewhere—as they are, and we all know it—why should we fail to confront them in this House, with the Secretary of State making his own contribution? Why should the White Paper evade them altogether?
Despite the pretty diagrams about which I do not grumble, in serious content the White Paper still falls far behind the annual report to Congress of the American Secretary for Defence and the white paper produced annually by the Federal Republic of Germany. This year, when grave issues are at stake which will determine the course of the 1980s, it is simply not good enough.
I turn to the matter of defence spending. There can be no argument about the fact that Britain must be properly defended. But that does not help us to answer what should be the level of defence spending. On the one hand, there is no fixed optimum level. Ask the Services how much money they would like and they will always say "More ". It is always possible to have more men and women under arms, better paid and better equipped. On the other hand, there is no fixed level below which spending can sink in order to render defence impossible. Here we are involved in matters of judgment
1022
of a very high order, and the Secretary of State knows it. He has said as much on several occasions. Of course, he must argue that the Government have got it right, as his Department argued with the Treasury and he argued with his colleagues.
In fact, the White Paper contains a revealing paragraph which must have absorbed much midnight oil and taken many telephone calls to the Chief Secretary's office. I refer to paragraph 806, which sits rather uneasily in the confident flow of the chapter. It states:
" The defence programme cannot be insulated from all change "
—that I take to be Treasury drafting—
" but our aim is to restore its momentum and expand it in the ways we have described."
That is the Department of Defence asserting itself. It goes on:
" But "
—note the word " But "; it is always a sign of trying to have it both ways—
" we shall not feel obliged to adhere slavishly to a particular growth path, nor shall we consider it a failure of policy if we modify our spending plans in either direction from year to year ".
That is a significant paragraph indeed. It is a way out of all difficulties. It will be the paragraph to point to when the going is rough. Despite their bold promises, the Government know that defence spending cannot be isolated from public expenditure as a whole or the state of the economy.
In the summer of 1977, NATO Ministers agreed to recommend a rise in defence spending of 3 per cent. a year for the period 1979 to 1984. In January 1978, in Cmnd. 7049, the Labour Government committed themselves to a 3 per cent. increase in each of the years 1979–80 and 1980–81, subject, however,
" to review in the light of our economic circumstances ".
I supported that decision then, and I support it now. On the available evidence, the increase was one that we could sustain. But circumstances are very different today. I do not believe—the Opposition amendment says this—that it is right to commit this country to increases in defence expenditure far in excess of forecasts for the growth of the economy; and that is precisely what the White Paper does.

1023
Let me give some figures, and let me take them from a source that Conservative right hon. Members regard as impeccable—the London Business School, home of fashionable monetarism and of Mr. Terry Burns, until he moved into the Chancellor's " think tank ".
In January 1978, when my Government agreed to a 3 per cent. increase in defence expenditure in each of two consecutive years, the London Business School was forecasting a growth in gross domestic product of 3 per cent. in 1978, 2½ per cent. in 1979, 3·2 per cent. in 1980 and 2 per cent. in 1981. But today, and here I refer both to the Red Book and to statements in the speeches of Treasury Ministers, the Government are forecasting a fall—I repeat, a fall—in GDP of 2½ per cent. in 1979–80 and an increase of only 1 per cent. over the whole five-year period—not 1 per cent. per annum; 1 per cent. over the whole five-year period.
This is a very different picture and an immensely gloomy one. I do not complain; perhaps it is realistic. I am not arguing about the figures. But I simply do not believe that defence spending can grow by a cumulative 13 per cent. over five years, or 20 per cent. until 1986, when GDP is growing by only 1 per cent. in that period. It cannot be sustained. It will not work. There is no prospect of stability in defence planning with such a wide disparity, and the Government are only piling up acute problems for us all by living in a dreamland of that sort.
I say it with regret. I wish that our economy was growing steadily at 2 or 3 per cent. a year. But it is not, and no authoritative source believes it will. Defence spending is determined by both needs and means. The means to a significant increase in the years ahead is lacking.
Let me make this clear—and it is consistent with the view that I expressed when I had some responsibilities. I do not say that the percentage of GDP spent on defence is the only measure of our defence effort. The comparisons in figure 21 of the White Paper are all relevant. Seen by our allies, the total defence expenditure or expenditure per capita may seem to matter more, but, in terms of the burden on our own economy and of proper priorities at home, the proportion of GDP is of great significance.
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The point here is that on the Government's own figures defence spending as a proportion of GDP will rise from 4·9 per cent. in 1979 to 5·7 per cent. in 1985–86. On the assumption that our allies will enjoy faster growth than us, we shall end up well at the top of the GDP league table, overtaking the United States. I say again: it simply will not work.
This is the link to new initiatives towards disarmament in the nuclear and conventional fields which is also mentioned in our amendment. I do not believe that this country can continue in an arms race that depends for ever on a regular increase of expenditure in real terms to match NATO's capability with that of the Soviet Union and the Warsaw Pact. This is not only a problem for the United Kingdom. It affects our allies, too. The slowdown in the growth of the economies of the Western world will be one of the major problems of the 1980s. We are entering a period in which priorities for the use of resources will be receiving the closest scrutiny.
In these circumstances, measures of arms control and disarmament are vital on economic as well as political grounds. In fact, they are the only alternative to a massive arms burden which we simply cannot carry.
The White Paper is quite right to draw attention to the fact that the Soviet Union's arms expenditure rose by about 4 per cent. a year in the 1970s and has probably accounted for 11 to 13 per cent. of GDP. The Secretary of State was right to mention these matters today. But it would be wrong—and let us show this perception—to believe that the Soviet Union is now, or, alternatively, will remain, indifferent to levels of defence spending to the end of this century and beyond. It, too, ultimately has an economic interest in arms control and disarmament.
It is on this multilateral and mutual basis that progress must be made to amore secure future for our people. Three months ago we debated the circumstances in which NATO Ministers had agreed to the modernisation of theatre nuclearweapons. I said then that the gap in time between this decision and the possibility of deployment in1983 provided avaluable breathing space. I expressed the hope that there would be a positive

1025
initiative to reach an agreement with the Soviet Union which would make deployment unnecessary on the basis of reciprocal action in withdrawing the SS20 and on measures for verification. This is still my strong view.
The Soviet Union is in the best position to advance the prospect of agreement by putting a moratorium on the deployment of any further SS20 systems and then negotiating the terms for withdrawing those already in their place.
Britain has lived under an American nuclear umbrella for many years, and it would be hypocrisy to wish to enjoy all the advantages of an alliance armed with nuclear weapons but none of the uncomfortable responsibilities.
Looking back to the time between 1959 and 1963, when land-based Thor missiles were deployed in the United Kingdom, and reflecting on where F.111s are based today, I see no question of principle involved in the deployment of cruise missiles, although the question of control remains disturbing despite what the Secretary of State said today. But nothing would please me more than an agreement which would ensure that cruise missiles were not deployed and that the SS20 was withdrawn. This would be a major step towards multilateral and mutual disarmament. It is imperative that this breathing space is used.
In our January debate I referred to other areas in which I believed that a new initiative could be taken towards arms control and disarmament. The interval has not lessened the urgency of this. I deeply regret that events in Afghanistan and the politics of a presidential year have halted the ratification of SALT II. I have no hesitation in saying—and I think that here I endorse views expressed by the Secretary of State—that this remains the highest priority.
The White Paper contains a number of customary paragraphs about arms control, but I cannot recall—and the right hon. Gentleman will remind me if I am wrong —a single speech that he has made or a single speech by his right hon. Friend the Prime Minister which has been devoted to the question of arms control and disarmament. I am old-fashioned enough— again, I share a view with the right hon. Gentleman—to believe that there are initiatives that Britain can take in the world.
1026
I even have a sneaking feeling—dare I say it?—that diplomacy is not always a dirty word. Now is the time for something far more substantial than paragraphs 130 to 135 of the White Paper. At further stages of this debate, my right hon. and hon. Friends will be indicating what we have in mind.
The Secretary of State heads a great Department and receives much advice of a very expert kind. I pay tribute, as he did, not only to the men and women who serve with distinction in the Armed Forces —and we all remember, as he mentioned, the events in Zimbabwe and the continuing events in Northern Ireland—but to all those who contribute to the proper defence of Britain. They deserve our regard. I pay tribute to them. But the issues that face Britain through the 1980s are highly political. They will be solved by imagination, by political courage and by a fundamental examination of many of the conventional assumptions of defence planning. The Secretary of State has a great responsibility, and I regret that he has not fulfilled it in the White Paper.
5.50 pm
Mr. Hugh Fraser: We have listened to one of the most remarkable speeches on defence at a time of crisis for the past 30 years. The right hon. Member for Stockton (Mr. Rodgers) took us right back to the 1930s, with the Labour Party completely schizophrenic about defence. On the one hand, the Labour Party supports the 3 per cent. increase in NATO spending, to which it is committed. At the same time, it tries to pander to its Left wing by making speeches about disarmament that is to be carried out purely unilaterally.
I am amazed that the Leader of the Opposition and other respectable members of the Labour Party should put their names to the motion that appears on the Order Paper and should seek to divide the House on defence when the world situation has never been more serious. Doubtless this will give Mr. Len Murray, that exhausted and extinguished molehill, something to say when he tries to march his troops through London on 14 May. The old red flags will be hoisted. There will be the old slogans such as " Better red than dead ", " Better pink than sink " and " Be a Commie not a Tommie ". Doubtless the Opposition's conduct will

1027
be useful to the exhausted trade union leaders as they try to rally their troops on 14 May.
Unfortunately, this is a serious time. The right hon. Gentleman pursued his arguments rather like an archaeologist examining a palimpsest. His attention to minute phraseology and the minute and exact meanings of words in the White Paper was positively that of an Egyptologist. When it came to the Labour Party's commitment to NATO, the right hon. Gentleman found some weasel words to allow it to escape from the problem. It is typical of some of the desiccated calculating machines on the Opposition Benches that even when dealing with defence they get their sums wrong. Far from there being a chance to increase defence expenditure by 3 per cent., it is much more likely to be 1 per cent. this year because of overspending last year.
When fingers are pointed, at the state of our defences today, as they must be and as they have been pointed by the all-party committee on defence, the fault lies with the right hon. member for Stockton, who is now sitting so comfortably on the Opposition Front Bench. There is the fault for a shortage of aircraft, a shortage of man-power and a shortage of ammunition.
On 1 February I said, to the consternation of some right hon. and hon. Members, that if necessary we should introduce some form of registration for eventual national service. If I was right in February, and I think I was, how much more correct am I this afternoon, three months later? We still have uproar from the Labour Benches when the issue is raised, but I shall be proved more right as the days roll by. I hope that I shall receive a more reasoned and courteous reply from the Under-Secretary of State when he replies to the debate.
The right hon. Member for Stockton and others speak as though defence is an issue that can be dealt with in the normal course of affairs, taking as it were one year with another. They suggest that there is no immediate problem. I on the contrary, take a touch more serious view of the world situation. I do not think that war will break out tomorrow or, as the shadow Secretary of State for Foreign and Commonwealth Affairs said, that the world will go on holding its breath week-end after week
1028
end. However, there is emerging clearly what must be seen by Moscow as the " window ", as it is called, between now and about 1985, when the armament of the East will be infinitely superior to that of the West.
There are three issues that should be considered seriously by the Ministry of Defence. The first is whether there should be greater expenditure based not so much on research and development but on buying off the shelf to fill the gaps that now exist. We are faced with shortages in our air defence system. There is a shortage of technical manpower in general. There is a shortage of manpower for our naval vessels. There are shortages of ammunition and other forms of equipment. The Tornado will not be in service until 1985. That being so, there is a great deal to be said for providing the Hawk, which is only a training aircraft, with some sort of stand-off missile. That is now being done, and it is obviously a good thing to do.
Consideration must be given to whether it is wise not to retain the V-force. Should we not disregard the best, which is always the enemy of the good, in pursuing our defence policy? We are now moving into a highly critical period that cannot possibly be met by the defence equipment that is now on order or can be manufactured.
We must also consider the running of the Ministry of Defence. I have worked in the Ministry, and I have a high regard for those who work in it. Ministers come and Ministers go, and we must consider whether the Chief of Defence Staff should take his place as a consequence of Buggins's turn, namely, three years to an airman, three years to a naval officer and three years to an Army officer. There would be a considerable advantage if we could find a man of character who could undertake the job for more than three years.
I do not attack any individual. I have known many Chiefs of Staff, and I have respected them all. However, there is a danger that at that level the naval officer, the Army officer of the Royal Air Force officer will rest on his laurels rather than ensure, with will and determination, that our defences are properly balanced and reach the right level of effectiveness.
Mr. Dalyell: Will the right hon. Gentleman give way?
Mr. Fraser: No, I will not. The hon. Gentleman has interfered a great deal. I do not want to get involved in personalities. I offer one historical example. Carnot was not given a three-year contract by Napoleon. It would be an advantage if we could find the right man and retain him for more than three years.
I return to the theme that I launched in the House in February—the need for more highly skilled and trained manpower and for greater numbers. We know that there is a shortage of pilots, doctors and trained artificers. Above all else, there is a shortage of numbers. It is no good the Ministry of Defence denying that. That is why a register of our people is necessary—not a call up, but an enrolment.
In 1970 we could put about 800,000 people—including all reserves—into the field. Today we could put 200,000 fewer. Can anyone say that the problems dangers and new commitments today are less than those of 10 years ago? Ministers must face the facts. If the process of 3 per cent. more this year and 3 per cent. more next year is followed, we shall not have time to build up our defences to the necessary level.
The Government have undoubtedly failed to bring forward a White Paper on civil defence. In modern times, defence should be a seamless robe. Control of civil defence should be the responsibility not of the Home Office but of the Ministry of Defence. I have said that before and I shall continue to say it. I believe that I have the support of many hon. Members. Over the next three years, time is not on our side. Strength cannot be found in a large number of aeroplanes. We simply do not have enough time to build those planes. Our greatest strength will be found in the involvement of the people. We should have—by registration or any other means—a citizens' army. Such an army would demonstrate that this country has the will to survive. That will tonight, by reason of their amendment, appears to be totally absent from the Opposition.
6.1 pm
Mr. John Cartwright: I endorse the points raised by my right hon. Friend the Member for Stockton (Mr. Rodgers) about arms control. The White Paper reminds us that the NATO Ministers' decision of 12 December was
1030
a dual one. It was agreed that NATO should modernise its theatre nuclear forces in the light of the threat from Soviet longer range theatre nuclear systems, particularly the SS20 and the Backfire bomber. It was also decided to offer the Soviet Union negotiations to limit theatre nuclear weapons as part of a possible SALT III agreement. Unfortunately, the first part of the decision has received far more attention and publicity than the second.
The White Paper makes no attempt to develop arms limitation proposals, but devotes considerable space to detailing the Soviet Union's theatre nuclear capabilities. Paragraph 217 of the White Paper states:
" We would regard an agreement involving significant reductions in the LRTNF deployments of both sides compared with the levels now projected as a highly satisfactory outcome ".
That is hardly a dramatic statement. It continues:
" but to proceed on the assumption that this is certain in advance would actually reduce the chances of achieving it."
I certainly understand the logic of that argument. However, the reverse is also true. To proceed on the assumption that agreement will not be achieved will lead to an appallingly dangerous nuclear arms race in Europe.
In his state of the nation address to the Bundestag last month, Chancellor Helmut Schmidt made quite clear that he wanted to see progress. He said:
" We stand by both parts of the decision... both parts must be taken seriously... NATO's arms control offer to the Soviet Union in the field of theatre nuclear forces will remain on the table and we shall try to make progress on arms limitation wherever this becomes possible."
It is a great pity that the White Paper is not equally positive in its approach.
In the aftermath of Soviet aggression in Afghanistan, we all understand the difficulties of blocking the path to meaningful arms limitation. However, despite the initial Soviet rejection, we must use the three years available before the cruise missiles are available in a genuine and energetic attempt to make their deployment unnecessary. We must remove the threat posed by increasingly menacing Soviet systems.
A major element in the White Paper is the scope and cost of Britain's defence

1031
responsibilities. The document makes it abundantly clear that Britain has more commitments, and more extensive ones, than any other European member of NATO. We are committed to the maintenance of an independent strategic nuclear deterrent, the defence of the United Kingdom home base, the defence of the Channel and the eastern Atlantic, and we have a major commitment to the central region of continental Europe. On top of that, the White Paper proposes new commitments outside NATO.
Doubts are already being raised about Britain's ability to discharge all those responsibilities. Can we, for example, afford the massive cost of replacing Polaris, while at the same time providing all the conventional arms and equipment which our Service men so obviously need? Is it possible to do everything set out in the White Paper, with the funds that are likely to be available? The Secretary of State clearly believes that it is. However, when he appeared before the Select Committee, even he appeared to admit an element of doubt. In answer to question 420, posed by my hon. Friend the member for Walsall, South (Mr. George), the Secretary of State said:
" A lot of things are talked about here that we would like to do and it may be in the end we shall not be able to do all of them."
It is that possibility that concerns many Opposition Members and some Conservative Members. If the Government cannot achieve everything in the White Paper, what will their priorities be? The Secretary of State has so far been unwilling or unable to give any indication. Even if it were possible to do everything proposed in the White Paper on the basis of an annual 3 per cent. rise in defence spending, can the nation afford to go on devoting such a large share of its gross domestic product to defence?
Figure 21 on page 26 of the White Paper shows that Britain is already spending almost as much of its gross domestic product on defence as the United States. That has occurred despite the fact that for many years our economy has been in serious decline. The Government's forecast suggests that output in Britain will not improve. Indeed, it is likely to decline still further during the next few years. Defence will,
1032
therefore, take a still higher share of national resources.
Even the Financial Times—hardly a pacifist or Left-wing Socialist newspaper —was compelled to inquire in its editorial of 3 April:
" whether a sustained increase of three per cent. a year in defence spending is economically and politically supportable in the long term."
The writer went on to voice a suggestion that has been raised by a number of other commentators. He wrote:
" It may well be that Britain is still trying to do too much or, to put it the other way round, the others too little."
The Secretary of State made clear to the Select Committee that he had an open mind about whether it was possible to " rejig "—as he put it—our commitment to NATO. He very reasonably pointed out that that was a matter for the Alliance to work out. Considering the contributions being made to the cost of joint defence by some of our allies—set out in the White Paper—it is surely high time that the Government began talking seriously about a fairer sharing of defence burdens.
Despite the difficulty of meeting our existing commitments to NATO, the Government propose—in paragraph 409 of the White Paper—that the Services
" should also be able to operate effectively outside the NATO area without diminishing our central commitment to the Alliance ".
To many Opposition Members that has a somewhat ominous ring. It sounds as if the Government are hankering after a return to an East of Suez role, or some world policing responsibility that is quite beyond our capabilities. Few details have been made available about what the Government have in mind. We are told that the additional capabilities can be provided at " relatively modest costs." The White Paper admits that our forces are already suffering a " degree of overstretch " in trying to meet existing NATO responsibilities. It therefore seems extraordinary that the Government should be loading them with more commitments, particularly when they are, apparently, not providing substantial extra resources to meet additional demands.
Paragraph 611 of the White Paper sets out the harsh realities facing the Services when they try to find the trained manpower that they need. An extra 20,000 trained personnel will be needed by the

1033
mid·1980s. With fewer young men in the 16–19 age group, the Services will have to recruit 11½ per cent. of them by the end of the 1980s. That means recruiting one out of every nine young men in that age range for the Armed Services. It is no wonder that the White Paper describes that as a " formidable task."
These difficulties make it all the more essential to make the best possible use of reservists. The Secretary of State has clearly recognised that need. The idea that Service women can play an important role in meeting the demand for trained personnel has received a less enthusiastic reception. For some reason the Secretary of State has got himself hooked on the issue of women carrying guns. Apparently he wants to see a great public debate on the question. I cannot understand why. With only 12,700 Service women, excluding nurses, there is tremendous potential for recruiting more women to do a wide range of useful jobs, none of which involves carrying guns. The Select Committee received some evidence suggesting that the Armed Forces were less keen on recruiting women because their period of service was, on average, half that of men. Therefore, expensive training was uneconomic for women. That seems a somewhat short-sighted view, if the aim is to have the maximum number of trained personnel available in this country in the event of war, whether those personnel are male or female.
I turn to the section of the White Paper headed " The Search for Savings " on page 89. When I look at the items mentioned under that heading, I get the distinct impression that Ministers are scrabbling about searching for candle ends. For example, I cannot really believe that putting out Ministry of Defence cleaning and catering work to private contractors will reduce substantially the share of gross domestic product devoted to defence. The Government have not yet indicated what sort of savings they hope to make as a result of this change, but it must pale into insignificance when compared with the £920 million being spent on the Sting Ray light torpedo—a project which is about five years behind schedule and the escalating costs of which have attracted the active interest of the Public Accounts Committee. In any case, the use of contract cleaners and caterers is hardly likely to produce
1034
dramatic savings since existing establishments are subject to regular Government inspection, both on staffing levels and efficiency of operation.
It has been suggested that the Ministry of Defence would save the cost of paid holidays and sick leave by using private firms. But such firms would surely have to reflect in their contract prices the cost of these benefits and the cost of wages which meet the requirements of the fair wages resolution—unless, of course, the Government have it in mind to employ the sort of cowboy operators who use casual labour on low pay and with poor conditions of service.
Several hundred of my constituents, working at establishments such as the Woolwich Arsenal and the Woolwich Garrison are affected by these proposals. Most of them are women and many of them are widows. Many have lengthy service and substantial entitlements, both to pension and to redundancy pay, Indeed, I have seen one estimate suggesting that the redundancy payments bill for some 7,000 cleaners alone will be about £1·25 million. Incurring that sort of fruitless expenditure seems a very strange way of saving money. It seems much more likely that the object of the exercise is not so much cost saving as an attempt to fulfil the Ministry of Defence's share of the Government's doctrinaire drive to slash Civil Service manpower.
In conclusion, I am sure that all hon. Members will endorse the White Paper's stated intention of stimulating an informed public debate about defence. But such a debate needs far more than colourful presentation. It must have far more hard facts than are given in this White Paper. In particular, we need to know far more about the Government's priorities so that the nation can decide whether they are the right ones. On those grounds alone, I believe that this White Paper should not be approved.
6.13 pm
Mr. R. Bonner Pink: I shall not follow the hon. Member for Woolwich, East (Mr. Cartwright) in detail. I note that he echoed his right hon. Friend the Member for Stockton (Mr. Rodgers), who indulged in wishful thinking that the Warsaw Pact will reduce its arms expenditure. If he believes that, he will believe anything. I should have

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thought that Afghanistan had proved the opposite, because this is the first time that Russia has used its own troops, instead of Cubans or other allies, for naked aggression.
In particular, I welcome the strengthening of the Navy. The new carriers, the first of which we hope to see something of this week, will be based in Portsmouth. I welcome also the new Navy patrol vessels for the North Sea, because that is probably our most sensitive and vulnerable spot.
It is the morale of people within the Services that really matters. I am concerned with the morale in the Navy, because I am sure that naval personnel realise that the rundown in the dockyards, which back them up, is a matter of serious concern. At the risk of being too parochial, I shall give some examples of the way in which the situation is developing in the Porstmouth dockyard. There is a shortage of skilled men in all the yards, and particularly in Portsmouth. This is largely because of local competition with such firms as Plessey, Marconi, and Vosper Thorneycroft, together with the hundreds of small subcontractors in the area. Whenever more defence contracts are let, the demand of these firms for staff increases and they poach more and more on the dockyard —the main source of skilled men in the area.
The loss of skilled men is serious. They cannot be replaced, even by trainees, because they take a long time to train. It is serious because the apprentices whom the Navy trains do not stay in the dockyard— they go to private firms outside. There are three particular shortages—electricians, electronic engineers and shipwrights.
The port of Portsmouth is far more than just a dockyard. It provides the anchorages and moorings for the Fleet, facilities for temporary berthing for leave periods, facilities for sport and recreation for the Fleet, short-term training, provisions, ammunition, supplies and stores of every kind. All those things are provided and backed by the dockyard. The dockyard itself carries out minor repairs during leave periods, emergency repairs, normal short refits, maintenance docking for bottom painting and long refits up to virtual reconstruction. The Navy just cannot operate without the efficient services of the dockyard behind it.
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In Portsmouth, there is a further problem, because the area contains the principal training establishments for the Navy in gunnery, torpedoes, electrics, signals, research and development of weapons and navigation. In all these establishments, the dockyard is responsible for installing the equipment that is used for training and the maintenance of that equipment. If the dockyard cannot maintain that equipment, the training cannot be carried out efficiently. This is a serious part of the training programme, particularly in Portsmouth.
Of course, there are possible cures. First, outside contractors could be used. This has been suggested on many occasions. This is done at present to a limited extent, we must remember the security angle.
Mr. Robert C. Brown: I have been following the hon. Member's speech with interest, and I think that he misses the real point when he says that we are short of skills in the dockyard. Why are we short of these skills? None of us would deny Service men the increasees that they are about to get, but the young Service man who has been trained will get more than the skilled artisan in the dockyard. To talk about bringing in outside contractors, who are already paying higher rates than the dockyards are now paying, will simply exacerbate the situation.
Mr. Pink: The hon. Member has gone slightly ahead of me. I said that one of the possible cures was the introduction or extension of outside contractors. Certainly one of the big problems of introducing outside contractors into the dockyards is that the mateys are working alongside the artisans and skilled men from private enterprise. People from electronics firms and from Vospers work alongside the dockyard mateys, and obviously they discuss pay and conditions. As a result, the dockyard mateys will not continue to work in the dockyard when they can get better paid jobs outside. Not only is the pay so bad compared with skilled jobs outside in his own trade, but it is so bad generally that a dockyard workman will often leave to take up a job of a milkman or some other unskilled position because of the pay differential.
The rundown in the Services last year was very disturbing. We stopped that to

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a large extent by raising pay, and we could do the same in the dockyards, but the difficulty of doing so is summarised in paragraph 641 of the "Statement on the Defence Estimates 1980 ", which states:
" Ministry of Defence civilians are part of the Civil Service and their pay is settled as a result of central pay negotiations covering the Civil Service as a whole."
The dockyards must be freed from the control of the Civil Service Department. The Admiralty must be responsible, and must have full control. Ideally, the Admiralty should be given a round sum annually to run the Royal Navy, and it should be told to get on with it, but I do not think that Parliament would agree to that. However, there must be far more flexibility on dockyard pay. There must be a realistic basic rate, a productivity bonus and hard-line money. Once this rate is agreed, the maximum lump sum should be allocated to each yard, which would then make its own arrangements, as would any private firm.
As I understand it, the Minister is conducting a full inquiry, and I had hoped that the result would be ready by now.
Mr. Dick Douglas: It is available, but the Minister will not publish it.
Mr. Pink: I have not seen it, and, as it is not available to the House,I should like to ask the Minister the following questions. How far can outside contractors be brought in? Has he considered the straitjacket of the present financial control by the voting system? Has he considered the scope of long refits? Are they seeking too much perfection? Would a lower scale, or half-life refit, with a shorter life, be more effective and cheaper in the long run? Have studies been made of comparable productivity and efficiency with private yards and the United States Navy? What consideration has been given to the organisation structure compared with that of private yards and with the United States Navy?
The situation is serious and urgent. Unless something is done, the Navy cannot possibly maintain its efficiency. I appeal to the Government to free the dockyards from the Civil Service Department and leave them to the Admiralty, which can, and will, solve the problem.
6.24 pm
Mr. Stephen Ross: I should like to follow a little along the lines of the hon. Member for Portsmouth, South (Mr. Pink), because a large number of my constituents work in Portsmouth dockyard, and I know it well. I agree that it is a tragedy that a dockyard that has been modernised to the extent of Portsmouth, and on which a great deal of money has been spent on new buildings, is unable to attract the sort of skilled men that are needed. I hope that the Secretary of State will take on board the comments of the hon. Member for Portsmouth, South.
I congratulate the Ministers at the Ministry of Defence—I believe that the Under-Secretary of State for Defence for the Royal Air Force should be given the real credit—on the production of the White Paper. I disagree with the right hon. Member for Stockton (Mr. Rodgers), because, at £8·50, it is very expensive. Because of that, its message is unlikely to reach grass roots opinion. That is sad, because it is desirable that as many people as possible should read the arguments and statistics—such as they are— that are presented in the White Paper. I suggest that it is advisable to produce a cheaper version—perhaps not in a variety of colours—for general distribution.
Although the majority of hon. Members sincerely believe in the necessity to modernise and improve our overall defence capabilities, there is considerable evidence, which we will be foolish to ignore, that there is a growing resistance within the country to that concept, and I believe that it will become more virulent as the public expenditure cuts bite deeper. Education of the public is therefore needed, and reminders should be constantly given of the role that NATO has played in preserving peace in Western Europe for the past 31 years. It is likely to do so in the immediate future only from a position of strength and unity.
I have already pledged the support of the Liberal Party to increased defence expenditure. We gave that support during the time of the Lib-Lab pact and we pressed for increased expenditure before that. We have also agreed to the updating of our theatre nuclear weapons by the introduction of the cruise and Pershing II missiles. Like the right hon.

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Member for Stockton, I still cling to the hope that, despite our present precarious position, we shall be able to ratify SALT II in due course. It is a tragedy that that has not been pursued, largely because of the American presidential elections. I fear that, for the same reason, a desirable move towards SALT III has been prevented. I still hope that we can, with statesmanship, make some progress with the MBFR talks in Vienna.
If confirmation is needed of our inferiority in the field of theatre weapons, it is most clearly demonstrated in the chart on page 15 of the White Paper. At present, we have no answer to the SS4, SS5 and SS20. That should be shown clearly to the public, and they would then be able to understand.
I addressed a meeting on that subject in my constituency last Sunday week. I was the only one in support of cruise missiles then, but at least two people wrote to me afterwards saying that they had not known the other side of the argument, and that they were grateful that it had been put to them.
I repeat my belief that not only can we not afford the independent nuclear deterrent and its replacement by Trident in 1990 or thereabouts, but neither do we need it. A Green Paper on the subject would surely be worth while. Obviously, the Government have some tricky and complicated decisions to take over how to make the best use of the limited resources available. If our Army in particular—but also the Royal Navy and the Royal Air Force—is to be provided promptly with the sort of equipment which needs and which our principal adversary already possesses, that will be a vastly expensive exercise, and I do not believe that we can possibly do it all. As the right hon. Member for Stockton said, something must give. What is perhaps more important to remember is that forces that do not have pride or faith in their equipment become dispirited, and morale falls.
I pose two questions. Is a sustained increase of 3 per cent. per annum in real terms to 1986 in defence spending economically and politically supportable in the longer term? Second, is that sufficient adequately to finance existing defence commitments? Those queries are echoed by the Defence Committee,
1040
and I congratulate the Chairman and the members of that Committee on producing their report so quickly.
We are surely entitled to ask, if we are to replace Polaris, what items of conventional equipment will have to be forgone. There is no answer in the Defence Estimates. The question is not even discussed. We should remember that Britain has more extensive commitments than any European member of the Alliance. That has been well spelt out in the debate. Our existing forces are undermanned and under-equipped, and there needs to be more consultation about who does what—about the division of labour, as I think the Germans call it. Perhaps Britain is trying to do too much, or, possibly, other countries are doing too little. We need more talks about defence in a total European context. If we could substantially reduce our presence in Northern Ireland where 13,000 troops are tied down, costing a great deal of money, it would be an enormous help. I hope that it will be possible soon.
I turn now to certain specific questions. I wish to indicate areas in which money needs to be spent now. I start by asking how the total sum now available, which we are told is £10·6 billion, is allocated between the three Services. It appears to be on a percentage basis, but surely it ought to be allocated to those whose immediate needs are greatest. I served in the Navy, but it seems to me that the Army's needs are greatest at present.
We are told in column 709 that the Chieftain tank is being improved, but I can find no mention of, or commitment to, the 300 Challengers—those that are available by the courtesy of the Shah of Iran—which I understand could be increased to about 600, thus allowing 300 of the Chieftains that are getting old to be withdrawn. Are we to be told the Government's position on that? The matter is discussed freely in the press, but there is no mention of it in the White Paper.
What is the position on the MBT 80— the main battle tank? Should not present plans be scrapped and a wholly new concept embarked upon for the 1990s? That is not my idea. The point was made in an interesting article in The Economist at the end of March. It seems that when the tank is brought in, it will be out of date.

1041
What is the position with the mechanised combat vehicle? How far has the assessment of the American infantry fighting vehicle progressed? The Secretary of State told us that Warsaw Pact countries have increased the number of such vehicles by about 80 per cent. in the past few years. Our forces have to be carried about in vehicles that are totally out of date and often break down.
What is the up-to-date position on the multi-launch rocket system? Can its entry into service be expedited? We are told that the Army is short of helicopters for transportation duties. What hope is there for an increased supply? What about the new lightweight rifle with its telescopic sight and the prospects for the artillery of the FH70 and the SP70?
We have already had two serious accidents involving Tornados, but as the right hon. Member for Stafford and Stone (Mr. Fraser) said, their manufacture should be speeded up, because they are not due to come into force until the mid-1980s.
When we discuss the Navy, I am struck by the huge cost of modern warships—£85 million for a Type 42 destroyer.
Mr. A. E. P. Duffy Mr. A. E. P. Duffy (Sheffield, Attercliffe) More.
Mr. Ross: It may be more, but that is the figure given in the White Paper. We are told that the through-deck cruiser—or new aircraft carrier—costs more than £200 million.
Are we seriously looking at the possibility of carrying out offshore protection with smaller, cheaper and simpler ships and aircraft? Offshore patrol vessels and Nimrods are first-class ships and aircraft and no doubt they do a good job, but they are expensive. I hope that that matter is receiving the serious attention which I am sure it deserves. As far as I am aware, we have had no export orders for any of our OPVs.
The Defence Committee rightly refers to the absence of any mention of hovercraft in the mine counter-measures role. I immediately declare a constituency interest, but the suitability study has been going on for years—certainly for the six years that I have been an hon. Member —at Leigh-on-Solent. Is it not time that conclusions were reached? Once again, we see that a Brecon class ship—a mine
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sweeper —costs £20 million and a great deal more to man.
I do not want to give Dick Stanton-Jones, the managing director of BHC, any ideas, but it does not cost that much to build a hovercraft. Some of us were surprised the other day when he was said to be quoting £2½ million each for an order for the Middle East. I do not want to put the cost out of context, but I know that it is a lot cheaper than the £20 million for a Brecon class ship, and hovercraft take a lot of blowing up.
Also on the subject of hovercraft, I refer to the larger Mountbatten class— the craft that go across the Channel and particularly the super N4s that work from Dover. Such vessels could play a substantial role in moving and landing assault forces, but there is no mention of that in the White Paper.
Hon. Members have already indicated the problems of Service recruitment that will be faced from 1982 onwards, because of the fall in birth rate and the insufficient number of recruits aged between 16 and 19. We shall desperately need reserve forces with some training. I do not believe in conscription, but it is important that the House should consider the role of community service. It has been discussed on a number of occasions, and I believe that there there is greater agreement than might at first appear. Such a service could have a military aspect, it could deal with civil defence and could include medical services, fire services, social services and helping the elderly, and environmental tasks. That is the way we could do it. I understand the rejection of conscription, but we could achieve our object through community service, taking in youngsters who are unable to find employment or are not going on to further education or skilled employment.
I am pleased that our territorial forces have been resurrected, but it is important that we give them the equipment that they need. At present, they have a great deal of out-dated equipment. We must also go further down the line, to the Sea Cadets and Air Training Corps. I occasionally visit the Sea Cadets at Cowes. They exist on virtually nothing. They receive no money from central sources and little support from elsewhere. In some areas, local firms buy uniforms and

1043
equipment. Generally small teams of hardworking organisers are trying to get youngsters interested in a career in the Navy but they get no assistance from the Admiralty. I may be shot down for saying that, but I understand that it is virtually the case. A little money needs to be spent in order to encourage youngsters to play their part.
The future cost of BAOR has not yet been mentioned, but it was taken up by the Defence Committee. I did not appreciate that the offset costs run out this year. What is to be done about that? Surely the cost will not fall totally on the United Kingdom. Are we to have discussions with the Germans to make sure that they continue to pay their fair share? I have suggested that Britain and Germany should each meet a quarter of the direct costs of BAOR and that the other half should come from EEC funds. Are we to get assistance from Greece, Portugal and Spain when they join the EEC?
Mr. Cook: I remind the hon. Gentleman that the EEC is a non-defence organisation. There would be stiff opposition to any effort to contribute to BAOR or any other defence force directly out of EEC funds. I caution the hon. Gentleman that the nation is not in the mood to see that sort of expansion of the Community's role at present.
Mr. Ross: I am not sure that the hon. Gentleman is right. I believe in European defence, and it is about time that Europe got down to that. I may be singing in the air, but I believe that our colleagues in Europe should understand that if we do not stand together we shall fall. I am suggesting merely that there should be contributions from other Western European countries towards the maintenance of BAOR.
During economic decline, can we go on without examining the realities of defence spending? A careful analysis must be undertaken, evaluating our extended role and the lack of contribution, in real terms, from our European allies. That aspect is raised in the comments of the Defence Committee.
There should be the closest discussion in Europe about defence policy and standardisation of equipment, at least within NATO if we cannot get it wider than that. We also need a closer involve
1044
ment of NATO with the Middle East nations. If we are not careful, we shall allow the Warsaw Pact nations to move into that area. We should be foolish to do that.
United within NATO and Europe, there must be hope. Divided, we shall surely fail.
6.40 pm
Sir John Eden: I agree with the closing words of the hon. Member for Isle of Wight (Mr. Ross), and I shall touch on them towards the end of my remarks.
At the outset, however, I want to applaud the speech of my right hon. Friend the Secretary of State and to express my thanks for his firm commitment on behalf of the Government to increasing steadily expenditure on defence over the years ahead. I am sure that everyone in the House today recognises that this is urgently necessary and has been so for a very long time.
The fact that our minds are concentrated on the events in Afghanistan and the Middle East is helpful, but it does not of itself create a new situation. We have been becoming weaker in military terms over a period of some time, and I am thankful that this Government are committing us all, through public expenditure, to trying to reverse that trend.
There is no doubt, as the White Paper makes clear, that we are in a period of high risk. In the past we have always been able to rely upon the strategic nuclear deterrent. We felt secure whilst that deterrent remained credible. It is not being alarmist to say that the nuclear deterrent capability is now less than credible and that the balance, even in strategic nuclear weapons, is swinging—if it has not already swung—in favour of the Soviet Union and the Warsaw Pact Powers. This is true also in the case of theatre nuclear weapons, where Warsaw Pact superiority is evident.
I must admit that I feel some anxiety when an authority as eminent as Marshal of the Royal Air Force Sir Neil Cameron says, as he did last year, that the vulnerability of some of our European target systems to SS20 and Backfire makes him shudder and that the sooner that this superiority can be balanced, the better. If a man with his experience, knowledge

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and understanding of these matters is given cause to shudder by the imbalance in defensive and offensive weaponry between NATO and the Warsaw Pact, how much more concern should we be expressing that the commitment of my right hon. Friend and his Government colleagues is met in years to come, and with urgency?
It is clear that we shall not go through a period in which there is likely to be ample warning of any aggressive military intent against us. We have to be ready to meet that, and the strike could come literally overnight. So my right hon. Friend is right to underline that, as we enter the 1980s, we enter a decade of real danger.
There is a gap to which my right hon. Friend was not able to draw attention in his White Paper. Other right hon. and hon. Members have mentioned it already. Indeed, some did so during interruptions in my right hon. Friend's speech. That gap is the need to strengthen our home defences through the creation of an effective volunteer civil defence force. The creation of such a force, at least to ensure an element of survivability in the event of a nuclear attack, is itself an essential part of the credibility of our nuclear deterrent. We should also bear in mind that we are vulnerable not only to the threat of strategic nuclear attack but to the threat of so-called conventional attack.
Against these threats, we must have an effectively organised volunteer civil defence capability. I regret that this is not a part of my right hon. Friend's White Paper. It should be. It should not be relegated to the Home Department, which displays a singular lack of urgency on this issue. It should form a central feature of this Defence White Paper. I beg my right hon. Friend to make the strongest possible representations that these responsibilities are taken over by him and the Ministry of Defence and no longer remain in the hands of the Home Office. It is vital that the people are alerted to the real risks and that, in being alerted to them, they are at the same time shown how to prepare to meet them and guard against them.
I hope that in the course of my right hon. Friend's discussions with his Government colleagues he will require other Ministers to demonstrate some real urgency about this issue, as he has demon
1046
strated about those matters which now fall directly within his own responsibility.
Mr. Churchill: I wish to re-emphasise what my right hon. Friend the Member for Bournemouth, West (Sir. J. Eden) said. Is he aware that as recently as last week, in a written reply, a Home Office Minister made it clear that his Department was unwilling even to identify publicly existing buildings and underground garages that might be available and suitable for use as nuclear fall-out shelters?
Sir J. Eden: I am grateful to my hon. Friend. That is just an indication of the ostrich-like attitude that the Home Office is adopting to this subject. This is an issue, beyond all others, where there should be the greatest possible public discussion and public knowledge. [Interruption.] If hon. Members do not like what they hear or are told, let them join others and disappear from the country. [HON. MEMBERS: "Why?"] Because the most urgent need in this country is to prepare to defend ourselves in the event of attack. That cannot be done unless we have the information on which to do it and on which to prepare individual citizens against that threat.
In Luxembourg last year, my right hon. Friend the Prime Minister made quite clear what, in her view, was the threat to Europe. She said:
" It is symbolised by the massive armies ranged by the Russians against us in the East, and by the stream of propaganda which they continue to direct against our institutions and aspirations. Let me be clear. The Soviet armies in Europe are organised and trained for attack. Their military strength is growing. The Russians do not publish their intentions. So we must judge them by their military capabilities."
If hon. Members study the White Paper, or read information currently available, they will learn quickly that the development of Soviet naval power, the vast increase in her armies, the enormous strike capability of the air forces of the Warsaw Pact countries and their chemical warfare capabilities are all openly and increasingly offensively oriented. Let that be understood. Those who wish to conceal those facts should face the responsibility that they place on the shoulders of their fellow countrymen by doing so.
It seems clear that the Soviet Union has taken a decision to be more aggressive on grounds, perhaps, that this appears

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safe—hence its invasion of Afghanistan. There are, however, other areas of threat. A big build-up has been taking place for some time in North Yemen. There is the threat to the independence of Oman and the whole of the Gulf region. There is also the threat to Iran itself from aggressive Soviet intent. The vulnerability of Iran to Russian invasion is a real factor.
There is ample evidence of Russian military ambition, whether directly mounted, or done through the Cubans or others, in the African continent. There is no doubt also that the Caribbean is an area of high vulnerability. All these matters underline the point that NATO's defence does not lie in Europe alone but must be organised and co-ordinated in depth. I agree very much with the hon. Member for Isle of Wight that we need an effective European response that goes far beyond the confines of the European continent.
We need a clear demonstration, that was not forthcoming at the time of the Russian invasion of Afghanistan, of European political co-ordination and European political will. This is the most important task for Western leaders. I believe that my right hon. Friend the Prime Minister and my right hon. Friend the Secretary of State for Defence have not only the greatest responsibility in these matters but also the greates opportunity to give a lead to the whole of the Western nations to show a more flexible and more realistic counter to the threat from the Communist forces of the Soviet Union and the Warsaw Pact arraigned against us today.
6.52 pm
Mr. James Johnson: I listened carefully to the speech of the right hon. Member for Bournemouth, West (Sir J. Eden). I could pursue his remarks, but I do not intend to do so. I feel tempted to follow his obscurantist exploits in Africa, with the Cubans in the Horn, but that is not the subject of this debate. I wish to console my hon. Friends by saying that I intend to make a short intervention. I should have liked to direct my comments to the Under-Secretary of State for Defence for the Royal Navy, but he has left the Chamber. I do not intend to zoom into the upper altitudes of geo-politics.
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I ask the Minister, to whom I intend to talk later, to study page 89 of the White Paper "Defence in the 1980s", which, under the heading " The Search for Savings ", states:
"The Government is committed to making the best possible use of the taxpayer's money."
I hope that they are. I do not think it always happens.
" The Ministry of Defence, as a major spending department, must play a full part in the pursuit of efficiency and savings."
I should like to suggest savings that the Under-Secretary of State could make. I invite him to visit my constituency, as the Select Committee did two years ago, under the chairmanship of my hon. Friend the Member for Goole (Dr. Marshall), another Humber constituency. The Select Committee told the Government of the day, which unfortunately, did not take its advice, that they should examine some of the magnificent vessels, particularly the large 90-metre long vessels, lying in Albert dock. They are ideal for many of the tasks mentioned in the White Paper, especially for offshore protection of these islands and its fishing. Although the previous Government did not examine this possibility, I suggest to the Minister that there are considerable savings to be made on what is contained in the White Paper.
Paragraph 725 on page 75 states:
"The United Kingdom must be able to protect its valuable offshore resources of oil, gas and fish."
That is the understatement of the year. Of course they must be protected. I quote official figures so that I cannot be accused of distortion. The table dealing with fishery protection on page 57 of volume II states that vessels boarded in 1977 totalled 1,702; in 1978, 1,637; and in 1979, 1,563. Any skipper, vessel owner, man on the deck, or anyone in a fishing port, will confirm that this country suffers more from poaching, particularly by our so-called partners in the EEC, than ever before. Yet fewer offenders are hauled into port.
The figures for convictions appal me. Convictions arising from boardings by the Royal Navy were 22 in 1977, 20 in 1978 and 24 in 1979. I should like to know the fines that have been imposed to deter these vessels. It is stupid to talk of conservation of fishing stocks if protection is not enforced and if we fail to deal with these villains who are looting

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and stealing the stocks on the seabed. I should like to know the amount of fines imposed on these people, whether they are Dutch, German or French.
The same table states:
" Boardings carried out by vessels of the Department of Agriculture and Fisheries for Scotland are not included."
I happen to know that fishing in Scotland, in terms of tens of thousands of tons, and also in money value, is higher than it is south of the Tweed. Yet nothing is shown in the statistics about what is happening in Scotland. I should like to know, not only for my own information, but for my constituents in Hull. We think that we are getting a bad deal. Our answer is to suggest that the Government should use vessels that are available for conversion instead of building new ones. The hon. Member for Isle of Wight (Mr. Ross) quoted astronomical figures for the cost of vessels. I believe that he quoted £200 million for a certain vessel.
Mr. Stephen Ross: That figure was for a through-deck cruiser that takes 13 years to develop.
Mr. Johnson: I can tell the Minister that if he cares to come to Hull he can purchase two of the finest boats that ever fished in the Arctic for £2 million each. They are the "Arctic Corsair" and the " Arctic Galliard ". Both can be converted at fairly short notice, I imagine, given the calibre of those employed in our dockyards. They can be used instead of buying new vessels. It disturbs me that we should be down to the last two of the Island class vessels. The last two have now been launched and accepted into service.
The White Paper says that we need new offshore patrol vessels. Why wait months or years and spend tens of millions of pounds building new vessels when these boats are available and are now useless? It is a sin that such boats, which caught hundreds of thousands of tons of fish, are just lying there, lapping on the tide. It is appalling to think that they are finished, unless the Government begin to think differently.
The boats mentioned in the White Paper are coming off the stocks too slowly and too expensively, yet these first-class vessels are lying idle. I hope that the Navy Minister will go up to Humberside and see what he can do.
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Yards have been tendering for nearly two years for certain types of vessel. When I have the luck to have an audience with the Minister, I shall give him the details of the yards. I hope that something will be done. The present process is too slow and leisurely and gives little, if any, satisfaction to people in the North.
I may be mistaken, but I understand that we have stood our corner and pledged ourselves to find two weather ships for NATO in North-West Europe. If we are to have to buy two met ships, I plead with the Minister to consider these vessels. They are surplus, because we are barred from Arctic waters. We are barred from the White Sea and Barents Strait by the Soviets, off Spits-bergen by the Norwegians, off Labrador by the Canadians and off Iceland by the Icelanders.
I hope that the Minister will convey what I have said to the Navy Minister and that something will be done.
7.3 pm
Mr. Michael Hamilton: I begin by congratulating the Secretary of State most warmly on his first White Paper, although I agree with the complaint by the hon. Member for Isle of Wight (Mr. Ross) that it is expensive at £8·50. I was fortunate enough to make my maiden speech in such a defence debate as this and I recollect that the Stationery Office charged a shilling for that White Paper. At that time the House was debating Cmnd. 952, and tonight it is debating Cmnd. 7826. A lot of water has flowed under the bridge and many White Papers have been churned from the presses. The world remains as dangerous a place as ever, but at least the standard of this White Paper is higher than that of any I have yet seen.
No corner of England contributes in a more varied way to our defences than that which I represent. We can claim the headquarters of United Kingdom Land Forces, the headquarters of Southwest district and the headquarters of 8th Field Force. We can boast the unrivalled facilities of Boscombe Down, where military aircraft are tested before being taken into service, and where the Tornado has been going through its tests. We have Larkhill and a remarkable range of research establishments.

