Sitting of 9 December 1980

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  FELIXSTOWE DOCK AND RAILWAY (No. 2) BILL.
  Read the Third time and passed.

Chairman of Ways and Means (Statement)
The Chairman of Ways and Means (Mr. Bernard Weatherill): Among the Private Bills for which petitions were deposited on 27 November was one promoted by the Society of Lloyd's
"to establish a Council of Lloyd's, to define the functions and powers of the said Council, to amend and repeal certain provisions of Lloyd's Acts 1871 to 1951, and for other purposes".
As I am a member of Lloyd's, a fact which is recorded in the Register of Members' Interests, I think it would be undesirable for me to discharge, in relation to the Lloyd's Bill, the various duties in relation to Private Bills which the Private Business Standing Orders and the practice of the House impose upon the Chairman of Ways and Means. At my request, the Deputy Chairmen have kindly agreed that one of them will act in my place in any of the proceedings relating to the Bill. I trust that this arrangement will commend itself to the House.

Oral Answers to Questions
  Employment

    Training Boards (Review)
    Mr Moateasked the Secretary of State for Employment when he expects to complete his review of the training boards.
    The Secretary of State for Employment (Mr. James Prior): I hope next year to take decisions about the future of individual boards in the light of the findings of the review of the future training needs of each sector of industry, which I have invited the Manpower Services Commission to conduct urgently.
    Mr. Moate: Is my right hon. Friend aware of the widespread feeling among a large part of industry that the training boards represent a major burden upon industry and that among all the quangos they are the biggest? When he contemplates his future plans for the boards, will he begin with the assumption that the object must be to reduce the bureaucratic and financial burden that the boards place upon industry without any commensurate results in training?
    Mr. Prior: I begin with the assumption that we need to reduce the level of bureaucracy but also that we need to maintain the level of training. I am well aware of my hon. Friend's views. They are frequently expressed to me. I shall certainly examine each individual board, as I suspect the Manpower Services Commission will do also, with a critical eye to the points that my hon. Friend raised.
    Mr. Wigley: Does the Secretary of State accept that often manufacturing industry benefits most from the training boards? Does he further accept that it is not unreasonable that manufacturing industry should make a substantial contribution towards the training costs because, at the end of the day, that industry reaps the benefits?
    Mr. Prior: Manufacturing industry does make a substantial contribution towards costs. We are considering the costs of the operating expenses of the board which are currently paid by the Government. If the boards are to continue, the operating costs should be paid by industry. That should sharpen the views of industry as to whether they wish the boards to continue in their present form.
    Mr. Stokes: Is my right hon. Friend aware that we are glad that he is to examine the individual boards, because they vary both in competence and in the respect that they have for their respective industries? Is he further aware that the best boards could survive by charging fees that industry would be glad to pay and that the others should be abolished as soon as possible?
    Mr. Prior: All those points will be taken into account during the course of the review. It would be wrong for me to try in any way to prejudge the findings of the review. The Manpower Services Commission will get on with the matter. It must report by the middle of June. We shall then take fairly quick decisions, taking account of the points mentioned by my hon. Friend.
    Mr. Harold Walker: What is the total amount that the secretary of State is proposing to withdraw from the boards? How much will be the additional burden imposed on industry as a consequence of his proposals? How many fewer training places will there be in industry? When will we have a full, detailed statement about these matters so that we can better understand the legislation that will be introduced?
    Mr. Prior: Legislation will be brought before the House in due course. There is no reason why it should have any effect on the number being trained. We are looking for training to a more fruitful end than some of the present training and expenditure. The operating costs of the training boards, which are paid for by the Manpower Services Commission through Government grant, amount to £40 million or £50 million. On this year's adjusted basis it is about £40 million.