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The Army owns 60,000 acres of Salisbury Plain, and long may it remain there. This week more than 7,000 soldiers are engaged in an exercise known as " Tiger's Head ". I am glad that the weather forecast for them is good. Relations with the civil population locally and with the Army's tenant farmers are excellent.
I understand that the River Elbe, where East meets West and where never a gun is allowed to be fired, has become the finest bird sanctuary in Europe as a result. Something of the same applies to Salisbury Plain. The flora and fauna and wildlife are protected, thanks to the presence of the military.
This goes further than mere conservation. The Secretary of State will know that, thanks to co-operation with his Department, there is a five-acre pen where serious efforts are being made—I think that they will succeed—to re-establish the great bustard, which is an extinct species in this country. Four pairs of birds were introduced. For the first time, last year they laid eggs and one chick hatched, but it survived for only 48 hours. The Army in the Salisbury area is as welcome as it is indispensable.
I want to refer tonight to Porton. The White Paper stresses the capacity of Soviet forces for chemical warfare. I was delighted that my right hon. Friend the member for Bournemouth, West (Sir J. Eden) made valuable reference to that point. Porton has knowledge of this specialised field, which dates back to the days before the Soviet Union was created.
The first gas attack took place in the spring of 1915, when a yellow cloud of chlorine gas blew across to the allied lines. Our troops were totally unprotected. Fortunately, the Germans launched their attack late in the day and dusk had descended before they could appreciate and exploit the immense success of their action. That is going back a long way, but it was that incident 65 years ago, almost to the day, which set in train the full study of protective measures—respirators, filters and the rest —which now takes place at Porton.
The chemical defence establishment a few miles to the east of Salisbury contains a body of dedicated scientists who stand ready to respond to whatever additional demands the Secretary of State
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may decide to place upon them. Never again must our troops be allowed to face chemical warfare unprotected.
Mr. Clive Soley: A number of us in this country share the concern of the hon. Member for Salisbury (Mr. Hamilton) about the development of chemical weapons. Does the hon. Gentleman agree that it is regrettable that there is only a short statement about that subject in the White Paper, and that it makes no response to the suggestion of Mr. Gromyko that an agreement should be drawn up to prohibit the development and use of such weapons?
Mr. Hamilton: The hon. Member for Hammersmith, North (Mr. Soley) will know that at the beginning of the century the Hague convention outlawed chemical warfare. One does not have to be much of a cynic today to question the efficacy of treaties such as the one suggested by the hon. Gentleman. Despite the treaty at the beginning of the century, the Germans launched the first chemical attacks in 1915.
Mr. Nelson: My hon. Friend the Member for Salisbury (Mr. Hamilton) will correct me if I am wrong, but is it not right—as pointed out in the White Paper —that the Soviet Union has a large offensive capability and stocks of chemical weapons? Our capability in this respect is entirely limited to a defence capability. What, therefore, is the point of an agreement?
Mr. Hamilton: I am grateful to my hon. Friend the Member for Chichester (Mr. Nelson).
I turn from chemical warfare to biological warfare, and I am sorry that this excellent White Paper makes no reference to the threat of biological warfare. The House knows that long-range Soviet aircraft enter our skies daily. The Secretary of State knows that a single journey by one such aircraft fitted with spray tanks and the biological agent, and making use of prevailing winds, could cause havoc among an unprotected population.
The Attlee Administration appreciated that danger and set up a huge purpose built microbiological research establishment. I believe that it is one of the largest brick buildings in the world. Two years ago, the Administration of the right hon.

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Member for Cardiff, South-East (Mr. Cal-laghan) decided to dispense with it. In this White Paper, the Secretary of State says:
" Defence capability takes a long time to build. It cannot be acquired or re-built suddenly... after it has been allowed to run down..."
That is correct, but I ask my right hon. Friend to ponder long and deeply whether the previous Administration had their priorities right.
I ask my right hon. Friend to ponder on the infinitely small fraction of 1 per cent. of his total defence budget that could reinstate this protection for the civil population. Biological warfare is a remarkably simple, unsophisticated business. It is also cheap; it is real bargain basement stuff. I suggest that it would be foolhardy to assume, in the present climate, that this weapon will not be used.
7.13 pm
Mr. Dick Douglas: I do not intend to follow the hon. Member for Salisbury (Mr. Hamilton) in the general body of his speech. My intention is to concentrate on those aspects of the debate that relate more particularly to my constituency, whose special feature is the Royal Naval base at Rosyth. I, therefore, zero in on those aspects of the White Paper affecting the replacement of Polaris, its relationship to employment in the naval dockyard there and for future employment prospects in the shipbuilding industry.
I wish to probe the Minister on the study on the future of naval dockyards generally which we have been told has just been completed. The White Paper states at paragraph 211:
" A programme of improvements to maintain the effectiveness of the strategic deterrent is well advanced. The programme, code-named Chevaline, is designed to respond to Soviet anti-ballistic missile capabilities which we know are being improved.
Chevaline involves a major and complex development of the missile front end and changes to the fire control system. The improved missile will carry advanced penetration aids and be able to manoeuvre its payload in space. The total cost of the programme is estimated at about £1 billion."
The problem for those of us who are interested in this aspect of the matter is to find out whether that £1 billion involves any additional expenditure on the modification of the Polaris boat hull and whether that work would involve a dockyard or take place in conjunction with
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British Shipbuilders. We should also like to know whether this programme would involve solely the modification of the weapon system. Clearly, if it involves modification of the hulls, we must be sure that the manpower is available, either within the dockyard or elsewhere.
We need much more information than is contained in the White Paper about the replacement of the Polaris system in total. We are all, rightly, concerned about the capital cost of replacement I take it that the Secretary of State, while being rightly guarded in his remarks today, will give us some indication of the time scale for a decision. It is true to say that a delayed decision means a delayed decision not to replace.
I am told that it is possible to keep a strategic deterrent well into the 1990s at little additional cost. The recent Adelphi paper by Professor Peter Nailor and Jonathan Alford is very persuasive. I quote some of the conclusions of the Adelphi paper:
"It is becoming clear that the British Government is very interested in acquiring the Trident C4 missile from the United States. Such a missile would clearly increase Britain's capability substantially even if only deployed in the same numbers as Polaris A3. The thrust of this Paper is that it is doubtful whether Britain needs to be able to deploy more warheads of substantially increased accuracy on missiles with close to twice the range. Rather, the analysis points to the conclusion that the Polaris A3 will remain an adequate missile even if new platforms have to be built to carry it Clearly ageing of this missile will be a matter for concern, but there do not as yet appear to be any absolute barriers to prevent Britain taking the necessary steps to assure the reliability of the system into the next century."
That is a persuasive document, and the Minister, I believe, has a responsibility— if he does not intend to produce a Green Paper on this matter—to spell out as soon as he can to the House and to others what his thinking is about the total cost of the system and whether we require hulls. That decision involves not only the dockyard but an analysis of the building programme of British Shipbuilders.
I turn now to the second report of the Select Committee. We are all indebted to the Committee for the expeditious way in which it has produced the report. In paragraph 16 it states:
" The important role of submarines in antisubmarine warfare is restated in the White

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Paper. More nuclear-powered fleet submarines (SSNs) are being ordered and under construction and studies are well advanced for a new class of conventionally-powered patrol submarines. At present only one shipyard (Vickers at Barrow) is building nuclear-powered submarines, although another has constructed such submarines sufficiently recently for it to be able to do so again."
I take it that that refers to Cammell Laird whose yard is in the constituency of my hon. Friend the Member for Birkenhead (Mr. Field), who tried unsuccessfully this afternoon to move the Adjournment of the House under Standing Order No. 9 on a matter connected with the yard. We have to be very clear about how we load particular shipyards.
The report continues:
"(1) We note the serious impact on present plans to build fleet and patrol submarines which would result from a decision to build a new class of submarines to replace the Polaris boats as the British strategic nuclear deterrent.
(2) We were told that if such a decision were taken, extra capital investment could be made to increase submarine-building capacity. Nevertheless, the construction of four or five nuclear-powered ballistic missile submarines would result in the loss or postponement of the production of some nuclear-powered fleet submarines. Shortage of manpower with particular skills would be an important factor in creating such a bottleneck."
I know that there has to be long-term planning in connection with this, and I know the responsibilities and difficulties in the dockyards.
I speak with a declared interest because I am still the director of a subsidiary company and shipyard which has no direct responsibility at present for building naval vessels of this calibre. British Shipbuilders has a corporate plan which should be valid until 1985. The Government have a responsibility through the Ministry of Defence to clarify their position in relation to the loading of these yards.
The key decision has to be the loading of the naval yards and then the loading of the so-called mixed yard. Unless that is done quickly, not only in respect of direct naval building but of other public sector building, these yards will have to relinquish manpower which, as the Secretary of State indicated, might be needed but could not be called into being overnight.
The problem of obtaining skilled manpower is manifest not just in British ship
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yards but in the dockyards too. As the White Paper indicates in paragraph 637, the problem of skilled manpower is a severe consideration in the Royal Naval dockyards. Many of the skills employed in the dockyards are highly prized by outside industry, and in this respect outside industry pays higher wages. However, it is not better at training manpower. All too often, men trained in the dockyard go to outside industry for employment, particularly in areas with oil-related activities. The dockyards undertake extensive training of apprentices only to find that when they become journeymen they move off to better paid employment outside.
This brings me to the study of the naval dockyards. I understand from the White Paper and from parliamentary answers that it was completed recently and is in the hands of the Secretary of State. It was delivered to him on 1 April, perhaps an unfortunate date on which to hand him such a paper. I urge the Secretary of State and the Under-Secretary responsible for the Navy to accept a responsibility here for the widest possible dissemination of the document and the widest possible discussion of its implications and conclusions.
The Secretary of State underlined the importance of morale, and it is vital to appreciate the morale of people engaged in back-up services. I refer here particularly to the dockyard, where morale has been undermined. There is some indication—I speak only about Rosyth—that morale is getting better, but it is important to keep morale high in the dockyards and to give the dockyards' management much more flexibility in dealing with labour relations and collective bargaining matters.
I conclude on a very narrow aspect of dockyard activity but one of supreme importance in our dealing with nuclear matters. The submarines contain a small and compact pressurised-water reactor. The individuals who are engaged in the repair and maintenance of the reactors expose themselves to additional radiation hazards. There is considerable pressure from the trade union movement for it to secure access to the records of the workers. I urge the Secretary of State to consider, with the Secretary of State for Employment, the updating of the ionisation regulations of 1968 and 1969 to allow

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trade union representatives direct access to the records of the workers.
I realise the difficulty, but the overriding claim for open government in terms of these records should allow updating to best practice here in terms of the gloss that the Department of Employment puts on a recent European draft convention on the matter. The Government should on this issue give the widest possible dissemination of information to agreed representatives of the workers.
7.27 pm
Mr. Geoffrey Rippon: The hon. Member for Dunfermline (Mr. Douglas) concentrated on a narrow but important part of our nuclear deterrent policy. I welcome the Government's determination, which was shared by their predecessors, to maintain our independent nuclear capability as a contribution to the strength of NATO. It is a vital part of what the White Paper calls " effective deterrence ", and I share the hope that it will not be long before the Government are able to come forward with their proposals and indicate how they are deciding between a replacement of the Polaris submarine and a possible alternative, namely, the provision of ballistic or cruise missiles, which are certainly favoured by some experts.
It is impossible for hon. Members— and this will be one of the difficulties in the presentation of the Green Paper—to assess all the facts and information, much of which must in the national interest remain secure and be kept within the confines of even a small number of Ministers. I say only that the situation which the West faces is so grave that, if there is any doubt, we should have both. In other words, we must face the expense necessary to ensure that our defences are adequate. The brutal Soviet invasion of Afghanistan has underlined the nature of the global threat to the freedom and security of us all.
The tragic consequence of the troubles in Iran has shown that danger can arise in unforeseen ways. My right hon. Friend made an impressive speech and produced a realistic White Paper. He said that it is the thirteenth contingency that one does not think of. Unhappily, the abortive attempt to rescue the illegally detained hostages in Iran has proved once again the truth of what
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a nineteenth century Liberal statesman, Lord Harcourt, said. Intervention may be justified on many grounds, but nothing is more injudicious than an unsuccessful intervention.
My right hon. Friend rightly indicated that the message must go from this House and from our European partners that we fully support President Carter and the American people. We understand then-position. We recognise the patience that they have shown, and we shall continue to take whatever measures are necessary to support them in getting the hostages out.
One factor is clear. Europe, which has sheltered for so long under the umbrella of American strength, must now be prepared to share the burdens as well as the benefits of the Alliance. We must therefore be prepared to spend more on our own defence. I have always shared the view of those who say that we cannot express defence expenditure arbitrarily as a percentage of GNP. I accept what my right hon. Friend says. In agreement with our allies, we have fixed for the moment an annual increase of 3 per cent. If circumstances change—and the Treasury would like them to change one way rather than another—the increase can be greater.
However, it is not enough to provide only money. It will take great effort to fill the gap. It takes time to spend the money. I believe that it was Stanley Baldwin who once said that the trouble with democracies is that they are always two years behind dictators, even when it is a matter of life and death. With modern technology, if we are not careful, we may be five years or more behind.
We are apt to condemn the leaders of the 1930s for their failure to react to the aggressive policies of Hitler. However, the free world is perhaps facing an even graver peril today. Many of us in this House—most of whom are on the Opposition Benches—still have to understand the one simple truth stated by Neville Chamberlain in this House on 6 October 1938, when his policy of appeasement was collapsing in ruins. He said:
" Our past experience has shown us only too clearly that weakness in armed strength means weakness in diplomacy ".—[Official Report, 6 October 1938; Vol. 339, c. 551.]
There is no escaping the consequences of military inferiority. Let us face it, the wishful thinking about detente in the

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1970s was not so very different from the appeasement of the 1930s. As my right hon. Friend explained, as a result, in the 1980s we have to face the growing threat of superior Soviet forces—in quality as well as quantity. The balance of military power has shifted against the West not only in Europe but in the Eastern and Southern Atlantic and the Indian Ocean. Some of us have been saying that for some years, but I believe that it is now appreciated.
At the same time that the capability of the Alliance has declined in nuclear and conventional capability, the Soviet Union, as my hon. Friend the Member for Haltemprice (Mr. Wall) has been saying in defence debate after defence debate, has been building a first-class blue-water navy. We have consistently refused to face the fact that about 80 per cent. of NATO's oil and 70 per cent. of its strategic raw materials move through waters highly vulnerable to Soviet naval and air attack. Sooner or later we have to mention South Africa in a defence White Paper. We can now surely perceive the folly or unilaterally abrogating the Simonstown agreement and abandoning the base at Gan. I should like to have seen a little more in the White Paper about our wider defence interests, but I know that my right hon. Friend has them well in mind, and the defence statement covers a great deal.
In paragraph 404, the White Paper states:
" The Government will continue to play a full part in firm collective Western responses to Soviet encroachments."
I should have welcomed an announcement that we were to revive the joint airborne task force that was dissolved in 1974, buttressed and extended by an appropriate naval force. That airborne force consisted of Hercules aircraft and parachute units. It gave us the capability to deploy a battalion of about 650 men and 200 tons of guns, ammunition and stores in a single lift to any required destination. To some extent, we can commit that to NATO, but I should like us to have it firmly in our own hands.
The defence statement is right in saying that the Soviet Union's actions are governed in part by its assessment of the West's reaction. We may expect the Soviet leadership to recognise and exploit
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any indecision, mistakes and weaknesses. I firmly believe that an essential element in defence is the demonstration to a potential aggressor of a manifest will to resist attack. I welcome the Government's determination with regard to Polaris, but if the doctrine of flexible response is to mean anything in the 1980s—and it is not much more than the old doctrine of the tripwire, because it is still a question of how many hours a Soviet aggressor would take to reach the Rhine—we must be equally concerned to strengthen our conventional capability, particularly with regard to home defence.
Like the hon. Member for Dunfermline, I warmly welcome the second report of the all-party Select Committee on Defence, which points to deficiencies that should be remedied as rapidly as possible. We clearly need better air and naval defence of our shores. We need home forces to protect vital bases and installations, to deal with enemy infiltration and parachutists or other forces that they may land, and, in the last resort, to maintain the essential elements of government.
I also agree with those who believe that civil defence is essential, in that it convinces an aggressor that he will, in truth, be resisted. It also—and this is important—involves the nation in a better understanding of what is at stake and the dangers that have to be faced.
My right hon. Friend said that civil defence is not a matter for him, but I do not believe that it can be left solely to the Home Office- There is a dangerous blurring of responsibilities here. In 1966, the Labour Government cut the Territorial Army and put the civil defence and auxiliary fire service on what was euphemistically called a care and maintenance basis. The then Secretary of State for Defence, who is the man most responsible for the greatest part of the damage done to our defences in recent years, the right hon. Member for Leeds, East (Mr. Healey), in effect, dispensed with 100,000 volunteers. He then said that if home defence was ever needed in the United Kingdom we would clearly have " gone nuclear ", which is a characteristic phrase, and which was a foolish assumption, even at that time.
Even in the event of nuclear war, there are some things that we can and should do to mitigate the effects—rescue survivors and stage some sort of come-back.

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We need to give the impression to a potential aggressor that there is no question of anybody walking in, as Solzhenitsyn once said, and taking this country with his bare hands.
The more likely consequences of a devastating conventional attack by the new generation of Soviet weapons, about which my right hon. Friend spoke so eloquently, have to be faced. I have long advocated the creation of a civilian volunteer force, capable of mounting adequate emergency services to meet unforeseen situations of the kind which, as my right hon. Friend says, history shows arise in unpredictable ways. We have never lacked citizens ready to come forward to help, but it requires organisation and training to make those services effective. That cannot be achieved during any envisaged warning period, however unwisely optimistic, as at present
It should be remembered that we were better prepared in 1939. Then we did have gas masks. We were prepared to deal with the form of chemical warfare that existed then. People laughed because they could throw the cardboard boxes away, but it was the fact that we had the gas masks that ensured that gas was never used. There were plans to evacuate 1½ million people from the great cities within a few days. The Anderson shelters had been ordered and were in production. Therefore, in many ways the Government of the 1930s had a far better grasp of the defence requirements of this country than have the previous two Labour Governments.
I am glad to say that my right hon. Friend the Secretary of State knows what has to be done and is doing it as urgently and effectively as possible. In many ways the most urgent task of the West is to awaken the people of all our countries to the real and immediate threat to their security, however unwelcome that truth may be.
7.40 pm
Mr. Ernie Ross: This is the first occasion on which I have participated in a debate on the Defence Estimates. As I said earlier to the Secretary of State for Defence, what distresses me and my constituents is that, when we look through the Defence Estimates, we see no mention of any new arms control initiatives. They are missing. It is that aspect
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of the matter that concerns me as a new Member of the House.
The House must ask what it is to make of a document which talks about NATO as an instrument of detente. The United Kingdom commitment to NATO is responsible for 95 per cent. of our defence expenditure, as the right hon. Gentleman confirmed in a parliamentary answer to me on 14 November last year. It is responsible for our enormously costly Polaris strategic deterrent and its probable replacement, Trident. It is responsible for our maintaining nearly 100,000 troops abroad at a cost of £1,150 million. It is responsible for a military research and development effort which last year cost £1,081 million. As we well know, NATO membership is also responsible for a yearly 3 per cent. increase, excluding inflation, in the United Kingdom's defence budget.
Those are some of the economic consequences of NATO membership. However, there are just as important political considerations for this country. It is an undisputed fact that NATO was formed in April 1949, on the initiative of the United States, to consolidate capitalism in Western Europe, to intimidate if possible the Socialist countries and to impede the growth of the world's national liberation and progressive movements. We need only look at the countries that are leaders of the Alliance to understand the role for which NATO was formed and whose interests it is intended to serve.
Labour's Foreign Secretary, Ernest Bevin, when moving approval of the United Kingdom's membership of NATO on 12 March 1949, was quite explicit about the purpose of the pact. He said that everyone, meaning the Western powers,
" was concerned as to how we could bring order out of the economic chaos that existed in Europe and in other parts of the world as well. We derived the greatest encouragement from the Marshall Aid offer, which was an indication of a great desire on the part of the United States to assist in healing the wounds of Europe and to put it back on its economic feet."
He added that:
" the countries forming this Atlantic pact are democratic countries. We have a common purpose to defend and what is more natural than that we should come together to defend it? "
—[Official Report, 12 May 1949; Vol. 464, c. 2013–16.]
More explicit still in identifying who the Alliance was directed against was

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Senator Cannon, who in 1949 was chairman of the Appropriations Committee of the American Senate. He said:
" Moscow and every other centre in Russia must be hit within one week after the war starts and that can be done only by land-based planes."
He added:
" In the next war let us equip soldiers from other nations and let them and their boys go into the holocaust instead of sending our own boys."
That is one of the reasons why cruise missiles are now being established in this country. It is not to defend Britain, but rather to defend the interests of the United States.
That is contained in a document that is prepared to talk of NATO as an instrument of detente. It is that same organisation which, since its inception, has fuelled the arms spiral. It is the organisation, dominated by the United States, whose initiatives created the H-bomb and the long-range bomber in 1953; the intercontinental ballistic missile in 1955; the nuclear submarine in 1956; the anti-ballistic missile in 1960; multiple warhead missiles in 1964, the neutron bomb and the cruise missile in 1976 and the MX missile and the giant Trident submarine in 1978.
It is that same organisation which, last year, spent £200 billion on arms, twice as much as the Warsaw Pact countries. It is that some organisation which, since its inception, has encouraged and assisted the disastrous defence policies pursued by various member Governments in Malaya, Korea, Kenya, Cyprus, Oman, Indonesia, Aden, Vietnam, Lebanon, the Dominican Republic and Iran.
Should we seriously accept affiliation to an organisation which, under article 4 of its charter, invests to itself the right deliberately to interfere in the internal affairs of another country? It seems futile to expect detente from an organisation whose response to Brezhnev's peace proposals in October 1979 was immediately to give the green light to the deployment in Western Europe of 572 cruise and Pershing II missiles. It should be remembered that that is the same organisation which, in the summer of 1976, when the United Nations was holding a special peace and disarmament session in New York, met at Washington and agreed to a
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United States demand for a 15-year armaments modernisation programme, whose 100 measures will cost $80 billion.
It gave Labour Members no great pleasure to witness a British Government bearing our party's name taking office and on the one hand having their social policies savagely restricted by one arm of United States foreign policy—the International Monetary Fund—and on the other being ordered to increase its military spending each year by the other arm of foreign policy—NATO. The priorities of the United States' leaders have been Chieftan tanks and multipurpose combat aircraft, not old people's homes and primary schools.
The most important point of all to bear in mind is that membership of NATO is not a static or unchanging affiliation. As we have seen in the very recent past, it allows one's country to be dragooned into an even more costly and dangerous arms race. The determination of that policy is in the hands of those miltiary and Government leaders who, in Bevin's words,
" have a common purpose to defend ",
and they increasingly take the view that the internal economic and social ability of the capitalist system is threatened by the worldwide liberation and democratic struggles of the peoples in the developing countries.
With each major conflict between capital and labour in the metropolitan countries—one needs to look only at the votes which the Socialist parties receive in France and Italy and at the pressure which immediately comes from NATO to ensure that there will be no broad-based coalition Government in Italy— and with each freedom struggle by the peoples of Asia, Africa and Latin America, the cry immediately goes out from the NATO hard hats that the West must strengthen its resolve and its defences. As a result, another twist is given to world tension and the arms spiral.
Throughout all this, the people most concerned with our involvement in NATO—the United States military and industrial corporations—are not doing too badly. Having saturated the enormous home market—$126 billion last year— they sold £14 billion worth of arms abroad. The Middle East heads the list of major buyers, which includes almost

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every reactionary regime in the world. For example, in recent years arms sales to South Africa have amounted to $3 billion. Arms were also supplied to South Korea, Chile, Saudi Arabia and, until the revolution, Iran. Far from being an instrument of detente, as we should like NATO to be, and as our people would like to believe it is, that illustrates that the military industrial complexes on both sides of the Atlantic, whose apologists dominate NATO, regard detente and peaceful coexistence as a direct threat to their own selfish interests.
As the United States professor, George Kennan said in the New York Saturday Review in 1977:
" The improvement of political relations between the USSR and the USA is perceived by the giant communities, which thrive on tension and military confrontation, as an acute danger."
As if to confirm Kennan's point, the reactionary American publicist Schlamm, wrote, again in 1977, that
" peace must be overcome because communists gain from peace and triumph in conditions of peace."
This Atlantic Moloch continues to guzzle up the fruits of the labour of millions of people in this country and continues to push the world to ever new spirals of the arms race. It has become one, if not the main, obstacle in the path to consolidating detente. It is now what it always has been: the instrument of the United States and the West European community of military industrial concerns.
But there is an alternative. Quite recently, the TUC launched its campaign for economic and social advance in this country. In the document, it makes the point that at the same time as we are about to spend £10,000 million on arms, the Government are dismantling both the Welfare State and British industry. They intend to cut the Labour Government's plans for the Welfare State. Housing will be cut by £1,576 million. Education and Science will be cut by £530 million. Health and personal social services will be cut by £237 million and social security by £50 million. Lending to nationalised industries will be cut by £100 million. Valuable public assets will be sold off for £500 million. Roads and transport will be denied £279 million, Energy, trade, industry and employment assistance will be denied £476 million.
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The Government appear to be determined to drag working people and their families back to the 1930s, with their industrial and social policies. Child benefits will rise by only 79p—less than the level of inflation. The real level of short-term unemployment and sickness benefits will be cut. The earnings-related unemployment benefit is to be scrapped. The families of strikers will lose £12 a week in supplementary benefit. The Government also intend to tax short-term benefits.
To imitate the 1930s in fashion and design is inoffensive and harmless. However, to imitate the 1930s in economic and social policies can only prove utterly destructive for the vast majority of workers in this country. I suggest that, as the Government seem determined to imitate the 1930s, our defence expenditure should be cut immediately to the 1930s level to reflect that as well.
I conclude by reading from a comment made by a fairly wise man who quite recently presented the Louise Weiss foundation prize to the International Peace Research Institute, Stockholm.
Mr. Chris Patten: Lord Mountbatten.
Mr. Ross: The hon. Member is right.
Lord Mountbatten said:
" We are most likely to preserve the peace if there is a military balance of strength between East and West. The real need is for both sides to replace the attempts to maintain a balance through ever-increasing and ever more costly nuclear armaments by a balance based on mutual restraint... I regret the fact that opposition to reaching any agreement which will bring about a restraint in the production and deployment of nuclear weapons is becoming so powerful in the United States... The nuclear arms race has no military purpose. Wars cannot be fought with nuclear weapons. Their existence only adds to our perils."
Like many other Opposition Members, tomorrow night I shall vote against the Government's defence expenditure. It means nothing to the ordinary man in the street except further unemployment and further misery. How shall we increase recruitment of young people by 11½ per cent. unless we are to increase unemployment or to increase considerably the wages of the Armed Forces? That is the only thing that will drive young people, not the warmongering that comes from the Conservative Benches.

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I believe that defence expenditure is both morally wrong and inhumane. I shall certainly vote against it tomorrow night.
7.55 pm
Mr. Patrick Wall: It is quite clear that the hon. Member for Dundee, West (Mr. Ross) wants to end all forms of defence. I remind him that so did some of his predecessors in the 1930s—and that landed us in Dunkirk. This time we shall not get a second chance.
Anyone who believes that this country can be defended against the USSR without NATO either needs his head examining or, perhaps really wants the Soviet Union to take over. In the latter case, he will not get his pension, his education, his houses or his roads, and he will lose his freedom. Is that what the hon. Gentleman wants?
This White Paper is a very great improvement on its predecessors. I join in the congratulations to my right hon. Friend, given by both sides of the House, on the layout, and particularly the illustrations and the statistics, which are very useful indeed. I hope that in due course, prodded by the Select Committee on Defence, the Secretary of State will be able to produce a report such as that which I am holding—the American defence report. It is much longer, and it really talks about the future. My right hon. Friend has not been able to do that today, for the reasons that he has explained, but I hope that we shall hear more about the Polaris replacement as soon as possible. It seems to me that there are only two alternatives—either the cruise missile, or Trident I. If one examines that problem, one quite obviously comes down in favour of Trident I. The sooner we make the decision to maintain an independent nuclear deterrent, the better.
Above all, the White Paper sets out clearly the threat. The country is beginning to wake up to the dangers from Soviet aggression. That is why the invasion of Afghanistan was a very great mistake on the part of the Kremlin. On the other hand, it would be wrong for us to believe that the USSR is 10 ft tall. It is the world's largest bureaucracy. If it starts aggression and it is checked in
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the early stages, it will fall to pieces; bureaucracies always do. That is what we must guard against—the initial thrust, wherever it may come.
In addition, the Soviet Union's economy has been on the decline for the last 15 years. Her manpower has been on the decline for the last 15 years. The eight Muslim states of the southern USSR will outnumber the population of Russia itself by the end of the century. That will cause all kinds of strains and stresses within the Soviet Union. The satellites are already restive. So are many of the component states of the USSR—for example, Lithuania, the Ukraine and Georgia. The Soviets cannot even feed themselves; they have to go to the United States and Canada to buy grain. Their power situation may be very serious in a year or two. They have plenty of oil reserves in Siberia, but it is very difficult to get that oil out. It would be much easier to get it from the Middle East. They need Western advanced technology, and they are now no longer in a position to pay for it, as the Comecon debt to the West is now between $60 billion and $70 billion. Therefore, I say that we must not regard the USSR as being 10ft tall.
Let us now look at NATO, on the other side. As has been said, NATO's rearmament started in 1977. As I see it, the danger is that the increase in NATO's armament will coincide with a decline in the Soviet Union by about 1984. By then we may have new leaders in the Kremlin. Those new leaders, being younger men, are much more likely to be hawks than doves. Therefore, I believe that the period of maximum danger will come in 1984, the next presidential election year. If aggression starts, it will obviously start in a year when the leader of the West is otherwise occupied.
Therefore, there is not much time. My right hon. Friend must lay down very clearly the priorities. I think that he has got them right, so far. The first and most important decision was taken last December in the modernisation of the theatre nuclear forces, which was absolutely necessary. We suffered a propaganda defeat over the so-called neutron bomb, but I understand that that is now being built, and I hope that it will be included in NATO's armoury in the not too distant

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future. In other words, the crisis management for NATO is good and the planning is good. The consultation is good within the NATO Alliance.
The problem lies outside the NATO area. That is where the dangers face us today—for example, oil from the Middle East or minerals from Southern Africa. Yet NATO's boundary ends at the Tropic of Cancer. We must do something about these problems outside the NATO area. I believe that they must be handled mainly by the maritime Powers of NATO taking the lead—the United States, ourselves and France, possibly helped by Italy, Germany and the Netherlands. It is satisfactory to note that two German destroyers will be going to the Indian Ocean in the near future.
Taking the Middle East first, I believe, as other hon. Members have said, that we should do everything possible to support President Carter's attempt to end the illegal detention of the hostages and to get them released as soon as possible. There has already been an exchange across the Floor of the House about Diego Garcia. If the Americans wanted to use Diego Garcia or any other British base to rescue illegally detained hostages, we should surely offer them every possible assistance. I believe that the present regime in Iran will disintegrate in the next six months or so. There is only one organisation left intact in Iran, namely, the Tudeh Party, which is the Communist fifth column in that country.
I have recently returned from America. Americans were saying—partly as a joke, but there is some truth in it—that it may be that in six months the USSR will take over Iran and return the hostages to America in an Ilyushin aircraft! We should not underestimate the feeling in the United States about the hostages. Secretary of State Vance, who was a dove, has now resigned. There is considerable talk on the Hill and elsewhere in Washington of taking further military action—for example, to mine the straits or ports of Iran. It is therefore essential that we have good consultation and good crisis machinery in areas outside NATO.
In these debates, I have stressed time after time that the vital areas lie outside the NATO boundaries. I have discussed oil supplies from the Midle East. The House will become rather bored with it
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if I again repeat the argument that I have made on many occasions, but I stress that, while our eyes are on the Middle East, we must not forget the other vital area of Southern Africa. Europe's heavy industries cannot survive without minerals from that area.
The erosion of Western defences in Southern Africa is going well from the Soviet point of view, thanks to Mr. Solodovnikov in Lusaka. That applies to Angola and Mozambique. We shall see the same course of events in Zimbabwe in the next year or two, in spite of Mr. Mugabe's efforts to avoid the Soviet yoke. I am afraid that the pressure on him will be too great. Namibia will be the next trap for the West. The United Nations will probably demand economic sanctions against South Africa over Namibia this summer. I hope that we shall use the veto. South African ports and airfields will be vital to us. These are all examples of what President John Kennedy had in mind when he spoke of the West being " nibbled to death ". That is exactly what is happening. It is outside the NATO area, and it is the most likely scenario in which the Soviet Union will win world war III without having to fight.
The need in Europe is rapid reinforcement—for example, 1½ million men, 2½ million tonnes of combat equipment, 3·3 million tonnes of ammunition and 100 million barrels of petrol. Vast cargoes have to cross the Atlantic. The hon. Member for Sheffield, Attercliffe (Mr. Duffy), who sits on the Opposition Front Bench, and I have recently been in America to discuss anti-submarine measures and the protection of these convoys. I cannot say too much about it as it is obviously classified. However, it is public knowledge that we shall be short of escort vessels. Therefore, I think it wrong to scrap, for instance, HMS " Tiger ", a proposal that appears in the back of the Estimates. HMS " Tiger " carries four Sea Kings, which would be valuable for convoy work. I know it is said that there is a lack of crews, but let us put " Tiger " in mothballs. That may cost quite a lot, but we may have great need for her. After all, we have only " Bulwark ", " Hermes ", " Blake " and " Invincible " in reserve. Therefore, HMS " Tiger " is one-fifth of our sea-borne air capability. It would be wrong to scrap her.

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Escorts are valuable. Yet three County class light cruisers have been scrapped. HMS "Kent" and HMS "Hampshire" have been scrapped and HMS " Devonshire " is now on the list. That was done by the previous Administration. I hope that this Government will not allow any of the DLGs to go merely because they are armed with obsolete sea-to-air missiles, namely, Sea Slug 1. They could undertake other functions; their antisubmarine warfare capability could be improved. Their hulls could prove very valuable.
I commend to the attention of my right hon. Friend what has been called the ARAPAHO project—the conversion of container ships to act as anti-submarine auxiliary aircraft carriers in war. It is a good scheme. It could be carried out, and it would be cost effective. However, it must be preplanned. There would have to be reserve helicopters, good communications and trained pilots. We now have many oil rigs, and there should be both spare helicopters and pilots.
We have fewer than 40 maritime patrol aircraft. We have not nearly enough. That is one of SACLANT's main concerns. There is a lack of maritime patrol aircraft in the Alliance. There is also a paucity of nuclear hunter-killer submarines, which are vital in the North Atlantic.
Anti-submarine warfare is the first priority, but the next priority to which I shall refer is the Royal Marines. "Fearless ", "Bulwark" and "Intrepid" will, I hope, be available for Royal Marine exercises much more than in the past. We cannot tie up a ship in the Dartmouth Squadron and then expect her immediately to land Marines.
In the past, it has been said that we would be all right because we could use British Rail ferries. Where would those ferries land in Norway? We shall not have docks from which we shall be able to land the vehicles of the Marine Commandos. They will probably be bombed, and it will be necessary to land on the beaches. I do not think that British Rail ferries would be effective for such an operation.
I am sorry that " Tarbatness " is not available for the Commandos. I understand that British Shipbuilders increased
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the price by over 100 per cent. Complaints have been made that British Shipbuilders lost its most recent orders. However, here it was given an order and then doubled the price. That does not seem to make sense. The Royal Marine Commandos need a ship for their exclusive use now. We know that HM ships are available only on a part-time basis. I commend the excellent work of the ski-trained commandos in Western Norway. Many hon. Members on both sides of the House have attended their exercises and been very impressed.
The air defence Tornado is vital to the air defence of Great Britain. I hope that everything possible will be done to bring it forward as rapidly as possible. It is vital to our defence. If my dates are right, it will be just in time. The Spitfire came just in time for the Second World War, and I hope that the Tornado will follow that example.
The defence of our airfields is crucial. We have nice maps in the White Paper, but I do not know how many of our airfields are now defended by Rapier or other surface-to-air weapons, such as Bloodhound, which, incidentally, is now becoming obsolete. There used to be two airfields defended in that way. I hope that there are now more. I suspect that there are still not enough.
I understand that the Americans are to buy Rapier for the defence of their airfields in Britain. That was the talk on the Hill when I was there. I hope that it is true. What are we to do about longer-range weapons? As I have said, Bloodhound is now becoming rather long in the tooth. Is consideration being given to the American Patriot?
,One of the great threats to Europe is mining. That is a vital element if we succeed in getting the convoys across. Let us hope that the politicans will use their common sense and get reinforcements across before the balloon goes up. If they do not, the convoys will have to fight their way through. Even though we are short of escort vessels, that could be done. The real danger will lie at the ports of arrival. I know that the Government are doing all that they can to bring forward the Hunt class mine hunters.
My parliametary neighbour, the hon. Member for Kingston-upon-Hull, West (Mr. Johnson),spoke at length about

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fisheries trawlers. The EDATS trawlers— MSM—are mentioned in the White Paper. There is a reference to " planning to buy". What does that mean? Does it mean that the Government will buy existing vessels? As the hon. Gentleman said, there are many excellent vessels that cost about £1 million apiece. That was their original cost. They could be fitted out navigationally almost like a frigate. They could be converted for minelaying and are now lying alongside Hull ready for my right hon. Friend.
I hope that the Government will not spend a great deal of money, as they did on the Island class, on the building of specialised vessels that come up to naval standards when cheaper but perfectly good vessels are available in much larger numbers at Hull and at other fisheries ports. The future for the distant-water fleet is grim. I understand that trials on two existing trawlers have taken place and that they have gone well. I hope that my right hon. Friend will buy existing trawlers and alter them rather than building new ships from scratch.
Reference has been made to interoperability and standardisation. A subcommittee of the North Atlantic Assembly Military Committtee has been considering these issues for five years. It has been concluded that if we are to have co-operative projects, the co-operation must begin at the design project stage. It is no good waiting—as we did when we considered the tank gun and other weapons—to have a competition between prototypes. Americans like competition, but such competition involves national honour and, although one may believe that one's weapon system is best, one finds that the other chap wins. International co-operation must begin at the design project stage. That method will produce a weapons system after seven years.
Although it is a controversial subject, I believe that we shall fight the next war with an international and integrated staff; and that our design requirements should be prepared by such a staff. I know that we have got IEPG and CNAD. However, they speak with their national hats; they are not an international staff. I have discussed this problem with the former chairman of a military committee of NATO, and I am told that that could be done by
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that committee. I hope that the Secretary of State will consider that suggestion.
It is ludicrous to build an MBT 90 for £1 million apiece while the Americans are building their XM 1, but we still do not know how the turbo engine will work in comparison with a diesel engine. The Germans are building the Leopard II. NATO will then have three different battle tanks in the next generation. The ammunition will not be inter-operable, and that is the height of folly. It is now proposed that we shall have a rifled bore while the other two nations tanks will have smooth bores.
We need a decision as soon as possible about the Harrier 5 and the AV8B. I accept that the Harrier 5 will prove to be an excellent aeroplane and that it will suit the RAF's requirements. Provided that the Americans are prepared to share the cost of research, development and building and share third party sales, we should take a longer-term view. The AV8B will provide a lead-in into the next generation of supersonic jump jet aircraft and have much larger sales.
When the Government came into office —about a year ago—they immediately increased pay in the Armed Services. That did an immense amount for morale, which had become low in all three Services. Morale has now been improved. However, we are foolish to allow recruits to leave the Services at any time during their training. As a young officer, whenever I did a scramble course or commando course and got wet and fed up, I might have said that it was not worth going on if someone had got at me and suggested that we packed it in. I might have asked to leave.
Not long ago, there were break points during the training. That made sense. When a man has been cursed by the drill sergeant and has become cold and wet, it would be the utmost folly to allow him to leave just because he wanted to. I understand that as many as 50 per cent. of recruits take up the offer to leave. I am against keeping a recruit who has become fed up with the Services. However, he could have opportunities to leave during the break points. I hope that the Secretary of State will consider that matter as manpower and money, as well as instructors' time, are being wasted.
Years of neglect in the Services have now ended. The Government have rightly

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made defence their first priority. Time is short and the period of maximum danger will come in about 1984. Our main need concerns not NATO but a proper consultative machinery outside NATO, where the threat exists. I refer particularly to the Middle East and Southern Africa because those two areas have minerals and oil which are essential to the West.
8.13pm
Mr. Clive Soley: The one thing about which we are all agreed is that the 1980s will prove to be a dangerous decade. My severe pessimism has been increased by the speeches of some Conservative Members. The language of war has got into gear. During an earlier intervention, I raised a point about chemical weapons. I suggested that the Government's statement should have made some response to Mr. Gromyko's suggestion of an agreement. I had not wished to discuss whether the Soviet Union had an aggressive capability in that area. I am sure that it has. I am equally sure that if we do not have that capability, we can find it quickly. The White Paper makes no statement about a possible response to Mr. Gromyko's offer. Such a failure is too serious to be ignored.
The language of war is apparent in other ways. I looked in the Daily Express today and found an article by Lord Chalfont. The headline stated:
" The West must stop being pushed around."
One finds the same language in street gang battles before a punch-up. Such language is dangerous. However, we should remember that a defence policy can maintain peace. It can also cause war. If we get our policy wrong, that danger will arise. A defence policy may cause war in two particular circumstances. First, it may cause a war when it fuels the arms race. Secondly, it may do so if it severely destabilises the situation. We are living in the midst of one of the most dramatic arms races in history. Indeed, I do not know of an historical example where an arms race has not led to war. We should keep that point in our minds.
The Government will claim that the Soviet Union has upset the balance of power by increasing its defence expenditureandbydevelopingtheSS20. If
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I had been asked to put my money on which country had most increased its defence expenditure, I would probably say that the Soviet Union had. However, if I did so without going into its background, I should be giving only half the argument. We are no longer discussing the European balance of power in isolation. We are debating a world balance of power which has become seriously destabilised in a number of areas.
Without being too specific about dates, one can say that between 1945 and 1970 the United States was the dominant world power. There is no doubt about that. It provided a stable world system. As I have said before, the key issue affecting that dominance was the 1962 Cuban missile crisis. The Soviet Union was defeated. It told itself that to be a super Power, it would have to be able to intervene effectively—as the United States can, and as the United Kingdom used to—with conventional weapons. It decided that it would need nuclear weapons at every point on the earth's surface. That sparked off the Soviet Union's increased defence expenditure. It made sense.
The White Paper hardly mentions— although it hints at—the Soviet Union's fear of China. It fears fighting on a front that stretches from the sea of Japan to Norway. If we do not understand that, we shall not understand the dangers that face us. One of the most serious dangers is the psychological state of the United States. It is going through the same difficult period that Britain went through when it ceased to be a world power, unchallenged by others. Democracies, particularly during election periods, can become unstable. It is a mistake to assume that only dictatorships are unstable. I am not anti-democracy, but very much in favour of it. However, it would be a mistake to assume that democracies cannot play into the hands of war.
From time to time, the West has undermined its own interests by backing unpopular regimes. Does that need saying after events in Iran? Does it ever need saying? We have done that time and time again. As has been pointed out, we have backed regimes that do us no good. The Secretary of State opened with a good line. He said that we must preserve the principles on which this

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House of Commons functions. That is right. However, do we do that by backing the Shah of Iran? Do we preserve those principles by backing Pinochet in Chile? Is that what we are defending? Is that what that does? If not, we had better start rethinking the issue, and we should change our policy accordingly.
There is a terrible mirror image to this language war. It is almost like 1984 " newspeak ". I always think that there is some international civil servant up on a satellite somewhere and the Soviet Union rings him up and says " We have this missile called the SS20, and the people on the other end of it do not really like it. Can you give us some nice phrase that will make it sound better? " As a result we get something like this: " The peace-loving nations of the world want peace." Then the United States gets on the line and says " We have this missile that looks a bit like a doodlebug, and you know what people think about doodlebugs. Give us a nice statement that will make it sound better." As a result of that we get: " We are only interested in defending the people of the free world". So it continues.
I give the House a few examples. On page 2 the White Paper says:
" In the face of the threat posed to us by the military build-up of the Warsaw Pact, we believe that this is a time for giving a higher, not lower, priority to defence—for our allies as well as ourselves."
I now turn to the Soviet News, in which there is a letter from Mr. Gromyko to the United Nations Secretary General in which he says:
" Nevertheless, due to the resistance of certain forces, the arms race was not discontinued. The United States and its allies continue to increase their military budgets. These countries are developing and equiping their armies with new and even more dangerous types and systems of armaments."
In other words, if one is born and brought up in the Soviet Union, one believes that. If one is born and brought up in the United States or the United Kingdom, one believes the opposite. There are exceptions on both sides but, by and large, that is the essence of it.
It goes further than that. On arms control, the White Paper says on page 10:
" Our aim is greater stability—where possible at lower levels of forces. Balanced,
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practical and verifiable arms control measures can serve this by limiting arms competition and making defence relationships more predictable."
In the Soviet News, we find this:
" The principled position of the Soviet Union remains unchanged: the Soviet Union is prepared to limit, to prohibit on a reciprocal basis in agreement with other countries any types of weapons without—it goes without saying—prejudicing anyone's security, in conditions of complete reciprocity among states possessing the given types of weapons."
One can continue with this exercise time and time again. I recommend to hon. Members the usefulness of picking two sides in a dispute and translating the arguments in the way that I have done here. It is a positive experience because it teaches one to look at the position from the other side. If we are to have peace, we must understand what the other side is doing, and the pressures on the other side. If we do not understand the other side, we may get peace but we shall not get it by judgment.
Mr. Wall: I agree with the hon. Member, but he must also reach the logical conclusion and look at the size of the forces on both sides. He will find that the Soviet side is much larger than NATO and that its forces are organised for offence rather than defence while NATO certainly is not.
Mr. Soley: I thought that I dealt with that in the earlier part of my argument. One reason behind the Soviet attitude was basically the events of 1962 in Cuba and the Soviet Union's desire to become a world super Power. The other reason was the threat of China. In those terms, it is understandable. We must ask ourselves what the Soviet Union's intentions are towards Western Europe. The danger for Western Europe is not just that of being taken over. The far greater danger is that of the great Powers fighting their wars on other people's territory. The danger for Europe is that a nuclear war would be fought by proxy between the Soviet Union and the United States while at the same time negotiations were taking place between those two countries on how to end the war. They would be right to do that. At the end of the First World War and the Second World War, negotiations were taking place to end those wars at the same time as the fighting was continuing. That is the essence of any negotiation towards the end of a war. That is not changed now.

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The only change is in the nature of the weapons. That is why we are in the front line when we were not before.
The White Paper is far too brief when it discusses arms control. Its other failure is that it says nothing about the actual troop withdrawals made by the USSR. I do not pretend for a moment that those withdrawals will alter the balance of power or that anyone will think that that in itself will bring peace. However, I feel that we should make a response to it. If we do not make a positive response, we are open to the charge of at best gross hypocrisy and at worst a desire to perpetuate the arms conflict.
There is nothing in the White Paper to deal with the fact that we need to understand the Soviet Union's pressures and the reasons why it has developed its arms industry. I quote from paragraph 108 on page 5 which says:
" There is also an explicitly aggressive motive for the Soviet military build-up. It is a basic, if nowadays seldom stated, tenet of Marxist-Leninist philosophy that Communism will ultimately be extended to every nation and that its spread should be promoted, if necessary, by military means when the circumstances are right. The Soviet Union has already demonstrated that it will use force to maintain the Soviet brand of Communism in Eastern Europe."
Do we really believe that we could not also say that we intend to see democracy triumph and extended to every other nation? I have heard politicians from both sides of the House say this over and over again, and I have even heard them say that we will do it by force. I have been alive, as has everyone in this House, when we have tried to do it by force. I find it quite mind-boggling that further back in this White Paper it says that we must bear in mind that when the Soviet Union goes to war, it intends to win. That is mind-boggling. I did not think for one moment that the Russians intended to lose. I assume that if we went to war the Secretary of State would intend that we should win. That is a matter of common sense.
When this mirror image language to which I have referred gets distorted, the dangers grow. I take the view of Lord Mountbatten, General Carver and others in the military establishment that it is too easy to blame people in that establishment.
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They, more than most people, are fully aware of all the dangers of a war of any kind. Lord Mountbatten said that we must expect the unexpected in war, and it would be difficult to see how a conventional war could be fought in Europe without it becoming a nuclear war. The Soviet Union seems to hold the same view. However, the Defence White Paper seemed to be uncertain about it. On page 6, paragraph 110, it says:
" Soviet strategists hold that any war in Europe is likely to escalate into a nuclear exchange."
However, it seems to accept that a campaign against NATO might start with conventional warfare. On page 9 in paragraph 124 it says:
" Should deterrence fail and an attack occur which conventional forces alone could not contain, NATO could threaten to use—and if necessary, actually use—nuclear weapons to cause the aggressor to abandon his attack."
That does not say anything about it escalating into infinitely more important problems, because if that happened a nuclear war would be fought by proxy in Europe to the detriment of us all.
The problems that we face go far beyond any meaning of the word " defence " as previously interpreted and discussed in this paper. I find the paper rather bland and not particularly helpful. I do not think it questions the assumptions underlying many of the things that we are pursuing. At the very minimum, I should like to see a statement of the need to restart discussions between the two super-Powers, despite Afghanistan, because the most dangerous aspects of the present situation is that the conversations between the two main protagonists have broken down.
That is the time when matters get out of control, and we slide into the 1914 position—not the 1939 position—whatever we think of the Soviet Union, and I am no great lover of that country. I am aware that, at the time of the Vietnam war, people from this country demonstrated and argued in the United States. I know that they could not have done that in the Soviet Union, but that does not make the Soviet Union Nazi Germany, or anything resembling it.
Mr. Dalyell: The much-vaunted hot line between Washington and Moscow apparently has been used once in the

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recent crisis—and that for rather stilted, staccato statements by each side.
Mr. Soley: It would be horrendous if war broke out over a conflict such as that in Iran—which is infinitely more dangerous than Afghanistan in this respect. If a war broke out which spread and began to get out of control, and if limited theatre nuclear weapons were used in Europe, the hot line would be used again in precisely the way that I described earlier. Both the Soviet Union and the United States would be right to use it, but they would be doing so over our dead bodies. Hon. Members need to understand that.
Much as I would like to defend the values of the Western world, ultimately Members of Parliament are here to represent the best interests of the British people. That is important. We need a more positive response to arms control, and because one of the major dangers of instability is from the Third world and the increase in expenditure on arms by the Third world, we should limit sales of arms—or even stop selling arms—to Third world countries, or to any country outside NATO. There is no point in stopping sales of arms to member countries of NATO, because they are too interdependent and interlinked. However, outside NATO there is much to be said for that policy. When Third world countries spend up to 40 per cent. of their budget on arms and are grossly unstable politically, the potential for war breaking out over a conflict such as that in Iran—not Afghanistan—is so great that it cannot be ignored.
I could say that many other measures are needed, but at this stage I am more concerned to get the analysis right, and to look at the language of war than to come up with tidy solutions which I do not have and which would probably not be acceptable to Conservative Members.
8.31 pm
Mr. Robert Atkins: We are discussing defence in the shadow of events in Iran and Afghanistan, and our liberty is under threat, perhaps more now than for many years. I emphasise that while the debate is concerned with defence generally, the propaganda war being waged by the USSR and the Warsaw
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Pact over Iran is beginning to get my goat and, I suspect, the goats of many hon. Members. It is beginning to appear that the United States is the guilty party, as opposed to Iran. I cannot agree with that, and I suspect that many of my hon. Friends cannot agree with it.
Afghanistan is the real problem, and it is the key to this debate, in the sense that it is a further indication of the Russian long-term strategy in relation to their offensive capabilities, and their intentions in various parts of the world where they believe that the West will not stand up to them. I do not believe that the West has a long-term strategy, and that is a matter to which we should be giving urgent consideration in the context of the EEC, NATO and other European organisations.
I wish to discuss capabilities, rather than intentions. Intentions can be changed in minutes, but capabilities take years to build. I shall not dwell on Polaris, Trident or cruise missiles because they will be discussed later this year when my right hon. Friend the Secretary of State and his colleagues make the decisions that are so important to the future of Britain. I wish to speak about conventional weaponry and equipment. I congratulate my right hon. Friend and his colleagues on the White Paper. It is impressive. I have always believed strongly in the principles that are employed in the United States—that the public should be aware of the problems that face their country in respect of defence, and of the problems of the Warsaw Pact. I believe that we should tell people more about what is going on. I find it regrettable that I can go to the United States and talk to senators, congressmen and people associated with the military and find out more about what is going on in this country than I can in this Chamber and through the various ways in which we put questions to Ministers. I find that depressing because I believe that the public have a right to know what is going on, and that they should know what is going on because the threat is so great.
I want this White Paper to be spread more widely than it is at present. We should continue talking to students at schools, colleges and universities and other organisations—as the Royal Navy has done recently, explaining what it is doing and the threats that it faces. That should be spread throughout the Services.

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Comment has been made about the so-called air defence gap and the problems raised by the Select Committee and the evidence given to it. I shall not dwell on the question of the gap, except to say that there is clearly a need for more planes. Bearing in mind the fact that the Tornado is built in my constituency, hon. Members will not be surprised to learn that I want more Tornados and I want them built faster.
I also want an urgent decision on the AST-403. Since I have been associated with British Aerospace in Preston, it has become clear to me that the firm strongly believes in continuity and planning in both industrial and defence work. That happens in France, Germany and the United States, but, because of the changes of policy resulting from changes of Government in this country, we have not had the continuity that we should have had.
I ask the Government to take on board the fact that an urgent decision is needed on the AST-403. I know that British Aerospace is operating two teams on a brainstorming basis to try to come up with a future aircraft, but the company does not seem to be getting the sort of co-operation that we should like to see from Germany, Italy or France on what criteria should dictate the decision on the AST-403.
I hope that in due course we shall be able to encourage the sales of Tornado to our friends and allies around the world if they show an interest. It is a fine aeroplane. It could be argued that £10 million or £11million is a lot of money, but it is worth every penny.
Mr. Ernie Ross: My union represents the largest group of aerospace workers. I wonder whether the hon. Gentleman will comment on the fact that many of his constituents have taken part in initiatives put forward by aerospace workers to divert their skills into much more socially useful production than defence aircraft.
Mr. Atkins: Whenever I have talked to workers at British Aerospace, I have founds that they are proud of the aeroplane that they are building and want to build more.
I turn to home defence and civil defence, of which little mention is made in the White Paper. I initiated the early-
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day motion signed by 101 of my hon. Friends, and I hope that the Government will note our concern about civil defence. We should be ashamed at our lack of provision, and I hope that my right hon. Friend the Home Secretary will eventually be able to make a statement to the effect that civil defence should be restored quickly.
At a recent private meeting, I was told by an expert on these matters that when a Backfire bomber approaches it is difficult to tell whether it is carrying a nuclear or a conventional weapon. If we are geared to reacting to the dropping of a nuclear bomb, and therefore all dive below ground, we shall not be able to react differently if it turns out to be a conventional bomb which requires us to operate the services that are required in a time of crisis.
I wonder whether we are geared up to be able to tell the difference and, if we cannot tell the difference, what conclusion we should draw from that fact.
I move on briefly to our reserves. I have had the good fortune to be associated with a couple of Territorial regiments. I have served in one, and I have been associated with another in my constituency. I make two quick points about them. I believe that the bounty should be increased. Even more important, while they are training and are involved in Army, Navy or Air Force activities, our Territorials should be treated as Regular Service personnel. If a Territorial is injured or, even more tragically, is killed, he or his relatives should get the same benefits as a Regular soldier. That is an area which deserves urgent consideration, especially following the accident on the Brecon Beacons recently. The sums involved there, frankly, made me ashamed.
I come next to equipment replacement. I am extremely concerned that there should be an urgent decision on the rifle. My local regiment, the Queen's Lancashire Regiment, has one of the country's leading shooting teams. It will be going to Canada shortly. Every one of those men will be firing rifles in that competition which are older than the members of the team. That is an astonishing state of affairs.
Incidentally, the regiment has been in Cyprus. I had the opportunity to make a brief visit to the island which enabled

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me to judge the state of morale and the problems faced by our troops there. I was concerned to learn that Cyprus, at present, a part of the soft underbelly of NATO, is classed only as a priority two commitment as opposed to what I believe it should be, which is a priority one commitment, the difference of course being that it will get much greater and much earlier attention in terms of replacement rifles, radios and other equipment.
Mr. Stanley Newens Mr. Stanley Newens (Harlow) rose—
Mr. Atkins: I shall not give way to the hon. Gentleman. Time is passing, and I know that a number of my hon. Friends still wish to contribute to the debate.
I congratulate the Government on their action when they came to power in increasing Service pay. However, I am not sure whether sufficient attention has been paid to the turbulence and separation resulting from the over-stretched resources of our Armed Forces. I believe that we should be more concerned about the problems of wives and children caused by the pulling up of roots and moving to different parts of the country, if not of the world.
I believe strongly that we should in crease our defence spending. In my opinion, the increase should be nearer 5 per cent. However, I recognise the problems that that poses. Therefore, if we believe in that, we have to be prepared to take action elsewhere. I know that my hon. Friend the Member for Bath (Mr. Patten), who used to run a research department, has views on this which doubtless he will draw to the attention of the House——
Mr. Chris: Patten: If he gets the chance.
Mr. Atkins: If he gets the chance. However, I asked a parliamentary question not very long ago about married quarters. I was disturbed to learn that there are 92,000 Service married quarters in the country, of which 21,000 are vacant. That is typical of an area which demands attention. We need to review our use of resources which do not appear to be used as fully as they should be. The fact that we believe in defence and defence spending does not mean that it is a sacred cow which does not demand attention.
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The White Paper is an excellent one. It indicates the policy of this Government following that of the last one, which frankly was awful and which produced a situation where we were down to bedrock. Our actions following the general election have been right, and I am pleased that my right hon. and hon. Friends have pursued a policy designed to improve morale and the supply of equipment.
It has been said that God grants liberty only to those who love it and are always ready to guard and defend it. Never has liberty and our democratic way of life been under greater threat. It may be that the increase of 3 per cent. in our defence spending is a minimum and that many of us would like to see more. But we may be quite certain that, if the Conservative Government do not continue the action that they have taken since the election, no one else will.
8.44 pm
Mr. James Lamond: It is very difficult to be brief in a debate such as this, not only because one has thoughts of one's own, but because the speeches from both sides of the House tend to make hon. Members want to make points against or in support of them in reply.
First, I compliment the Ministry of Defence on the more lively presentation of the White Paper in these two volumes and on the much more readable way it has been prepared. It contains some exteremly interesting information. I think, however, that the price of £8·50 is a little expensive. Many friends in the peace movement, who are interested in obtaining the document, find the price prohibitive. I echo the request made earlier about preparing a more popular version at a cheaper price that retains the most valuable information.
I was saddened by table 7·1 in volume II which lists the number of deaths among our forces in Northern Ireland. The figure in 1979 was 48, almost double the average over the previous four years. It should be borne in mind, when discussing defence matters, that there is a war going on inside the United Kingdom.
I have one quarrel with the interesting statistics in these two documents. Information about our own defence expenditure is obviously accurate. But the whole

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tenor of the documents is that we must continue to increase our defence expenditure because the Warsaw Pact is doing so. I cannot agree with the hon. Member for Preston, North (Mr. Atkins) that defence expenditure was down to bedrock under the previous Government. In 1978–79, defence spending amounted to £7,455 million. The estimate for 1979–80 is £8,558 million and, for next year, £10,785 million. These increases are far too excessive.
It is interesting that the White Paper, in paragraph 104, under the heading " The Warsaw Pact ", dealing with expenditure in the Soviet Union, states:
" Defence is given priority over other claims on available resources, rather than having to compete as it does in Western economies "
I believe that defence is given undue priority in this country. The present Government certainly give it great priority over other matters such as schools, hospitals, the Health Service, pensions house building and almost all the social services that are being cut while defence expenditure is increased. If that is not a case of this country giving the same priority that we claim the Warsaw Pact is giving to defence, figures must lie.
I should like to comment on the estimates of the expenditure of the Warsaw Pact countries. It is true that the Soviet Union does not produce a White Paper. Its spending on defence is not accurately known. An interesting article in The Observer on 23 March, by its defence correspondent, entitled "How CIA measures Russia's war threat", must indicate part of our methods of calculating the figures that appear in the White Paper. The article stated:
" So, Soviet spending has to be estimated. In a study earlier this year, ' Soviet Defence Activities 1970–79. A Dollar Cost Comparison ', the US Central Intelligence Agency estimated that the Soviet Union spent $146,000 million on defence last year, 45 per cent. more than the US.
This figure is commonly used in American armed forces journals and is quoted frequently by American politicians."
The same figure must be used in this White Paper. It mentions that expenditure runs between 11 per cent. and 13 per cent. of the gross national product of the Soviet Union. That is the same figure as the one reached by the CIA at the end of its calculations. The article goes on:
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"... the CIA method of calculating the Soviet defence spending is highly misleading."
This is The Observer's defence correspendent speaking, not me, and not even Soviet News:
" The technique is to build up a profile of Soviet troops and their equipment from satellite photographs and other intelligence sources. The CIA then calculates what it would cost in US dollars to run these forces and to manufacture and maintain this equipment. The resulting total is published as the CIA's estimate of Soviet defence expenditure."
The correspondent then goes on to explain why he believes this to be a miscalculation—because of the emphasis placed in various countries on the cheapest way in carrying out certain functions.
He goes on:
"Up to 1976, the United States intelligence agencies calculated Soviet military expenditure at between 6 and 8 per cent. of the Gross National Product. Then, under political pressure, they decided that Soviet defence procurement procedures were a lot less efficient and more costly than had previously been presumed. Overnight, the proportion of defence spending to gross national product went up to... 12 per cent."
That is overnight, from 6 per cent., by a recalculation of the CIA.
" Although all that had happened was a change in the accounting procedures, commentators have used these figures to claim a sudden increase in Soviet the accounting procedures, commentators have spending."
Perhaps from that source, that recalculation, we get all the claims about the Soviet Union increasing its arms spending in order, somehow or other, to attack the West. However, to give the author of the White Paper credit, he says that there is no evidence to show that there is any intention by the Warsaw Pact to attack Western Europe.
Volume I of the Defence Statement, just below paragraph 104, has a table headed:
" Comparative Distribution of Military Expenditure ".
This is an attempt to show that, even within the military expenditure of the Soviet Union and the Warsaw Pact, they can spend more on equipment than we can because the wages of their soldiers and so on are lower. It shows that production of new equipment in the USSR is 42 per cent. of military expenditure, while in the United Kingdom, it is 23 per cent.

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However, related to that is a footnote, which says:
" Data in this table have been adjusted to conform to the NATO definition of military expenditure and are therefore not compatible with the data in Chapter 7."
That is an interesting footnote, which one might miss if one were not reading carefully.
Chapter 7 says:
" Expenditure on equipment will absorb 41%of the defence budget in1980/81."
So, contrary to the suggestion that we cannot spend so much on equipment because our soldiers are paid much more and therefore our spending on equipment was only 23 per cent. compared with 42 per cent. by the Soviet Union, it is revealed that our expenditure is in fact 41 per cent.—a very compatible figure indeed. If I had time to go through this document in detail, I could give other examples that even someone such as I can pick out from the statistics.
I congratulate my right hon. Friend the Member for Stockton (Mr. Rodgers) on his opening speech. He made many points with which I thoroughly agree. I believe that a much greater emphasise should be placed on arms control. I do not believe that spending greater and greater sums of money on arms leads to peace and prosperity. I think it leads us into danger. I only wish that I could sincerely believe that my right hon. Friend would have made the same sort of speech had he still been on the Government side of this Chamber.
8.55 pm
Dr. Alan Glyn: I am grateful for the opportunity to speak in this debate and to the hon. Members for Oldham, East (Mr. Lamond) and for Sheffield, Attercliffe (Mr. Duffy) for giving me time. The debate has revealed to the nation and to our constituents how vulnerable we are to Soviet aggression, and shows the justification for the additional expenditure proposed by my right hon. Friend. I would go further. I would wish to spend more. We must spend money if we are to maintain our capability.
I am glad that my right hon. Friend paid tribute to all ranks in the Services, from the CIGS to the level of the people on the factory floor. They all make their contribution.
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We debate these issues against the background of Afghanistan and the possibility that the Russians, by one means or another, will move south towards warm waters. Without the presence of the American fleet in the region, there is no means of stopping the Russians, since there is no buffer State. I believe that nothing could stop the Russians save the ultimate deterrent and the knowledge that, if necessary, it would be used.
Paragraph 108 of the excellent White Paper singles out Afghanistan as the first country to be invaded. I was in Hungary in 1956 when a peace treaty was being signed by the Soviet Union and, at the moment they were signing it, Russian tanks were entering Hungary. Therefore we cannot believe what the Soviets say. I was a witness to what I have just described, and I know that the House will believe me.
The most important aspect of the debate is that, after years of prevarication, we now know that Polaris is to be up-dated and possibly replaced. I am sorry to see the V-force go, because I believe that it still has a role to play.
Tactical nuclear weapons are now so sophisticated that it is almost impossible to distinguish between tactical nuclear weapons and strategic nuclear weapons. We have been told today by my right hon. Friend of the strength of the Warsaw Pact. We know of it. He listed weapons including the SS20 and the Backfire bomber, so we realise the dangers that we are up against.
I wish to highlight two important points. First, in relation to chemical and biological warfare, I ask whether we have sufficient weapons in our armoury to prevent the Soviet Union—or any other aggressor—using chemical and biological weapons. Secondly, I believe that it is most important that we should have the capability to defend ourselves not only against an ordinary attack but against attack by chemical or bacteriological weapons.
I believe that our allies in the EEC should help us in the contribution that we make to protect them. They cannot sit back for ever under the nuclear umbrella of America. They must allow nuclear warheads and delivery systems on their soil in peace time. As the Prime Minister said in Brussels on 23June1978, the

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EEC must help us to bear the heavy burden of responsibility that we undertake in the defence of Europe. It must be in their interests as well as ours that we are able to maintain an independent nuclear deterrent. I believe that that independent deterrent is essential and that we should move as fast as possible to replace our present Polaris system, while in the meantime ensuring that that system is up-dated.
We want peace, but not at any price. We must maintain our civil defence and our reserves. Our civil defence, our reserves and our Army must all be under one command, not split between the Home Office and the Ministry of Defence. Obviously, we must increase the Regular and Territorial Army. My right hon. Friend the Member for Stafford and Stone (Mr. Fraser) spoke of having a list, and I believe that we should have a register of people capable of moving in when they are required.
There is no trip-wire and no buffer State. The sooner the people in this country realise the dangers and that we cannot have hospitals, schools, roads or an increase in social services unless we have the capability to resist Communist attack, the better. We cannot rely on China to act as a deterrent to Russian aggression. Our safeguard against that lies in the joint action of NATO and the EEC countries. NATO's role must enlarge to take in not only Europe but all the sources of our supplies and raw materials.
I hope, therefore, that this debate will bring home to the people the dangers that face us, while encouraging the Government to proceed along the lines set out in the White Paper. We shall then be assured that the country will be adequately defended and we can go on to building up our social services and other essentials of our life. The principal requirement is the defence of this country, of Western Europe and of civilisation throughout the world.
9.1 pm
Mr. A. E. P. Duffy: In my experience, debates on military spending have always featured the numbers game, with participants on both sides inclined to play fast and loose with their statistics. Sometimes the game has
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begun to resemble the croquet match in " Alice in Wonderland ", the players seeming to make up the rules as they go along. That is not so today. The debate has got off to a good start. It has been informed, and there have been many good speeches on both sides. We have all been united by an obvious concern to preserve the peace, although there is a different fundamental approach to that objective between the two sides. It was put powerfully by my right hon. Friend the Member for Stockton (Mr. Rodgers), and it has been followed by many of my hon. Friends. I intend to do the same
At least we are united on two other matters. We all welcome the White Paper—its format, style, content and information—and we congratulate the Secretary of State and those other people in the Ministry of Defence who are responsible for it. I am sorry that we did not do it ourselves. I think that we must also be agreed that, while overall public spending in the next three years is due to fall, military spending will continue to rise.
Most of the increase, as we know, will go to finance the development and procurement of new weapons and equipment. Concern about this increased defence spending has been amply demonstrated on the Labour Benches, but I met with the same concern and scepticism about increased military spending in Washington last week. Fears about inflation are making it difficult for more and more members of Congress to support hefty increases in Pentagon spending. After the Soviet invasion of Afghanistan, Congress seemed to be on the verge of a substantial increase in the Administration's 1981 military spending request. The Senate budget committee, however, has now scaled down the early proposals and, though agreeing to some increase, has undoubtedly back-tracked. Other senators, however, do not accept that modest increase because, they argue, it will be at the expense of social programmes. They are now expected to attack the budget committee's recommendation when it comes before the Senate.
Meanwhile the House budget committee has called for a cut in next year's military budget. Therefore, my right hon. and hon. Friends and I are not alone in our concern about the present levels of defence spending and in our desire to see

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evidence of much greater cost effectiveness in respect of the proposals of the Secretary of State and his ministerial colleagues.
Indeed, there are defence analysts in Washington who say that the most important national security issue there is not whether more money can be drummed up for defence but whether the Pentagon, by exploiting advanced technology and reassessing existing missions, can get more bang from the same number of dollars. Pentagon economists acknowledge that steps could be taken to spend the existing military budget more efficiently.
Outside the Pentagon a growing number of defence analysts maintain that much larger savings could be achieved by redirecting new weapons programmes. I am sure that the Secretary of State and his colleagues are well aware that even the MX mobile missile system has its critics today and they are growing in number.
In conventional forces, some analysts argue that a new class of " smart " missiles and bombs, known as precision guided munitions, could revolutionise warfare and, if properly exploited, could yield important military savings. These PGMs would use lasers and advanced sensing devices, such as heat or microwave detectors, to zero in and destroy targets in a single strike. The Pentagon research chief, William Perry, who will be known to many hon. Members, is directing work, it is believed, on a PGM missile system called " Assault Breaker " for knocking out Soviet tanks in Europe. Proponents tell me that, if that system works, the tank could go the way of the cavalry and with it all the proposed investment in the new tank.
Other analysts argue that the Pentagon's fascination with advanced technology has blocked more efficient use of the military. I could go on with that argument. However, it is only fair to say that even the " Nimitz " has its critics, as the Secretary of State and the Under-Secretary of State for Defence for the Royal Navy will know.
There is concern in Washington that there is still too much concentration on advanced technology, while simpler equipment is ignored. The American navy's reliance on super sophisticated
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carriers like the " Nimitz " and the " John F. Kennedy " has come in for criticism. Some people believe that America should instead be developing a smaller and less vulnerable vessel, such as we have in the Invincible class. There seems to be more evidence of a willingness on the other side of the Alantic to look at need and how to meet it.
On these Benches, we are not alone therefore in arguing for a more critical scrutiny of defence spending. In the present fluid and fast-moving economic and military situation, it is imperative to do so. A commitment to higher defence spending is not necessarily in the national interest. I am sorry to say that some Conservative Members have seemed to take for granted in this debate that it is. My right hon. Friend argued convincingly that it will not work, anyway.
More appropriate to present circumstances is the most rigorous appraisal of defence spending in order that we may be assured that all potential benefits of standardisation, rationalisation and interoperability may be realised. All too often, we tend to think of those aims in relation only to our allies, yet they can be equally applied within our own country and in each Department. That is my first point. We must be assured that we shall get from the Secretary of State, through his otherwise attractive White Paper, a much higher degree of utilisation in the event that he has to change direction, as my right hon. Friend reminded him, and as he provides for in the text of his defence statement.
The defence statement acknowledges that
" The scale of our defence effort cannot be divorced from our general economic capability."
The right hon. Gentleman shows that awareness. The statement goes on to say:
" Within these constraints, our task is to get the balance of priorities right again: to restore our defence effort to the level needed to give the best possible guarantee of safety, using the most economical means available."
That shows further awareness.
But will the Secretary of State get the balance of priorities right? That is a very important question. Again, I must say that, like my right hon. Friend the Member for Stockton, I encounter too little evidence, either in the defence statement or elsewhere, of these precepts being fulfilled in practice. Let me illustrate

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from paragraph 128, where reference is made to the long-term defence programme
" to effect improvements in ten priority areas in which collective action is needed to make the most efficient use of Alliance resources."
I shall not spell them out; I believe that they will be known to the House. I want merely to refer to those which relate to maritime operations. It seems to me that they are immediately called into question by the new emphasis that the White Paper places on a larger British share of operations outside the North Atlantic area, in which funds and forces have been concentrated for the last 10 years. Is the Secretary of State sure that he can do both—provide for the North Atlantic, with all that that entails, given the speech of his hon. Friend the Member for Haltemprice (Mr. Wall), and fulfil a growing global role? Is he sure that he will get that balance of priorities right?
Unlike the Warsaw Pact, with its largely internal lines of communication for reinforcement and resupply, the NATO allies, as the White Paper points out, are dependent upon the free use of the sea. In a time of tension or war, the transatlantic reinforcement of Europe would be crucial to a land strategy. A major allied naval and air effort would be needed to protect the operation of reinforcement and the continued shipment then of the essential supplies.
Yet the Soviets not only possess the capability to project power over great distances, but they continue to improve that ability to operate naval units, aircraft and resupply forces far from their shores. Their command, control and communications capabilities are already worldwide. This is a striking transformation for a nation historically preoccupied with defence of the homeland.
Wartime shipping requirements, as the Secretary of State knows only too well, will include not only military reinforcements and military supplies but also economic cargoes, which are expected to continue at about half the normal peace time flow.
I cannot quantify this requirement, any more than could the hon. Member for Haltemprice, but is the Secretary of State sure that he has a full picture of the magnitude and scale of that operation?
Mr. Pym: On the first point, the hon. Gentleman referred to the long-term defence programme. That programme was agreed to by NATO when the Labour Government were in power. We thought that they were right to agree to it, and we have given our full support to it.
On the second point, I made it totally clear that our commitment to NATO remained exactly as it was before. But I point out that the threats to NATO now extend far beyond its own boundaries, and it is, therefore, foolish not to examine the extent to which, whilst maintaining our full support for NATO, we can contribute and should contribute to defence outside the NATO boundaries.
The third point, as the hon. Gentleman has just pointed out, is the extent to which the Soviet Union's naval strength has increased and is operating infinitely more widely—all the more reason why we should ensure that that increased capability by the Soviet Union is responded to.
Mr. Duffy: I do not have to remind the Secretary of State that what he has just said represents a fundamental departure in the policy of NATO and the principles that underlie it.
Mr. Pym: No, not at all.
Mr. Duffy: The Secretary of State envisages deployment beyond the Tropic of Cancer.
Mr. Pym Mr. Pym indicated dissent.
Mr. Duffy: However, we shall leave
that matter. What is much more important at this stage, assuming that the Secretary of State is right to undertake these additional tasks——
Mr. Pym: With respect, I have not said that anything has been undertaken. We are examining this with the Alliance. That must be right. There is no commitment to undertake anything. We are examining it because of the threats which exist far beyond the boundaries of NATO. NATO would be very wrong if, as an alliance, it did not look at these issues. As a members of NATO, with all our history, knowledge and tradition, we would be wrong not to see how we might be able to contribute in the light of any decision taken by the Alliance.
Mr. Duffy: The Secretary of State will, I think, agree that he is doing more than examining. He will know that in his first year of office, he has begun to provide afloat support facilities elsewhere outside the conventional NATO sphere.
However, because of its position, Britain is uniquely placed among the European allies to provide and support those forces which will have to cross the Atlantic in time of tension or war. As paragraph 328 points out,
" we would supply the main weight of forces readily available in these areas. A vital task would be the deployment and protection of British and United States ballistic missile submarines. We would also have a major part to play in neutralising enemy submarines: in supporting NATO's Striking Fleet Atlantic; in the defence of reinforcement and resupply shipping and of amphibious operations in support of the Northern Flank and Atlantic Islands; and in the seaward defence of the United Kingdom itself."
I return to my question. Does the Secretary of State really believe that the United Kingdom forces can undertake that range of tasks?
Let us consider the question of rapid reinforcement, which was raised in the most urgent tones by the hon. Member for Haltemprice. I have said nothing so far which his hon. Friend did not say. In fact, his hon. Friend said more about rapid reinforcement than time will allow me to say. He stressed its importance and urgency and the growing threat towards its fulfilment. Therefore, is the Secretary of State quite sure that United Kingdom forces can provide for the local protection of convoys, or the defence of sea lines of communication and also seek to establish broad area control or integrate in an ASW barrier concept, as well as provide support for strike fleets or otherwise engage in forward defence strategy? As paragraph 409 states, will United Kingdom forces
" be able to operate effectively outside the NATO area, without diminishing our central commitment to the Alliance "?
That is my concern. That is the question that I have put repeatedly to the Secretary of State. If broken down—again, I simply echo what the hon. Member for Haltemprice put to him—it seeks to discover whether the right hon. Gentleman believes that he has enough ships and escorts. Although paragraph 409 states that
" certain improvements in the Services' worldwide capability are being considered".
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can he assure the House that improvements in the defence of the home base will also be considered? For example, the Soviet Union has large stocks of naval mines. Our home waters are especially vulnerable to that kind of warfare, as the right hon. Gentleman has been reminded by his hon. Friend. Is the improvement of our minehunting and minesweeping capability being tackled with sufficient urgency? We have been considering the possibilities of providing that for years, and I shall return to that in a moment.
My hon. Friend the Member for Kingston upon Hull, West (Mr. Johnson) asked a similar question in relation to minesweeping trawlers. The hon. Member for Isle of Wight (Mr. Ross) asked a similar question in relation to hovercraft. It was not the first time on which he has done so, nor is it the first time that my hon. Friend has done so. Indeed, when I was in the Navy Department, I was especially interested in the provision of ships. I was aware then that we needed more.
I interested myself in the Type 24 frigate. I was interested to know that the Type 2400 conventional submarine was corning along, and I was especially interested in the further provision of offshore patrol vessels. I was led to believe that each of those designs had the ability to take a variety of weapons systems and sensors according to the requirements of the customer navy and that each would represent a breakthrough in design. Yet all that we have got from the Government in their first year in office is the offshore patrol vessel.
The Type 24 frigates seem to have been sunk without trace. I suspect that an order for a Type 2400 submarine will come along at some time this year, but what is holding it up?
I understand the difficulties over the Type 24 frigate. I understand that there are difficulties with another Department. However, I must remind the Secretary of State that in his first year at the Ministry there have been only three orders for warships. There was the nuclear submarine ordered at Vickers at Barrow, the seabed operations vessel ordered at Scott Lithgow and the offshore vessel ordered at Aberdeen.
Those orders must be set alongside the concern that has been expressed on both sides of the House to day, especially

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by Conservative Members. As some of my hon. Friends know, and as my hon. Friend the Member for Dunfermline (Mr. Douglas) has said, many firms, especially British Shipbuilders, have been concerned about the lack of orders. Some of them have been embarrassed following the expectations of orders from the Ministry of Defence.
Firms have responded to invitations to tender and have attended tender contract clarification meetings. They have submitted revised designs and tenders. They have retained work people in the expectation of substantial orders. They now learn in the White Paper that orders are not to go ahead. The lack of orders over the past year has cost shipbuilding firms, including British Shipbuilders, a great deal of money. It has affected the morale of many workers, especially those in the follow-on or mixed yards.
There is a general belief that the delay in placing orders during the past half year has been due in part to the Government's deliberations concerning a future generation of ballistic missile submarines. Undoubtedly a decision to build a new class of SSBNs would reduce the number of yards building surface warships unless the portion of the defence Vote assigned to shipbuilding was increased.
Although we have rightly praised the White Paper, it should not make the error of quoting the cost of a Type 42 destroyer as only £85 million. That was true of a ship ordered in about 1978. However, a similar ship ordered today by an overseas customer would cost more than £100 million.
We must have been thinking about and arguing about a need for mine-hunters, minesweepers and hovercraft for about 10 years. In the past year, there has been no advance in the proposal to order 12 trawlers, for which British shipbuilding yards have tendered on two occasions.
I hope that some Conservative Members will recall their own expressed concern in this debate or having listened to it from others, and will bear in mind what I have said about the paucity of shipbuilding orders that have been placed by the Government during the past year. Only three warships have been ordered in a year which, we are told, has set us on
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the threshold of a decade of danger and years of high risk. How do we reconcile that with a lack of ship orders?
The direct defence of the United Kingdom is vital not only to this country but to our allies. Our ports and airfields provide important operational bases and key assembly, transit and launching points for the reinforcement of NATO's forces. Any Warsaw Pact conventional attacks on Western Europe would probably include heavy attacks with conventional weapons to prevent NATO from bringing forward vital reserves of reinforcements. The Soviet air threat, especially with the build-up of the Backfire bomber force, extends to NATO's surface ships and submarines.
The convoy system is slow and inefficient. A poorly defended convoy is worse than no protection. No matter how far to the south such convoys may be routed, they would have to swing northeastwards towards the English Channel at some point. They would therefore come within the range of Backfire bombers.
Soviet submarines are not only more numerous, as the Secretary of State reminded us, but are becoming faster, deeper, quieter, coated and smarter. Is the Secretary of State satisfied that he has adequate numbers of marine patrol aircraft? Is he satisfied with ASW systems in general? The Soviets have 50 to 100 Backfire bombers in the northern and Baltic fleets. Is the Secretary of State satisfied with the present state of our air defence systems and with electronic warfare techniques in particular? He will be aware that trends in the balance of power favour the Warsaw Pact in several key areas. Will he assure the House that quality improvements by NATO continue to compensate for any quantitative deficiencies?
In addition to cost effectiveness, we also favour arms control. Indeed, we have said that again and again. We should like to see its limitation and reduction. We are well aware that by choosing that alternative we shall not automatically get the security that we need. That can come about only as a result of mutual agreement. We are equally aware that the Soviet Union has used the 1970s for a steady build-up of its military power. The uses to which such power can be put have been recently demonstrated.

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Although the Western democracies have held together better than expected, there is little sign of the confidence needed to enter wholeheartedly into arms control talks. The feeling persists that problems are accumulating faster than man's ability to cope with them, that irrationality is a stronger world force than many had bargained for, and, above all, that the two super Powers are failing to live up to their responsibilities.
Arms control should be pursued, but we recognise some of the difficulties. Quite apart from the threat, it must involve us in the modernisation of NATO forces if the restoration of a reasonable balance is the prerequisite of meaningful talks. We would have to give the Warsaw Pact notice that unless SALT III includes ceilings on nuclear forces in Europe, and unless a more positive attitude is adopted towards MBFR and CSCE, both sides will be heading for an arms race which, given our relative economic and technological advantages, they cannot win.
The conflict between, on the one hand, improving our societies and living by our values and, on the other, preserving both in a rough and tumble world has never been easy. Politics is not an exact science. It has always involved the art of finding and maintaining the best possible balance between competing, or sometimes contradictory, goals, under a constantly shifting sets of circumstances and within the limits of current voter perceptions. At least two hon. Members have expressed concern about voter perception. Voters do not recognise defence as a main item of concern. However, those same electors were not worried about most of the problems that face us today when they were small enough to be manageable.
Our problems of defence and arms control are still manageable, but they should not be allowed to grow. If we, the elected representatives, had not only the courage of our convictions but the courage to form convictions, we would meet a deep response from those electors who now appear disinterested. We must provide electors with much more information. We must also be absolutely frank. We should tell them that we deplore the scale of world-wide military spending in 1978, the last fully recorded year. Expenditure was four times as great in 1978 as in 1960, and 70 per cent. more at constant prices. The trend is unlikely
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to have changed since then. Unhappily, the fastest rise has occurred among developing countries. Meanwhile, about 600 million people cannot afford basic necessities. In 1979, about 8 million children died from hunger or illness related to malnutrition.
We should also tell electors that such figures tell us at least three things. First, they tell us that during the 1970s only the advanced countries of the West discovered that the party was over. That was their central experience during that period. For most of the world, that party never began. Secondly, mankind is extraordinarily bad at managing his own affairs in a spirit of enlightenment and self-interest. Thirdly, the world has become a much more dangerous place during the 1970s.
Only in this way can we hope to promote that perception by those who provide the taxes and, in some cases, also will provide the military service within the Alliance of the need and the size of the burden that they are asked to bear.
That is why for the Opposition the argument about how far we should match the Warsaw Pact concerns not only defence spending, and is certainly not about more defence spending or even about the type of strategy that we should pursue. It also concerns the type of society that we wish to create. The more we try to match the Warsaw Pact in arms spending, the more we shall be in danger of following the countries in that pact in other ways. A society with a better and freely accepted balance between military spending, consumer spending, social welfare and industrial investment will prove not only more appealing to the electorate but healthier and ultimately stronger.
9.31 pm
The Under-Secretary of State for Defence for the Army (Mr. Barney Hayhoe): The hon Member for Sheffield, Attercliffe (Mr. Duffy) opened his wind-up speech with congratulations on the White Paper. This reflected the general comments made by most hon. Members who participated in the debate. We are very grateful for these kind comments. My hon. Friend the Under-Secretary of State for Defence for the Royal Air Force must take particular pleasure in them

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because of his particular role in the format of this White Paper.
There have been suggestions that an attempt should be made to produce a popular version of the White Paper at much cheaper cost so that many more people may read it. I am not sure about the technical feasibility of such a proposal, but certainly I think that it is highly desirable, and the possibility will be carefully examined.
The speech of the hon. Member for Attercliffe displayed the confusion which was also evident in the speech of his right hon. Friend the Member for Stockton (Mr. Rodgers). He began his speeech by saying that a visit to the United States had led him to believe that it was possible to get a bigger bang by a more effective use of resources and perhaps even a saving of money. He then went on to criticise the White Paper for suggesting that some very small increases in capability and flexibility could be obtained because the resources were not there to do more. There was a continuous confusion. I am not sure whether the hon. Member was in favour of buying more ships. Certainly he ordered a lot just before the election, but there were votes in that. Tonight, I was not sure whether he was in favour of buying more ships or whether he was criticising the size of the budget for being insufficient to order more, At the same time, he said that the budget was too big, anyway. Perhaps these contradictions were not all that unexpected in the context of this debate.
We have had a good and constructive debate with very powerful speeches by a number of my hon. Friends. [Interruption.] As usual, the hon. Member for Feltham and Heston (Mr. Kerr) was not present for one moment throughout the course of the debate, yet he is able to give us the benefit of his advice. He has now taken the only honourable course by withdrawing. We heard powerful speeches from my right hon. Friends the Members for Stafford and Stone (Mr. Fraser) and Bournemouth, West (Sir J. Eden). Both speeches underlined the gravity of the present international situation.
My right hon. and learned Friend the Member for Hexham (Mr. Rippon) spoke of the need to alert the nation to the
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present perils, and I am certain that this speech and many others that have been made will have just that effect. Reference was also made to the telling phrase of the right hon. Member for Stepney and Poplar (Mr Shore), who spoke at the weekend of the world holding its breath because of the crisis. All those comments show the importance of the subject that we are debating today. They demonstrate effectively the disenchantment and irrelevance of the terms of the Opposition's amendment. The amendment is designed not to express a view but to conceal a difference. What a wide, yawning and damaging difference there is on the Labour Benches, as hon. Members who had the misfortune to hear the wild and irresponsible speech of the hon. Member for Dundee, West (Mr. Ross) will testify.
The hon. Member for Hammersmith, North (Mr. Soley) sought to equate the language of the White Paper with quotations from the Soviet News. The difference is that he can stand up in this country quoting from both the White Paper and the Soviet News, but if he were in the Soviet Union holding somewhat mirror image views, what chance would he have? He would be shipped off, either to preventive detention, or at least to some obscure part of the Soviet Union so that he could not influence his fellow citizens.
The right hon. Member for Stockton opened the debate with great skill, seeking to bridge the fundamental gap that exists in his party. When he was Dr. Jekyll, he was congratulating us on the White Paper and hoping that it would be widely read. But instantly he turned into " Red Hyde ", saying that it was not worth reading, because it said nothing new and was too bland. I welcome the forthright support that he gave to NATO, in describing it as the cornerstone of our defence policy. However, he quickly went on to regret that he was not able to provide the finance in order to meet the NATO commitments that had been entered into by the Government of which he was a member.
Tomorrow the Opposition must say —we have not heard a word from them, or at least from their Front Bench today—how they will reduce defence expenditure. Is it their intention to renege

1105
on comparability for Forces pay? Is it their intention to cancel equipment orders, and to refuse to place orders for additional equipment? If so, will they be specific? Will they cut back on work services, and not provide the accommodation and buildings that are needed for both operational and reasonable living conditions for our Service men? What will their cuts in defence expenditure cost in terms of the loss of jobs that will flow from their proposals?
The right hon. Member for Stockton complained about lack of information, undue secrecy, and absence of parliamentary debate on nuclear policy. Yet he is a member of a party which, when in government, launched the development of British nuclear weapons in the late 1940s—largely for internal party reasons. I applaud his Government for having done so, but it was done in secrecy, without even discussion in the Cabinet of the day—if we are to believe the memoirs. His Government maintained the Polaris deterrent in the 1960s. They initiated the updating and hardening of Polaris in the late 1960s— the Chevaline programme—and sustained the programme from 1974 to 1979. During their last 10 years in office, the Labour Government did not hold a single debate in the House about nuclear weapons, and they avoided any significant mention of them or any details about them in any official document.
The right hon. Member for Stockton is an agreeable chap, but he must not strain our general good will by such absurd criticisms. My right hon. Friend the Secretary of State has given a great deal of information on the subject. He has promised a full explanation and account of the reasoning behind the decisions that will be made on the Polaris successor system. He deserves credit from all parts of the House for breaking with the tradition set by the previous Government of keeping these matters under a veil of secrecy.
Mr. Dalyell: If the hon. Gentleman is in the business of helping tomorrow's debate, will he comment on the difficult question of why his Prime Minister and Foreign Secretary first heard of the American military action in Iran from Mr. Brian Redhead and Miss Livvy Purves and how it came about that the Secretary of State for Defence could not
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tell us—I do not blame him; he is a courteous and truthful man—whether the Americans had the use of the British base at Diego Garcia? It would greatly help tomorrow's debate if we had something forthcoming on that vital aspect of information available to senior members of the Government.
Mr. Hayhoe: Far from helping tomorrow's debate, that intervention will probably provide some publicity for the hon. Gentleman, but we understand his skill in such matters.
I want to turn to a matter that was raised by the right hon. Member for Stockton and many of his hon. Friends namely arms control.
Mr. Douglas: Will the Minister give way?
Mr. Hayhoe: No. I intend to speak about arms control. I want to make clear the Government's view on arms control and disarmament.
Mr. Douglas: Will the hon. Gentle man give way?
Mr. Hayhoe: The hon. Gentleman is not normally unprepared to listen to a prepared and carefully considered point on a matter that was raised by the right hon. Member for Stockton, who opened the debate for the Opposition, and was continually raised by many other hon. Members. I am surprised that the hon. Gentleman should persist, because the House is entitled to receive from me some comments on the question of arms control
We want to make progress, and we shall continue to make every effort to secure progress.
Mr. Douglas: Will the Minister give way?
Mr. Dupty Speaker: Order. It is clear that the Minister is not giving way.
Mr. Hayhoe: We need to be clear-sighted about our objective and about the means and conditions for achieving it. It is easy to talk of, or call for, new initiatives, but any new initiative on arms control must be properly thought through and soundly based. Arms control is a matter not for grand gestures, but for solid, painstaking work.

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Of course I can understand the appeal to some people of unilateral disarmament. To them, it must seem an easy solution to the undeniable moral dilemmas presented by modern weapons of mass destruction. However, while I respect their sincerity, I profoundly disagree with their conclusions. Unilateral disarmament is not the way to preserve peace and stability between nations. It would distort the balance on which our security, and that of our friends and allies, rests, and would undermine the capability of the North Atlantic Alliance to deter aggression.
In December last year, my right hon. Friend the Secretary of State and the Foreign Secretary, together with the Foreign and Defence Ministers of our allies, endorsed a major new arms control initiative designed to contribute to a more stable military balance in Europe and to improve relations between East and West. The initiative took the form of a comprehensive programme of action—addressing both the military balance and the need to build confidence —to improve mutual security and cooperation in Europe.
I should like to remind the House of the content of that programme. First, there was an offer to negotiate for substantial reductions in the level of long-range theatre nuclear forces as well as inter-continental strategic forces within the framework of SALT III. Secondly, it offered the unilateral withdrawal of 1,000 United States nuclear warheads from Europe. Thirdly, there was a proposal for an interim phase 1 agreement for mutual and balanced force reductions designed to give fresh impetus to the MBFR negotiations. Fourthly, there was a proposal for a package of associated measures in MBFR designed to ensure compliance with the agreement and to make military activities more transparent, thereby improving mutual confidence. Fifthly, in furtherance of the work of the conference on security and co-operation in Europe, there was a readiness to examine proposals concerning confidence-building measures and a conference on disarmament in Europe. I emphasise that these are not just ideas which have been floated in a vague way. They are concrete proposals.
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Immediately following the December meeting, the United States Administration made a formal offer to the Soviet Union to begin negotiations on limiting theatre nuclear forces. The Russian response was negative. If no negotiations are taking place, that is the responsibility of the Soviet Union. It is not that of the members of the Alliance. We have stressed that the offer is serious, and it remains on the table.
Work on the offer continues within the Alliance. The unilateral withdrawal of 1,000 United States nuclear warheads from Europe will go ahead. In addition, when the Alliance deploys modernised theatre nuclear forces, further warheads will be withdrawn on a one-for-one basis. Thus, unilaterally the West will have reduced substantially the number of warheads that it deploys in Europe.
Also in December, shortly after the ministerial meeting, Western representatives in the MBFR talks presented proposals for an interim phase 1 agreement and a package of associated measures. There has been another round of talks since then in which both sides have reaffirmed their commitment to a search for an MBFR agreement. The Western proposals remain on the table, and we await a constructive response from the East. Here again, the ball is not in our court.
The United Kingdom is also participating with the United States and the Soviet Union in negotiations towards a comprehensive test ban. The issues involved are complex, and progress is slow. But the Government remain committed to the achievement of a fair and verifiable test ban which we believe would play an important part in curbing the development of new types of nuclear weapons. We shall also continue to work for a successful outcome to the Madrid conference which is to be held later this year and also to the review conference on the non-proliferation treaty.
The Government, therefore, are firmly committed to seeking realistic measures of arms control and disarmament. I assure the House that we shall look most carefully for other areas where there is scope for further concrete and viable initiatives.
Mr. Ernie Ross: The Minister has
listed a number of alleged initiatives——
Mr. Hayhoe: They are not alleged initiatives.
Mr. Ross: I repeat, alleged initiatives. However, at the same time, was not a decision taken to station 572 cruise missiles in Western Europe?
Mr. Hayhoe: The decision made by NATO to station those cruise missiles was accompanied by a comprehensive offer of this kind. It is interesting that to date the Soviet Union has not responded in a positive fashion.
Two other related subjects were raised during today's debate. I refer, of course, to biological and chemical weapons.
The United Kingdom played an active and leading part in the successful biological weapons convention review conference which was held in Geneva in March of this year. The parties to the convention reaffirmed their strong determination, for the sake of mankind, to exclude the possibility of biological agents and toxins being used as weapons. They also reaffirmed their strong support for the convention, their continued dedication to its principles and objectives and their commitment to implement effectively its provisions. I regret, however, that the conference was not able to conclude that these provisions had been complied with fully. The position of the United Kingdom remains that in no circumstances would we consider developing, possessing or using biological weapons. We urge all Governments to make unambiguous statements of non-possession or destruction of biological weapon stocks.
I now turn to chemical warfare, raised by a number of hon. Members, on both sides of the House. The United Kingdom is committed to seeking a verifiable ban on the production and stockpiling of chemical weapons. We believe that all Governments should support efforts to this end, but Soviet unwillingness to countenance the necessary verification methods which would be an essential safeguard means that we cannot hope for early progress. Although we hope that such weapons will be banned by international agreement, the Soviet posession of a substantial chemical capability poses a serious threat to the United Kingdom and her allies that we cannot ignore. It is in the context of this threat that the
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whole subject of chemical warfare is being kept under careful review.
I am grateful to the hon. Member for Isle of Wight (Mr. Ross) for his general support of the White Paper and our policy towards NATO. I am grateful to him for reminding us of the recent feature in The Economist about the Army. I should like to respond to some of his questions about equipment. In artillery support, we have decided to purchase a further 48 self-propelled M109 guns from the United States for delivery next year. These will enable us to increase the size of our batteries in BAOR from six to eight guns and to increase the number of batteries with 155mm weapons as opposed to 105mm Abbot guns. This measure will greatly enhance the hitting power of our corps' artillery. In the longer term, an advanced 155mm self-propelled gun, the SP70, is being developed jointly with Germany and Italy and is due to enter service in the late 1980s.
The SP 70 will provide fast, accurate and heavy concentrations of artillery fire in support of the close combat battle. Depth fire will be provided by a new multiple launch rocket system—the MLRS—to be procured under a memorandum of understanding with the United States, France and the Federal Republic of Germany. This is a tracked, self-propelled armoured rocket launcher, carrying 12 rockets capable of very rapid reload and planned to enter service with the British Army in the mid-1980s. Its introduction will provide a major jump in the volume of depth fire available to the 1st British Corps.
Questions were asked about the new mechanised combat vehicle for the Army. Part of the present fleet of AFV 430 tracked aramoured personnel carriers is due for replacement in the mid-1980s. GKN Sankey Limited has started development and is making good progress on a mechanised combat vehicle, the MCV 80, to meet this requirement. We are also looking carefully at progress being made on a United States development, called the IFV, the infantry fighting vehicle.
A decision will soon be made between the options of continuing with the MCV 80 or manufacturing the IFV in this country under licence. This matter is being currently studied. Either vehicle will afford our mechanised infantry considerably increased mobility, protection and

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fire power on the future battlefield. While our present anti-tank guided weapons have an effective capability against the T64 and T72 tanks, we are planning an evolutionary programme of improvements to Milan, TOW and Swingfire which will be designed to counter recent and forecast improvements in Warsaw Pact armour.
The details of the improvements must obviously remain classified, but they are designed to ensure the continuing effectiveness of our family of anti-tank missiles. We are also going ahead with full development by Hunting Engineering of anew light anti-tank weapon, LAW. The weapon is due to come into service with the British Army in the early 1980s. It is very simple to use and cheap to pro duce—a single shot, throwaway weapon in which the launcher is discarded after firing. It can be carried by one man, in addition to his other equipment. As the short-range member of the Army's anti- armour family of weapons, it will complement the crew-served Milan medium- range weapon now in service with many battalions. Specifically designed for engagements against the whole range of tanks that will be on the battlefield throughout the 1980s, we are confident that LAW will be lethal against all known and potential targets. It is a great im provement on the American M72 66mm weapon and the Carl Gustav 84mm weapon, both of which will be replaced. It will be issued widely throughout the infantry and to other arms and Services, including those in the rear areas. Wide spread interest has been shown in the weapon by NATO armies to which it has been demonstrated. It is the only weapon in the world which fully meets the requirements of our European Allies' armies and has considerable worldwide potential. The contract——
Mr. Douglas: The Minister is not answering the debate.
Mr. Hayhoe: The hon. Member was not here at the time when the hon. Member for Isle of Wight raised a number of these questions about equipment.
Mr. Douglas: Not true.
Mr. Hayhoe: The hon. Member also asked about helicopters. A contract is being placed with Westland Helicopters
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for a further 14 Lynx helicopters to maintain the Army's planned front-line strength——
Mr. Douglas: I was here.
Mr. Deputy Speaker: Order. The hon. Gentleman cannot keep addressing the House from a sedentary position.
Mr. Douglas rose—
Mr. Hayhoe: No, I will not give way.
I am replying—
Mr. Douglas: The hon. Gentleman is not answering the debate.
Mr. Deputy Speaker: Order.
Mr. Hayhoe: These questions were raised, and I am trying to reply to some of them.
My right hon. Friend the Member for Stafford and Stone asked about the Hawk aircraft. I am pleased to announce that the RAF is to get 18 more Hawk jet trainers to supplement its fleet of training aircraft. They will help to meet the increased requirement for fast jet training and, as with the present RAF Hawk aircraft, a proportion of the new aircraft will be able to carry the Sidewinder AIM9L air-to-air missile. This will provide the ability further to supplement the RAF's specialist air defence forces. The first of the new aircraft should be delivered by 1983.
Questions were also asked about the air defence of the United Kingdom, a subject of great importance. It is not only the aircraft and the weapons systems which need to be improved. Just as important in providing modern and effective air defence systems is the network of ground operation centres, communications systems and surveillance radar which act as the eyes of the system and provide the information to which the aircraft respond. That is why we have embarked on a major programme to modernise the system.
I have explained——
Sir John Eden: Since at least four of his hon. Friends mentioned civil defence, if the Minister does not answer that question tonight, will he ensure that it is answered tomorrow?
Mr. Hayhoe: I am grateful to my right hon. Friend. I was not proposing to discuss that subject tonight, but I assure

1113
him that reference will be made to it tomorrow. As he knows, the matter is the responsibility of the Home Secretary. That is why it is not mentioned in the White Paper. However, I understood, as did my right hon. Friend, the great strength of feeling expressed by a number of hon. Members about the vital importance of civil defence. That has been noted, and I hope that some comments will be made about it tomorrow. Studies have been continuing on this matter.
I wanted to say a word about the Royal ordnance factories. They manufacture a wide range of equipment to meet the needs of the Armed Forces and of overseas customers, with exports representing about half of their total output by value. The ROF's have operated successfully with the greater commercial freedom that they have enjoyed since the ROF trading fund was established in 1974. They have paid total dividends of about £31 million into the Consolidated Fund, which is the equivalent of a 10 per cent. return on the public dividend capital and its reserves.
The loss of Iranian orders for tanks has had a serious impact upon the results, as has industrial unrest, but, having visited ROF Blackburn and ROF Leeds, I can testify to the high quality and good motivation of the staff. They know that future trading success depends upon the manner in which the ROFs respond to the challenges which undoubtedly lie ahead, and every effort is being made to secure new overseas markets and to improve the organisation's competitive position.
I was hoping to have time to say something about defence sales policy——
It being Ten o'clock, the debate stood adjourned.
Debate to be resumed tomorrow.

USSR TRADE INSPECTORS
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Waddington.]
10 pm
Mr. Cyril D. Townsend: The House has been told that, following the Soviet invasion of Afghanistan, all aspects of Britain's political, commercial and cultural links with the Soviet Union were being reviewed. In addition, hon.
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Members have criticised the Government for asking our Olympic athletes to bear an unfair portion of the burden of our disapproval. The onus rests on the Government to convince all concerned that that is not so. For these reasons, I welcome this opportunity to bring to the notice of the House the presence of Soviet and Eastern European trade inspectors in this country and to call upon my hon. Friend the Minister of State to tell the House the attitude of our Government towards them.
According to information I have obtained from parliamentary questions and other sources, there are at present no fewer than 65 Soviet inspectors permanently in this country monitoring the manufacture by British companies of goods and equipment to be delivered to the Soviet Union under export contracts. Last year there were 68, and the year before there were 79 inspectors. Before 1978 the figures were not kept in such a way as to make it possible to distinguish between Soviet inspectors and Soviet technicians on temporary attachment to the Soviet trade delegation. The combined figures for these two categories for the three years previous to 1978 were 73, 75 and 83. The 65 Soviet inspectors presently in the United Kingdom have been here for an average of one year and two weeks. The longest length of stay is 36 months, and 50 of the inspectors are accompanied by their families.
In the Official Report of 1 December 1975, the Labour Government gave a list of British firms which had Soviet inspectors attached to them. The firms included John Brown Engineering, International Computers, the Singer company, Swan Hunter shipbuilders, Vickers, and Wilkinson Sword. The present Government have decided that it would be undesirable to update the list. I have been told that there are two inspectors in Scotland, one in Wales and three in Northern Ireland and that one chemical company has no fewer than 11 inspectors attached.
I believe that the House will be surprised to learn that there are no limits on the number of inspectors permitted to work here at any one time. In theory, there could be several hundred. They are required only to demonstrate that they are needed here under the terms of particular contracts and they qualify for entry under our immigration rules. They have to

1115
apply for extensions of their stay every four months.
In contrast, there are fixed limits on the number of Soviet officials resident in the United Kingdom for periods longer than three months, which have remained unchanged since 1971. For example, the figure for the Soviet embassy is 93 and for the Soviet trade delegation it is 47. In the present circumstances, 65 trade inspectors is a large number. That number is greater than the number of diplomats in the Polish embassy, the Bulgarian embassy or the Hungarian embassy. At a time when the Government are trying desperately to convince our sportsmen not to go to Moscow, are these 65 trade inspectors fully justified and, if so, should not 65 at least become the maximum limit for the time being?
I do not oppose trade with the Soviet Union, but this is the moment to start laying down our terms to that country. Certainly, it allows only half that number of our business men to reside permanently in the Soviet Union.
On 28 February, I asked the Foreign Office which other Communist countries had trade inspectors here, and how many there were per country. There was an embarrassingly long pause. The Minister kindly wrote to me on 26 March to apologise for the delay which was caused, he said, by the need:
" to consider with other Government Departments the feasibility and necessity of changing the way in which the Home Office maintain their records so that it is more immediately apparent which of the trade personnel from Eastern European countries as opposed to the Soviet Union can properly be called inspectors. You will see from the information that I am now giving that we have concluded that a change of practice in the Home Office would be useful in this case ".
The House will welcome the news that changes are to be made. I am most grateful to the Minister for being here tonight, and I hope that he will go a little further. However, it is clearly suggested that in former years there has not been the surveillance and control of trade inspectors from Eastern Europe that there should have been. There is reason for concern that the Government do not know how many are permanently residing in our country or that they have not been prepared to tell hon. Members.
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Surely it would be foolish to draw too great a distinction between trade inspectors from Russia and East Germany. To put a specific point to my hon. Friend, is he now in a position to tell me how many trade inspectors there are—or approximately how many—from East Germany? Soviet inspectors resident in the United Kingdom are subject to a travel notification scheme. May we be told whether that now applies to those from other Eastern European countries, or are they still to be treated differently? Soviet inspectors resident in London hate to give at least two working days' notice of travel to places more than 35 miles from central London. Those resident outside London are required to give one working day's notice of travel outside the immediate area of their residence. The mind boggles at the amount of extra work that must cause the authorities.
From the correspondence I have had with companies to which Soviet trade inspectors are attached, it appears that they are accepted willingly in return for the companies getting important contracts from the Soviet Union. That is an understandable commercial attitude. But there are wider implications for the House to consider. The companies normally supply furnished accommodation and arrange for the inspectors to be accompanied inside the plants. The administrative burden must be considerable. The inspectors travel unaccompanied away from the factories and, when an overnight stay is necessary, they are not supervised in the evening. Renewal applications for visas and certificates take a very long time to be dealt with—up to three months—and are often returned with errors resulting in prolonged correspondence with the immigration department.
I heard one report of a Soviet inspector attached to a company in Northern Ireland who was not much of a problem since he was often away visiting officials in the Soviet embassy in London. One wonders why. Another firm told me that its Soviet inspectors
" have been located in Portsmouth, specifically at the request of the Foreign Office with the intention of reducing security problems. These inspectors and their families are allowed complete freedom of movement within a 10 mile radius of Portsmouth, but on the mainland only."

1117
I am concerned at the openings for industrial espionage. Is it possible to prevent a Soviet trade inspector taking photographs of another highly sensitive manufacturing process operating either within the company to which he is attached or within another company that he might legitimately be able to visit?
Almost certainly the vast majority of these Soviet trade inspectors are genuinely performing a routine technical service. Many overseas clients will make it a condition of contract that their inspectors should have access to offices and works to check design and equipment and ensure adherence to contract specifications.
In 1971, as the House will remember, 105 so-called diplomats and trade delegates were expelled by the Conservative Government in a purge called for—it appears for some time—by the security authorities. They were expelled for being spies and agents provocateurs. Are the Government satisfied that the KGB has not found a way round the ban imposed by my right hon. Friend the Member for Sidcup (Mr. Heath) through the fine print of the Anglo-Russian trade agreement, signed by the right hon. Member for Huyton (Sir H. Wilson)? The record all too clearly shows that the KGB never misses a chance to infiltrate spies into a Western country, and Britain has proved to be a prime target in recent years.
It is unusual for the Soviet Union to allow more than 100 of its citizens outside the diplomatic world to live for approximately a year in the West, sampling all its advantages, including consumer advantages, before being replaced by others.
Are the Government convinced that not one of those Soviet inspectors represents an intelligence threat or is involved in subversion in the heart of Britain's industrial life? How can the Government be certain that none of these technical inspectors has been given a crash course in intelligence work by the KGB? Are they sure, for example, that the wife of a trade inspector in Northern Ireland is not in reality a Soviet agent in contact with the IRA? Indeed, is it wise to have three Soviet inspectors in Northern Ireland at present?
I seek firm assurance from my hon. Friend that if the security services are
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convinced that any of these inspectors have been involved in espionage they will be sent packing without delay. When two Hungarian diplomats were caught red-handed photographing a secret nuclear weapons establishment in April 1976, the Labour Government failed to expel them. The late Mr. Crosland, then Foreign Secretary, described the action as " foolish and provocative ", but questioned whether their expulsion would serve any useful purpose.
In conclusion, may I remind my hon. Friend that my right hon. Friend the present Prime Minister said in Dorking on 31 July 1976:
" We must consider how we can ensure that our commercial relations with the Soviet Union don't damage our own long-term security interests."
10.13 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Peter Blaker): I am grateful to my hon. Friend the Member for Bexleyheath (Mr. Townsend) for initiating a debate on this important subject.
As he said, the Soviet invasion of Afghanistan caused the Government to review every aspect of our relations with the Soviet Union. That included a review of our policy on Anglo-Soviet trade. Since the presence of Soviet trade inspectors in this country is a consequence of that trade, I should like to remind the House of the Government's present policy on this matter.
The Government continue to support trade between the United Kingdom and the Soviet Union which is of benefit to the United Kingdom. That means that we are not attempting to place a total embargo on trade. Such an embargo would not harm the Soviet Union because other countries would not impose a similar embargo, but it would be damaging to our own interests, and our exporters would sacrifice business to their competitors in other countries. There is no prospect of getting our partner countries to agree to a total embargo on trade with the Soviet Union, even if one were thought desirable.
On the other hand, the Government firmly believe that Anglo-Soviet trade should not confer special benefits on the Soviet Union. That is why we decided not to renew the Anglo-Soviet credit agreement of February 1975 which made

1119
available to the Soviet Union credit on particularly preferential terms. That is also why we are engaged in consultations with our partners on how to ensure that the export to the Soviet Union of sensitive goods and technology is more tightly and effectively controlled. There is already agreement that no significant exceptions will be made to the COCOM rules for the time being. That represents a tightening of past procedures. We are now discussing how the rules can be tightened on a longer-term basis.
As a consequence of our review of British-Soviet trade policy, and encouraged by my hon. Friend's interest, the Government have also reviewed the arrangements for Soviet trade inspectors in this country. If we are to export to the Soviet Union, we must be prepared to compete for the business. Much of this business involves heavy industrial exports. If we are to get the business, our firms have to meet the terms which the buyer lays down. The buyer knows that firms in other exporting countries will do that. Our exporters have to match them if they are to have a chance of getting the business.
One term which is frequently laid down is that the exporting company shall receive Soviet inspectors on its premises to monitor the quality of the goods and equipment concerned. This is a normal practice in international trade in industrial products. The alternative to having these inspectors in Britain is thus to lose the business which, of course, would mean losing jobs. The Government's policy is, therefore, not to object to the presence of these inspectors as long as they are performing functions necessary for the conduct of trade which is beneficial to the United Kingdom and are doing so in a proper manner. Other Western Governments pursue a broadly similar policy.
Since the level of Anglo-Soviet trade varies, and the frequency with which particular contract negotiations come to a head is irregular, it would make no sense to place an arbitrary limit on the number of inspectors permitted to reside in this country at any one time. I think that that answers one of the points which my hon. Friend raised. This also applies, of course, to inspectors from other countries, such as China, and the countries of Eastern Europe.
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The Government's policy, therefore, is to treat each application from a Soviet trade inspector to reside in this country on its own merits on a case-by-case basis. Numbers have, in fact fallen in the last five years, from 83 in February 1975 to 62 today. That is a further drop compared with the last figure which my hon. Friend gave.
My hon. Friend will not need reminding—indeed, he mentioned it himself— that a previous Conservative Government found it necessary in September 1971 to require the Soviet Government to remove from the United Kingdom the 105 Soviet officials stationed here who had engaged in unacceptable activities. The fact that this was necessary clearly demonstrates the need for all Governments to exercise particular vigilance towards Soviet nationals Present in their territories.
As a consequence, the Government's arrangements concerning the granting of visas to Soviet inspectors include provisions for careful and thorough control. These are designed to ensure that inspectors are here for the right reasons and are working to advance trade which is in this country's interest.
My hon. Friend referred to some of the safeguards. Perhaps I can spell them out a little more fully, because I think that it will help to reassure my hon. Friend. First, a visa will not be authorised for a Soviet inspector wishing to work in this country unless the Government, after consultation with the British company concerned, are satisfied that his presence in the United Kingdom is required under the terms of a particular trade contract. The Government require information about his precise role, his place of work and his residence. He must also satisfy all the other requirements of the immigration rules.
Secondly, every Soviet inspector is required to seek an extension of his visa every four months during his stay in this country, if he stays longer than that period. At these times, the British company concerned must confirm to the Government's satisfaction that the inspector is still required and that he is carrying out his duties satisfactorily. If this confirmation is not given, or if the Soviet inspector concerned has not carried out his duties satisfactorily from any other point of view, the Government may

1121
decline to renew his visa. This has happened on a number of occasions.
Thirdly, Soviet inspectors staying in this country for more than three months are subject to a travel notification scheme. This requires those resident in London to give two full working days' notice in advance of travel more than 35 miles from the centre of London. Inspectors resident outside London must submit notifications of travel beyond the immediate vicinity of their place of residence at least one working day in advance.
Following our review of these controls, we are satisfied that they are generally both reasonable and adequate. The review has brought to light a possible need for some minor adjustments to the administration of our system. My hon. Friend mentioned, I believe, one such adjustment in a related area which has already been made: the Government are now beginning to keep separately the figures for Eastern European inspectors so that their numbers will be immediately distinguishable from the numbers of other types of commercial personnel. Other changes may be made after further study by the Government Departments concerned.
Mr. Cyril D. Townsend: Will my hon. Friend give way?
Mr. Blaker: I am just about to take up a point. I shall give way later if time allows, but I have some important things to say which I think my hon. Friend will want to hear.
My hon. Friend referred to the delay in answering one of his questions—a legitimate point to take up. The question which took a long time to answer was one concerning the numbers of Eastern European trade inspectors in this country. As I have explained, the reason for the delay in this case was the need to consider whether the Government would change this method of keeping records. Since then we have conducted a careful review of the situation. This has involved a significant amount of work by a number of Government Departments. It is better to conduct a review of this sort thoroughly than to do it in a rush. As a result, we have changed our system.
Since I answered questions from my hon. Friend on the subject of Eastern European inspectors on 27 February and 26 March, our research has shown that
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there is at present only one Eastern European national resident in this country on attachment to a British company who can properly be described as an inspector. Eastern European countries are generally entitled, under their contracts with British companies, to appoint resident inspectors. However, this function is generally carried out in practice on behalf of the Eastern European countries by visitors from the commercial section of the London embassy concerned or from the headquarters in Eastern Europe of the relevant trading organisation.
My hon. Friend may have in mind the possibility that some Soviet inspectors in this country are involved in industrial intelligence-gathering activities. I am sure that most British companies, particularly those with international markets, are very well aware of the need for safeguards. To a large extent, this is a matter of commercial judgment. No Soviet trade inspector is allowed here unless his presence has been agreed by, indeed in effect requested of the British Government by, the British company involved. For their part, however, the Government are also alive to the potential risks in this area.
As part of the review I have mentioned and in preparation for this debate, the Government have been in touch with some of the British companies with most experience of working with Soviet inspectors. None of these companies suggested that the Government's general approach to the matter was wrong; and all took the view that Soviet inspectors generally performed a useful and helpful function. The consensus was that Soviet inspectors are almost invariably genuine experts in their field; that they are kept busy on their inspection jobs; that they are useful to both buyer and seller since they reduce the chances of damaging and long drawn out disputes at a later stage about whether particular items of equipment were properly manufactured and packed and who is responsible for any damage to them; and that they help companies in the difficult business of establishing better communications with Soviet buyers.
My hon. Friend has asked in the past about the apparent lack of reciprocity in this area. He referred to that today. He has said that there appear to be no

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British inspectors in the Soviet Union. The main reason for this disparity is no doubt that we import few capital goods and little capital equipment from the Soviet Union. The need for inspectors does not, therefore, normally arise. However, there are quite large numbers of British site personnel in the Soviet Union supervising the erection of plant exported from the United Kingdom.
Mr. Cyril D. Townsend: I have listened with close attention to the encouraging news that my hon. Friend has brought to the House. Will the one Eastern European trade inspector we have come across be treated in the same way as the Soviet trade inspectors? Secondly, and perhaps rather more importantly, will he give the guarantee for which I asked— that if the Government suspect that any Soviet trade inspector is involved in espionage, they will send him packing without delay?
Mr. Blaker: If my hon. Friend is referring to notification of travel, I cannot give that guarantee. We do not operate
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a similar arrangement for the Eastern European countries. The main reason why we operate the notification of travel arrangements with the Soviet Union is that the Soviet Union operates restrictions on the travel of our people in the Soviet Union. It is a matter of reciprocity.
In answer to my hon. Friend's second question, I merely say that the Government will yield to none in their determination to safeguard the security of this country.
I am grateful to my hon. Friend for raising the issue of the Soviet inspectors in the United Kingdom. It is of great importance and of particular interest at present. I assure him, having examined carefully the system that we operate, that I do not believe that there is cause for concern. I can also assure him, in response to his second question, that if there were cause for concern the Government would not hesitate to take immediate action.
Question put and agreed to.
Adjourned accordingly at twenty-six minutes past Ten o'clock.

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

CHP GENERATING STATIONS
Viscount HANWORTH: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have considered the possible economic advantages of smaller electric generating stations working on a combined heat and power cycle (CHP), sited adjacent to suitable conurbations, thus providing district heating potential without the prohibitive cost and energy loss of very long mains pipelines.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, the programme of work announced by my right honourable friend the Secretary of State for Energy on 2nd April to examine the feasibility of combined district heating and power generation in particular locations will necessarily have to include examination of the most appropriate method of supplying heat. It is impossible at this early stage to anticipate the nature of any future CHP scheme but the siting and size of the generating capacity will clearly need to be taken into account. The House may, however, be interested to know that the report of Dr. Walter Marshall's inquiry into CHP indicates that transmission costs assume less importance the larger the scheme.
Viscount HANWORTH: My Lords, I thank the noble Earl for that helpful reply. Would he agree that, whereas there is a potential saving of energy from combined heat and power of perhaps 30 per cent. or more, the loss in efficiency between a large and small generating station is of the order of 5 per cent.?
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Bearing in mind that the objection to moving ahead with a CHP scheme has always been stated as being that there was not a big enough conurbation to take the heat from a large power station, would he give particular weight to the Question which I have put down on the Order Paper?
The Earl of GOWRIE: My Lords, I am delighted to give weight to the Question which has been put down. Indeed, the Government have really to some degree anticipated the noble Viscount's Question by setting up a programme.
The Earl of LAUDERDALE: My Lords, are we to understand from my noble friend's reply that the Marshall Report has in principle been accepted by the Government, and that the Government will now seek to identify a suitable site for a pilot scheme?
The EARL of GOWRIE: My Lords, my noble friend is anticipating the Government a little. The Government have accepted the need for conservation and the value of CHP schemes as outlined by the Marshall Report. As a result of accepting this issue of principle, they are now setting up a programme to look at the feasibility and costing of utilising such schemes.
Lord LEATHERLAND: My Lords, will the Government bear in mind the welfare of the coalmining industry, because what might be a convenience to some districts here might spell disaster for some mining communities?
The EARL of GOWRIE: My Lords, there is no plan to have a CHP programme as part of a network all over the country. In the initial stages, it would probably be at most half a dozen sites.
Lord AVEBURY: My Lords, does the Minister recall that a few years ago the South of Scotland Electricity Board conducted a feasibility study in the Pinkston area of Glasgow, and came to the conclusion that it was marginally uneconomic on the assumptions made of required return by the Treasury and the future increases in the cost of coal? In view of the fact that the Government are now committed to undertaking a feasibility study, would not one possible way forward

999
be to request the South of Scotland Electricity Board to rework the arithmetic in that scheme, putting in more realistic assumptions about the future costs of energy?
The EARL of GOWRIE: My Lords, I think that the noble Lord, Lord Avebury, has in fact put down some Questions for Written Answer in respect of the need for the electricity board to reconsider its costings, which I am in the process of answering, if I have got the timing of that right. The broad principle about the use of CHP has led the Government to set up a programme, but what comes out of the programme will of course depend on the economic cost-effectiveness of what we discover.
Viscount HANWORTH: My Lords, would the noble Earl say whether I am correct in thinking that Newcastle have carefully studied the problem and asked for a CHP scheme in that area?
The EARL of GOWRIE: My Lords, I am not aware of what particular boroughs have made representations to the Government at this stage, because at this stage the Government are inviting individual local authorities to put forward their recommendations; but when they have done so I should be delighted to let the noble Viscount know.
The EARL of HALSBURY: My Lords, would the noble Earl agree that whatever conclusions come from today's studies would be a function of today's costs and prices, and that what is at issue for the future is not realistic assumptions on the lines of Lord Avebury's Questions, but updating the conclusions of any current inquiry regularly year by year in the Department of Energy's annual report, so that the issue is not lost sight of in future?
The Earl of GOWRIE: My Lords, it would also be right for that point to be drawn to the attention of those working the programme, because it would be lamentable if the programme were allowed to get out of date.
Lord WYNNE-JONES: My Lords, will the noble Earl take into account the possibility of retaining the CHP
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scheme which has been working at Battersea, and renewing the equipment of the station in order to give it a new lease of life?
The Earl of GOWRIE: My Lords, I shall certainly be delighted to inquire into that.
The Earl of LAUDERDALE: My Lords, will my noble friend add this further point to the matters he has answered? Will the Government consider inviting local authorities, when they prepare their structure plans, to consider the possibilities of CHP as a suitable ingredient, if you like as a suitable input, in their studies for structure planning?
The Earl of GOWRIE: My Lords, I think that that effect will be achieved as a result of the programme which my right honourable friend announced on 2nd April.
Viscount HANWORTH: My Lords, would the noble Earl agree that, in looking at the economics, what really matters is the economics over the life of the power station and not necessarily at the present time? Would he also agree that costs of fuel will almost certainly rise and that what is not now clearly economic will be economic in a few years' time?
The Earl of GOWRIE: My Lords, my information is that at the upper end of the scale of energy savings given in the report, those from CHP and district heating would have an economic value equivalent to 30 million tons of coal per annum, and that would be between 5 and 10 per cent. of probable United Kingdom primary energy demand up to the end of the century.

RATES DEMANDS: BILLING
2.44 p.m.
Viscount HANWORTH: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they consider that sending out separate demands for general rates and for water charges is efficient or accept-

1001
able bearing in mind the extra work and expense placed on the consumer and the possibility of having to take separate action for enforcement of payment.
Lord MOWBRAY and STOURTON: My Lords, we think on balance that it is right that the water industry should, like others, collect its own charges. One has to remember that in fixing these charges water authorities are required under the Water Act 1973 to have regard to the cost of providing services. Consequently, although domestic consumers are currently charged mainly on the basis of rateable value, there needs to be scope for water authorities to adopt other systems, such as two-part tariffs and metering. Water authorities have in fact made savings by direct billing and consumers are now better informed about charges for the services they receive.
Viscount HANWORTH: My Lords, while thanking the Minister for that reply, may I ask whether he appreciates that having to reply to two separate demands first of all means two stamps of 12p and, for most of us who pay by cheque, an additional charge of 15p? If there are perhaps 20 million households in England, that conies to well over £1½ million. Surely, any administrative inconvenience would be far outweighed by that amount. Would the noble Lord agree that the definition of a civil servant must be one who serves the public and not his own administrative convenience?
Lord MOWBRAY and STOURTON: My Lords, I am not certain of the implication of the noble Viscount's last statement; civil servants serve their Ministries which serve the public, and the public decide at general elections whether they are content. As for what the noble Viscount said in the earlier part of his supplementary, which was more to the point, there is no reason why water authorities, which are authorities in themselves, should not do their own billing. Electricity boards and gas boards do their own billing. Why should water boards not do their own billing? There has never been any comparison with other services such as education and policing, which are charged to the general rates. I said in my main Answer that there was a saving. For instance, the Severn Water Authority estimates that its consumers alone have
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benefited by some £3½ million by direct debiting.
Lord STRATHSPEY: My Lords, is my noble friend aware that a great many people in this country are paying three rates, not two: one to the local authority in the shape of a general rate, a second to the water company for the supply of water, and a third to the water board, water authority or whatever it may be called, to cover sewerage, environmental river control and all sorts of other things?
Lord MOWBRAY and STOURTON: My Lords, I am not quite certain to what my noble friend was referring in the second part of that supplementary. Water authorities not only provide water—purified, clean and pure water such as very few countries have in such good supply—but also have one of the best sewerage systems in the world, and we should be proud of what we have. The average family in this country is still on average paying only £1 a week for all this service. I do not think we need hide our heads in shame about this. We are proud of what we have done in this sphere.
Lord PARGITER: My Lords, is it a fact that some water authorities examined the position in regard to direct billing and found that local authorities were charging them more to collect the water rates than it cost to do it themselves?
Lord MOWBRAY and STOURTON: Yes, my Lords, and I am grateful to the noble Lord for making that point. The average council was charging about 3 per cent. of all the money taken from the public, so the public were not getting a good bargain. I must point out that local authorities should be reducing that amount which now the water boards are charging out of their own rates. In other words, the rates in general would have been higher had the water rates not been paid separately.
Lord WYNNE-JONES: My Lords, were the laudatory remarks made by the Minister concerned with a national or privately-owned board?
Lord MOWBRAY and STOURTON: My Lords, the water authorities in this

1003
country, whether private or national, have in my opinion all done a splendid job.

ILEA: THE BAKER REPORT
2.49 p.m.
Baroness PHILLIPS: 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 action is contemplated following the Baker report on ILEA.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, my right honourable friend the Secretary of State for Education and Science is today announcing that the Government have embarked on a comprehensive examination of the local government arrangements for the provision, administration and financing of education in Inner London. A further statement will be made when this examination has been completed.
Baroness PHILLIPS: My Lords, I am sure that the Minister will be glad to know that I appreciate her reply, bearing in mind that there is a great deal of concern about what appeared to be action on behalf of a report—a political report—which seemed to be curiously inaccurate. The parents, teachers and children concerned will be very glad to know that there is to be another inquiry.
Baroness YOUNG: Yes, my Lords; I am glad to have the recognition from the noble Baroness, Lady Phillips. The Government are in effect undertaking the review of the Inner London Education Service which the London Government Act 1963 said should be put before Parliament in 1970. In fact this provision was repealed by the Labour Government in 1967, but it was clearly intended by the legislators in 1963.
Baroness DAVID: My Lords, may I ask the Minister what consultations are proposed with parents and the governors of the schools which will be affected in the
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Inner London Education Authority's area? May I also ask what notice the Government intend to take of the costs which might be involved, remembering that, in the Marshall Inquiry, which went into this matter in 1977–78, Sir Frank Marshall, now vice-Chairman of the Conservative Party, said that any break-up would greatly add to the financial problems facing London's local government? In a statement made more recently he said—this year—that only a fool would attempt it.
Baroness YOUNG: My Lords, with regard to the first part of the noble Baroness's supplementary question, the Government have already received a great many representations on this matter. Naturally we shall be willing to look at any further written expression of views from interested parties, whoever may submit them. We shall take full account of these and the earlier representations in the course of the present study.
So far as the cost is concerned, the unit costs of the Inner London Education Authority are generally higher than those of other education authorities, although they are not always the highest in every sector; and I recognise that there are special factors in London which affect costs. I think that it is worth looking at the analysis of individual authorities' estimates of expenditure which are contained in the education statistics published annually by the Chartered Institute of Public Finance and Accountancy, and copies of this are in the Library.
Baroness PHILLIPS: My Lords, bearing in mind that the Minister will be making another statement on the committee to be set up, may I ask her for an assurance that the committee will not be composed merely of Conservatives but will take into account all parties and all interests?
Baroness YOUNG: My Lords, this will be a Government examination of the matter, and plainly it concerns a number of other Ministers as well as my right honourable friend. The examination will be done in a way which involves them all.
Baroness DAVID: My Lords, will the Minister agree that it is not only the education costs in Inner London that are higher than those in the areas of many

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other authorities, but that there are social services and housing costs, too, and these are not administered by the GLC or ILEA?
Baroness YOUNG: My Lords, I would not feel it appropriate at this moment to comment on the costs of other services, because the Question is concerned with education in London. However, we shall of course be looking at all aspects of this problem, and we recognise that the alteration of administrative arrangements for education in Inner London would have wide financial and educational implications.
Lord PEART: My Lords, the noble Baroness has said that Government Ministers will look into this matter, but that means that there will be political decisions. Is she not aware that ILEA has been responsible for a fine example of the development of comprehensive education? Many of us feel that the party opposite is anxious to destroy ILEA, but is she aware that we hope it will survive?
Baroness YOUNG: My Lords, I note the points that the noble Lord has made on this matter. The Government have concluded that it would be right, particularly in view of the undertaking that was given in the 1963 Act, and which has never, for the reasons that I have already indicated, been fulfilled, to look at this matter. We are setting up a Government committee to do so, and we shall of course take into account all the points that have been made.
Lord AVEBURY: My Lords, does the answer of the Minister to the noble Baroness, to the effect that all parties will be involved in the inquiry, mean that they will not be represented on the body which is to conduct the inquiry, and that therefore it has already been decided to have an internal departmental inquiry, to which the political parties would merely be able to give evidence? If that is so, does the Minister recognise that it would be profoundly unsatisfactory to do this behind closed doors, and that what the public in London demand—in particular, the parents and teachers in Inner London—is that the examination should be conducted both thoroughly and in public?
Baroness YOUNG: My Lords, the way that the Government propose to conduct the inquiry is, I think, a normally accepted way of conducting inquiries of this nature. As I said in my original reply, we shall be publishing the result, but, since we have reached no conclusions at all on the matter, I cannot say precisely what form that might take. But of course we shall be very happy to receive evidence on this matter from anyone who cares to submit it.
Baroness PHILLIPS: Finally, my Lords, is the Minister aware that this report, which is very far-reaching so far as ILEA is concerned, was received at County Hall only through indirect means, which, to put it at its lowest, seems highly discourteous, and, at its highest, really quite dangerous, because they obviously had no way of making comment on this? In some cases they read about it through the Press, and in other cases they obtained copies of the report quite indirectly.
Baroness YOUNG: My Lords, if the noble Baroness is referring in her remarks to the Baker Report, I should make it clear that this report was not commissioned by the Government, and therefore it is not for me to comment upon it. If the Government's own examination of the issues leads us to conclude that a major change is necessary, that would of course require legislation. Thus, naturally, there would be opportunity for consultation and public debate on any changes proposed.
Baroness PHILLIPS: I am sorry, my Lords, but surely the Minister is incorrect. The report may not have been commissioned by the Government, but it was certainly set up by the Minister of State for Education. I am not quite sure whether that amounts to it having been commissioned by the Government, but the terms of reference specifically stated that it was set up by the Minister of State.
Baroness YOUNG: My Lords, this was not a Government report in the sense of the Government review that I have been speaking about in my answers to questions.
Baroness DAVID: My Lords, I have here a report which says,
"As has been widely reported in the Press, a committee of London Conservatives was established last autumn by the Secretary of State for Education and Science …".
Baroness YOUNG: My Lords, the noble Baroness is quoting from a report in a newspaper. I should like to give an assurance—
Lord PEART: No—from ILEA.
Baroness YOUNG: Well, my Lords, the noble Baroness may be quoting from ILEA. I should like to say, so far as the Baker Report is concerned, that it was not a Government report, and that what we are proposing to set up here is a Government committee to look at the whole question.

RIGHTS OF THE CHILD: DECLARATION VIOLATIONS
2.57 p.m.
Lord JANNER: 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 have been, or are being taken, by the members of the United Nations to deal with violations by terrorists of the Declaration of the Rights of the Child adopted unanimously by the United Nations; and in particular what action they propose to take in regard to the Lebanese Government, who are harbouring terrorists who plan and carry out such violations.
Lord TREFGARNE: My Lords, as I have said on several occasions, the Government condemn all acts of terrorism, including those mounted from Lebanon against neighbouring countries. The Declaration of the Rights of the Child is not a binding legal instrument, but exhortatory. The question of violation does not therefore arise. The chances of preventing terrorism from Lebanon would be considerably increased if the Lebanese Government were enabled to exercise their authority throughout the country.
Lord JANNER: My Lords, with the greatest respect, is not that an evasive reply? Did not Lebanon in fact vote for the declaration, and does it not today harbour and encourage the PLO, and give them an open field to commit these atrocities against babies and children in
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homes, and in addition to destroy the confidence that any decent set of people can have in a Government who are prepared to perpetrate, and assist in perpetrating, these acts?
May I also ask the noble Lord whether it is not about time that Isreal ceased being blamed for doing what it is entitled by international law to do; that is, to pursue these criminals into Lebanon, in the same way as we ourselves act, and as other nations act, in accordance with the desire to prevent babies and children from being murdered, brutally assaulted, and treated as hostages? What are we prepared to do in order to persuade the Lebanese Government to stop the PLO doing these things?
Lord TREFGARNE: My Lords, I think that the noble Lord misleads the House with those kind of supplementary questions, because he is wholly misrepresenting the situation. The fact is that the Lebanese Government are doing their best to maintain law and order in their country, and at the moment are very much obstructed by the irregular forces of Major Haddad, which are operating in the South of that country. Those forces, we are told, are supported and encouraged by the Israelis.
Lord JANNER: My Lords, may I ask one final supplementary question? Is that not the kind of answer which is being given in respect of a democratic country which, for example, condemned the action of one sect of Moslems who killed somebody in another sect, and which was blamed for it in certain quarters? Will the noble Lord realise that I know enough of the situation not to misrepresent it, and to know that no longer ought we to utilise Israel as a scapegoat for any difficulties that arise?
Lord TREFGARNE: My Lords, perhaps the noble Lord did not quite hear my original Answer, when I said, as I have said so many times before from this Box, that we condemn all acts of terrorism, from wherever they come and whoever may perpetrate them. The fact is, as I have said on many occasions before and as your Lordships will know in any event, that the problems in Southern Lebanon are at the moment under control (or we would wish they were more under control) by

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virtue of the presence of United Nations forces in that country. The actions of that force are being severely hampered by the forces to which I referred earlier.
Lord WELLS-PESTELL: My Lords, may I ask the noble Lord the Minister this question: Since he has said that the Lebanese Government are anxious to maintain law and order, is he saying that the Lebanese Government recognise Israel's right to exist?
Lord TREFGARNE: My Lords, that is a wholly different matter, and, of course, those sort of things come within the compass of an overall settlement in that area.
Lord PAGET of NORTHAMPTON: My Lords, does not the point which my noble friend has raised really involve a very much wider issue? An increasing class of nations have neither the power nor the will to perform their duties under international law or to respect the security of their neighbours, and will not the time come when such nations have to be told that if they cannot perform their duties under international law then they cannot expect the protection of international law, and that nobody will help them when private action is taken?
Lord TREFGARNE: My Lords, I am not quite sure who the noble Lord is referring to when he talks about countries not honouring their commitments under international law on this matter, but as far as the Lebanese are concerned they, of course, are party to the fact that the United Nations forces are present in their country, and the situation there would be greatly helped if those United Nations forces received more co-operation.
Lord GORONWY-ROBERTS: My Lords—
Lord PAGET of NORTHAMPTON: My Lords, if my noble friend will permit me, may I—
Lord GORONWY-ROBERTS: My noble friend has had one go. May I ask the noble Lord whether he is aware that there is general agreement in condemning this kind of abomination, whoever is responsible for it? But is he further aware (to put it like this) that it is not
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always a question of national policy, but sometimes that stems from the fringe groups—very powerful, very vindictive—which are operating all over the world; and, to that extent, would it not be a good idea for this country and like-minded countries to promote in the United Nations an international statute with sanctions, rather similar to the series of provisions which we have successfully adopted in regard to hijacking, especially in the air?
Lord TREFGARNE: My Lords, that sounds a most interesting suggestion, which clearly ought to be looked into further.
Lord PAGET of NORTHAMPTON: My Lords, if I could return to the noble Lord's reply to me, is he suggesting that the Lebanese Government are in control or in charge of their own country`? They obviously are not. They are not in a position to control the PLO. That is the whole trouble, is it not?
Lord TREFGARNE: Yes, my Lords, the noble Lord is quite right.

BUSINESS
Lord DENHAM: My Lords, with the leave of the House, at a convenient moment after 3.30 my noble friend Lord Belstead will repeat a Statement being made in another place on the disturbances in Bristol. This will be followed by my noble friend Lord Trefgarne, who will then repeat a Statement being made in another place on the Tenerife air crash.
It may also be to the convenience of your Lordships to know that dinners will be available this evening at the usual time. The Committee stage of the Industry Bill will be adjourned at approximately 7 o'clock for approximately an hour, and consideration of Commons amendments to the Insurance Companies Bill will be taken during this adjournment.

TRANSPORT BILL
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Lord Bellwin): My Lords, I beg to move the Motion standing in my name on the Order Paper.

1011
Moved, That it be an Instruction to the Committee of the whole House to whom the Transport Bill has been committed that they consider the Bill in the following order, viz.:—

Clauses 1 to 3

Schedule 1

Clauses 4 to 12

Schedule 2

Clauses 13 to 20

Schedule 3

Clauses 21 to 33

Schedule 4

Clauses 34 and 35

Schedule 5

Clauses 36 and 37

Schedule 6

Clauses 38 to 43

Schedule 7

Clauses 44 to 51

Schedule 8

Clauses 52 to 58

Schedule 9.

—(Lord Bellwin.)

On Question, Motion agreed to.

INDUSTRY BILL
3.6 p.m.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, that the House do now resolve itself into Committee.—(Viscount Trenchard.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Functions of the Board and Agencies]:
Lord LEE of NEWTON Lord LEE of NEWTON moved Amendment No. 1:
Page 1, leave out lines 8 and 9.
The noble Lord said: I beg to move the first amendment standing in my name and those of my noble friends. The effect of leaving out lines 8 and 9 would be to retain in Section 2(2) of the Industry Act 1975 the words "reorganisation or", and paragraphs (c) and (d) of that subsection, which seek power to extend public ownership into profitable areas of manufacturing industry and to promote industrial democracy in undertakings which the National Enterprise Board control. The power of the National Enterprise Board to reorganise those firms which are within its control, in the sense of transferring the functions of one to another, may well become a most appropriate method of saving numbers of firms which are in danger of collapse.
I am, of course, well aware that there are many ways of interpreting "reorganisation"—I suppose that in the last analysis the courts would determine that—but it seems to me that in its widest interpretation it could be inimical of the ability of management within firms to reorganise their line-out, their methods of production, and that if they are to be tied down by their inability to reorganise they could be in very great danger of collapse. There cannot be within the NEB, or the Welsh and Scottish Development Agencies, the reasons which some firms in the private sector have for promoting take-over bids, which serve to eliminate competition or asset-stripping. There is no danger whatever of that kind of thing happening so far as the NEB is concerned. I do not know whether the Minister has any ideas, but, for my part, I have no knowledge of any charges ever made against the NEB by private firms that they feel in any way threatened by the powers which are now vested in the NEB under the 1975 Act.
Paragraph (b) of the subsection with which we are dealing, subsection (2), deals with this, and I invite study of the words. It does not speak only in terms of the reorganisation of an industry; it includes,
"or any undertaking in an industry";
and it is this wording which prompts me to wonder just how far the NEB will be inhibited by the deletion of the words in the 1975 Act. I suggest therefore that we are dealing not only with the reorganisation of an industry but with the firms within an industry. We all know of

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firms which are, or were, under the control of NEB which have more than one factory within their undertaking. Changing productive methods in one large undertaking often leads to switching between factories. I am thinking in terms of Rolls-Royce, Ferranti and Fairey. They may find that the reorganisation which is essential to their purpose is now forbidden to them.
One of the principal causes of the serious decline now taking place in parts of our manufacturing industries is the failure of firms to reorganise themselves on modern lines and adapt their plants and layouts to enable them to produce new lines of products as consumer demand changes. Surely, we can all agree that there has never been a period since the first Industrial Revolution when the ability to reorganise industry with the very maximum of speed was more essential to success than at the present period. Yet the first issue with which we are asked to agree is a quite deliberate attempt to freeze NEB industries into whatever form they happen to be when this Bill becomes an Act of Parliament. Many of the firms within the NEB are there because their private owners had failed to keep them profitable. They are the very ones who are in the greatest need of drastic reorganisation. Yet this paragraph in the first clause seeks to imprison these firms in an almost petrified posture, which can only deny the best managements their ability to modernise.
At Second Reading I pointed out the fact that the firms owned by the NEB which the Secretary of State said were not "up for grabs" were those in the advanced technology range. These are the ones in which the NEB have made great efforts to keep us abreast of the microelectronic revolution and the development of the silicone chip. It reminds me of a period when I was in industry when we were developing radar and when we were compelled to reorganise our methods as the "boffins" improved on previous ideas. It was almost a daily occurrence that we had to stop production and reorganise the lines completely as the "boffins" came along with new ideas. It seems to me that this is the kind of period we are now in.
I should like to comment on the efforts, for instance, of INMOS, the NEB company dealing with software in the computer
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industry who are doing an extremely good job in trying to ensure that the nation becomes competitive with other nations which are going ahead with this. If they are to be forbidden to indulge in any drastic reorganisation it would put back our modernisation a very long way indeed. While I am speaking of INMOS, can the Minister tell us whether they are to get the extra £25 million? I commented on this the other day. They were promised a further tranche of £25 million by the last Government. The present one does not show much inclination to come forward with this. Can the Minister say whether this is to take place or whether we are still in negotiation with Sir Arnold Weinstock on the future of INMOS and whether that may be holding up INMOS' plans while the competitors proceed on their way?
The second part of the amendment that I am moving forbids the extension of public ownership into the profitable areas of manufacturing industry. In other words, we must pass the supreme test of Tory nationalisation of manufacturing industries by making quite sure that it is unprofitable—in which event the nation can be left to shoulder the losses. Again, the NEB have no power of compulsion in the sense of taking over industries or firms in the public sector. All that would have to be by mutual agreement between the parties. Why is it that the Government feel that it is necessary to cripple the NEB in this quite ridiculous manner? In his Second Reading speech on the Industry Bill, the present Secretary of State for Industry made it clear that the object of this Bill is to increase the size of the private sector of industry and to decrease the size of the public sector. I suppose, politically, he is entitled to take that view; but, surely, that is no excuse for deliberately emasculating an organisation which nobody on any side of this Committee can argue has been a failure. In any sense, NEB have been a first-class success. Merely to say that he now proposes to cut them down for no better reason than that he wishes to see an extension of the private sector is anarchy at its worst.
The Secretary of State told the House on that occasion that he would rather see private industries going out of existence than to see them in the public sector. What a remarkable statement for a Secre-

1015
tary of State to make! If anybody wishes me to do so I will quote the source. But that is the statement he made in response to an interruption during his Second Reading speech.
It seems to me that, on the two grounds that I have mentioned, no real reason has been advanced why the Government wish to take this step. The third ground refers to the promotion of industrial democracy. The power of the NEB in the way of promoting industrial democracy is to be eliminated. The Liberal Party have an amendment down which deals with this subject. I shall certainly support them in the amendment that they move. To anybody who looks at this logically, if you are opposing the creation of industrial democracy, you are supporting its opposite; and the opposite of industrial democracy is industrial dictatorship. And this in a period when we are perfectly entitled to say that some of us, anyway, have been trying extremely hard to get the trade unions to move away from the task they were created to carry out; namely, to improve the conditions of their members. I want to see them do that, but also I want to see them take an active and responsible part in the creation of industrial democracy within the industries and the firms with which they are concerned.
I had a great deal of experience in industry before I went to the Commons in 1945, in a great factory employing many thousands of people. It was more like a town than a factory. One spent one's time as a principal representative of the unions working in complete harmony with management in trying to improve industrial democracy within that great factory. Indeed, we reached a stage in perfecting our internal negotiating machinery where we did not need to ask for the intervention of either outside trade union officials or representatives of the employers' associations; we perfected our own machinery as part of our idea of improving industrial democracy. The machinery of negotiation of course is an essential part of promoting such democracy.
In these days, when so many people on both sides seem either to have forgotten or failed to learn what constructive negotiation is about, I should have thought that Governments should be
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encouraging the promotion of industrial democracy, not vetoing it in this ridiculous way. I have commented before about the habit of this Government first of all telling us how abject has been the failure of incomes policies, and then bemoaning the results of free collective bargaining. This cannot be applied both ways. If one wants to encourage a constructive, positive approach by all sides of industry—the unions and employers—then there is no substitute for an arrangement by which both sides accept responsibility for the products and for the pace of production. These are the essential concomitants of an industry which can put Britain back in the position where we all want it to be. I cannot understand why a Government, which is in the terrible predicament of seeing a great deal of our manufacturing industry being eroded, should now be trying to put back the clock to the days when employees were simply numbers on a clock card. Surely, that day has gone. What I have said about the NEB also applies to the Scottish and Welsh Development Agencies.
There are noble friends here from Wales who must be wondering what kind of future Wales has with the rundown of steel and the running down that may well affect coal, and the ancillary industries which will be affected. What can be the future when, added to that picture, we are now forbidden to think in terms of an industrial democracy which to me—with some little experience of how men react to these things—is to be vetoed? I think that it is drastic and deplorable. I beg to move.
3.22 p.m.
Lord ROCHESTER: I am rather sorry that the noble Lord, Lord Lee of Newton, has framed this amendment in the way he has. My noble friends and I sympathise with the view that the NEB should retain two of the three functions that the amendment deals with and about which the noble Lord, Lord Lee, has just spoken. We believe that the board should retain the power to promote or assist the reorganisation of industry, as he has suggested. We have consistently expressed the view that the board should be able to continue its work on as broadly agreed a basis as possible, irrespective of the political complexion of the Government of the day.

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I recall the more drastic fate which overtook the Industrial Reorganisation Corporation under an earlier Conservative Government; it was abolished altogether. That has not yet happened to the NEB; but I have grave doubts whether, if it loses its capacity to help in the reconstruction and development of our British industry that is so sorely needed at the present time and will be needed in the next few years, and it is left only with British Leyland, with the odd "lame duck", with some responsibility for new technology—important though that is—it can for much longer remain a viable body. If a Labour Government are returned to power in the future, are we to go through the same old rigmarole once more? Is there to be yet another reversal of national policy? If so, we shall never achieve the political equilibrium in industry that in this respect we so badly need.
If I may say so to the noble Viscount, Lord Trenchard, the Department of Industry seems to have struck an attitude that on no account must there be any intervention in industry. This constrasts markedly with the position in France, through its Civil Service; in Germany, through its Central Bank; and in Japan. In those countries over the past few years there has been an industrial performance which has been better than our own. It also contrasts most markedly with what the Minister of Agriculture was reported the other day to have said: that if you are in competition with an industry overseas, and that industry has the cooperation and collaboration of its Government, and you do not have that co-operation, then you normally lose. That is a very big indictment—if the Minister was correctly reported—coming as it does from within the Conservative Government.
Secondly, we believe that it is a mistake for the Government to deny to the National Enterprise Board any role in seeking to develop industrial democracy in undertakings for which it is responsible. I personally prefer a term such as "involvement" or "participation", if only because the term "industrial democracy", following the publication of the Bullock Report, has so many interpretations, with which some of us would not agree: things such as worker control and the pursuit, as we see it, of excessive union power on the boards of companies, and so on. Indeed, if this particular amendment that
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we are now considering does not succeed, then, as the noble Lord, Lord Lee of Newton, has already said, I shall be moving another amendment couched in different terms in part for this reason. Let it be clearly understood that we fully support the principle underlying the amendment of the noble Lord in this respect. How could it be otherwise when for the past 50 years the Liberal Party has taken the lead in championing this very cause?
We are in some difficulty over that part of this amendment which seeks to retain as a function of the NEB the extension of public ownership into the private sector of industry. Judged by the crucial test of performance over the past 35 years, we cannot accept that there is any case for even more nationalised industry. We therefore find ourselves in a dilemma, to say the least. I do not see how I could readily vote or recommend my friends to vote either for the Government, for the reasons that I have given, or—because of this particular difficulty—for Lord Lee's amendment. It is obviously for him to decide, together with his noble friends, whether at this juncture he should press it to a Division. We shall all listen to what others have to say, and in particular to what the noble Viscount, Lord Trenchard, has to say on behalf of the Government.
Perhaps I should say no more at this stage except that if, in the light of the discussion, the noble Lord, Lord Lee, and his friends felt that they could for the moment withdraw this amendment in its present form and come back at a later stage with some amendment to which we on these Benches could agree, that would be a happy arrangement. That might take into account, I suppose, also the fate—whatever it proves to be—of the next amendment we come to. It is entirely for him and his noble friends to decide. I mention it as the most constructive suggestion that I can think of at this moment, if he wishes to rely on our support.
3.30 p.m.
Lord BROOKS of TREMORFA: The Secretary of State for Industry said on 6th November 1979:
"The Government's regional policy announced in our manifesto and carried through by me is to reduce regional incentives by one third. We do not intend to abolish them. We intend to take them away from areas where economic conditions do not justify them".

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I wish to speak specifically to that part of this clause which refers to the Welsh Development Agency, and I should he very grateful to the noble Viscount, Lord Trenchard, if, when replying to this debate, he would tell us how the Government can possibly justify evaluating the role of the Welsh Development Agency in the light of what the Secretary of State said on 6th November.
In this House there have been a number of references to the economic and social conditions in the Principality, particularly in the light of the Government's policies since last May. But perhaps they have not been said loudly enough, and for a brief period I should like to repeat some of what was said and to bring to your Lordships new information that has come to hand as a result of a document produced by the Standing Conference on Regional Policy in South Wales.
The Standing Conference is a body comprising the three counties of Glamorgan—West, Mid- and South Glamorgan—and the County of Gwent. The West and Mid-Glamorgan counties are Labour controlled; South Glamorgan is controlled overwhelmingly by the Conservatives and in Gwent no party has an overall majority. There is no party political dispute among the elected representatives in South Wales as to the seriousness of the problems that face us.
In the document that is entitled South Wales in the 1980 Steel Crisis, they tell us that the present figure of unemployment is 90,000 and that it is suggested that it will rise to 130,000 as a result of the proposals to run down steelmaking at Llanwern and Port Talbot. The Wales TUC estimates the figure at 140,000, and the Western Mail said on 29th January that a Welsh Office projection had shown that the figure would reach 160,000 towards the end of 1981.
It took 10 years to provide 32,000 jobs in South Wales, and that was done with a whole range of regional incentives. I wonder whether at this point I may say to the noble Lord, Lord Rochester, who said that he had severe doubts about further extensions of public ownership, that we in Wales are not too perturbed about whether the industry is in private or in public ownership; we want more of
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both. I ask him to bear in mind when we are dealing with this clause that it refers to the Welsh Development Agency and the Scottish Development Agency, and that, for historical reasons, we in Wales have depended much on public ownership—the coal and steel industries. I think I gave a figure some months ago showing that some 70 to 80 per cent. of the people working in Wales depended on public ownership of one kind or another for their living, so that is the historical situation in which we find ourselves.
I ask the noble Lord, Lord Rochester, not to take on board the dogmatic approach of the Government in looking at these problems. When Members of Parliament representing South Wales seats are attempting to bring industry into their areas they are quite happy to negotiate with entrepreneurs in exactly the same way as they try to influence Governments in order to bring more industry and industrial activity to their areas. There is no dogma in it at all, and I ask the noble Lord, Lord Rochester, if he would reconsider his hesitancy on whether he is to support us on our amendments.
Very briefly, the document to which I refer has given a great deal of the background to the problems that we find in South Wales, and there is no question that, despite a hiccup or two, the Welsh Development Agency has played a very important role in financing and attracting new industry to the Principality.
In South Wales we have lost 100,000 jobs in steel and coal over the last 25 years. I have said to your Lordships before that there is no Luddite attitude in Wales at all. The facts and the figures speak for themselves. Pits were closed literally by the dozen in the 'fifties and the 'sixties and steelworks have already closed. I am told that many of the workers at Llanwern and Port Talbot recognise that the industry needs restructuring; although they would by no means go to the lengths to which the British Steel Corporation has gone, they recognise that there are problems in the industry and they are prepared to co-operate. I suggest that that co-operative attitude requires the same kind of response from the Government, and what are we getting? We are getting an emasculation of the Welsh Development Agency, which could play a very important part in rejuvenating the Welsh industry.
The PARLIAMENTARY UNDER-SECRETARY of STATE, HOME OFFICE (Lord Belstead): There are two Statements this afternoon for your Lordships' House. If it be for the convenience of the Committee, I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

DISTURBANCES AT BRISTOL
3.37 p.m.
Lord BELSTEAD: My Lords, with the leave of the House, I shall now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"I have considered the full and clear report which I have had from the Chief Constable of the Avon and Somerset Constabulary, and I have placed in the Vote Office a memorandum containing an account of the disturbances, of the difficulties which faced the police, and of how they sought to deal with them.
"In the light of the memorandum, there will not, I believe, be dispute about the facts. What began as a normal operation into possible criminal offences, turned sharply and unexpectedly into serious public disorder. The memorandum also sets out the chief constable's conclusions and recommendations for future arrangements in his force area. A number of important lessons have been learned from this event. The chief constable has acknowledged frankly that there were points at which decisions might, with hindsight, have been taken differently. But he remains of the opinion that the decision to regroup his officers away from the area of St. Paul's was, in the face of great violence and extensive injuries to the police, a necessary step. In the light of his report, I understand the reasons for that decision, as, I am sure, will the House.
"There can be no excuse for the lawlessness which then followed. But we must ensure that, however quickly or fiercely public disorder may occur, the
1022
police are able swiftly to restore the peace and enforce the law.
"We must therefore concern ourselves with the more general lessons which must be learned from these events, not only for the efficiency of policing, but also for good community relations. There are three ways in which I believe we can best move forward.
"First, in this country we rightly wish the police to maintain order through traditional methods but, if that is so, police forces must be able to call rapidly on sufficient trained officers. I am, therefore, asking senior officials in my Department and Her Majesty's Chief Inspector of Constabulary, in conjunction with the Commissioner of Police of the Metropolis and the Association of Chief Police Officers in England and Wales, to examine thoroughly and urgently the arrangements for handling spontaneous public disorder. I shall publish the results of that review.
"But we must not look simply at the policing aspects of these events. We must look much more widely in our search for solutions to the underlying problem. Secondly, therefore, the Government particularly welcome the decision of the Select Committee on Home Affairs to look into racial disadvantage and, as a part of that work, to study the St. Paul's area of Bristol. We shall do all we can to help the Select Committee in this work.
"But action at local level is also essential. I welcome the decision of the Avon County Council and the Bristol City Council to come together to examine how best they can further help in strengthening good community relations in the area. Experts from all the Government Departments concerned will play a full part in this examination.
"Mr. Speaker, I am convinced that this three-fold approach is the best way to respond positively and constructively to these events."
My Lords, that was the Statement made by my right honourable friend the Home Secretary in another place.
Lord BOSTON of FAVERSHAM: My Lords, I should like to thank the noble

1023
Lord, Lord Belstead, for repeating that Statement and for taking this early opportunity to keep the House informed, as he promised to do on 3rd April. Certainly, I would welcome the speed with which the police inquiry was instituted and carried out. Would the noble Lord the Minister accept that I also welcome the fact that there is to be this three-pronged investigation? It does, I think, go some way to meet some of the misgivings which some of us had in your Lordships' House on 3rd April about the adequacy of a police inquiry alone into this disturbing matter.
So far as the chief constable's report is concerned, that will obviously need further study. The memorandum referred to by the noble Lord, Lord Belstead, which is being made available to your Lordships, is a very lengthy one. At this stage I would just say this, if I may, and ask the Minister to accept it: In the particular circumstances of the situation on 2nd April, I would accept the chief constable's decision to regroup on that occasion. However—and I think this needs to be emphasised—it remains the case that we must not countenance what have been referred to as "no go" areas of any kind in this country.
Whatever else may be said, would the Minister also accept that there was clearly no lack of courage on the part of police officers when this incident took place?—including, if I may say so, the Chief Constable of Avon and Somerset who was on the scene from an early stage. I do not think we should overlook this, either: it is in fact a tribute to the police that there was no loss of life, nor indeed any serious injury sustained.
So far as the police study is concerned to examine as a matter of urgency arrangements for dealing with situations involving public disorder, I would ask the noble Lord the Minister to accept that we would welcome the fact that this is to be published, because it may well be that the conclusions arising out of this will be not just of local but of general application. While it is clearly essential that there should be support available for a police force from outside a particular area, I would ask the Minister whether he would agree that it is nevertheless absolutely essential that control should continue to
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be in the hands of those who know the area. I would ask him, too, whether he could confirm, even before these inquiries are further embarked upon, that nothing is contemplated in the nature of a national body here.
So far as the Select Committee investigations in another place are concerned, those are clearly to be welcomed. I am wondering whether the Minister can say if it is likely that some at least of those sessions might be in public, because if they were to be, no doubt many people, not only here in Parliament but throughout the country, would welcome the fact. So far as the local investigations by Avon County and the City of Bristol are concerned, would the noble Lord, Lord Belstead, accept that we would hope their report will be published? I would welcome the involvement of the Commission for Racial Equality, the Department of the Environment and other bodies. Again, it may well be here that there will be lessons to be drawn which are of wider than purely local application. Therefore, it would be particularly valuable if that report, too, could be published.
The noble Lord has said something about the wider implications of the events in Bristol on 2nd April. Misgivings about those were expressed in your Lordships' House on the following day. I would ask him now whether he could confirm that some of the questions and concerns that were mentioned during the course of our exchanges on 3rd April are among the questions which will be covered in one way or another by one or other of these inquiries—such as the underlying causes and indeed the fact that, as we heard earlier, there were warnings from local leaders of difficulties arising before the events of 2nd April. It would be valuable—indeed, I would suggest, essential—if those fears could be allayed and those questions answered. I would venture one further point. Would the Minister also accept—this is something which has been mentioned before, but it needs re-emphasising now—that there is a great need to tackle even more urgently than before the problems of the inner cities and to maintain expenditure on urban programmes?
Lord WIGODER: My Lords, it is clearly a matter of the utmost gravity when the police have to abandon control

1025
of an area in one of our major cities for some four to five hours, during which some 49 police officers are injured and I think, 21 police vehicles severely damaged, with 13 premises attacked and looted.
Arising out of this matter, may I raise three very brief issues with the noble Lord? First, it is clear from the chief constable's memorandum that this was in no sense a race riot. It appears to have been, if anything, an anti-police riot. Is it not correct that those people in positions of responsibility who spend their time in hysterical abuse of the police force as an institution have very much to answer for when a disturbance of this sort takes place?—though one must add with regret that perhaps disturbances of this sort are exactly what they hope will arise.
Secondly, is it not clear from the chief constable's memorandum that much of the difficulty arose here as a result of an unfortunate decision by the police officers concerned to seek to remove a damaged vehicle at a time when the violence had quietened down? In saying that, I am very much aware that it is easy to make criticisms in the calm light of day in your Lordships' House of a decision taken on the spur of the moment at a time of crisis.
Thirdly, do the Government accept the chief constable's observation that it is essential that, in situations of this sort, the local police community relations officer should be consulted in advance? May I also ask the noble Lord whether he feels that it is sufficiently recognised in the police force that that position is one of the highest responsibility? It is not a dead-end position, but one which should be held by officers of the greatest ability, because it plays the most important role in seeking to preserve the peace on occasions such as this.
3.50 p.m.
Lord BELSTEAD: My Lords, I am grateful to both noble Lords for their response to this Statement. If I may reply to the noble Lord, Lord Boston, certainly the points which were made in your Lordships' House on the occasion of the first Statement on this subject have been very much taken into account. Your Lordships may have noticed from the Statement which I have just made that the review of police contingency arrange-
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ments—the first prong of the three-pronged approach—is a review which my right honourable friend has undertaken to publish.
I agree with the remarks of the noble Lord, Lord Boston, about the bearing of the police in this matter. I would like to make it crystal clear that my right honourable friend the Home Secretary has full confidence in the chief constable. There were reasons for the withdrawal of the police from the area for a time, but I think your Lordships would prefer to look yourselves at the memorandum, to reach your own conclusions, and to read the conclusions of the chief constable which are very frankly set out.
Lord Boston asked me about the making public of the deliberations of both the Home Affairs Select Committee and also the meeting at local authority level. Obviously this will be a matter for a Select Committee of another place, and for the local authorities concerned, as to exactly what they want to say in public. I am most grateful to both noble Lords for accepting that this is a sensible way to proceed. I think that for the two local authorities concerned, the county council and the city council, to come together in this way with other agencies, which incidentally will also include the Manpower Services Commission, is a valuable and sensible way to proceed.
The noble Lord, Lord Wigoder, asked whether it was the fact that this was not a race riot. The answer in broad terms is, yes, the noble Lord is correct in that assumption. It was not what we would call a race riot. Was it an unfortunate decision, the noble Lord put to me, that an attempted removal of a police car occurred, which perhaps started the trouble off again and led perhaps to its escalation? I think the noble Lord would want to read the memorandum on this and to see how the matters in this very difficult night in fact went from one step to another. Clearly that was a step in the story. Thirdly, Lord Wigoder put to me whether the local police community relations officer should not be consulted in advance in matters of this sort? The answer is, yes, and the chief constable in his very frank report, in the memorandum in the Printed Paper Office, says as much.
Baroness PHILLIPS: My Lords, having had the opportunity to work with the

1027
Avon and Somerset police in both crime prevention and the juvenile liaison bureau, I want it on the record that this is an area which has had particularly imaginative schemes for dealing with both juvenile delinquency and community relations. As the police force has had some notable successes, I feel this to be the moment when these should be recorded in this House.
Lord ELWYN-JONES: My Lords, I am grateful to the noble Baroness. While we on this side of the House welcome the inquiries which are to be made, both parliamentary and local, into the underlying problems, may I ask the Minister what positive action the Government are taking in the meantime to tackle what is at the root of much of the trouble in urban areas with a large black or coloured population; namely, the persistent level of above-average unemployment among the youths in those areas? Has not the increase in unemployment since the Government have been in office exacerbated the problem very seriously?
Lord BELSTEAD: My Lords, I would not necessarily accept that on a local basis. When the noble and learned Lord, with his experience, takes a view on a matter of this sort, I would not take it upon myself to say that he is wrong. So far as a particular place of the size and importance as Bristol is concerned, however, surely your Lordships' House would want to find out what at local level the elected representatives think. It is because my right honourable friend the Home Secretary wants to find out what is really thought on this as well as on other points by the county council and the city council, in consultation with other agencies which I have mentioned, including, as I said, the Manpower Services Commission, that I think it would be right to wait for the result of those local deliberations.
Baroness MACLEOD of BORVE: My Lords, in view of the very worrying escalation of the carrying of offensive weapons by people of all ages, but mostly by the young, I wonder whether my noble friend the Minister can tell the House how many of those arrested carried offensive weapons?
Lord BELSTEAD: My Lords, I am afraid I cannot answer my noble friend's question. There is no question but that a great deal of the damage and the injuries was probably done by missiles which were thrown. All I think I ought to say in reply to my noble friend, as I cannot answer the specific question she has put to me, is that the numbers have changed somewhat since I reported to the House on the first occasion. We do now know that 22 police officers were injured; 27 more had minor injuries, and 10 members of the public were also injured.
Lord SHINWELL: My Lords, may I ask the noble Lord the Minister to explain why he has referred in his Statement to the "underlying causes"? I notice that the Members of the Opposition have referred to the "underlying causes", but seem to be reluctant to go further than make reference to them, when everybody in your Lordships' House is aware that those underlying causes are, first of all, unemployment; secondly, social conditions; thirdly, the abominable housing conditions in these areas. What is being done in the matter, as it appears to me, is to deal with it superficially by transferring the social problem to the police. Why should that happen? Why should the police he used to deal with social problems wherever there is discontent which expresses itself by looting or assaults upon the police? This is not the responsibility of the police. Although we call upon the police to suppress disorder whenever it is possible to do so, it is a matter for the Government to delve deeply into this issue of underlying causes. Why are we so reluctant to talk about it? There seems to be some hesitancy. I do not share that hesitancy. I have seen this sort of thing happening many years ago on the Clyde—long before we accepted vast numbers of coloured people from Asia and elsewhere—because of unemployment, because of discontent, because of poverty. These are the underlying causes and I cannot in any aspect of Government policy detect any real effort to eradicate these problems.
Lord BELSTEAD: My Lords, so far as the police are concerned, the point of the Statement is that the police are looking into their own contingency arrangements for the future. The police inquiry has nothing to do with the social conditions

1029
to which the noble Lord, Lord Shinwell, has drawn attention. The noble Lord asked me what the Government are doing about the social conditions in the area. Grants under Section 11 of the Local Government Act are paid to Avon County Council, which is responsible, for instance, for education in Bristol. In the last year grants amounted to £400,000, mainly to aid expenditure on the salaries of teachers specially employed to meet the needs of Commonwealth immigrants and their children; and the noble Lord will, I am sure, be glad to hear that grants under Section 11 to Avon in the current financial year are being increased.
So far as the urban programme is concerned, which over many years now has been specifically designed to try to relieve the kind of conditions which the noble Lord has been explaining to the House, the Government recognise the extent and depth of the problems facing people of all races in deprived parts of our inner cities. For that reason, the Government have maintained the level of resources allocated to the urban programme which helps those parts of our cities which are facing the most acute social and economic problems. It is not the case that the Government are not sympathetic to the kind of problems which the noble Lord has outlined to your Lordships' House.
Lord KILMARNOCK: My Lords, while it is obviously necessary that a study should be made of police contingency arrangements for emergencies of this nature, will the noble Lord give an assurance to the House that this will not become the thin end of the wedge for the establishment of a national paramilitary type of police force, on the lines which exist in other European countries; for example, in France and Spain? I think that the noble Lord, Lord Boston, made some reference to this, and I do not believe that we had a reply.
Lord BELSTEAD: My Lords, I do not think that this matter arises from the Statement which I have made. It was for that reason that I let go that point which the noble Lord, Lord Boston, made.
Lord ELWYN-JONES: With respect, it may arise by reason of the reference in the Statement to the fact that the Chief Inspector of Constabulary, the Commis-
1030
sioner of Police of the Metropolis and the Association of Chief Police Officers in England and Wales are all going to be involved. This may have caused the noble Lord the anxiety that he has expressed.
Lord BELSTEAD: I am so sorry, my Lords. I am grateful to the noble and learned Lord for helping me in this matter. The reason why there is this meeting together of people on a national basis for what has happened in local circumstances, is that my right honourable friend the Home Secretary has an overall responsibility for the efficiency of policing in this country, and it is my right honourable friend who has asked these representatives to come together to look at contingency arrangements for policing against spontaneous outbreaks of violence and trouble in England and Wales.

TENERIFE AIR CRASH
4.3 p.m.
Lord TREFGARNE: My Lords, with your Lordships' permission, I should like to repeat a Statement which is being made in another place by my right honourable friend the Secretary of State for Trade about the accident at Tenerife last Friday. The Statement is as follows:
"The House will be aware that on Friday last a Boeing 727 operated by Dan-Air Services Limited from Manchester to Tenerife crashed about 10 miles from its destination and all the 146 passengers and crew on board were killed.
"I am sure all sides of this House will wish to join me in expressing Parliament's great distress at this tragic accident and our greatest sympathy to the relations and friends of all those who were killed.
The accident occurred after the crew had reported when the aircraft was at 6,000 feet over a radio beacon at Los Rodeos airport on the northern end of Tenerife island 19 minutes after 1 o'clock in the afternoon GMT. It was then cleared by air traffic control to descend to 5,000 feet and carry out an approach procedure to the runway, but this message was not acknowledged by the aircraft and it is believed to have

1031
crashed very shortly afterwards. The accident site is about 10 miles South-West of the airport and just over 5,000 feet above sea level. The aircraft had completely disintegrated.
"The Spanish authorities have commenced an investigation into the circumstances and causes of the accident and a team of investigators from the Accidents Investigation Branch of my Department arrived at 6.30 a.m. on Saturday morning and have been participating in the Spanish investigation in accordance with established international practice. The flight data and cockpit voice recorder have been recovered from the aircraft and will be carefully examined and read out in the next few days. Similarly, the recording of the radio communications will also be subject to detailed analysis. I will give more information to the House as soon as it is available. There remains much work of investigation to be done and it is expected that it will be some time before the final report of the investigation will be completed. By international agreement a copy of the report will be passed to the State of registry of the aircraft.
"The House will wish to know that the Spanish authorities have treated this tragedy with the greatest sympathy and consideration and memorial services are being held in Tenerife today. British Consular officials and members of the Dan-Air Company are doing everything in their power to assist the official services in Tenerife with their work."
My Lords, that is the Statement.
4.6 p.m.
Lord PONSONBY of SHULBREDE: My Lords, may I thank the Government for their early Statement, and also thank the noble Lord for repeating it this afternoon. We on this side of the House wish to associate ourselves with the sympathy expressed by the Government to all the relatives and friends of those killed in this appalling tragedy. Already, a number of theories have been floated in the Press as to the cause of the accident, and I am sure it would be premature to add any weight to any of those theories at this point of time. However, what we must
1032
ensure is that the inquiry is of the fullest, and that it deals with such matters as the safety of the aircraft, the landing procedures, the value of the ground proximity warning system and the limitation of the radar system at Los Rodeos airport.
The noble Lord has said that it will be some time before the final report of the investigation is received. One hopes that that will be well before the British holiday season. British holiday-makers should be reassured as to the general safety arrangements in Tenerife. I wonder whether the noble Lord can give some indication as to when the report is likely to be received? By saying that the report will be passed to the State of registry, one assumes that the noble Lord means that it will be passed to his department. I should be glad if he could confirm that. I am sure all noble Lords will be pleased to know that all concerned are doing what they can to assist the official services in Tenerife.
4.8 p.m.
Earl GREY: My Lords, we on these Benches also wish to express our sympathy and to extend our condolences to the relatives and friends of those who were killed. We are grateful to the noble Lord for making that Statement. We should like to know whether the black box has been translated and, if so, what it says. Is it not time that airlines were advised to avoid airports which do not have full-scale, up-to-date navigational equipment, bearing in mind the growing increase in holiday traffic?
The noble Lord said that the aircraft was cleared by air traffic control to descend and to carry out an approach procedure, but that the message was not acknowledged by the aircraft. Is it yet clear that this was so, or whether the captain was recommended or ordered to divert and land at the alternative airport? Finally, when the official inquiry is completed, will the report be published in full, without any alterations or deletions?
4.9 p.m.
Lord TREFGARNE: My Lords, I am obliged to noble Lords for their reception of this Statement. To answer the noble Lord, Lord Ponsonby, the report is, in fact, prepared by the Spanish authorities and thus the timing of its publication is a matter for them. However, there are

1033
British representatives accredited to the investigation team who will, of course, be assisting with the inquiry within the limits laid down under the international agreement.
As for the questions put to me from the Liberal Benches, both the flight data recorder and the cockpit voice recorder have been recovered. The playback of these devices, which is a highly technical matter, has not yet been completed. As for the other questions which the noble Earl put, naturally I do not want to pre-empt anything that is considered by the inquiry, but we understand the position so far to be that the aircraft was not instructed to divert, nor did the captain indicate that he was so doing. I can, of course, confirm that the facilities at Los Rodeos airport, although they do not include radar, are entirely satisfactory and have been approved for that purpose for many years.
Lord KILBRACKEN: My Lords, I understood the noble Lord to say that the aircraft was flying at an altitude of 6,000 feet and that it was then cleared to descend to 5,000 feet. Am I right in assuming that that is the height above sea level, because the noble Lord went on to say that the airfield itself is at 5,000 feet. In this case, the two pieces of information do not appear to coincide.
Lord TREFGARNE: My Lords, I do not think I said that. The airfield is 2,073 feet above sea level, and the height of 5,000 feet, which is the height above sea level, as the noble Lord suggested, is the correct height for the approach procedure to Runway 1/2.
Lord BALFOUR of INCHRYE: My Lords, may I ask the Minister whether, from now on, scheduled airlines and charter companies will operate from the new airport and not from this airport at which the aircraft which crashed was attempting to land and which is admitted to be, particularly in bad weather, one of the most unsatisfactory airports for pilots to approach—and I use the word "unsatisfactory" advisedly? Secondly, assuming the unlikely event of the Spanish authorities declining to publish the findings, can the Minister say whether in that event our British representatives will be asked to give to Her Majesty's Government
1034
their information and their views on the findings?
Lord TREFGARNE: My Lords, if I may first answer the last supplementary, under international agreements the Spanish authorities are required to provide a copy of their report to the country of registry, and I have no doubt that they will do that. Publication by us of a Spanish report can only be done, I think, with the agreement of the Spanish authorities, but I have no reason to believe that they will withhold that permission. As for the earlier supplementary of my noble friend, I understand that it is not intended that the new airport should replace Los Rodeos, because the two airports are located at opposite ends of the island and it is proposed that in future they should each serve the different resorts nearest to them.
Lord MORRIS: My Lords, would my noble friend be good enough to let me know whether Her Majesty's Government will be expressing to the Government of His Majesty the King of Spain their gratitude for the very moving expressions of sympathy by the people of Tenerife as a result of this disaster?
Lord TREFGARNE: Certainly, my Lords. As I indicated in the Statement, we very much appreciate those expressions of grief.

INDUSTRY BILL
4.13 p.m.
Committee stage resumed.
Debate on Amendment No. 1 continued.
Lord BRUCE of DONINGTON: I should like to reinforce some of the arguments which have been put forward by my noble friend Lord Lee of Newton in regard to the amendment which we are moving. One of the functions of your Lordships' House—many noble Lords may perhaps think that it is the most important function—when considering legislation that comes to it from another place is to give the Government of the day an opportunity to reflect upon what has previously been done.

1035
This afternoon we are moving Amendment No. 1 in the hope that the noble Viscount, Lord Trenchard, will see fit to announce that the Government are prepared to accept it. Indeed, at a later stage I am sincerely hopeful of being able to carry the noble Lord, Lord Rochester, with me in seeking to convince the Committee that this amendment is vitally necessary and that, so far as the matters dealt with in this paragraph are concerned, the Industry Bill 1975 is much better left in the form in which it now stands, unamended.
In the euphoria after a General Election one can expect the newly elected Government to seek to demonstrate that they really believe in what they say and to try to enact, with some emphasis, those political objectives to which they have frequently given such strident voice in the course of the election itself. Given their mandate, one would therefore expect this Government not to be exactly enthusiastic about nationalisation. The argument on this issue has gone on between the parties for many years, and nobody would blame the Government if, in general terms, they stuck to their attitude. If, however, the Government wish to prevent the National Enterprise Board from embarking upon any further nationalisation, one finds they already have powers, under Section 7 of the Industry Act 1975, to give specific directions to the hoard on what it may or may not want to do.
I should have thought the most sensible way of going about this would be to leave the Industry Act as it is. Each proposal—if, indeed, one came from the National Enterprise Board—for possible further nationalisation, or demand from Parliament or elsewhere for this or that to be done, should be dealt with on the pragmatic basis that if the Government seek to exercise their will that such-and-such an industry shall not be nationalised they already have adequate powers under Section 7 of the Industry Act to give a direction that it shall not be done. I should have thought that this was the more sensible way of going about it. What is now happening is that the Government have not only closed the door but have bolted that door against themselves. Are the Government really quite sure that over the next two or three years circumstances will not arise in which they
1036
would be very glad indeed if the National Enterprise Board had retained this power?
As your Lordships know, one of the greatest problems in British industry ever since 1950, although it was not so much of a problem in the years 1945 to 1950, has been to get a sufficient amount of manufacturing and industrial investment out of the private sector or the financial interests, who presumably are there to serve precisely that purpose. This has been not only the experience of successive Labour Governments; it was the experience of Mr. Heath's Administration. The noble Viscount, Lord Trenchard, who has a very good memory, will doubtless find engraven on his soul at some point the cri de coeur from Mr. Edward Heath in August 1972, when, in the course of a bitter address to the Institute of Directors, he said that they had given them every possible inducement—taxation, credit or otherwise—and still, said Mr. Heath, they refused to invest.
The present Government have gone on a different tack. They have said, first, that industry has been groaning under a burden of taxation. All those of your Lordships who are aware of the reliefs granted under Schedule 5 to the 1976 Finance Act in regard to stock appreciation relief may perhaps be permitted to raise an eyebrow as to the groaning of any corporation under the burden of taxation. After taking into account the provisions of Schedule 5 to the Finance Act 1976 and the earlier Act, has been reduced to an almost derisory 26 per cent. in real terms, as against the higher rates of corporation tax on the Continent. I think the noble Viscount is aware of that, but it is said that if one reduces personal taxation, particularly at the higher levels (or so it has emerged), there will be much more enthusiasm in the private sector.
Similar arguments have been adduced by the Government as regards the progressive reduction of the public sector borrowing requirement, on the grounds that it will free funds to be invested in industry. Even the Government cannot remain insensitive to the fact that, so far, the response has been completely negative. Moreover, the Government themselves in their own recent White Paper envisaged a further decline in industrial development. We know where the funds have gone, of course, because, as one could observe from the Financial Times of 25th April, invest-

1037
ment overseas by British financial institutions has risen sharply since the ending of exchange controls last year. Essential statistical figures published yesterday showed that purchases of overseas company and Government securities totalled £490 million in the second half of last year, compared with £195 million in the preceding six months.
The question I have to ask the noble Viscount is this: What happens if the new incentives offered by the Government for investment in manufacturing industry in this country do not produce any more favourable response than the old ones? Are the Government content, for the sake of maintaining party dogma, to refuse to acknowledge for the good of the country as a whole that private investors have for one reason or another failed to respond to the incentives that have been so generously bestowed upon them? If they fail to invest, are the Government prepared to confront the country with that failure and at the same time to say to the country "We, for our part, are so committed to our dogma that we would sooner the whole spectrum of manufacturing industry and its place in the economy went to the dogs than abandon our cardinal principle"? That is ultimately what the Government will have to answer for to the country.
As my noble friend Lord Lee of Newton has pointed out to the Committee, there is the case of INMOS—the case of investment in the micro-chip industry. The noble Viscount knows quite well that private enterprise capital, in view of the heavy risk involved is up to now unprepared to take the risk on its own. But there is a very good reason why. It is because they are in competition, or at any rate in potential competition, with the Americans in this field, and the Americans, partly as a spin-off of their space programme, have been completely State-subsidised in this aspect of their industry. Is the noble Viscount prepared to face the possibility that this country might be denied the development of this most important section of manufacturing and commercial activity purely for the sake of keeping to a party dogma? It is quite clear—and I shall be glad to hear from the noble Viscount to the contrary—that if this industry is to get firmly on its feet (and I am speaking of the microchip and INMOS) to compete on any
1038
scale with the United States of America, it will have to receive sustained and very significant Government support. Whether or not the noble Viscount likes that, I am afraid that the opinions of most experts in the matter, of which I have here several copies but with which I will not weary the Committee, are exactly to the contrary.
Does it not follow that, if the State—or, if the noble Viscount prefers it, the British taxpayer (which means all of us)—is going to support industries of this kind, it is right that the nation should have some interest in its outcome? The most that the noble Viscount has said so far, in his Second Reading speech, is that the Government look to the NEB to maximise the involvement of the private sector in these companies as soon as as practicable.
On this side of the Committee it has been emphasised by my noble friend that we do not take such a dogmatic attitude. The noble Viscount, Lord Trenchard, will have observed that, with regard to the Industry Act 1975 and also the Scottish Development Agency Act 1975 and the Welsh Development Agency Act 1975, we have not raised any objection to the insertion of the words,
"promoting the private ownership of interests in industrial undertakings".
There is no reason why we should, because we take a very pragmatic attitude towards it. What we want within a mixed economy—and I take it that the noble Viscount is as committed to the mixed economy as other parties in this House—is for all sections of British industry to prosper, whether they be under national ownership or whether they he in private hands. That, surely, should be the yardstick.
Therefore I reiterate the argument with which I started, that surely in the light of the six months' experience that the Government have had since they first drafted this Bill—I believe it had a Second Reading in the other place on 6th November and it must have had a two months' period of gestation prior to that, during which time the noble Viscount's own party's dogmas have come under some query, not the least from substantial sections of his own party, as well as from the CBI—the time has come for the Government to take another look at this.

1039
What harm can there be in leaving the industry as it was in 1975? In so far as it was going to be affected by Clause 1 of the present Bill, why should it not be left as it is? The Government have lost nothing thereby. They are still at liberty under Section 7 of the Industry Act 1975 to enforce their will in so far as that will may remain constant, although, as past experience has shown, it has occasionally exhibited symptoms of wavering. Just leave that as it is. If for the time being Sir Keith Joseph in another place still holds on to his dogma, which is beginning to become a little shaken in view of the wide doubts which are now spreading within his own party, he can always issue a direction under Section 7.
I think it is most dangerous that these prohibitions should be put on the statute book. I would think otherwise if there were not powers in the Industry Act for the Secretary of State to issue specific directions in specific cases. I do hope that we on this side of the Committee shall not only carry the support of the noble Lord, Lord Rochester, and those who sit with him, but shall also, upon reflection, carry us with the noble Viscount, Lord Trenchard, who, as past experience has shown, is a most reasonable Minister.
4.32 p.m.
Lord CLEDWYN of PENRHOS: I will, if I may, confine my remarks, for the sake of brevity, to the problem posed in the Bill for the Welsh Development Agency. No one, I think, on either side of the House would doubt the importance of the Welsh Development Agency; certainly there is no one, of whatever political complexion, in Wales who would seek to argue today that the Welsh Development Agency is not an essential instrument for the purpose of seeking to resolve some of the more acute problems which confront the Principality at this time.
When the Welsh Development Agency Act was going through Parliament the party opposite saw fit to oppose it. In fact they were able successfully, within the proper rules of parliamentary procedure, to delay implementation of the Act for 12 months. We protested at the time. In due course the Bill became law. But after the Act had been in operation for two or three years the views of the party opposite changed, and it is very much to
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their credit that their views changed. They then said publicly that they thought the Welsh Development Agency was a first class instrument, and I think they took the same view about the Scottish Development Agency, and to a lesser degree the National Enterprise Board as well. But certainly so far as Wales is concerned the then Front Bench spokesman for Welsh Affairs, Mr. Nicholas Edwards, who is now the Secretary of State, said publicly in the other place and in the Welsh Grand Committee that the party opposite had changed their minds, that experience had shown them that this was an agency worth keeping, worth building upon. This was good news to us and certainly it was good news to the people of Wales. If it was true then it is even more true today. With the worsening employment situation. with the increasingly grave economic position in Wales, the Welsh Development Agency is of even more crucial importance than it was.
I have in two or three speeches gone into some detail on the present unemployment and economic situation in Wales and I do not propose to repeat myself on this occasion. But I would refer to a memorandum which was submitted by the Welsh Office to the Committee on Welsh Affairs. The report of the committee was recently published, and therefore I take it that the House as a whole, including the Government, will regard this report as a detached report, and it is therefore worthy of our consideration.
What the report says on page 1 is that the pattern of employment in Wales in recent years shows four major features: (a) unemployment rates continually higher than the Great Britain average; (b) changes in the structure of employment; between 1967 and 1979 there has, for example, been a severe decline in mining and quarrying, down by 52 per cent., agriculture, forestry and fishing, down by 41 per cent., metal manufacture down by 28 per cent., growth in professional scientific services, insurance, banking and finance up 44 per cent.; between 1967 and 1976 employment in miscellaneous manufacturing rose by 44 per cent. Those figures I think summarise the development of employment opportunities in Wales over the last few years.
Then the report goes on: (c) a decline in the total number of male employees in

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employment and a steady increase in the number of females coming into employment; and, lastly, (d) an expectation that the labour force after a period of comparative stability will rise by some 179,000 in the period between 1976 and 1991. This represents an increase of 15 per cent. compared with 10 per cent. in Great Britain as a whole.
That report from the Welsh Office, under a Conservative Administration, summarises the problems which face the Principality at the present time, and these are the problems which the Government and the House have to face. Certainly we who live in Wales and meet the people who are affected, those like myself who meet people who are going into unemployment for the first time in their lives, who are meeting young school-leavers with no chance of a job, are truly deeply and profoundly disturbed about the implications of the present trend. That is why we are entitled to take seriously the Government's proposals in this Bill.
We have been told of a £35 million cut in the industrial assistance being given to Wales. I would ask the Minister of State, whom I have always found both in and out of Government to be a reasonable man, for further clarification of this. The noble Viscount, Lord Trenchard, referred to this when lie made a speech in the House in our Welsh Affairs debate on 20th February. Then we were told by him, and by the Secretary of State for Wales, Mr. Edwards, that Wales is to receive an additional sum of money amounting to £48 million. These figures need to he brought together; they need to be explained to the House so that there can be no misunderstanding about the situation. What is the nature of the £48 million? How is it to be paid? Through what channels is it to go? Again, how is the £35 million cut analysed? How are we losing that £35 million? Is it that what we are to receive over the next two years is in fact a net £13 million, which is the difference between £35 million and £48 million? If that is the case let us be told; let us have no playing about with words. If it is £13 million, well, £13 million is better than nothing, but it certainly is not enough to deal with our present problems. That is the reality of the problem Ministers opposite have to face.
As I understand it—I would ask the Minister to deal with it in rather more
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detail—the rates of regional development grants in the development areas are to be reduced from 20 per cent. to 15 per cent., and regional development grants in intermediate areas are to be eliminated altogether. Are those two cuts in fact responsible for the overall cut of £35 million in grants to Wales? If that is the case perhaps the Minister will so tell us.
Then there are the functions of the Welsh Development Agency. Would he be precise as to these? Are they to be affected in any way, and if so in what way, by this Bill? We are, of course, concerned not only with the functions but with the resources available to the agency. If the functions remain the same but the resources are reduced, then the operations of the agency are much crippled at a time when they should be receiving more resources.
There are noble Lords in the House—and I respect them—who take the view that no agency is justified and that no kind of instrument is justified. There are those who would go the way of laissez-faire, the way of the last century. They are perfectly entitled to their point of view, but they are very fortunate that they do not live in a Welsh valley at present. It is very easy to make these points from an easy chair in the Athenaeum but it is much more difficult to swallow them if you and your family are out of work.
Therefore, when we deal with this matter we need to deal with it with a certain amount of realism, and I hope that that is what we shall get from the noble Lords on the Government Bench. Given the enormity of the problem we need the fullest possible resources. Because I am not clear on the matter, I should be grateful if the Minister of State would differentiate between the resources made available under Section 7 of the Industry Act, which now come under the Secretary of State for Wales, and the operations of the Welsh Development Agency.
Our present fear is that the resources will not be adequate. What will be made available in South Wales and Deesside—however welcome that may be—will itself not be enough, but it will certainly preclude necessary funds and resources being made available to those other parts of Wales which are more sparsely populated, but where the problem is equally serious—for example, in areas like the island which I had the honour to represent for so many

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years, and where unemployment at present is running at about 15 per cent. of the insured population. It could be argued that we must leave Angelsey at present, with its small population of 65,000, and we must consider the hundreds of thousands of people living in the industrial areas of South Wales and on Dee-side. I appreciate that point and the problems of the area mentioned by the noble Lord, Lord Brooks of Tremorfa, who spoke so well at the beginning of this debate. But, it does not make the problems of the rural areas and the small towns of Wales any less: they must be given equal consideration by the Government and by Ministers opposite. Therefore, unless I hear some very powerful arguments from the Minister of State, I see no apparent justification for the changes which are now proposed by the Government.
The Welsh Development Agency is working well, as is the Scottish Development Agency. The National Enterprise Board is, at present, an absolutely essential instrument in Great Britain. To interfere with their operation for apparently doctrinaire reasons is absolutely inexcusable and I hope that the Committee, on all sides, will have the courage to defeat this proposal unless the Government put forward very strong arguments indeed in favour of it.
4.45 p.m.
Lord HATCH of LUSBY: Clause 1, which we are seeking to amend, is obviously the philosophical core of the whole Bill, and I would dearly love to debate the issue on those grounds, but this is not the time to do so. I wish to refer very briefly to two issues raised in Clause 1 and those parts of Clause 1 which we are seeking to amend. According to the Explanatory and Financial Memorandum they are covered in the words:
"the NEB and the Agencies shall cease to have the function of promoting industrial reorganisation and industrial democracy".
I want to make a special appeal to the Government, to the Liberal Benches and to the Cross Benches to consider what has happened since the Bill was first drafted. A number of important things have happened which concern the industrial and economic future of this country, and which I believe should lead us, and should
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lead the Government, to think again about this section of Clause 1.
The Government, like all of us, have been deeply concerned about the decline in manufacturing industry. The Government, again like most of us, have been constantly making pleas for greater wealth production in this country. Yet, since the Bill was drafted it is the Treasury that has forecast that manufacturing industry in this country will fall by 20 per cent. over the next two years. That was not a forecast that was available to the Government at the time the Bill was drafted. However, further to that point, since the Bill was drafted the Government have had the opportunity of discovering what effect the dropping of foreign exchange control has had upon investment in this country.
My noble friend Lord Bruce of Donington gave some figures. I would remind the Minister who is to reply that this was an issue which I raised at the time that exchange control was dropped, during the economic debate of last summer, when I pointed out to the Government that there was a precedent here from which they could learn—namely, that when they were in office in 1970 they could see during the first two years of Mr. Heath's Government what was happening to investment when the restrictions on overseas investment were removed by that Government. I gave figures at that time and I asked the Government why they thought that their experience in 1979–80 would be different from that in 1972–73, when, as I pointed out to them, there was the massive exodus of investment to Western Europe and North America compared with the minimal investment in industry in this country.
Now, again since the Bill has been drafted, they have been told by no less an authority than the Financial Times that, within the first two months of the dropping of exchange control, this country lost in overseas investment a greater sum than the Prime Minister is now trying to recover from our contribution to the EEC. During the first two months of the dropping of exchange control we lost well over £1,000 million in overseas investment. I would suggest to the Government that that should eive them some cause for thought. If at one and the same time our manufacturing industry is declining—and if my noble friends Lords Balogh and

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Kaldor were present we would be told for how long it has been declining; that it has been declining at least since the nineteenth century, and it is now declining very rapidly, indeed it has almost disappeared—and also investment is going overseas instead of into industry here, what is the Government's remedy? Surely at least one of the major factors of that remedy must be the operation of the National Enterprise Board.
Instead of repudiating the Keynesian remedy for industrial decline and depression, as they have done, I would suggest to the Minister that many members and supporters of his own party are now beginning to recognise, and are now saying, that Keynes should have been used more and that there should have been an increase in Keynesian operations, rather than a decrease, to meet exactly the situation with which we are now faced.
But let me go one stage further than that. Most, if not all, of the industries that have been supported by the National Enterprise Board have been industries which are export-orientated, and which certainly export more than they import; whereas, as we know, our country as a whole imports more manufactured goods than it exports. Again, let me make this plea, in particular to the Liberals and to the Cross-Benches. Surely in these circumstances it is only common sense—indeed, it is our responsibility to the people of this country—to ensure that when we are faced with rising imports and falling exports, the Government take some action to reverse that position. The machine that they have to hand—and have to hand in the Industry Bill—is the National Enterprise Board. The National Enterprise Board can be used in order to stimulate industrial development in this country and in particular our export-orientated industries.
I shall deal very briefly with the question of industrial democracy; the Liberal spokesman accepted that part of our amendment and has tabled an amendment on industrial democracy. Surely the argument that I have just put to the Liberals would convince them that industrial reorganisation is essential for the future, if we are to maintain just the present standard of living of the British people; that that reorganisation needs the use of the National Enterprise Board, but that
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it is an extremely dangerous, difficult and complex human problem.
The reorganisation of industry in this country—which means concentrating upon those industries which we can develop while inevitably allowing certain industries to run down—requires mobility of labour. That is a very nice phrase, but in fact it means people being prepared to tear themselves away from their familiar surroundings, their friends and relatives and moving to other parts of the country. It often means retraining men and women who are 30 and 40 years old—people who thought that they had finished their educational activities many years ago. It often involves a deep and wounding argument within the family itself. It is a very complex and profound human problem.
If it is to be achieved successfully, surely the first thing required is an involvement of the workers themselves in the organisation of the industry in which they are asked to take part. Is there any way in which industrial organisation can be achieved without the measure of industrial democracy which gives the worker a stake, a feeling of possession, a new home in the industry which he is entering? Therefore, I am suggesting that industrial reorganisation and industrial democracy are inextricably linked and that our amendment, which includes both of them, should be accepted by the Government and, above all, should be accepted and supported by the Liberals and the Cross-Benches.
Viscount TRENCHARD: May I take a little time in my answer to the important statements that noble Lords have made in relation to this Clause 1 amendment? As various noble Lords have said, it is a fundamental one. I do not wish to repeat, more than I need to, what has been said in the Second Reading debate, but a degree of repetition has already taken place and I feel that I must answer some part of it. Perhaps if I take the time to do so on this fundamental clause, we may not need to repeat ourselves; I shall try to follow that lesson myself hereafter.
The noble Lord, Lord Lee of Newton, gave a perfectly correct definition of the purpose of his amendment. We see the amendment as having exactly the effects which he declared. It is because we are

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fundamentally opposed to them that I shall have to advise the Committee not to accept it. At this point, if I may, I shall turn to the interesting remark that the noble Lord, Lord Bruce of Donington, made when he said, in a voice of astonishment, "Unless the noble Viscount tells us that this Government really believe in what they say". Odd as it may seem, I can confirm to the noble Lord that a responsible party and Administration should really believe in what it says and said before the election; but, yes, against the failure of the previous policies, we believe in what we say and intend to carry it out.
Is it more dogmatic or less dogmatic to believe in furthering public ownership by one means or another, or Government agencies for reorganisation, rather than furthering private enterprise? We need to recognise that at first base there is no more intrinsically dogmatic view on this side of the Committee than on the other side on this question. We believe most sincerely not in winding up all public ownership or all important functions of the NEB—to which I shall return in a moment—but in moving towards the maximisation of private enterprise. We believe in it and we believe that the evidence in the major economies of democratic countries is on the side of those who believe that this is most likely to produce success and to raise standards of living, as indeed it has raised them above those of the United Kingdom by a long way.
We believe that ours is the more humble of the two beliefs, whether dogma or not, because it is based on a humility about what Ministers, Governments or centrally created Government agencies can do. We believe that the success of a country depends upon a free market because it harnesses all the efforts of all the people. We believe that the market system and private enterprise have—
Lord WIGG: Will the Minister give way? If he is arguing the case for or or against dogmatism, will he tell us the meaning of his previous words?
Viscount TRENCHARD: I am sorry, I did not catch the noble Lord's question.
Lord WIGG: The noble Viscount said that the Government believe in having as much private enterprise as they can because it releases all the efforts of all the people. If that statement is not a dogmatic one, I should like to know what is.
Viscount TRENCHARD: I think that the statement that public ownership should be expanded and that Government agencies should investigate and reorganise large branches of successful private industry is much more dogmatic. My statement at the beginning was that there was no prima facie case either way. We happen to believe—and we believe that the evidence is on our side—that the success stories of world economies go the other way, and that they permit the kind of thing we all need and want; a rise in the standard of living, a rise in our social policies, and our educational policies, about which we have to discuss so many things because at the moment we cannot afford them.
Lord HOWIE of TROON: I wonder whether the noble Viscount would give way for a moment? Is he not just over-egging the pudding a little? Could he tell us why all the advantages he has adumbrated arise from private rather than public ownership? It is not as easy as that, is it?
Viscount TRENCHARD: I think that, as I continue, the balance of what we believe will become clear.
Lord HOWIE of TROON: Why should it not become clear now?
Viscount TRENCHARD: I believe that the noble Lord will be satisfied. Well, I doubt whether the noble Lord will be satisfied, but certainly his question will be answered as time goes on.
Lord HOWIE of TROON: Why not at this time?
Several noble Lords: Order!
Viscount TRENCHARD: We believe that the health of the private sector of industry, which has in the past created the wealth for this and other nations to a greater extent than the public sector, has been debilitated over two decades in which controls, lack of incentives, taxation

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policies, have made sure that it has neither the money nor the freedom with which to operate. My answer to noble Lords opposite who have argued that the investment was not available in the past—and I include the period of the previous Conservative Administration mentioned—is that the whole system had been reduced to a level of profitability which I have quoted many times in this House and which is about a quarter of that of our main international competitor countries; a quarter of the profitability level; barely a level at all in current cost accounts.
In that situation we do not believe that one can instantly wave a magic wand and have universally a really profitable private sector of industry. One has to move gradually. We believe, however, that the alternative roads have been tried with no success, and that the road to follow is the one we have described often, and which I have mentioned this afternoon. But we do not believe that any one Government agency, the NEB or the Scottish and Welsh agencies, can be a panacea for putting right all that is wrong across the whole field of a complicated industry. Neither do we believe that they can conceivably, within the resources left to us in this country, either put right the total investment that we should like to see in this country, or be a prime way—as I think the noble Lord, Lord Lee of Newton, said—to save any appreciable numbers of firms against bankruptcy.
That does not mean that either this Bill or our intention is to reduce the NEB, let alone the agencies, to which I shall return later, to, as the noble Lord, Lord Rochester, said the odd "lame duck" function. The functions that remain were well outlined on Second Reading. There are some 60-odd holdings of NEB, and they are important. The new function, of returning some of those investments as soon as it is possible to do so to private ownership, is an important and a difficult one. The catalytic function in high technology areas which remains, and which is in the guidelines in the Library, has been completely ignored by speakers opposite. The functions in the assisted areas and in relation to small businesses have been ignored. These are formidable functions by any standard. I can tell noble Lords opposite that I
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would find those as much as any one board of directors could begin to carry out efficiently.
We leave to the NEB not a short-term role, not the odd "lame duck", but major and important functions. We leave precisely these parallel functions to the agencies, and we do not interfere with the other functions that the agencies have. There was a suggestion that the agencies were being emasculated; that NEB was being emasculated. I reject the word. In the case of the agencies, other functions not mentioned in this Bill remain, including their factory building functions for instance, the promotion of investment, their inward investment functions. Formidable functions, important functions, remain, but we believe that the direction must be to maximise private investment.
Lord HATCH of LUSBY: Would the noble Viscount allow me to intervene for a moment? I have followed the argument closely so far, but if one reads Hansard tomorrow I think one will see the reason for my question. If you believe so fervently in private enterprise, then why do you maintain any nationalised industries at all, and in particular the NEB and the agencies we are talking about? If private enterprise is so wonderful in its investment, management and profitability, can you philosophically explain why you are maintaining the public sector that you are now claiming has so many important functions?
Viscount TRENCHARD: Because we are not dogmatic.
Lord HATCH of LUSBY: You cannot have it both ways.
Viscount TRENCHARD: It is because we are not dogmatic. Certain functions of the State have been agreed for many years, and we go right back to defence and other things here. Nationalisation has taken place in many areas over a prolonged time. The NEB exists, and my right honourable friend and I have paid tribute to the work they are currently doing, in fact because we are not dogmatic.
It was suggested that reorganisation was to be forbidden—I think that is what the noble Lord, Lord Lee of Newton, said.

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There is nothing in our philosophy which forbids reorganisation taking place. We believe that in the main this will take place if the normal market forces are allowed to operate. In addition, reorganisation in the areas within the guideline rules of the NEB can be prompted, within the rules and within the safeguards that exist.
Lord BRUCE of DONINGTON: I promise not to interrupt the noble Viscount again, but if what he said be the case, then what is the reason for removing the words "reorganisation of" from Section 2(2)(b) of the Industry Act 1975?
Viscount TRENCHARD: Probably I did not make myself clear. I said the market system would cause reorganisation, and I further said that while the general reorganisation powers of the NEB over an extraordinarily wide range are to be curtailed, there is nothing to stop the NEB—within its terms of reference in the advanced technology industries, in its existing holdings and in the assisted areas once more—from prompting reorganisation.
In turning to the advanced technology situation, I remind the Committee that we have said that the catalytic function in advanced technology must continue. And I say to those who have said that we are dogmatic in being non-interventionists, that we are supporting—I leave out for the moment, because I shall come back to it, the question of a further £25 million—INMOS, we are supporting the electronics industry through MAFF and MAP and we are continuing various schemes which help research, development and technology outside the NEB; and the NEB role will specifically be to include the catalytic function in the high technology areas.
In relation to INMOS, at present the question of the further £25 million for which they have applied and the location of their production unit are, as the House knows, under consideration. Both those questions raise many very important issues on which noble Lords opposite and their right honourable friends in another place have been making very clear to me in the Department of Industry that they have definite views. I can only tell them that there is more than one view in both parties about exactly what we should do on those two issues. However, we do not plan
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to cause a hold-up of any consequence to the INMOS operation in coming to these decisions in terms of meeting the market-place requirements. They have asked for this money in advance of their absolute need and we are coming to the point of decision as fast as possible.
The noble Lord, Lord Bruce of Donington, suggested that the Secretary of State could use Section 7 to give directions, and we shall come to amendments later. Section 7 is the one dealing mainly with regional support and Section 8 with support for special industries or industry reorganisation plans. These functions will continue to be functions of the Secretary of State and the Department of Industry, but we do not think they should be muddled with the question of the NEB's powers. NEB subsidiaries with support from the NEB itself can, in accordance with the regulations of those schemes, apply for aid and these matters can be judged in the normal way and on merit.
The noble Lord, Lord Cledwyn of Penrhos, asked questions about Wales and the noble Lord, Lord Brooks of Tremorfa, made a number of important points relating to Wales. We have had a Welsh debate—as the noble Lord, Lord Brooks, knows because he introduced it—and we have had a great many steel discussions, and I do not want to go into either of those subjects. It is perhaps a pity that South Wales has depended to such a high degree on public ownership industries where, for one reason or another, demand, which has nothing to do with the fault of anybody, has fallen, or our share of markets due to our failure to remain competitive has fallen. There is a good deal of growth, as the noble Lord knows, in Wales now. I do not accept the extrapolation of figures which were mentioned as rising as high as even 160,000 unemployed in Wales; I believe the present figure is just below 90,000.
The reorganisations plans of the BSC have yet to be confirmed, agreed and timetabled and, in anticipation of those, we have already gone ahead with £48 million extra authorisation for factory building. I will write to the noble Lord, Lord Cledwyn, in relation to the exact calculation of the £35 million he mentioned. If I have noted his intervention aright, it is that £35 million less would be likely

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to be available under the regional programme plan. I will confirm to him what aspects of the plan are involved. At this point I will merely say—and I do not want to debate regional policy either—that I am convinced of the need for a change away from a regional policy which covered 43 per cent. of the population and 56 per cent. of the travel-to-work areas in Britain as assisted areas, with the whole of the intermediate areas having unemployment no higher than the non-assisted areas (to the decimal point it was the same) meaning that approximately half of them had more unemployment than the assisted intermediate areas. That sort of nonsense—I have to call it that—relieved me when I examined it because it has enabled us to make large economies, economies which we must make because of the situation of the economy of this country, and yet retain a sharply pointed and effective regional policy. So while I confirm the figure of less money for Wales, I can tell the noble Lord that Wales has a bigger percentage of assisted areas than Scotland or even the North of England—the vast majority is assisted in one form or another—and even though the grant may not be available in the intermediate areas, Section 7 assistance for good projects is.
I leave the general questions which have been raised, except to return briefly to the statement by the noble Lord, Lord Hatch of Lusby, that we have lost £1,000 million overseas in relation to investment. There is no evidence that money, either nationally or internationally, is a completely finite quantity in terms of investment. If there are more good things to invest in and if things are going well and expanding, investment can follow. It does not start the other way, and all the studies reveal, for example, that greater investment overseas in a particular country is almost always mirrored by greater exports to that country within a certain time-lag of years behind it.
I will not go into the question of the decline over the century. As I pointed out in the economic debate last week or the week before (as recorded in Hansard) it has not been a decline over a century. Indeed, there was a major period of recovery between the wars, but there has been a catastrophic decline in the last two decades—
Lord HOWIE of TROON: The noble Viscount mentioned a time-lag. Will he tell us what the time-lag is?
Viscount TRENCHARD: No, but I shall write to the noble Lord. These matters are never entirely regular; they will differ from country to country. However, as I understand it, the majority of academic evidence is quite clearly that overseas investment is compatible with increasing exports—
Lord HOWIE of TROON: Yes, but we are not interested in other countries; we are interested in our own country.
Viscount TRENCHARD: May I now turn to the major remaining function that the amendment seeks to change; that is, the question of the NEB ceasing to have the function of promoting industrial democracy. Of course, everyone in your Lordships' Committee and every industrialist I know is trying in every way possible to arrive at a situation where all the people in a particular company will work with the same objective, and much information is already being made available to all employees and trade unions within companies in order to do this. I believe that every responsible company, and certainly the NEB, will probably encourage its subsidiaries, according to their various and particular needs, to do everything they can to promote this situation, because it is so important for productivity.
However, we do not believe that we should impose particular forms of employee participation on companies, nor in general—and this is a matter of industrial organisation—involve the NEB in the relationships between an NEB subsidiary and its work force. This should be a matter for the companies themselves, and for the NEB, as it finds appropriate and necessary in a particular case, gently to prompt or prod. Perhaps I may remind your Lordships that under the previous Administration the NEB found itself quite unable to exercise its industrial democracy function because of the absence of any coherent Government policy on that subject.
I do not in any way wish to discourage; I wish to encourage in every way possible, within sensible management organisation, the furtherance of the working together

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that we need so badly. I always find it a little strange that noble Lords opposite, and the party that they represent, should be so keen to force things in this area—even though they did not really do this themselves when they had the opportunity—when they resist so fervently legal questions in relation to trade union affairs which will only take the situation in this country to a far less legalistic point than that of all our major industrial competitors. I invite the Committee to reject the amendment.
Lord KALDOR: Before the noble Viscount sits down, may I ask whether I heard him correctly when he said that this country suffered a catastrophic decline in the last two decades? If that is what he really said, I fear that he was in error. We may have suffered a catastrophic decline in the last decade, the 1970s, but in the 1960s our productivity growth was considerably better than it was in the 1950s, and in no sense can one describe the 1960s as a decade of catastrophic decline.
Viscount TRENCHARD: I stand a degree of correction and accept it from the noble Lord, but the decline has been accelerating. I do not think that in the 1960s our record internationally was good and we lost a large share of world markets during that period; but I accept that the situation has become very much worse in recent years.
Lord LEE of NEWTON: I have heard nothing which prompts me to withdraw the amendment, but may I mention one or two matters before we divide. The noble Lord, Lord Rochester, is, I know, a very fair-minded man. He said that he and his party would not accept any further nationalisation, but the fact is that no one is asking them to do so. We are asking that the 1975 Industry Act be retained, whereas the Government are asking us to make changes. It is not the case that anyone is asking anyone else under this proposal to accept any further nationalisation.
I do not think that the noble Viscount really expects us to be very enthusiastic when he tell us that the NEB has an
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enormous role to play in emasculating itself. That may be a process that improves certain steeplechase jumpers, but it hardly has that kind of effect for the NEB. Again in this case it is the Government who are taking an initiative of that sort, whereas we, like good Conservatives, are asking to retain the status quo.
Viscount TRENCHARD: I must say that I said that the four roles of the NEB that I outlined constituted a major task.
Lord WIGG: I wonder whether the noble Viscount is able to acquit himself of the charge of being over dogmatic on the issue of public ownership versus private enterprise. It seems to me that here he is fighting a battle which in fact is over and done. I believe that there is a considerable body of opinion among members of the Labour Party that ownership as such is not the dominant issue; ownership can take varying forms. So I am not going to battle with the noble Viscount on that issue. Rather I want to make a point as follows. He said that he is not dogmatic, but when I intervened earlier it was in order to underline the fact that on the issue of the pricing system and the practicability of leaving everything to the market forces, as the Government are doing, the noble Viscount is dogmatic and, in my view, is 100 per cent. wrong. I should go so far as to say to him that if he went to a place where the free market really operates—for example, Epsom Downs on Derby Day—in view of the philosophy that he has expounded, with an incompetence which passes belief, the one thing I would guarantee is that when he came away he would not have even his braces.
Viscount TRENCHARD: I must tell the noble Lord that one of my earliest commercial duties was to be in charge of the sale of ice cream on the free side of the race course that he mentioned, and so I am well aware of the situation there.
5.29 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 57; Not-Contents, 105.

CONTENTS

Ampthill, L.

Gore-Booth, L.

Phillips, B.

Ardwick, L.

Goronwy-Roberts, L.

Ponsonby of Shulbrede, L.

Barrington, V.

Gregson, L.

Robson of Kiddington, B.

Bernstein, L.

Hale, L.

Rochester, L. [Teller.]

Beswick, L.

Hampton, L.

Seear, B. [Teller.]

Birk, B.

Hanworth, V.

Stamp, L.

Blease, L.

Hatch of Lusby, L.

Stedman, B.

Boston of Faversham, L.

Hylton-Foster, B.

Stewart of Alvechurch, B.

Brockway, L.

Irving of Dartford, L.

Stewart of Fulham, L.

Brooks of Tremorfa, L.

Jacques, L.

Stone, L.

Bruce of Donington, L.

Janner, L.

Strabolgi, L.

Byers, L.

Kaldor, L.

Taylor of Gryfe, L.

Chitnis, L.

Kilmarnock, L.

Taylor of Mansfield, L.

Cledwyn of Penrhos, L.

Kirkhill, L.

Thomson of Monifieth, L.

Collison, L.

Leatherland, L.

Underhill, L.

David, B.

Lee of Newton, L.

Wells-Pestell, L.

Davies of Leek, L.

Maelor, L.

Wilson of Radcliffe, L.

Davies of Penrhys, L.

Northfield, L.

Winterbottom, L.

Donaldson of Kingsbridge, L.

Ogmore, L.

Wootton of Abinger, B

Evans of Hungershall, L.

Oram, L.

Wynne-Jones, L.

Gaitskell, B.

NOT-CONTENTS

Abercorn, D.

Forester, L.

Murton of Lindisfarne, L.

Airey of Abingdon, B.

Fortescue, E.

Newall, L.

Alexander of Tunis, E.

Fraser of Kilmorack, L.

Northchurch, B.

Avon, E.

Gainford, L.

Onslow, E.

Balerno, L.

Galloway, E.

Orkney, E.

Bellwin, L.

Glenarthur, L.

Pender, L.

Belstead, L.

Gowrie, E.

Penrhyn, L.

Bridgeman, V.

Greenway, L.

Rawlinson of Ewell, L.

Campbell of Croy, L.

Gridley, L.

Redmayne, L.

Cathcart, E.

Grimston of Westbury, L.

Robbins, L.

Chelwood, L.

Hailsham of Saint Marylebone,

Rochdale, V.

Cockfield, L.

L. (L. Chancellor.)

St. Davids, V.

Colville of Culross, V.

Harmar-Nicholls, L.

Sandys, L. [Telllr.]

Cork and Orrery, E.

Holderness, L.

Savile, L.

Cottesloe, L.

Hornsby-Smith, B.

Sempill, Ly.

Craigavon, V.

Killearn, L.

Sharples, B.

Cullen of Ashbourne, L.

Kimberley, E.

Strathspey, L.

Daventry, V.

Long, V.

Sudeley, L.

Davidson, V.

Loudoun, C.

Swinton, E.

de Clifford, L.

Lucas of Chilworth, L.

Torphichen, L.

De La Warr, E.

Lyell, L.

Tranmire, L.

Denham, L. [Teller.]

Macleod of Borve, B.

Trefgarne, L.

Drumalbyn, L.

Mancroft, L.

Trenchard, V.

Ebbisham, L.

Marley, L.

Tryon, L.

Eccles, V.

Merrivale, L.

Vaux of Harrowden, L.

Ellenborough, L.

Middleton, L.

Vivian, L.

Elliot of Harwood, B.

Mottistone, L.

Wise, L.

Exeter, M.

Mowbray and Stourton, L.

Young, B.

Ferrers, E.

On Question, Motion agreed to.

Resolved in the negative, and amendment disagreed to accordingly.
5.37 p.m.
Lord ROCHESTER Lord ROCHESTER moved Amendment No. 2:
Page 1, line 9, after ("effect") insert ("() after paragraph (b) there shall be added—
"(c) in undertakings which the Board control encouraging action aimed at
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increasing the involvement of employees in the making of decisions which affect them."").
The noble Lord said: As has already been said, one effect of subsection (1)(a) of Clause 1 of this Bill is to remove from the National Enterprise Board the function of promoting industrial democracy in undertakings that the board control. The purpose of the amendment now before

1059
us is to ensure that, at a time when more than ever it is necessary for management and employees to work together to improve our industrial performance, the National Enterprise Board should play a part in achieving that objective by encouraging action aimed at increasing the involvement of employees in making decisions which affect them. In conjunction with my noble friend Lady Seear, I have endeavoured to frame the amendment in such a way as to invite the maximum support from all parts of the Committee. The term "industrial democracy" is not used because of the offence which that term can cause in certain quarters. To accommodate those who feel that it is not for the National Enterprise Board but for the undertakings themselves to initiate action in this area, the amendment does not even "empower" the board to promote but merely to "encourage" such action.
The word "involvement" is used deliberately, in part because when I referred to the amendment which was put forward from the Conservative Front Bench to the clause of the 1975 Industry Bill which gave the Board the function of promoting industrial democracy, I found that this was the word which was then advocated in substitution for the offending phrase, "industrial democracy" It was also the word used by Sir Raymond Pennock, President-elect of the CBI, at an industrial society conference that I attended last Wednesday, when he said that one of the three main personal objectives that he had set himself for his term of office was to raise the standards of involvement of employees in industry. I fear that Sir Raymond may have to modify these objectives somewhat in the light of the sad death, later the same day, of Sir John Methven, but, knowing him. I somehow do not think that this particular objective will be one of those to suffer.
Having mentioned Sir John Methven, and since it is the Industry Bill that we are discussing, I hope the Committee will think it fitting for me, as a former colleague of his who held him in high respect, to say how widely his loss will be felt and how much many of us, in whatever part of your Lordships' House we may sit, admired the unstinting way in which he devoted himself to the wellbeing of British industry. The amendment calls for increased involvement of employees in the
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process of decision-making. Again, I should like to call in aid the president-elect of the CBI for, in the same speech to which I have referred, he said that in his view there were still, in industry generally, too few opportunities for employees to influence, before they were made, decisions that could directly affect their livelihood. I suggest that my amendment goes a little way to remedy that deficiency.
It does not advocate that employees should join in the taking of decisions nor that there should be any alteration or extention of existing arrangements for collective bargaining, for negotiation with trade unions and so on; what it recognises is the situation which already exists in our most progressive companies. I could elaborate on this from my knowledge of what goes on in the great company for which I myself used to work; but that would take too long. It is perhaps sufficient to say that in the consultative framework that has been built up in that company over the past 50 years—very properly starting at plant level and working upward to the very top; and not the other way round—what is now talked about is not the food in the canteen but relevant business facts such as where the money comes from and where it is going to; the criteria which should determine how capital is invested and the plans for that investment extending over the next two or three years, including the location of new plants and so on.
I suggest that it is that best industrial practice that needs to be encouraged. Surely, the NEB is a body which should have the function of giving such encouragement to the undertakings that it controls. I am convinced that this gradual approach to greater employee participation is the way forward. I hope that we shall not be told that if this paragraph in the 1975 Industry Act is removed there still will be nothing to stop the NEB from making sympathetic noises if the companies under its wing wish to do more of this sort of thing. I took some encouragement from what the noble Viscount, Lord Trenchard, said in his winding-up speech at the end of the discussion on the last amendment when, if I heard him correctly, he said that in this area he thought that the function of NEB should be to exercise what he called gentle persuasion on the companies which it controls.
The point is that the Government are now proposing to take out this paragraph. If it is removed without putting anything better in its place, this will be seen as a setback to industrial relations at just the time when we should be advancing on this front together. In my view, we cannot afford to stand still. If we do, I fear that in time employers will find that they will have changes imposed upon them which do not have their consent and we shall have missed the chance of obtaining the political consensus in this field which in my view is absolutely essential.
I hope that the amendment will commend itself to noble Lords in all parts of the Committee. May I say at this point how grateful I am for the assurance that, as I understood it, the noble Lord, Lord Lee of Newton, speaking for himself, has already given. I hope that his example may be followed by members of his party. I hope also that it may command support from noble Lords on the other side of the Committee and particularly from those who have experience of industry. More than that, I trust that the noble Viscount, who well knows about—and, I I do not doubt, has sympathy with—the kind of thing that this amendment intends, will feel able to accept it on behalf of the Government. I beg to move.
5.45 p.m.
Baroness SEEAR: I should like to add to what my noble friend has said. The noble Viscount, Lord Trenchard, in his summing-up speech said that this was going on in any case. I think that he said that every company of which he was aware was doing all that it could to see that all important information got through to the whole of the staff. The noble Viscount, Lord Trenchard, moves in the best circles. I do not. I frequently talk about these matters on managerial courses—at which I get rather a different clientele from that with whom the noble Viscount mixes. I can assure him that there is no such widespread conviction that this is what we ought to be doing.
On the contrary, the position at the moment is that there is widespread belief in the rank-and-file management of British industry that Bullock is dead, thank God!—and I refer to the report, of course—and that Heffer is temporarily out of the way and that there is therefore no need to do anything.
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This is the greatest folly from every point of view. It is the greatest folly, as the CBI are fully aware, from the point of view of employers because they now have a heaven-sent opportunity to experiment and develop their own patterns of involvement. This is what they say they want to do; this is what they said in response to Bullock; and this is what, in my belief, they ought to do. I do not believe in mass produced formulae for involvement. They must be tailor-made to suit individual organisations, but they must be prodded into doing it. We are not talking about the Unilevers or ICIs (with respect to the noble Viscount, Lord Trenchard, and my noble friend) but about the great mass of British industry which, left to itself, will do little or nothing because it does not believe that it has to do anything.
I would underline what my noble friend has said. If there had never been any mention of industrial democracy in relation to NEB perhaps there would be some argument in support of what the noble Viscount, Lord Trenchard, has said: but to take out the reference to industrial democracy and to put nothing in its place will be seen by the type of manager to whom I am referring—and he is in the great majority in this country—as a message, a signal, that efforts to increase employee involvement are now no longer of any considerable importance. What we are making is a very modest request. There is to be no force behind this; it is only encouragement. Surely the noble Viscount, Lord Trenchard, can agree that encouragement in this field has everything to be said for it. I beg noble Lords on all sides of the Committee to see that at a time when we need technical change, and we need consent to get technical change, we must do nothing whatsoever to discourage new experiments and efforts in the field of employee involvement.
Lord LEE of NEWTON: This is the old story: if only everybody was as good as the best we should have no cause for complaint. I agree with what has been said from the Liberal Benches. It is now essential that we should try to get the people working in any industry utterly involved, and to encourage them to seek information on decisions which are of great importance to them. I agree with what the noble Baroness, Lady Seear, was saying. I can remember being on production com-

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mittees long before the war; they all became devolved during the war. In factories where work people really are taken into confidence, this is part of the make-up and part of the set-up. We did not need a war to start going on to production committees, although they functioned very well during that period. In a great many factories that I know it is not the case that there is the slightest encouragement given in this respect.
There seems to be a fear that if employees know the state of the order book or the rate of investment, in some way or other this is treading on what we used to call "managerial functions". "Managerial functions" have a very bad taste in my mouth: they caused the biggest lock-out I can remember in the whole of my life. We have to start from the point that trade unions were not set up to co-operate with management. There are still a number of important unions that do not wish to do so. They take the view that their job is to get the best possible terms and conditions for their members, and that management is for others. That is arguable, of course; but it is the wrong approach. It is an approach which, especially in these days, probably finishes up with the situation where many of their members are unemployed anyway.
I want to support this amendment in the hope that we can get a far wider anticipation by those employers and unions which have not yet thought of dedicating themselves to a vast increase in productivity, to getting their people to want to know some of the things now, regarded almost as confidential by some managements for some reason that I have never understood. I came to the point of agreeing to a reduction in piece work prices in order to get a contract; and, in consequence, men who would have lost their jobs did not do so. This is the atmosphere we can create if we get people together to discuss the way a company functions. The future prospects may depend on succeeding in getting those contracts which we may fail to get by a short head.
For my part, I believe that there has been a great deal of movement in some national trade unions on this issue. There is still a long way to go, and I think that this amendment will help bring it about.
Lord SHINWELL: I had the good fortune this afternoon of listening to several of my colleagues from the Front Bench arguing in support of the retention of the very useful and desirable functions of the NEB. All of them argued with great force and ability against, as they alleged, the emasculation of the NEB. Unfortunately, I left the Chamber before the noble Viscount, Lord Trenchard, made his response. Whatever, that was, I have no doubt that it was executed with his customary ability. Whether or not we accept his arguments is beside the point because a Division was taken. The decision has been reached; I do not quarrel with that. It derives from what happened at the last general election and one has to face facts.
Now we are being asked to accept an amendment which, in its general objective and based on the principle involved, follows what members of the Liberal Party have been advocating for many years; namely, a form of co-partnership or (to present it in the form in which the noble Lord, Lord Rochester, argued it) involvement of the workers in decisions. I respond to that to begin with by making this comment: it is quite unnecessary to have such an amendment or to promote legislation towards such an objective. Almost any trade union in the country, particularly those with substantial memberships and—to use the jargon that is now common—plenty of "muscle", could force or persuade ("persuade" is a more appropriate term) the employers concerned to agree that the workers in the industry should be involved in decisions, not merely regarding—and I use the expression we have just heard from my noble friend Lord Lee—productivity, but on administration, organisation and indeed almost every aspect of the industry concerned.
There is a history about this project. My noble friend touched upon it when he referred to the efforts that were made in the past through the medium of productivity committees to assist in reaching decisions which presumably were intended to benefit not only the industry itself but, in particular, the workers involved. I have had something to do with this. I now venture to impart to all the members of the Committee who are present—not

1065
a great many, which is perhaps a pity—that I was engaged in preparing legislation for the nationalisation of the coal mining industry.
Unfortunately, not one of the miners' leaders of the time who met me and fully represented the workers in industry are alive today. But in the course of our discussions I used language which is on record in a Government document, so that it cannot be challenged. One could challenge the argument, but not the existence of what appears in the record. I said to them that I did not want them to regard themselves as employees; when the National Coal Board was actually formed, with responsibility for the administration of the industry and all of the aspects associated with it, I wanted them to regard themselves as partners, not only concerned about wages, health and safety, but also about the organisation of the industry and the administration. I said that if they would agree to my suggestion—subject, although I did not say so at the time, to Cabinet decision, which was obvious; I had to have their consent—I would embody the proposal in legislation. They rejected it out of hand. They said to me, in the language that miners' leaders were accustomed to use at the time, that they were concerned about the interests of their members and they wanted none of my fancy ideas.
That is the position. The fact is that if the trade union movement wants to participate in industry in the various industrial firms existing in the United Kingdom, it has only to ask and to press for it, without an industrial dispute, and it will be embodied in industrial language without any difficulty at all. The fact remains that the workers do not want to do so; they do not want to be involved in administration. It might lead to a loss or, if it led to a profit, they would have no assurance that they were going to derive any advantage, so why should they do it? In their view they should go on in the old-fashioned way with their collective bargaining.
The only comment that I want to make about collective bargaining—and we have had it from the beginning of the century, as I well know; I was involved in it early in the century—is that it has never proved successful or effective. It is no more effective today than it was at any
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other time. Sometimes advantages have been gained, such as changes in wages, in the hours of labour and in working conditions. But very often, no sooner had they attained these advantages than they disappeared because of the construction of the industry itself, the difficulties associated with finance, and so on. That is the position; the trades unions do not actually want it. Let me leave that for a moment to deal with the question of nationalisation, because that has a bearing on this—the NEB, for example. Our opponents, if I may use that term, on the other side of the Committee and elsewhere, dislike nationalisation. They say that they do not like nationalisation because it is socialism. All I have to say, having had something to do with it, is that it is nothing of the sort. If, for example, one takes the nationalised coal mining industry, of course the miners have succeeded in obtaining wages far in excess of what was anticipated in the past, and working conditions on the whole are satisfactory; safety, so far as it is practicable, is ensured; and all the advantages have been derived as a result of a change in legislation. But there is no socialism in the industry. It is a very class-conscious industry, although not class conscious in the socialist sense at all.
We have the various grades, beginning at the top with the chairman of the Coal Board, with a very substantial salary. I will say nothing of the perks—I set those aside. Then we have the members of the Coal Board; then the general managers, the under-managers; and so it goes on, from the top to the bottom, a whole series of relations, and at the bottom are the people who do the work. The others are responsible for administration and policy. So far as those who do the work at the coal face are concerned—and heaven knows, anybody who has seen the men working at the coal face realises that it is pandemonium, and no one should ever express a feeling of dissent because they get very high wages—they have no say in the administration of the industry or of its organisation. They tried it.
I shall come back to the point raised by my noble friend Lord Lee about productivity. They created pit committees, and they were to sit down round the table and discuss, what? Even while they

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were discussing, as they had to do from time to time, there was a decision of the Coal Board to close down a number of pits. That was the great achievement of my noble friend Lord Robens, not Lord Robbins. I am speaking of the industrialist—not the economist—who was responsible for the most remarkable achievement. He closed down 250 pits. I could have done that myself, without a salary. Anybody could have done so. That feat was equalled only by the noble Lord, Lord Beeching, who closed down two-thirds of the railway system—a wonderful achievement!
But the people in the coal mining industry, the men at the coal face, at the surface, those who assisted in cleaning and processing the coal—I wish they would process it even more; I tried to introduce that myself but failed because the processors were not available—take their wages and do what they like with them. They enjoy themselves, but so far as the administration and being involved in decisions are concerned, there is nothing at all. They may believe from time to time that they exercise some power during a strike, but so far as the administration is concerned, there is not a word. That is nationalisation. One of these days it will change and we shall convert it into a form of socialism. Then one will get industrial democracy as I understand it. Industrial democracy is not achieved merely by allowing the workers to have a discussion with management about productivity and the like.
Therefore, I say to my friends of the Liberal Party that their amendment, however well intentioned it may be, and though the principle is one that sooner or later will have to be adopted, is quite unnecessary, for the simple reason that if the trade unions wanted it, if they could make up their minds and, instead of having that one-day strike about which there is considerable controversy, they went to those at the head of the industrial firms and said that they wanted more say in the running of that industry, it would be impossible for the employers to reject that request. That is how it can be done. This will not please the people on the other side of the Committee. They are on the road to socialism. We shall have nationalisation with socialism and industrial democracy, but not until then.
Lord BRUCE of DONINGTON: I rise briefly to say that, so far as I can see, the amendment proposed by the noble Lord, Lord Rochester, does not carry any reference either to trade unions or to co-partnership. I prefer to think that the amendment means what it says. I think there can be no doubt that we can all have own own views as to what "industrial democracy" may or may not be; but there can be no doubt that over wide sections of industry, in some of which I have myself had a managerial responsibility, one of the problems leading to industrial unrest is the undoubted feeling by some workers, particularly those in large industrial undertakings, that they are alienated from the whole ethos of the firm in which they operate. I cannot help feeling that anything which encourages a company or a works to operate more as a social organism—for that is what in fact it is—is something that ought to be encouraged.
I say nothing about the involvement of trade unions, either officially or unofficially. These are matters in which there is some argument even within the established political parties in this Chamber. But of this I am sure: the more a worker feels himself identified with the progress of the firm and with the whole climate which is in existence within that firm, the less likelihood there is of the industrial disputes that we have experienced these many, many years. Therefore, in principle, we on this side of the Committee, with a few exceptions, are generally in support of the involvement of people who work within undertakings in the objectives, purposes and decisions that are pursued.
May I say, as one who some years ago managed a public company in the North, that I found it of tremendous assistance to technical directors, to works directors, inspectors and so on, that one could get first-hand opinion from the floor of the shop on a whole series of matters. I recall one instance where the works director, in conjunction with his technical director colleague, proposed changes of layout within a factory which it was thought would work to far greater advantage. We had a works committee on it which took place in the boardroom. The representatives were invited and shown models.

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They contributed their own views as to how they thought the same thing could be accomplished but in a much more profitable and easier fashion. I must tell the noble Viscount that we benefited very considerably from that advice: in fact a good part of it was preferred by the board to the advice which was given by the works director. The final conduct of a company's affairs must reside in a company's board and its chief executive and managing director, but that does not prevent the workers from being involved in consultation in the whole of production and also, in some cases, in the marketing process. I think this amendment should be supported.
The noble Viscount, Lord Trenchard, in dealing with the previous amendment, which mentioned "industrial democracy", said, I think very truthfully: "We all have different definitions of industrial democracy." But I do not think there can be any difficulty in the correct interpretation of what the noble Lord, Lord Rochester, really means. They are plain words, and the noble Viscount opposite understands them just as well as the rest of your Lordships do. He says, however, that this should be the function of the company and not of the NEB. But I thought the noble Viscount attributed great regard to ownership. Ownership, in his view, is of the utmost importance. All publicly-owned things are bad and all privately-owned things are good.
If there is one responsibility which ownership has, whether it is public or otherwise, it is the right to appoint directors to the boards of companies who are responsible for policy decisions. I cannot for the life of me see why the NEB, which, as this report shows, is the owner, part-owner or substantial owner of a number of firms and is likely, if what the noble Viscount says is true, to participate in private industry even further, should not have this mandate. It is a mild mandate, a good mandate: it is not a dogmatic mandate. I suggest it is in keeping either with what is the spirit of the times now in certain areas, or certainly with the spirit of the times as they ought to be. Therefore, I hope the noble Viscount will accept this amendment.
Lord GORE-BOOTH: Your Lordships may be a little surprised that I should intervene in this debate, and so I had
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better present my credentials. The first one is that I went the whole way through the debate which we had in connection with the Bullock Report. I sat through all that and made a speech on it. I also studied some German work on this precise subject, so that I have grappled with it before. But perhaps my most powerful qualification to say just a word on this subject is that in fact my father spent practically the whole of his working life manufacturing steel in Sheffield, and so one got a little insight into these things, particularly as the rest of our lives at that time were spent only about six miles from Doncaster. Therefore I was able to visit and talk with people for many years in those great industries.
I should like to express a warm acknowledgement to the noble Lord, Lord Rochester, for introducing this subject. Certainly, with the growth of education and the general growing versatility of the people of this country, it is quite clear that you cannot deal with this problem in the old way; namely, as appeared to grow up in some of the cities such as I mentioned, with what are called "workers"—I dislike that term because I worked quite hard myself and yet I do not think anyone would call me a worker, so it is a bad one for this purpose. However, leaving that behind, it certainly was the fashion then in that part of industry that the people who were the employees and doing the hard work on the floor, were regarded, in a way, as citizens entirely separate from the rest of us. I am quite convinced that society will not go on being like that. It will go on in the way that it is going now: that more and more people will combine knowledge of and experience in differing industries at different times. The ability of the people who do mainly manual work to understand other things has grown enormously and greatly to our benefit in our life time.
I am therefore extremely grateful to my noble friend Lord Rochester for raising this matter because I am sure it is a very up-to-date and useful thing for us to talk over. To try to see, through the mists of the next part of history, whether society is going in the direction in which people who do manual work also do a great deal of mental and intellectual work, and therefore feel that they have some claim to take part with management in certain processes of running industry and in which both sides

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can help each other to an important extent.
I do not accept in these days the enmity theory of industry. Neither do I accept that it is one big happy family. I am sure, and again this is from seeing it if not actually practising it, that both elements subsist in a natural and normal industry. In other words, that at times, particularly over economic matters, there will be perfectly honest conflict between those people who really are working and, at other times, it will be a happy family. That can be done with intelligence, good temper and a real consideration for other people on the side of management. Equally, it can happen, because it does happen in quite a lot of industries, that the people doing the manual work enjoy it and are not people who resist management all the time.
It is quite clear, from such spectator experience as one has had, 'that that mood can exist and then there is real and genuine co-operation between what are, not perhaps very happily, called the two sides of industry. Although one has to admit that in certain respects two sides do exist. With those few words, taken from a little experience, I would very much support the ideas contained in the speech of the noble Lord, Lord Rochester. I hope very much therefore that the Government will feel able to give this amendment a fair wind, whether it is done directly by accepting the amendment or at least by associating themselves with the ideas that the amendment contains. I believe that something along the lines of the noble Lord's thinking is basically helpful to the modernity and prosperity of our industries.
Lord ROBBINS: I cannot believe that there is anyone in this House who will find himself in disagreement with the spirit underlying the statements of Lord Rochester and Lady Seear. While in harmony with that spirit, while wishing—to use the words of Lord Bruce of Donington—to diminish the sense of alienation, I can believe, however, that some reserve may be expressed regarding the wording of this amendment. After all, this is the Committee stage, and we are obliged at this stage to pay attention to the implications of the words to which we are
1072
asked to agree as well as to the spirit which underlies them.
It seems to me that the words,
"involvement of employees in the making of decisions which affect them",
are capable of interpretation in ways which are not beneficial to mutual understanding. It is all very well to elaborate arrangements which acquaint the employees of any undertaking, large or small, with the situation and with the prospects of that undertaking, but involvement in the administrative decisions of the board—and it is those decisions which principally affect the future of the employees—is another matter.
Lip service has been paid by various speakers to the fact that the board must eventually decide. But in so far as the decisions regarding, let us say, reorganisation. regarding the installation of advanced technology, are taken at board level, may it not be that if we pass this resolution with these precise words that some of the employees can say, "I was not involved in the making of those decisions"? I submit that this is not a frivolous point.
Baroness GAITSKELL: I would add one sentence to this. It seems to me that if we do not carry this amendment we shall be so much behind the times in the world—in the way the whole argument is going about employees and management—that we shall be ashamed of what we are doing. It has now become the problem, and we should not be arguing about it at all but accepting it wholeheartedly.
Viscount TRENCHARD: I covered parts of these points in resisting the previous amendment, but this has been a most interesting discussion and I shall read it again with extreme care. May I start by saying that I should like to associate myself and the Government from these Benches with the sentiments expressed by the noble Lord, Lord Rochester, in relation to Sir John Methven. We have lost a man of exceptional ability, with a record of service to the private sector, then to the public sector at the Office of Fair Trading, and then again to the private sector. He was a man of great qualities and, I know, a personal friend of many of us here. We shall miss him very badly.
The Government are not saying just that this amendment is unnecessary because

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there is nothing to stop companies introducing employee involvement systems of one kind or another. That is true. But we resist it on wider grounds than that. What we are really asking is: Does an amendment in the words of this amendment in legislation, have any substantial effect in the direction which nearly all noble Lords have supported this afternoon, in terms of improving and increasing employee involvement? Is it, in that context, necessary and would it, in that context, achieve anything?
Let me say straight away that perhaps I should not have given the impression, if that is what I did do, as the noble Baroness, Lady Seear, suggested, that everything in this area is perfect—of course it is not perfect—and that everyone is doing what we would wish him to do. But I said that, in any event, at the appropriate time, the NEB would no doubt prod, or, as the noble Lord, Lord Rochester, suggested, gently persuade, those of its subsidiaries where they felt there was improvement in this area to be made.
Here I would ask the Committee to consider whether it is really likely that the distinguished industrialists on the NEB—and I hope in the future, once more, trade unionists, where seats have been kept—and the representatives of leading companies, where, as the noble Lord, Lord Rochester, suggested the best practice is practised, will not put this sufficiently importantly to their subsidiaries in the way and at the time that seems right to them?
I certainly did not wish to give the impression that I was looking only at the leading company areas, but I think that the small business area there are fewer problems here than anywhere else. The problem is where you get size and big areas of employment, whether in the nationalised industries or in the private sector. What Government do think is that where involvement is inadequate, there is almost certainly a history of problems with, quite possibly, faults in relation not just to management but also to employees and their representatives.
There are complicated problems. There are some of those problems from some while ago, which the noble Lord, Lord Shinwell, described and which still exist in some areas. Even the noble Lord.
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Lord Lee, said that there were certainly areas where the representatives of employees went single-mindedly for the best terms, rather than participating in the organisation. In the Bullock debate, in which the noble Lord, Lord Gore-Booth, made a notable speech and in which I made a very inadequate maiden speech, some of us questioned whether, in all cases, the same objectives were shared and whether this was a necessity before any particular systems were introduced.
The noble Lord, Lord Robbins, has suggested that even the mild words—and they are mild words—of this amendment could be taken to go too far and to impinge on decisions which are, essentially and finally, those of management. I have very considerable experience in the countries of the Continent, where the systems are more specified and more detailed. I tell noble Lords that whatever the systems written, the situations come down to the same problems. Management has to get its head clear on what seem to it to be the possible alternatives, before it starts consultation and finally has to decide. If one of three factories has to be closed management, in the end, has to decide which it shall be.
I wondered whether the noble Lord, Lord Shinwell, with all his wisdom, was going to support words such as "encouraging" in legislation, and in this respect, he made some very interesting observations out of the history of some time ago. I hope very much that the picture he paints is diminishing. I should like to assure the noble Lord, Lord Gore-Booth, that I associate the Government fully with the desire that that picture of employees refusing to be interested in the objectives of a company will fade, and that management will play a major part in making sure that it does fade.
If we are to have the success of countries such as Japan, we really must have employees not just being involved, but chasing management in order to get management to change processes, to introduce new products and to become more effective, even if it means redundancies in some areas, in order that, at the end of the day, their firm shall be competitive and that there, therefore, will be something in real money terms, not paper terms, to share. So perhaps, in those terms, I can assure the noble Lord that the Govern-

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ment associate themselves with the desire to see this kind of progress.
But we are left with the question of whether an amendment using the all-important word "encouraging" should find a place in legislation, in relation to what a board of very distinguished industrialists from leading companies advise their subsidiary companies to do. It is in that sense that the Government believe that the amendment is unnecessary, that it is perhaps capable of the kind of misinterpretation that the noble Lord, Lord Robbins, explained and that it should be resisted. But the record should stand in this House, as I believe it does in the other place, that the whole House—and I hope that the noble Lord, Lord Rochester, who moved this amendment will make clear that it is the whole House—supports the greater involvement of people, particularly in the large employment areas, as all leading industrialists, including those he mentioned in the CBI, will of course support it.
6.39 p.m.
Lord ROCHESTER: I am grateful to all those who have spoken in this little debate. I am particularly grateful to the noble Lord, Lord Lee of Newton, to the noble Lord, Lord Bruce of Donington, and to the noble Lord, Lord Gore-Booth, for their support. I was frankly depressed by the contribution of the noble Lord, Lord Shinwell. If, and in so far as, it is that union members do not want the sort of thing that this amendment seeks to achieve, then I suggest that that is largely why we are in the mess that we are in.
I was not going to say anything more about the company of which I spoke in my opening speech, but perhaps in the circumstances I may be forgiven for just adding this. In that company, in all the committees, at each level from the plant to the very top, all the employee representatives are, in fact, shop stewards, and there is absolutely no doubt in their minds that they wish to influence decisions, of the kind that I was talking about, before they are taken. It is of interest that near the top of that consultative framework there is a business and investment committee, upon which sit employee representatives—again shop stewards who
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have received training from the London Business School, the TUC and the company. I suggest that it is highly significant that at a meeting last year of the central committee, at the very pinnacle of this framework, it was an employee representative, a shop steward who has since become a union official, who presented the company's investment plan. It was not presented by a main board director, and I am told that it could not have been done better. Surely it is that sort of thing which we want to develop.
The noble Lord, Lord Bruce of Donington, was absolutely right to say that there is no intention in this amendment of interfering with collective bargaining on the part of trade unions. I was sorry that the noble Lord, Lord Robbins, interpreted the amendment as he did, given that I had sought to say in my opening remarks that the intention here is not that the employee representatives should themselves join in the taking of decisions. Nevertheless, I have to recognise that the noble Lord speaks with great experience, and clearly it is possible to misinterpret what I had in mind since that is what he did.
Had it been the noble Viscount, Lord Trenchard, who had said that the wording was defective, that could easily have been put right; I am sure that between us we could have sorted out some wording that would be generally acceptable to accommodate the difficulty. But the noble Viscount, Lord Trenchard, as I understood him, was saying something quite different. He was saying that this was not necessary, that it would not substantially improve things, and so on. If the National Enterprise Board are in any event going to give encouragement to the companies under their control, what is the objection to putting in a simple phrase of this kind?
I do not want to detain the Committee any longer. My noble friends and I will give further consideration to the possibility of coming back with a further amendment to take care of any defective wording that there may be. I am clear that there has been a good discussion of the principle underlying the amendment. It has enjoyed a lot of support, and I think that I should be letting down not simply my noble friends but others who have spoken if I did not take this opportunity,

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as a matter of principle, to press the amendment to a Division.
Noble Lords on the other side are not now present in large numbers, but no doubt shortly they will be pouring in. Some of them have considerable industrial experience and, I do not have very much doubt, must feel that there is a lot to commend this amendment. I hope that for once, if they feel they should, they
will have the courage of their convictions and vote for this amendment. If they cannot—well, let them at least not vote against it.
6.45 p.m.
On Question, Whether the said amendment (No. 2) shall be agreed to?
Their Lordships divided: Contents, 61: Not-Contents, 84.
Lord DENHAM: My Lords, I do not know quite what the feeling of the Committee would be, but we agreed to adjourn for dinner at approximately 7 o'clock. It seems a pity to start another amendment and then possibly break off in the middle.
Lord WELLS-PESTELL: My Lords, may I ask the Government Chief Whip whether we are in a position to proceed with the next business?
Lord DENHAM: Yes, we are, my Lords.
Lord WELLS-PESTELL: Then I would agree entirely with what the noble Lord has said.
Lord DENHAM: My Lords, if all sections of the Committee are in agreement, I will move that the House be resumed and perhaps if the next business is finished before five minutes to eight, then at the end of that business we will adjourn until five minutes to eight, so that we restart this Committee stage at that time. I beg to move that the House be now resumed.
Moved accordingly, and, on Question, Motion agreed to: House resumed.

INSURANCE COMPANIES BILL [H.L.]
6.54 p.m.
Lord LYELL: My Lords, I beg to move that the Commons Amendments be now considered.
Moved, That the Commons Amendments be now considered.—(Lord Lyell).

COMMONS AMENDMENTS
[References are to Bill [84] as first printed for the Commons.]
1 Schedule 1, page 10, line 9, leave out from 'or' to the end of line 10 and insert 'Articles 2(2) and 3(1) of the Industrial Assurance (Northern Ireland) Order 1979'.
2 Schedule 1, page 10, line 28, leave out from 'or' to the end of line 29 and insert Articles 2(2) and 3(1) of the Industrial Assurance (Northern Ireland) Order 1979'.
3 Schedule 1, page 11, leave out lines 37 to 42.
Lord LYELL: My Lords, I hope it may be for the convenience of your Lordships'
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House if I move Amendments Nos. 1 to 3 in this instance and if I speak to those amendments and also to Amendments Nos. 5 to 12. In other words, I should like to speak to all the amendments with the exception of Amendment No. 4. Since your Lordships considered this Bill, the Industrial Assurance (Northern Ireland) Order 1979 has been made and has come into operation. That measure, which I shall refer to as the 1979 order, is a pure piece of consolidation of earlier Northern Ireland industrial assurance legislation. The purpose of all these amendments is simply to delete all mention of the Industrial Assurance (Northern Ireland) Act 1924 and the Industrial Assurance and Friendly Societies Act (Northern Ireland) 1948 and to insert the appropriate references to the 1979 order, which consolidated both of these spent orders.
These amendments, Nos. 1 to 3 and 5 to 12, are purely technical amendments to bring the present insurance Bill up to date. I am assured that none of them makes any material change, but I am sure your Lordships would agree that I should run through them briefly. Amendments Nos. 1, 2, 5, 6 and 7 simply substitute reference to the 1979 order for references to the old Acts. Amendment No. 3 deletes the requirement in Part II of Schedule 1 to the Bill for the Industrial Assurance Commissioner for Northern Ireland to report on his proceedings under the Insurance Companies Act 1974. This provision has become unnecessary because the 1979 order itself contains the requirement. Amendments Nos. 8 and 9 are amendments to Schedule 3 to the Bill and this particular schedule deals with consequential amendments to primary legislation.
Amendment No. 8 deletes the reference to the repealed 1924 Act and the second amendment (No. 9) brings in the 1979 order and makes the necessary modifications. Amendments Nos. 10 and 11 are to Schedule 5 of the Bill, which is dealing with the consequential repeals of primary legislation. These two amendments delete the references to the repeal of the 1924 and 1948 Acts and in their place Amendment No. 12 brings in the 1979 order and provides for the necessary repeal of some of its provisions. I hope that that explanation will be of some assistance to your Lordships. I beg to

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move that this House doth agree with the Commons in their Amendments Nos. 1 to 3 en bloc.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
Lord BLEASE: My Lords, I am grateful to the noble Lord, Lord Lyell, for his explanation of the Commons Amendments Nos. 1 to 3, and I readily accept the manner in which he proposes to deal with them. I take this opportunity to speak in general terms to the Commons amendments and say that I readily accept them, subject to one or two matters on which I may ask for explanations. Nevertheless, there are some aspects of the EEC requirements which I consider impose on the United Kingdom a compliance with impracticable uniformity. I am glad to see that the measures we are considering today are more in keeping with the ideals of a useful and helpful harmonisation. I believe that the proposals contained in the amendments should enable Northern Ireland interests to be dealt with effectively in the changed EEC circumstances.
One point which arises out of several of the amendments which are before us, beyond Amendments Nos. 1 and 3, with which we are now dealing, is this. In the changed administrative arrangements I assume that the Department of Trade will report annually to the United Kingdom Parliament. I should like to ask the noble Lord this: Will the Northern Ireland Commissioner or the Northern Ireland Department of Commerce be enabled to present with that annual report a regional section dealing with Northern Ireland affairs only? In other words, will all the relevant Northern Ireland provincial data and information be distinguishable from the total United Kingdom data and information? I think it important that we are enabled to see Northern Ireland's performance in respect of this and see it aside from the total report that may be presented to Parliament. With that point in mind, I would support the amendment as presented by the noble Lord.
Lord LYELL: My Lords, perhaps I may at this juncture thank the noble Lord for his general welcome for what I have said so far, and especially for his comments that this is mainly useful harmonization
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of existing United Kingdom law and indeed Northern Ireland provisions. I had hoped to be able to convey to the noble Lord some information on his question, but I am sure he will appreciate that, as we are running a little ahead of the schedule, I have not been able to obtain the information he is seeking. Certainly I will obtain it as soon as I can and in the simplest and most concise form, and I hope he will have it very shortly.

COMMONS AMENDMENT
4 Schedule 2, page 12, line 42, at end insert—
"The Insurance Companies (Valuation of Assets) (Amendment) Regulations 1980 (S.I. 1980/5)".
Lord LYELL: My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 4. Since your Lordships last considered this Bill a new Statutory Instrument has been made under the Insurance Companies Act 1974 and indeed this has come into operation. This Statutory Instrument is called The Insurance Companies (Valuation of Assets) (Amendment) Regulations 1980. They were laid before Parliament on 25th January and they came into force on 15th February this year. Therefore they need to be added to the list in Schedule 2 of the secondary legislation that this Bill is extending to Northern Ireland. I am assured that no modifications are needed to take account of their extension. These particular regulations enable life assurance companies to elect to use the book value of their assets for the purpose of actuarial valuations which are required by the Act, rather than what we broadly call market values which result from determinations made in accordance with the principal Valuation of Assets Regulations. It is somewhat complicated, but I think the two concepts are reasonably simple.
In the intervening time I have received a brief answer to the noble Lord's query. I hope your Lordships will allow me to reply briefly to the noble Lord's question. I am informed that the Industrial Insurance Commissioner for Northern Ireland will report on the Northern Ireland figures, as indeed the noble Lord, Lord Blease, was asking. The Secretary of State for Trade will report on the United Kingdom basis, and that will include, of

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course, Northern Ireland. I understand that we are establishing a United Kingdom régime to cover both these aspects. I would hope therefore that the noble Lord's query is answered. Perhaps we could leave it there and if there is any point that is still uncovered we may settle it later. I beg to move.
Moved, That this House doth agree with the Commons in the said amendment.—(Lord Lyell.)

COMMONS AMENDMENTS
5 Schedule 2, page 14, leave out lines 8 and 9 and insert 'Industrial Assurance (Northern Ireland) Order 1979".'.
6 Schedule 2, page 14, line 14, leave out from 'or' to the end of line 17 and insert 'Article 2(2) of the Industrial Assurance (Northern Ireland) Order 1979".'.
7 Schedule 2, page 14, line 23, leave out from 'or' to the end of line 24 and insert 'Schedule 5 to the Industrial Assurance (Northern Ireland) Order 1979".'.
8 Schedule 3, page 16, leave out lines 24 to 40.
9 Schedule 3, page 18, line 24, at end insert—
'The Industrial Assurance (Northern Ireland) Order 1979
19. In Article 3(4) of the said Order of 1979—

(a) for "Order and in particular to Article 6(2) of that Order" substitute "Act 1974 and in particular to section 2(2) of that Act";

(b) for "Northern Ireland" substitute "the United Kingdom";

(c) for "Article 7 of that Order" substitute "section 3 of that Act".

20. In Article 18(1) of the said Order of 1979 for "Insurance Companies Order" substitute "Insurance Companies Act 1974".
21. In Article 32(1)(b) of the said Order of 1979 for "Insurance Companies Order" substitute "Insurance Companies Act 1974".
22. In Article 40 of the said Order of 1979—

(a) for the words from the beginning to "Order" substitute "Sections 42 and 43 of the Insurance Companies Act 1974";

(b) for "Article 83(5)" substitute "section 72(6)".

23. In Article 50(2) of the said Order of 1979 for "Order" substitute "Act 1974".
24. In Schedule 5 to the said Order of 1979—

(a) in paragraph 1 for "Article 2(2) of the Insurance Companies Order" substitute "section 85(1) of the Insurance Companies Act 1974 ";

(b) in paragraph 6 for "Order" substitute "Act 1974".'.

10 Schedule 5, page 21, leave out lines 12 to 18.
11 Schedule 5, page 21, leave out lines 35 to 47.
12 Schedule 5, page 23, line 6, at end insert

'S.I. 1979/1574 (N.I. 13)

The Industrial Assurance (Northern Ireland) Order 1979.

In Article 2(2) the definition of "Insurance Companies Order".

In Article 23, in paragraph (1) the words "and an industrial assurance company" and the words "or company" and in paragraph (3), sub-paragraph (b).

In Schedule 8 the entry relating to the Insurance Companies (Northern Ireland) Order 1976.'.

Lord LYELL: My Lords, I beg to move that this House do agree with the Commons in their Amendments Nos. 5 to 12. I have already spoken to all these amendments in my first intervention.
Moved, That this House doth agree with the Commons in the said amendments.—(Lord Lyell.)
Lord DENHAM: My Lords, I beg to move that this House do adjourn until 7.55 p.m.
Moved accordingly, and, on Question, Motion agreed to.

INDUSTRY BILL
7.55 p.m.
House again in Committee.
On Question, Whether Clause I shall stand part of the Bill?
Lord BRUCE of DONINGTON: I rise to address your Lordships on the

1085
Motion, Clause I stand part, only to put a question. Your Lordships will recall that during the opportunity I had of addressing your Lordships on the Opposition's amendment to Clause 1, I put a question to the noble Viscount, Lord Trenchard, which was substantially in the following terms. I asked the noble Viscount what he or the Government would do in the event of the incentives offered to industry—in the variety of ways in which they have been offered over the years in terms of credit facilities, tax incentives and all the rest—not succeeding in attracting the amount of investment into manufacturing industry which would enable it, as a whole, to reverse the present position of decline. Would they, in those circumstances, for the sake purely of the pursuit of dogma, still refuse to allow the State itself, out of taxpayers' money, to establish those manufacturing industries that were necessary for the economy of the United Kingdom to remain a viable unit? I asked him whether he would in all circumstances, if the incentives failed, refrain from taking action on the lines that were already in the Industry Bill 1975 prior to its emasculation—would he still refuse that the State should involve itself in public enterprise? In asking the noble Viscount that question, may I say that today is 28th April 1980 and within one year I shall return to this question after events unfold.
Viscount TRENCHARD: Let me very briefly reply to the noble Lord. Indeed, I thought that I had taken too long in my original reply and if I did not specifically answer his question let me now try and remedy the situation. I think that I answered it indirectly because I spoke of the continued involvement of the Government in their own schemes and through the wide range of powers of the NEB, which we are keeping. Really my answer to him is that we have by no means pulled out of intervention or help in investments. I mentioned a good number of the schemes that we still operate. So I think that his assertion in the question is not a valid one. But we believe that the scope of the Government of this country, in its present economic position, to think they can—as the noble Lord has just said—out of taxpayers' money put everything, or a great deal, right is something that we regard as unrealistic and back to the thought of the NEB as a panacea.
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The other point which I did not answer earlier was raised by the noble Lord, Lord Blease—and I apologise to him for not mentioning the matter—when he again said, as he did on Second Reading, that by any standard the NEB had been a success. We want it to be a success in its limited roles. I would refer the noble Lord to column 524 in the Second Reading debate, where I gave the figures in terms of historical accounts and the trends of the figures. New figures will shortly be published and there will be a note in terms of current cost accounts. I think that that may put into perspective the power of any one agency to reverse industrial decline and to get investment right.
The problem currently with investment—although we want it to keep right up-to-date and be changed wherever possible—is not that we actually have too little investment; it is, in the main, in the utilisation of our existing investment that we are not competitive.
Clause 1 agreed to.
Clause 2 [Transfer of property to Secretary of State.]:
8.2 p.m.
Lord BRUCE of DONINGTON Lord BRUCE of DONINGTON moved Amendments Nos. 3 to 6:
Page 2, line 38, leave out ("or to a nominee of his;")
Page 2, line 38, leave out from ("State") to end of line 2 on page 3.
Page 3, line 6, leave out ("or a nominee of his")
Page 3, line 12, leave out ("or a nominee of his")
The noble Lord said: It may be convenient if the four amendments that are down in our joint names are taken together. The powers that are taken in this clause of the Bill mean that by direction of the Secretary of State the assets or other property held by the board or the agencies may be transferred by them, on his direction, either to himself or to his nominees; and that the direction shall extend to the giving of directions as to the making and terms of a transfer. This seems a little odd. We have heard that the Government do not consider the National Enterprise Board to be all that successful. The inference from that is that the Secretary of State knows much

1087
better. That is a little odd, because in the speech by the noble Viscount on the previouse clause he referred to the personnel of the NEB as being distinguished industrialists. Indeed, in his Second Reading speech on the same matter he referred to:
"… two high-powered sets of industrialists, industrial executive directors and managers, one on top of the other, and the Government's inevitable involvement on top of that, was not a sensible organisational position. "—(Official Report, 18/2/80; col. 489.)
Therefore, for one purpose the noble Viscount appears to consider that these are very estimable gentlemen, full of all the industrial and commercial virtues with which the noble Viscount normally associates private enterprise; then, in this particular clause, he gives power to the Secretary of State to give directions as to the making and terms of a transfer of property or other assets held by the board. That appears to be a little odd.
With his party's devotion to the selling off of assets under the control of the NEB at the present time, I can understand the noble Viscount, saying. "Well, when it comes to selling them off, we should have the best possible skills in the world in determining the terms of the transfer". After all, the industrialists in the NEB, and very often in the firms that are involved, are pretty high-powered people. I do not want to be disrespectful to the noble Viscount's right honourable friend Sir Keith Joseph, but I should hardly think that he is a person on whose commercial judgement I would rely to negotiate the sale of one of the NEB's assets. I should not think that he was the right person. He is a very distinguished politician, and certainly a theoretical and fanatical economist of kinds, but if it comes either to running an enterprise or to selling it off, I would not trust him to run a whelk stall.
Therefore, when it comes to the terms on which assets belonging to the NEB should be disposed of, with the greatest possible respect, I would sooner rely on those people who have been more intimately concerned with their administration and who have some knowledge of them—unless it is the policy of the Government, in the pursuit of obtaining a quick buck out of capital, to reduce their public sector borrowing requirement and count asset realisations as income in their hands, which the present Government are very
1088
much disposed to do; unless they virtually wish to sell them at any price. Therefore, as I said, I should not have thought that the Secretary of State is the best person to give directions as to the making and terms of a transfer.
The other subsidiary matter on which I have already had discussions with the noble Viscount and on which he is prepared to enlighten us, is as to the reasons why the securities or other property should be transferred to the Secretary of State "or a nominee of his". I understand that there are technical reasons for that and the noble Viscount can shorten the proceedings by referring me to those particular sections of the Companies Acts 1948, 1967 or 1976 which he considers have particular relevance to the insertion of "a nominee" here. It is my experience—and I stand to be corrected by the noble Viscount—that once a company has been incorporated, it is a legal entity, and even though its shares may be transferred to one person only, that transfer does not invalidate the status of the company as a corporate entity. I may be wrong about that; I do not have the advantage of having had a prior consultation with the Law Officers of the Crown or even with the noble and learned Lord the Lord Chancellor; but perhaps we could have some enlightenment on that. Of course, in ordinary legal parlance, "nominee" means a transfer to a person who ultimately has no beneficial interest. I can conceive of circumstances in which it might be convenient for the Secretary of State to nominate someone else to receive them without having beneficial ownership, but we should like some enlightenment on that. In the meantime, however, our objection remains.
Once again there is this impulsion by the Government, regardless of the merits of a particular case, to proceed with haste in disposing of, or transferring to the Secretary of State, companies either under the control of the NEB, or in which the NEB has substantial interests. I have been going through the annual report and accounts for 1978 for the NEB, which are the latest accounts available to me. On going through them I am curious as to which assets, companies, or shares the noble Viscount is bent on disposing of. Perhaps he could give me some enlightenment.
The NEB holdings cover a wide range of activities. I have been through them all carefully. It would be helpful to the Committee if some indication could be given as to which particular holdings, or part thereof, the Government intend to transfer to the Secretary of State. It might also be convenient if the reasons could be given. I shall afford the noble Viscount the opportunity, should he so wish, to draw my attention to any particular companies that the Secretary of State may have in mind.
It would be a complete injustice to the Government—and one knows that we on this side of the Committee do not wish to inflict any injustice on them in any way—to think that this clause was put in without any particular reason, or without some idea in mind as to what they might do. I should have thought that at least half-a-dozen companies would trip off the tongue of the noble Viscount as to assets, or part thereof, that they might want to dispose of. If so, we should be glad to hear them, and associate them with the report and accounts for 1978. If, on the other hand, it is purely a general idea that they should have this, then frankly, on the Secretary of State's track record so far in the field of commerce and industry, I do not think that he ought to have the power. Therefore, I shall invite your Lordships to support the amendment standing in our names.
Viscount TRENCHARD: I have some points to make of a general nature later and I shall hold them, but may I just deal with the technical points in relation to these amendments before the noble Lord, Lord Rochester, speaks, because that might be helpful. The words "or to a nominee of his", which these amendments seek to remove, are necessary to avoid a difficulty which could arise under Section 31 of the Companies Act 1948. This is because some of the provisions of a limited liability company would not apply if there is only one member of a company. For these provisions to apply there have to be two or more shareholders. That is the whole purpose of the words which the amendments seek to remove.
The provision would allow the Secretary of State to nominate sufficient other persons for this difficulty to be overcome. In practice, this would mean that a number of senior officials would each hold one
1090
share and the Secretary of State would hold the rest, with his liabilities limited to those to which such a shareholder would be subject. I shall reserve my remarks, and I want to answer some of the noble Lord's general points, but I thought it might be helpful to have that technical explanation before there were more contributions.
8.15 p.m.
Lord ROCHESTER: I shall not follow the noble Viscount down that particular road. I endeavoured to look knowledgeable while he was speaking, but I do not think that any contribution that I can helpfully make will touch on that technicality. We should like to support this amendment, if indeed I have properly understood its general purpose. From the quizzical look from the noble Viscount I am beginning to wonder whether I have. However, let me proceed. If I make any errors, or have any second thoughts, they can always be remedied in the Division Lobby later should the amendment be pressed that far.
I have not much to say that the noble Lord, Lord Bruce, has not already said. As it appears to me, although the future of Rolls-Royce appeared to be the immediate issue, surely it was interference, was it not? with the commercial judgment of the National Enterprise Board as provided for in this clause which earlier precipitated the resignation of the whole board under Sir Leslie Murphy, for whom I certainly had a very great respect.
Like the noble Lord, Lord Bruce, unless I still have something to learn from the noble Viscount, I am not at all clear why the Secretary of State should wish to take to himself the power to give directions as to whom assets of the National Enterprise Board should be transferred; nor why it should be thought that a Government department knows better in these matters than people with the commercial expertise of those now serving on the NEB.
What if some firm, perhaps from overseas, which may now be in partnership with the NEB, finds itself lumbered in consequence with a partner unacceptable to it? Surely that is not going to prove a fruitful or productive association. At the very least, should not the Secretary of State be required, in making directions

1091
of this kind, first to seek parliamentary approval? It seems to me to come oddly, certainly from a Government priding themselves on standing back and letting industry get on with the job and all that, to take power to interfere as directly and as arbitrarily as they can under this clause, particularly when the body interfered with responds so directly as does the NEB.
On the basis of the information that is now available to me, and unless I have misunderstood something which I took to be only of a technical kind and not really impinging on basic points such as these, I think that if this amendment were pressed to a Division I should be likely to recommend to my noble friends that we should vote with the Opposition.
8.20 p.m.
Lord BRUCE of DONINGTON: To deal with the technical point with which the noble Lord dealt in regard to Section 31 of the Companies Act 1948, it should be noted that that section says:
"If at any time the number of members of a company is reduced, in the case of a private company, below two, or in the case of any other company, below seven, and it carries on business for more than six months while the number is so reduced"—
those words are particularly important, "carries on business for more than six months while the number is so reduced"—
"every person who is a member of the company during the time that it so carries on business after those six months and is cognisant of the fact that it is carrying on business with fewer than two members, or seven members, as the case may be, shall be severally liable for the payment of the whole debts of the company contracted during that time, and may be severally sued therefore".
I can quite understand the apprehension of some noble Lords lest the Secretary of State, in an excess of party or partisan zeal, decided to issue a direction to the NEB, or to anybody else, to transfer shares to him, and of course if he held on to them for longer than six months, he would be liable under that section. But can anybody in their right senses imagine the Secretary of State running a business for six months? I should have thought the whole purpose of the clause which we are debating was to enable the Secretary of State to say to the NEB, "I want you, on terms that I shall determine, to transfer the shares from A to B. Initially, of
1092
course, they will be transferred to myself and after that they will go to some section of private industry".
The decision is a political one, is it not? I cannot imagine the Secretary of State meditating for over six months about what he should do with the shares he has acquired. And I am terrified at the thought of him running an undertaking during that period because, like the noble Lord, Lord Cockfield, I want the public sector borrowing requirement to be reduced by the maximum amount I can get for the shares. The thought terrifies me and should terrify the Committee, and therefore to accomplish the purpose of the Government—that the Secretary of State should rid himself of the shares he has acquired within six months—I urge prudence on the Government. They should clearly circumscribe the powers of the Secretary of State to hang on to the shares, and after taking due advice he should certainly get rid of them within six months, after which, as the noble Lord said, the disciplines of Section 31 of the 1948 Act would apply. I am sure noble Lords will agree that the Opposition's amendment in this matter should be supported in every quarter of the Committee purely on grounds of commercial and industrial prudence.
8.24 p.m.
Viscount TRENCHARD: The amendments as drafted are technical and are designed to delete the words "or to a nominee of his." They do not stop businesses being transferred to the Secretary of State, so the amendments as drafted are technical and the reason why we require the words "or to a nominee of his" are those I have described.
The noble Lord, Lord Bruce of Donington, quick to the reference books—and I congratulate him for that—pointed out that what I had said was accurate but that there was a six months provision in it. The case that has already arisen, namely Rolls-Royce, could conceivably be there for a good deal longer. I am not suggesting there is some particular need for this protection in relation to Rolls-Royce, but just that there could be circumstances in which even the six months provision, which I have not had time to be advised on, is not completely appropriate.

1093
As for the general point on the powers of the Secretary of State to request the NEB to transfer companies or assets to him, nobody with my right honourable friend's record could possibly be accused of wishing to manage any business whatever. That is neither his intention nor his style—certainly not, as we have said, to manage Rolls-Royce. We stand as shareholders and it is a question of time whether there should be an intermediary or not. So on the general question regarding these powers, I give those answers and will amplify a little further, though I say again that the purpose of doing it is simply to answer what has been said rather than to bear on the amendments, which refer only to the question whether the words "or to a nominee of his" should be included.
It is the Government's policy that the NEB should progressively sell more of its shareholdings as soon as that is commercially practicable and having regard to the interests of the company and the taxpayer. The power of transfer is there to deal with difficult and intractable cases which the Government and the Secretary of State cannot dodge. These powers are to enable the latter to deal with otherwise difficult disposal problems that could become incompatible, say, with the achievement of the NEB's financial duties. Similarly, the power to determine the making and terms of a transfer could relieve the NEB of obligations it could not otherwise meet.
The policy has been stated and passed in the other place and on votes already taken in this place. The constitutional duties of the Secretary of State for the proper use of public powers and public funds are clear and unavoidable, and for the reasons I have stated he wishes to have those powers. However, in regard to these amendments, we believe that the power should be not only to transfer the property to him but to transfer it to his name and that of nominees, who would normally be senior officials, as I have described. I therefore hope the amendment will be resisted as a technical one which is completely unnecessary.
8.28 p.m.
Lord LEE of NEWTON: Would the noble Viscount agree that in another place the question was raised whether this clause
1094
was inspired by the Rolls-Royce issue? My noble friend Lord Bruce of Donington asked for an explanation of which of the assets would be likely to be involved. The Secretary of State himself gave as his reason for the decision to take these powers that there might be occasions on which the disposal of an asset might take an inordinately long time, and it seemed to him that it would be unreasonable to leave the NEB with the burden of managing such a company. That was the case put by the Secretary of State.
So far as we can make out, the NEB does not seem to have encountered any such difficulty. Indeed, when one of my honourable friends in another place asked the Secretary of State whether he could give an illustration of a set of circumstances in which an inordinately long time might hinder the workings of the NEB, but would not hinder the workings of his department, he replied, "No, I cannot"; so it does not look as if this sort of emergency has come about. It was some time ago that those matters were argued in another place. I wonder whether the noble Viscount, or the Secretary of State, can give an illustration of such a contingency arising.
Viscount TRENCHARD: At this stage of a new Government policy relating to the direction in which the NEB should move it is not surprising that we have not yet had more than one case where it has been decided that the shares of an NEB company should be transferred to the Secretary of State. There may well be more such instances, for the reason that my right honourable friend mentioned (to which the noble Lord, Lord Lee of Newton, has referred) as well as for the reasons that I have spelt out. His answer was typically short and to the point, but I agree with him entirely; I certainly will not speculate on the many possible problems that can arise within this policy of gradual disposal of major assets.
Lord BRUCE of DONINGTON: May I press the noble Viscount on one further question. I am sure that he would not wish to mislead the Committee, but he tended to indicate that the amendments put down by my noble friends and myself were technical amendments, and that we were concerned with the question of nominees. If the noble Viscount looks at the second

1095
amendment of the group, in which we seek to leave out the words:
"shall extend to the giving of directions as to the making and terms of a transfer",
I am sure he will appreciate that that is not a technical amendment. It is a direct amendment that seeks to challenge the right of the Secretary of State to determine the terms in regard to any transfer. I should be glad if the noble Viscount will agree that that is far from being a technical amendment, and perhaps the Committee will also like to have his views on what in particular qualifies the Secretary of State, as against a group of distinguished industrialists, to determine the price at which such shares should be transferred.
Viscount TRENCHARD: I do not accept that the noble Lord has a point of substance in relation to the second of these amendments. As I have tried to point out in my previous answers, I do not consider that it is a question of whether the Secretary of State is better qualified than are other people to do a commercial

CONTENTS

Ardwick, L.

Hampton, L.

Phillips, B.

Birk, B.

Hatch of Lusby, L.

Pitt of Hampstead, L.

Blease, L.

Irving of Dartford, L.

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Jacques, L.

Rochester, L.

Brockway, L.

Janner, L.

Seear, B.

Brooks of Tremorfa, L.

Jeger, B.

Sefton of Garston, L.

Bruce of Donington, L.

Kaldor, L.

Stewart of Alvechurch, B.

Byers, L.

Kirkhill, L.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Lee of Newton, L.

Stone, L.

Collison, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Taylor of Gryfe, L.

David, B.

Taylor of Mansfield, L.

Davies of Leek, L.

Maelor, L.

Underhill, L.

Elwyn-Jones, L.

Northfield, L.

Wigoder, L.

Evans of Hungershall, L.

Ogmore, L.

Wilson of Radcliffe, L.

Goronwy-Roberts, L.

Oram, L.

Winstanley, L.

Hale, L.

Peart, L.

Winstanley, L.

Hall, V.

NOT-CONTENTS

Airey of Abingdon, B.

de Clifford, L.

Gridley, L.

Alexander of Tunis, E.

De La Warr, E.

Grimston of Westbury, L.

Avon, E.

Denham, L. [Teller.]

Haig, E.

Balerno, L.

Drumalbyn, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Bellwin, L.

Eccles, V.

Belstead, L.

Ellenborough, L.

Hanworth, V.

Bridgeman, V.

Elliot of Harwood, B.

Harmar-Nicholls, L.

Brougham and Vaux, L.

Falmouth, V.

Hornsby-Smith, B.

Campbell of Croy, L.

Ferrers, E.

Hunt of Fawley, L.

Cathcart, E.

Forester, L.

Hylton-Foster, B.

Chelwood, L.

Fortescue, E.

Killearn, L.

Cockfield, L.

Gainford, L.

Kimberley, E.

Colville of Culross, V.

Galloway, E.

Long, V.

Cork and Orrery, E.

Glenarthur, L.

Lyell, L.

Craigavon, V.

Gowrie, E.

Macleod of Borve, B.

Cullen of Ashbourne, L.

Greenway, L.

Mancroft, L.

deal. The last thing that I think my Secretary of State should ever want to become involved in would be the details of a commercial deal, and in all probability the deal would be between the company—particularly if it were a large company—and the private interests who were to take it over.
The power of the Secretary of State at such a point, if he has taken over responsibility for the company, obviously is very necessary in order that he can ensure that the deal is a fair one in relation both to his constitutional duties and his duties as shareholder. I believe that that would be the nearest equivalent of normal practice in the commercial world.
Lord BRUCE of DONINGTON: I beg to move the amendments en bloc.
8.34 p.m.
On Question, Whether the said amendments (Nos. 3 to 6) shall be agreed to?
Their Lordships divided: Contents, 47; Not-Contents, 73.

CONTENTS

Ardwick, L.

Hampton, L.

Phillips, B.

Birk, B.

Hatch of Lusby, L.

Pitt of Hampstead, L.

Blease, L.

Irving of Dartford, L.

Ponsonby of Shulbrede, L. [Teller.]

Boston of Faversham, L.

Jacques, L.

Rochester, L.

Brockway, L.

Janner, L.

Seear, B.

Brooks of Tremorfa, L.

Jeger, B.

Sefton of Garston, L.

Bruce of Donington, L.

Kaldor, L.

Stewart of Alvechurch, B.

Byers, L.

Kirkhill, L.

Stewart of Fulham, L.

Cledwyn of Penrhos, L.

Lee of Newton, L.

Stone, L.

Collison, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Taylor of Gryfe, L.

David, B.

Taylor of Mansfield, L.

Davies of Leek, L.

Maelor, L.

Underhill, L.

Elwyn-Jones, L.

Northfield, L.

Wigoder, L.

Evans of Hungershall, L.

Ogmore, L.

Wilson of Radcliffe, L.

Goronwy-Roberts, L.

Oram, L.

Winstanley, L.

Hale, L.

Peart, L.

Winstanley, L.

Hall, V.

NOT-CONTENTS

Airey of Abingdon, B.

de Clifford, L.

Gridley, L.

Alexander of Tunis, E.

De La Warr, E.

Grimston of Westbury, L.

Avon, E.

Denham, L. [Teller.]

Haig, E.

Balerno, L.

Drumalbyn, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Bellwin, L.

Eccles, V.

Belstead, L.

Ellenborough, L.

Hanworth, V.

Bridgeman, V.

Elliot of Harwood, B.

Harmar-Nicholls, L.

Brougham and Vaux, L.

Falmouth, V.

Hornsby-Smith, B.

Campbell of Croy, L.

Ferrers, E.

Hunt of Fawley, L.

Cathcart, E.

Forester, L.

Hylton-Foster, B.

Chelwood, L.

Fortescue, E.

Killearn, L.

Cockfield, L.

Gainford, L.

Kimberley, E.

Colville of Culross, V.

Galloway, E.

Long, V.

Cork and Orrery, E.

Glenarthur, L.

Lyell, L.

Craigavon, V.

Gowrie, E.

Macleod of Borve, B.

Cullen of Ashbourne, L.

Greenway, L.

Mancroft, L.

Mottistone, L.

St. Davids, V.

Swinfen, L.

Mowbray and Stourton, L.

St. Just, L.

Swinton, E.

Murton of Lindisfarne, L.

Sandys, L. [Teller.]

Torphichen, L.

Northchurch, B.

Savile, L.

Tranmire, L.

Orkney, E.

Selkirk, E.

Trefgarne, L.

Orr-Ewing, L.

Shannon, E.

Trenchard, V.

Pender, L.

Sharpies, B.

Vaux of Harrowden, L.

Redesdale, L.

Stamp, L.

Vivian, L.

Rochdale, V.

Sudeley, L.

Resolved in the negative, and amendments disagreed to accordingly.
8.42 p.m.
Clause 2 agreed to.
Clause 3 [Finance for companies transferred to Secretary of State]:
[Amendments Nos. 7 to 9 not moved.]
On Question, Whether Clause 3 shall stand part of the Bill?
Lord LEE of NEWTON: As I understand Clause 3, we are dealing with writing off capital which is represented by the firms which have been sold by the NEB or by the agencies, and my understanding is that the agencies are to be answerable to the Scottish and Welsh Ministers, who for all we know may take a view different from that of the Secretary of State for Industry. 1, for my part, have no objection—in principle, anyway—to dead capital being written off. Indeed, I remember on one occasion writing off about £415 million of the NCB's capital because it was imposing a heavy penalty on the NCB. Over the years there had been many pit closures, the coal industry having been asked by the Government to invest for more coal than in fact was ever needed. Therefore, I have nothing in principle against writing off dead capital, but I submit that this case is a very different proposition. There is no question of writing off dead capital: indeed, the assets are so much alive that others are buying them in forced sales made necessary only because of the policy the Government are now pursuing. They are creating a situation, quite deliberately, to shrink the activities of the board itself in order to sell back to private firms the assets which have been made viable by the work of the NEB and the two agencies.
Of course, there are many examples of firms having been rescued from bankruptcy by enlightened reorganisation, which is forbidden under this Bill. It is
1098
always a great pleasure to learn about such rescues, either by private enterprise or, indeed, by public enterprise. But, of course, no such story can in fact be told in this instance. Clause 3 envisages that the Secretary of State has acquired the assets of the NEB and is putting such assets "up for grabs". It is to that principle (if that is the right word) that we now object. We object very much indeed to conduct of that type, and we are not willing to accept the Secretary of State's arrangements with the Treasury to complete emasculation. It is because of our opposition to that which lies behind Clause 3 that I myself object to the clause standing part of the Bill.
Viscount TRENCHARD: The fact that the noble Lord has not moved the amendments which were standing in his name disappoints me no end, because I wanted, possibly at the expense of my noble friend Lord Cockfield, to make the point that in the past many Ministers have sought to leave out the powers of the Treasury in giving permission for money affairs—Ministers of more than one Government.
Lord LEE of NEWTON: If the noble Viscount agrees to second it, I will move it.
Viscount TRENCHARD: But really that was not practical; and the other amendment was a technical one. I do not think that Clause 3 has any of the sinister concepts that the noble Lord, Lord Lee, suggests, if I followed him correctly. This is a clause which follows the power to transfer assets to the Secretary of State, which we have discussed at considerable length, and provides the necessary finance in, I think, unobjectionable, sensible and technically correct ways in order for him to be able to discharge his duties if those companies are transferred to him. I think I would really ask the noble Lord to be a little more specific as to what is wrong with that. I see it as inevitably following Clause 2, upon which the Committee has just voted.
Lord BRUCE of DONINGTON: The noble Viscount has himself said that in his view Clause 3 essentially follows Clause 2. This is a remarkable situation, because here we have a situation where, in Clause 2, he takes powers to direct the terms and everything else of transferring assets to himself and/or to his nominees, presumably with the aim of disposal, because that is the avowed policy of his party. Now we come to a situation where, according to the note explaining the clause, it:
"empowers the Secretary of State to provide finance for companies in which a controlling interest has been transferred to him from the NEB".
So, in a situation where not only does the Secretary of State acquire the company, presumably for some good purpose, but (if I may use the term loosely) "flogs" it off to private enterprise, he wants to finance it before he does so.
Viscount TRENCHARD: No.
Lord BRUCE of DONINGTON: If the noble Viscount will excuse me for a moment, I am reading directly from the explanatory note to the Bill.
Viscount TRENCHARD: I wonder whether I could interrupt. I wonder how the noble Lord would suggest that the Secretary of State should carry out his responsibilities in relation to Rolls-Royce, for instance, in the continued probably quite long interval before that company can be returned to private ownership, without the kind of powers spelled out in Clause 3.
Lord BRUCE of DONINGTON: I can answer the noble Viscount very quickly. He should not exercise the powers under Clause 2. This is the very simple answer. The noble Viscount admits that the Government are proceeding with such indecent haste for purely dogmatic and doctrinaire reasons to dispose of assets which are in either the ownership or the partial ownership of the NEB, and he wants to exercise Clause 2 with such haste that he thinks, "I need not bother about taking it over now because if I need finance to hold it over for a bit longer I can get it under Clause 3". I should have thought that that was a very unsound way of doing it. The correct thing, of course, is that if Clause 2
1100
is applied properly and in due time, even in strict conformity with the policy of the Conservative Party, Clause 3 ought not to be necessary.
Lord ROCHESTER: As one who has just given evidence of support to the Labour Opposition by voting with them on the last amendment, may I endeavour to mediate? I must say that for our part (for I think I speak for my noble friends as well) we feel that what the noble Viscount has just said is not unreasonable. It seems to follow on what we have just done. We have had a vote on the principle involved and have gone our separate ways. I hope that in the circumstances the noble Lord, Lord Lee of Newton, or Lord Bruce of Donington, will not press this matter any further.
Clause 3 agreed to.
Clause 4 [Public dividend capital.]:
On Question, Whether Clause 4 shall stand part of the Bill?
8.52 p.m.
Lord BRUCE of DONINGTON: Clause 4 provides for the making of payments by the NEB and agencies in reduction of their public dividend capital. The NEB and the agencies are empowered to make such payments with the agreement of the Secretary of State, and must do so if required by him. I think it is remarkable that the Secretary of State should seek powers of compulsion for an enterprise to reduce its capital and to pay over the funds (doubtless for the pleasure of the noble Lord, Lord Cockfield, for application to the Consolidated Fund or something like that) when, in the view of the company itself or the NEB, it is, on purely commercial grounds, not desirable that the capital of the company should be reduced.
I can think of many circumstances. The board of directors, whether or not confirmed by their shareholders at an annual general meeting, may have farsighted plans for the development of the company in the company's own interest and, if I may say so, in the interests of the nation as a whole. They may desire to keep their capital intact, because (whether or not the Secretary of State likes it on purely doctrinaire grounds) they may wish to extend their activities

1101
into a whole series of developments and make the company more prosperous than it is.
I should have no objection if the NEB or one of the agencies as a matter of their own skill and judgment—and we have it on the authority of the noble Lord that the NEB and the agencies are composed of illustrious individuals—in consultation with the Secretary of State agreed to a reduction of capital as in the foreseeable future capital could not be more profitably employed and might (to the pleasure of Lord Cockfield) be applied in reducing his public sector borrowing requirement. If the decision is arrived at jointly on industrial and commercial grounds and in consultation between the Secretary of State and the agencies or the NEB, then I am in agreement with it.
But here, once again we have the doctrinaire diktat. If the Secretary of State decides that there are unused funds or decides for his own purposes that there is surplus capital in a particular concern, he may decide on purely political grounds to direct a return of capital. He may decide, on the eloquence of the noble Lord, Lord Cockfield, and the weight of support that we are reliably informed he commands in the Cabinet, that these concerns are in effect milked—not of income, as they have been in the case of the Electricity Board and the Gas Board—of their capital. That is the reason why I propose to ask the noble Lords on the Liberal Bench to join us in resisting this diktat. If the noble Viscount will undertake to introduce at Report stage a suitable amendment which indicates that this is a matter of joint consultation between the boards and comes on the initiative of the board, this is one thing which we might consider; otherwise, I would advise my colleagues to go into the Division Lobby against this clause.
8.56 p.m.
Viscount TRENCHARD: I shall explain in a moment the technical purpose of this clause; but in relation to who could have power over public dividend capital it clearly must be the Government and the Secretary of State working in conjuction with his colleagues. To decide how much public dividend capital is necessary cannot he a question for the NEB.
This clause is here for the following set
1102
of reasons. Under paragraph 5(3) of Schedule 2 to the Industry Act 1975, the Secretary of State already has power to require the NEB to make payments to him in consideration of receiving public dividend capital. That power is sufficiently widely drawn to cover the surrender of share disposal receipts to the Exchequer. The same applies to the agency. That has been there in the 1975 Act. The noble Lord's amendment would not therefore prevent the Government from obtaining the actual proceeds from disposals by the NEB or the agencies; but, because there is no existing statutory power for him to write down public dividend capital, the appropriate adjustments could not be made to the NEB's or the agency's capital structure to reflect the fact that they would have surrendered the actual receipts from the disposals. Without the clause, the effect of the NEB's surrendering the receipts from disposals would be to depress artificially their financial performance. Their apparent results would no longer reflect their true performance as the public dividend capital, or part of it, would not be represented by companies or assets that they still held.
Noble Lords opposite may disagree with Government policy on "privatisation", which we have debated several times already. That is a difference of principle. But it is clearly necessary that the NEB's books should show the effect of disposals in a sensible way. I therefore hope that noble Lords opposite, if that explanation has helped them, will withdraw their opposition to this clause.
Lord LEE of NEWTON: Is it not the case that Clause 4 reduces the £3,000 million rising to £4,500 million of the 1979 Act as far as the NEB is concerned and that the Scottish Development Agency—I am quoting from the Under-Secretary at the Committee stage in another place—
Viscount TRENCHARD: There could have been different clause numbers. It is Clause 5 which deals with the financial limits. Clause 4 deals with the reduction of public dividend capital in the Bill before the Committee. That is for the technical reasons that I have described. Otherwise, if the board no longer has a company, it would still have the dividend capital and we should not be able to do anything about it.
Lord BRUCE of DONINGTON: The noble Viscount has made the point once again that this is a purely technical matter and largely a question of the presentation of accounts in their form. May I draw the noble Viscount's attention to the wording of the clause as it now stands:
"The Board may with the agreement of the Secretary of State, and shall if the Secretary of State with the approval of the Treasury requires them to do so, make payments to the Secretary of State in reduction of the public dividend capital of the Board;"
Let nobody think that this is merely a window-dressing operation to regularise matters from an accounting point of view. Anybody with any knowledge of accounts knows that this is not so, and it says so in the Bill. It says:
"… make payments to".
"Payments", if "payments" means anything, means "payments in specie". We do not know in a year's time, with inflation running at 20 per cent. with no possibility of a reduction, what the payments are going to be worth in real terms. But they are still payments and they are a matter of compulsion. There is no need for the noble Viscount to go beyond anything that is said in the explanatory statement to the Bill at Clause 4. It explains the position precisely as I have endeavoured to explain it, embodying a
principle with which we do not agree and upon which we propose to divide the Committee.
Viscount TRENCHARD: I repeat that there is no existing statutory power to write down public dividend capital. I also ask the noble Lord to consider once again who can make decisions about public dividend capital. It cannot be the NEB; it must be the Government.
Lord ROCHESTER: Before this is put to the test, I am afraid that the noble Lord, Lord Bruce of Donington, cannot have our support if he takes this matter to the Division Lobby. At the Report stage in another place this was judged to be consequential—and I have the relevant copy of Hansard before me—by my honourable friends. Although we are capable of making up our own minds on these Benches in this Committee, I should say that if this matter is pressed to a Division, we shall not support the Opposition but feel obliged to vote with the Government.
9.3 p.m.
On Question, Whether Clause 4 shall stand part of the Bill?
Their Lordships divided: Contents 73: Not-Contents 35.

CONTENTS

Airey of Abingdon, B.

Gainford, L.

Orr-Ewing, L.

Alexander of Tunis, E.

Galloway, E.

Pender, L.

Avon, E.

Glenarthur, L.

Rochdale, V.

Balerno, L.

Gowrie, E.

Rochester, L.

Bellwin, L.

Gridley, L.

St. Davids, V.

Belstead, L.

Grimston of Westbury, L.

St. Just, L.

Bridgeman, V.

Haig, E.

Sandys, L. [Teller.]

Brougham and Vaux, L.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Savile, L.

Campbell of Croy, L.

Seear, B.

Cathcart, E.

Hanworth, V.

Selkirk, E.

Chelwood, L.

Harmar-Nicholls, L.

Sharples, B.

Cockfield, L.

Hornsby-Smith, B.

Stamp, L.

Colville of Culross, V.

Hunt of Fawley, L.

Sudeley, L.

Cork and Orrery, E.

Killearn, L.

Swinfen, L.

Cullen of Ashbourne, L.

Kimberley, E.

Swinton, E.

de Clifford, L.

Long, V.

Torphichen, L.

De La Warr, E.

Lyell, L.

Tranmire, L.

Denham, L. [Teller.]

Macleod of Borve, B.

Trefgarne, L.

Drumalbyn, L.

Mancroft, L.

Trenchard, V.

Eccles, V.

Mottistone, L.

Vaux of Harrowden, L.

Ellenborough, L.

Mowbray and Stourton, L.

Vickers, B.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Vivian, L.

Ferrers, E.

Northchurch, B.

Wigoder, L.

Forester, L.

Ogmore, L.

Winstanley, L.

Fortescue, E.

Orkney, E

NOT-CONTENTS

Birk, B.

Hale, L.

Northfield, L.

Blease, L.

Hall, V.

Oram, L.

Boston of Faversham, L.

Hatch of Lusby. L.

Peart, L.

Brockway, L.

Irving of Dartford, L.

Pitt of Hampstead, L.

Brooks of Tremorfa, L.

Jacques, L.

Ponsonby of Shulbrede, L. [Teller.]

Bruce of Donington, L.

Janner, L.

Sefton of Garston, L.

Cledwyn of Penrhos, L.

Jeger, B.

Stewart of Alvechurch, B.

Collison, L.

Kaldor, L.

Stewart of Fulham, L.

David, B. [Teller.]

Kirkhill, L.

Stone, L.

Davies of Leek, L.

Lee of Newton, L.

Underhill, L.

Elwyn-Jones, L.

Llewelyn-Davies of Hastoe, B.

White, B.

Goronwy-Roberts, L.

Maelor, L.

White, B.

Resolved in the affirmative, and clause agreed to accordingly.
On Question, Whether Clause 5 shall stand part of the Bill?
9.11 p.m.
Lord LEE of NEWTON: The switch from Clause 4 to Clause 5 having taken place, after having put down an amendment to Clause 4, may I say a word about Clause 5 before we part with it. As I understand it, the 1975 Act laid down limits for the NEB of some £3,000 million and provided that it could be increased by order to £4,500 million. Clause 5 now removes the power to make that increase. So far as the Scottish Development Agency is concerned—and my Scottish friends know the state of the economy up there at the moment—the limit of £500 million could be increased to £800 million under Clause 5; that increase will not now be implemented. When we come to the Welsh Development Agency, the effect of Clause 5 is that, whereas the 1975 Act gave an amount of £250 million which could be increased to £400 million, the limit will remain at £250 million. Therefore, on the argument that by the Government's policies there would be increases of some type or another for the private sector, the reductions in amount from the NEB, the Welsh Development Agency the Scottish Development Agency will be as I have described.
We know of the state of industry in Wales and in Scotland. We know of the pace of inflation that will make that which they will receive of far less value than it was. The Government are choosing at this time to force the agencies in particular to try to bring about a decent level of employment and to generate new industry in Wales and in Scotland on the basis I have described. It seems to me that for a Government deliberately so to treat
1106
places in the United Kingdom where there is particularly heavy unemployment and where there is worse to come, according to the pundits—and, indeed, according to the Government themselves—at such a moment savours of a Government who do not care two hoots about the levels of unemployment in those areas.
9.14 p.m.
Lord DAVIES of LEEK: I am grateful to my noble friend on the Front Bench who spoke about the Welsh situation. If one looks at the world situation, whatever economic standpoint we might take—and I am not going to speak for more than a couple of minutes, so I do not want noble Lords to think that I am trying to waste time—I really believe that at this juncture in the history of capitalism (I use the good old fashioned word) there is not the slightest doubt about it: Major economists from one end of the world to the other who study these matters, and may be themselves in support of the acquisitive society, are realising more than ever that at this juncture to get private enterprise to invest is very difficult indeed.
Consequently, in certain areas of the world—I will just take Wales, but I could take it on a vast world scale—it would be absolutely necessary for an intelligent Government which was looking after the welfare of the State to keep up its sleeve an organisation such as the National Enterprise Board that we established. Particularly is it true of the Welsh valleys, because of the nature of that society which had impinged upon it in our glorious 19th century and the period of our imperialism the great industrial incubus of one industry only; namely, coal.
That has gone, and to take away the National Enterprise Board that could have encouraged small businesses—and to use the Schumacher phrase, "small is

1107
beautiful"—I think, without trying to make a party point, is a mistake on any Government's shoulders. Consequently, in this tiny debate on clause stand part, I must regret that this has been left in by the Government. I sincerely believe it is shortsighted.
Lord TAYLOR of GRYFE: I do not propose at this stage at all to discuss the doctrine of whether we should have a greater degree of State involvement or private enterprise. The Government have made up their minds on that matter and, frankly, I go so far as to say that if private capital is available to support industrial development there is no reason why the State should be involved in financing such projects. Therefore, I would try to look at this matter quite objectively, as one would look at any financial proposition.
What we are doing, as the noble Lord has just said, is putting financial limits on the activities of these agencies. But in a period of inflation you are going to have a substantial reduction in these limits anyway, because they are financial limits; so that you are, by the mere fact that there is a 20 per cent. inflationary rate, reducing their capacity to intervene. That is one thing.
The second thing, of course, is that it is common ground between all parties that the economic situation is not going to improve in the immediate future; and various Ministers have spoken about two or three years, and so on, in which we shall have a deterioration in economic activity. It is in that situation that interventionist agencies may be necessary.
I am not arguing the doctrine of whether the State should be more involved or less involved, but there are very few economies in the world—and I am thinking about Japan, Germany and other countries—where they have retained these tools of intervention to be used in a situation which shows signs of deterioration and where the process of de-industrialisation must be halted in the interests of the survival of the nation. Therefore, I say that the Government's objective of reducing the involvement is going to be achieved by inflation. Secondly, the need for tools of intervention could be all the greater as the total economic situation deteriorates.
1108
The theory is, of course, that if you limit the financial powers of these agencies there is some other source of finance. But we are moving into a period of very high interest rates where the attraction of Government stocks to investors is much greater than that of risk capital investment in a period of economic uncertainty. Therefore, there is no immediate availability of funds on a large enough scale for industries that are showing weakness or have very poor prospects in the immediate future. I would say that in the light of the growth of inflation, the general economic deterioration, and the competing sources of finance in the City, it might be wise in the interests of the nation and of the nation's survival that we keep these limits reasonably high.
I have a good deal of admiration for the men who are serving on the NEB and in the SDA. It is unfortunate perhaps that our trade union friends have not found it possible to continue their membership. I know that the Minister agrees with me in that regard. Nevertheless, the nation and the Government are indebted to the men who are serving in these agencies. If you consider their background and their record in industry, they are men of considerable wisdom and experience. If you have confidence in these men to do a job for the nation then it might be very unwise to limit them. Why limit them? I trust their wisdom. I trust their judgment. They are not all socialists who are hellbent on nationalising everything in sight. They are respected industrialists and bankers who have taken a view of a situation and can be trusted. To that extent, therefore, it might be wise not to limit them.
For all these reasons I would certainly commend to the Minister the view that it is unwise to insist on these limits. This strikes me as being a bit of a gesture. We do not need these kind of gestures but we may need these instruments, which I am glad are going to be maintained, but I do not think you should reduce their capacity to intervene at this stage.
Lord MOTTISTONE: I greatly respect the words of Lord Taylor of Gryfe, who is much more knowledgeable in these matters than I am, but that is not the problem. Is not the problem that when there is underpinning from the State,

1109
it creates in people's minds a sense of dependence and not get up and go? Under the guidance of the noble Lord opposite, we introduced all these agencies, we introduced all this underpinning, this supporting, this "Auntie Government can help you out if you cannot help yourself". I am sure noble Lords did not feel that when they put the legislation through, but that is what I fear has been the effect on the people. Having done this underpinning, and created this position in which people feel that there is somebody to fall back upon, they have not realised that it is up to us all in this country to get ahead and to do something on our own, without an underpinning, with a feeling that we have got to try.
What the sense of this rejection of the clause is seeking to do is to say: "Let us keep it nice and soggy so that Auntie Government continues to help, and maybe help a little bit more". This surely is wrong—surely we must stand on our own feet.
Lord TAYLOR of GRYFE: The people who are going to administer these cash limits are not the Government, are not the people who are creating a soft atmosphere or a soft option. They are hardheaded businessmen. I am simply asking that we trust the judgment of these substantial people who presently man the NEB, the SDA, the Welsh Development Agency, and so on.
Lord MOTTISTONE: I am sure they are splendid people in every way and exactly as the noble Lord, Lord Taylor of Gryfe, says. It is the effect on people of the sort of legislation which is being modified in this Bill which is what matters rather than the day-to-day competence of the people trying to administer the previous laws. I am not quarrelling with that, but with the underlying thought. This Bill is trying to modify that. It is not going to wipe it away, but to modify it so that people stand on their own feet.
Lord BROOKS of TREMORFA: Before I make my main comments on this amendment, may I say a word or two to Lord Mottistone. I quite understand the view he has just put, that people should stand on their own feet; that they should not hang about and wait for "Auntie Government" to assist them.
1110
Unfortunately, there are some areas of the United Kingdom which, for historical reasons and not of their own choosing, simply have to look to Auntie Government.
I have said before in debates in your Lordships' House, and, indeed, I said it again this afternoon—perhaps the noble Lord, Lord Mottistone, was not here—that almost 80 per cent. of the insured population of Wales depend upon public expenditure of one kind or another. Private enterprise is not going to rush in to help the people of the Principality, particularly in the light of the severe problems that we shall face as a result of the rundown of Llanwern and Port Talbot, and, of course, the unemployment which will be consequential upon those rundowns. So I am wondering whether the noble Lord, Lord Mottistone, would exempt at least the Principality from some of his strictures, because I assure your Lordships, as I said earlier, that we in the Principality really do not mind whether the investment is private or public, as long as the investment is there.
What this Bill seeks to do, to use a word that is popular in these debates, is to emasculate the Welsh Development Agency. If the Government want to emasculate the National Enterprise Board, I shall, of course, oppose it. But when they want to do the same thing to the Welsh Development Agency, they are talking about two different animals which are designed to do two different tasks.
The noble Viscount, Lord Trenchard, has a wholly unintentional but lamentable talent for provoking me. He has repeatedly referred to some of our amendments as technical and consequential. Of course, in some respects that is correct, but he has constantly referred today to the Welsh Development Agency and other agencies as not being a panacea. No one on this side has ever suggested that they were panaceas, or were ever intended to be panaceas. They were intended, in the main, to be part of a thrust to help the regions, in the case of the Welsh Development Agency, along with a series of other measures, to help the Welsh economy through a very difficult period, and the agency has done a very good job. What this clause is intended to do is to make the task of the Welsh Development Agency even more difficult than it already is.

1111
Perhaps I may quote again from the document which was published by the Regional Policy Committee, comprising the four South Wales counties, which stated:
"Merely to generate the momentum to maintain the South Wales economy in its pre-steel crisis state will require at least an additional 20,000 new jobs in manufacturing industry (that is replacement for steel and coal jobs lost, plus additional manufacturing jobs lost in this crisis). The cost of this is estimated as a minimum of £380 million Rhodes and Moore (the Cambridge Economists) on the basis of past experience have put this figure much higher at £1 billion".
The role of the Welsh Development Agency and its ability to generate industrial activity in Wales is more important now than ever it has been. So I understand that it is the intention of the mover to press this to a Division, and he should have the wholehearted support of the Committee.
9.29 p.m.
Lord BRUCE of DONINGTON: In addressing myself to Clause 5, I wish simply to deal with the aspect that reduces the limits of finance available to the two agencies, as distinct from the National Enterprise Board. I do not wish to discuss the board, but wish rather to discuss the reductions that have taken place in regard to the Welsh Development Agency and the Scottish Development Agency. The Committee will be aware that the existing limits for the Scots and the Welsh are £500 million and £250 million, but I believe there is power by order, under the 1979 Act, to increase them to £800 million and £400 million respectively. What the present clause does is to take the National Enterprise Board together with the two boards; it lumps the whole lot together and limits them to £3,000 million. This is, I understand, the position.
Something that has been discovered in Europe—and is, I think, known to all economists, including the noble Lord, Lord Cockfield—is that there is a regional problem in practically every country in Europe, including the most prosperous ones. In other words, the regional problem is not unique to the United Kingdom, although its intensity in some areas, particularly in South Wales and Scotland and also, of course, in Northern Ireland, is rather greater than it is in some parts of Germany, and it is about on a par with
1112
some parts of Italy, particularly the Mezzogiorno.
The common experience in Europe over the last four years—I speak with a year's experience as chairman of the European Parliament's Regional Committee, reinforced by Commission reports on the subject—is that the poorer regions are still getting poorer while the rich regions are still getting richer. The detailed statistics will not arise for discussion on this clause, and I reserve the right and, indeed, the duty to refer to the figures when we come to discuss the provisions of Clause 14. But there can be no doubt, even on the basis of the unemployment statistics which were issued only last week, that exactly the same thing is happening in the United Kingdom, as an entity, as is happening in Europe. The poorer regions are getting poorer and the richer regions are getting richer.
Despite the increase in the unemployment figures, your Lordships will find that the South-East region still remains remarkably stable, at approximately the same percentage of unemployment as it was last year at this time. This is not the case with the other regions. I am a little puzzled to know why the Government should want to reduce these limits. We are not talking here of sums that are paid out to people who, through no fault of their own, are unemployed or who through no fault of their own are sick or incapacitated. We are not talking about payments to indivudals out of the normal social security scheme. Some noble Lords opposite seem to think that the payment of social security to individuals somehow inhibits their will to work. Believe me, there are well over 1½ million people who at present would be only too willing to work if there were jobs for them. But I digress. The finance available to the agencies is not for payments of that kind. It is, in the main, as my noble friend has indicated, for payments towards the establishment of enterprises, of infrastructure and the rest of it within the regions themselves.
Why, therefore, should the Government seek to restrict that development at this time? Bearing in mind the desire of all parties in the House to aid private enterprise in establishing new enterprises, particularly in view of the very dismal forecasts that have been incorporated in the

1113
annex to the region budget statement, one would have thought that the mind of a reasonable Government would have been directed towards making things as easy as possible for private enterprise to establish itself in these areas in order to reduce the disparities in the regions, because, of course, the Government intend in effect to regard these matters as digits. In a sense people have become statistics in the same way that capital is a statistic. The difference between capital and labour is that capital can be transferred from one side of the earth to the other by key tested telex in about 2½ seconds but if you want labour transferred from one place to another (which you would have to do to obey the immutable laws of capitalism, which have been so recently enshrined by Milton Friedman and his British disciples) one would expect labour automatically to flock to where capital is prepared to invest.
But the noble Lord knows perfectly well, as a matter of practical experience, that there is the whole of the social furniture established in the localities which suddenly, through no fault of their own, find themselves divested of the means by which they can enter into the phase of production. Thousands of millions of pounds have been sunk in the provision of hospitals, of schools, of houses and of all the other social furniture which goes to make up life in those particular areas, inadequate though (as we all know) it is still in some of those areas. Therefore, I should have thought that it would be in the interests of all sane Governments, mindful of the interests of all the people, mindful of the inherent tendency for the rich areas to get richer and the poor areas to get poorer—rather than restrict the limits of this moment in time—
Lord BROUGHAM and VAUX: May I ask the noble Lord a question. Will he not agree that the noble Lord's Government put a lot of money into a factory at Treforest in South Wales and the company has gone bankrupt?
Lord BRUCE of DONINGTON: That might well be so. The noble Lord has asked me a question and I will answer him as I understand it. I am not aware of the particular incident to which he referred; if the noble Lord had given me full particulars I would have replied to
1114
it. If the noble Lord is making it conditional for the adoption of a principle that every grant of aid to every enterprise should be successful, and that if it is not successful in one or two instances that would vitiate the principle, then on that basis the whole of private enterprise in the United Kingdom stands condemned because in private enterprise there have been the most deplorable failures, the most deplorable standards of management. But they do not apply over the whole range of British industry and in case the noble Lord gets too mournful about the matter when discussing the plight of British industry, I am pleased to report that out of the 50 most prosperous companies in the whole of Europe no fewer than 25 are British companies. I am very pleased to report their success. It does not altogether square with some of the mournful tales we hear from time to time when questions of taxation are being discussed.
However, I revert to the principle. It should surely be the aim of every Government—bearing in mind that all citizens are supposed to be equal before the law—that the poorer areas are alleviated. That is so, even adopting the principles of noble Lords opposite, not necessarily by establishing State industries, although that might well be necessary and I certainly would not exclude it. But we are not insisting on that—not by subsidising individuals and by handing them out various social security benefits, which are not the subject of this Bill. I cannot understand why they should deliberately restrict themselves to this policy which flies in the face of the conclusion of every economist qualified to write about regional affairs in the whole of Western Europe. If any noble Lord cares to give me the name of an economist discussing regional questions who comes to the opposite conclusion I would be very pleased to be supplied with the name and the reference, and I will sling that back in his teeth.
So far as we are concerned, this is a regressive clause altogether; it displays an attitude of mathematical cutting, in order to produce some effect upon a public sector borrowing requirement in the future or some monetary supply M3 definition which we now know is not of all that frightful individual significance anyway. We reject it because it is a doctrinaire measure calculated, not to meet the real

1115
needs of the regions to which they apply or the industries at which they might aim, but purely in satisfction of a dogma which has progressively been proved to be entirely in error anyway.
Lord ROCHESTER: I wonder whether, before the noble Viscount replies, I may intervene in an endeavour to make progress in a generally acceptable way. If I may latch on to something which I understood the noble Lord, Lord Bruce, to say earlier. He wished to reserve to himself the right to revert to the question of the amounts of aid to be given when, perhaps tomorrow, we come to the very important Clause 14, which deals with regional development grants. I was not quite sure to what the noble Lords were going to lead either in relation to any action he might feel like advising his noble friends to take in relation to this amendment, or indeed precisely what he would have in mind for tomorrow. I always listen with the greatest care to what the noble Lord, Lord Taylor of Gryfe, has to say, and I was impressed by what he said, as always. However, I wonder whether he, and indeed other noble Lords of the Labour Opposition, might feel that the better place in which to resolve this question of principle in regard to amounts of aid might be under Clause 14, rather than now. Certainly if that was their view, subject of course to the way in which the debate on Clause 14 might proceed, I think they are likely to find a sympathetic response to their views from these Benches.
Viscount TRENCHARD: Following what the noble Lord, Lord Rochester, has just said, I shall not deal with questions of regional policy, to which we have made ample reference at Second Reading and again shortly at the start of today's Committee stage, and which, as the noble Lord, Lord Rochester, rightly points out, will come up no doubt under the Clause 14 amendment. I say, will come up, if they must, because in fact the policy within statutory powers has been decided, debated at length in this Chamber, and Clause 14, as I shall describe tomorrow, does not in fact alter the regional policy. It is quite clear to me that noble Lords opposite are taking any opportunity of restating the arguments on regional policy as such that have been stated before.
1116
We are supposed to be discussing whether Clause 5 shall stand part. The noble Lord, Lord Brooks, was supporting an amendment; I do not know what amendment he was supporting. I return his compliments to me, and those of his friends who paid me more generous ones earlier. Just to get the facts of Clause 5 right, and the noble Lord, Lord Bruce, has them right, it was the 1979 Act that laid down £3,000 million for NEB with power to raise to £4,500 million, Scottish Development Agency £500 million with power to raise to £800 million, and Welsh Development Agency £250 million with power to raise to £400 million. The powers to raise are deleted here and the figures held. That is in view of our change of policy which is gradually to decrease the shareholdings, and thus the needs to borrow, of these organisations.
We have been through this matter today again as well as during Second Reading. We shall move steadily and slowly. Initially, we asked the NEB to find £100 million worth of sales in the financial year. We let it off that particular hook. It has sold ICL for, I think, a fair price of all concerned, and we welcome it back into the private sector and wish it well. We believe that other disposals will follow. Therefore, against these policies which we really have debated, these figures are not so unreasonable as perhaps the noble Lord, Lord Taylor of Gryfe, in a very reasonably toned approach may feel. I would ask him to take account of the change of policy.
As regards the noble Lord, Lord Brooks of Tremorfa, once again I should like merely to say that there is no intention of emasculating the Welsh Development Agency, either in relation to the figures, about which we are talking here, or in relation to its other purposes to which we recently allocated £48 million extra to build factories to relieve the problems of the public sector, as he rightly says, on which Wales has too great a dependence. There is considerable growth in Wales to which we shall no doubt refer on other occasions in your Lordships' House. So I should like to suggest that this clause, to which no amendment is recorded, stand part of the Bill.
Lord LEE of NEWTON: We have heard nothing which dissuades us from the

1117
point that this is a Gradgrind kind of a clause which is unworthy of the Bill and we shall vote against it.

CONTENTS

Airey of Abingdon, B.

Forester, L.

Orkney, E.

Alexander of Tunis, E.

Fortescue, E.

Orr-Ewing, L.

Balerno, L.

Galloway, E.

Pender, L.

Bellwin, L.

Glenarthur, L.

Redesdale, L.

Belstead, L.

Gowrie, E.

Rochdale, V.

Bessborough, E.

Greenway, L.

Rochester, L.

Bridgeman, V.

Gridley, L.

St. Davids, V.

Brougham and Vaux, L.

Grimston of Westbury, L.

St. Just, L.

Campbell of Croy, L.

Haig, E.

Sandys, L. [Teller.]

Cathcart, E.

Hailsham of Saint Marylebone, L. (L. Chancellor.)

Savile, L.

Chelwood, L.

Seear, B.

Cockfield, L.

Harmar-Nicholls, L.

Selkirk, E.

Colville of Culross, V.

Hornsby-Smith, B.

Sharples, B.

Cork and Orrery, E.

Hunt of Fawley, L.

Stamp, L.

Cullen of Ashbourne, L.

Killearn, L.

Sudeley, L.

de Clifford, L.

Kimberley, E.

Swinfen, L.

De La Warr, E. [Teller.]

Long, V.

Swinton, E.

Denham, L.

Lyell, L.

Torphichen, L.

Drumalbyn, L.

Macleod of Borve, B.

Tranmire, L.

Eccles, V.

Mottistone, L.

Trefgarne, L.

Ellenborough, L.

Mowbray and Stourton, L.

Trenchard, V.

Elliot of Harwood, B.

Murton of Lindisfarne, L.

Vaux of Harrowden, L.

Falmouth, V.

Northchurch, B.

Vickers, B.

Ferrers, E.

Ogmore, L.

Vivian, L.

NOT-CONTENTS

Birk, B.

Goronwy-Roberts, L.

Peart, L.

Blease, L.

Hall, V.

Pitt of Hampstead, L.

Boston of Faversham, L.

Hanworth, V.

Ponsonby of Shulbrede, L. [Teller.]

Brockway, L.

Hatch of Lusby, L.

Brooks of Tremorfa, L.

Irving of Dartford, L.

Sefton of Garston, L.

Bruce of Donington, L.

Janner, L.

Stewart of Alvechurch, B.

Cledwyn of Penrhos, L.

Jeger, B.

Stewart of Fulham, L.

Collison, L.

Kirkhill, L.

Stone, L.

David, B. [Teller.]

Lee of Newton, L.

Taylor of Gryfe, L.

Davies of Leek, L.

Llewelyn-Davies of Hastoe, B.

Underhill, L.

Elwyn-Jones, L.

Northfield, L.

White, B.

Resolved in the affirmative, and Clause 5 agreed to accordingly.
Clause 6 agreed to.
[Amendment No. 10 not moved.]
Clauses 7 and 8 agreed to.
Viscount TRENCHARD: I beg to move that the House do now resume. I think we have gone far enough tonight at this stage on this subject.
Moved accordingly and, on Question, Motion agreed to: House resumed.

  EARNINGS AND TAX PERCENTAGES
  EARNINGS AND TAX PERCENTAGES
  COMMISSION FOR RACIAL EQUALITY: Mr. J. MASTRONTONE
  COMMISSION FOR RACIAL EQUALITY: Mr. J. MASTRONTONE
  THE WORLD ADMINISTRATIVE RADIO CONFERENCE: REPORT
  THE WORLD ADMINISTRATIVE RADIO CONFERENCE: REPORT
  SEABED RESOURCES: MANAGEMENT
  SEABED RESOURCES: MANAGEMENT
  RECOGNITION OF GOVERNMENTS: POLICY AND PRACTICE
  RECOGNITION OF GOVERNMENTS: POLICY AND PRACTICE
  THE FOREIGN AFFAIRS COUNCIL MEETING
  THE FOREIGN AFFAIRS COUNCIL MEETING
  TELEPHONE CONNECTION FOR SERVICE PERSONNEL
  TELEPHONE CONNECTION FOR SERVICE PERSONNEL
  MAJOR-GENERALS AND EQUIVALENT RANKS
  MAJOR-GENERALS AND EQUIVALENT RANKS
  MINISTRY OF DEFENCE: EXECUTIVE OFFICERS AND HIGHER GRADES
  MINISTRY OF DEFENCE: EXECUTIVE OFFICERS AND HIGHER GRADES
  SERVICE PERSONNEL STRENGTHS
  SERVICE PERSONNEL STRENGTHS