    Northern Region
    Mr. Radiceasked the Secretary of State for Employment whether he is satisfied with the progress in reducing the growth of unemployment in the Northern region.
    Dr. David Clarkasked the Secretary of State for Employment what plans he has to stimulate employment in the Northern region.
    The Under-Secretary of State for Employment (Mr. Jim Lester): The level of unemployment in the Northern region remains much too high. The Government recognise that areas such as the North-East require special help to overcome their particular problems.
    This is why the Government provide a considerable amount of assistance to the North-East—for example, through their regional policy and through the special employment measures. In the longer term, the economic future of the North depends on a general improvement in the industrial performance of the country as a whole.
    Mr. Radice: Is the hon. Gentleman aware that there are 168,000 unemployed in the Northern region, which is an increase of 43 per cent. since last year, and that there are further 23,000 on short-time working, which means that unemployment is bound to worsen? When will the Government Front Bench make the Prime Minister understand what is happening? When will it persuade the right hon. Lady to change her policies?
    Mr. Lester: I am aware of those figures. I am also aware that in the Northern region we have established one enterprise zone and that we are currently considering a second one. We have offered substantial help through the Industry Act, amounting to £215 million. There have been 200 advance factories. We have expanded from 41,000 places on the youth opportunities programme this year to 57,000 in 1981–82. Surely, that is a positive response to the figures that the hon. Gentleman has quoted.
    Dr. Clark: Does the hon. Gentleman realise that the appalling figures that my hon. Friend the Member for Chester-le-Street (Mr. Radice) has mentioned include terrible black spots such as Hartlepool, Consett and Sunderland and that in my own constituency one in five of the men are out of work? Does he realise also that he has managed to confirm the image of the Conservative
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    Party as being the party of unemployment? When will he suggest to his right hon. Friend that he should press in the Cabinet for a northern development agency?
    Mr. Lester: The suggestion of a northern development agency is not a matter for my right hon. Friend. Labour Members and some of my hon. Friends have been pressing for an agency. I think that the matter is now being considered by the Department of Industry.
    We are aware of the unemployment figures. The hon. Gentleman knows that I have been to his constituency. I have visited the North since then. It is not a matter of not realising and not understanding. The question is what the Government can do that they are not doing already. We need to get our industrial performance and productivity in line with our competitors. When we have done that, we shall create real jobs.
    Mr. Banks: Is my hon. Friend aware that there have been press reports that there may be delays in placing shipbuilding contracts for the Royal Navy? Will he recognise the immense importance of maintaining a viable shipbuilding industry for building warships and of the employment that goes with that?
    Mr. Lester: That question was raised when I went to the North-East, to Swan Hunter. I have taken it up with the Department of Industry.
    Mr. Beith: Does the Minister realise that long before his right hon. Friend the Prime Minister advised people to seek work away from home many men from the North-East went to towns such as King's Lynn in Norfolk to seek work? Is he aware that they now find themselves returning to the North-East without a job, having been declared redundant on the principle of last in, first out? Does he realise that that further underlines the importance of changing the economic policies that are causing the recession in the North-East?
    Mr. Lester: To change the economic policies would create worse problems in the North-East. We have problems now because Governments have been panicked by unemployment figures, which we believe are short-term transitional figures, into reflation. We have ended up with a higher base rate of unemployment than that with which we started.

    Unemployment Statistics
    Mr. Winnickasked the Secretary of State for Employment if he will state the latest number of registered unemployed in the United Kingdom.
    Mr. Prior: At 13 November, the number of people registered as unemployed in the United Kingdom was 2,162,874.
    Mr. Winnick: Do not the figures indicate the appalling level of unemployment, including that in the West Midlands, and the human and national tragedy that is involved? Do not all the indicators demonstrate that unemployment will continue to rise sharply? Bearing in mind that the right hon. Gentleman had such a close connection with the former Prime Minister, the right hon. Member for Sidcup (Mr. Heath), would it not be wise to bear in mind his warning to the Tory Party of the connection between the Conservative Party and unemployment?
    Mr. Prior: I find myself in agreement with the hon. Gentleman in so far as these are appalling figures. They are the result of 20 years of gradual decline. The same sort of questions as are now being asked of myself and my hon. Friends were being asked 20 years ago when unemployment was 3 per cent. It is now nearly 10 per cent. That suggests to my hon. Friends that the policies that have been pursued in the past, to which some Labour Members ask us to return, would be no more successful if pursued again.
    Mr. Needham: Will my right hon. Friend tell the House what he believes are the practical suggestions, if any, put forward by the Labour Party towards curing these terrible figures?
    Mr. Prior: As I have said, it has no policies at all.
    Mr. Barry Jones: Has the right hon. Gentleman told the Cabinet that further cutbacks in steel will add to the miseries of unemployment in the North and in Wales? Is he aware that many of us on the Opposition Benches are apprehensive about the likely outcome of the current review? What is the right hon. Gentleman doing in the Cabinet on behalf of steel workers?
    Mr. Prior: The important thing about the steel industry is that we should sell more steel. If we do that, we can produce more steel. It is in the marketing of steel that the present chairman of the corporation is hoping for and seeking a way out of the serious problems facing the industry. What happens in British Leyland, in the car industry and in the production of consumer durables is reflected directly in the amount of steel that we can produce and, therefore, the number of jobs in the steel industry. That is the crucial element and that is the message that I give to the hon. Gentleman and my hon. Friends.
    Mr. Gordon Wilson: Does the right hon. Gentleman realise that such is the horrific proportion of unemployment in Scotland that the Scottish Trades Union Congress organised yesterday a national convention on the problem of unemployment, which was attended by about 950 representatives of industry, trade unions, political bodies and other bodies? Will he be prepared to meet the standing commission of the convention to listen sympathetically to any proposals that it might care to advance for the amelioration of unemployment in Scotland?
    Mr. Prior: Subject to the demands of etiquette in my relationship with the Secretary of State for Scotland, I shall be delighted to meet either the Scottish Trades Union Congress or the standing commission. I am glad that the Conservative Party, including Conservative trade unionists, took part in the conference that met yesterday. I gather that it put up a good show.
    Mr. Ralph Howell: I accept that the unemployment figures are unbearably high. However, is my right hon. Friend aware that when I visited employment exchanges that cover his constituency I was told by the managers that about one-third of those who are registered as unemployed genuinely wanted to work and that when I visited North-East labour exchanges I was told by the managers that about 45 per cent. genuinely wanted to work? What is my right hon. Friend's estimate of the percentage of those who genuinely want to work?
    Mr. Prior: I can assure my hon. Friend that in my constituency the percentage is a great deal higher than he
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    suggests. I believe that the vast majority of British people want to work. It is a duty of society to seek to provide the maximum number of jobs. I believe also — in this I share some of the anxieties of my hon. Friend — that there are many more in society now who do not mind if they work or if they do not. There are many more who take that view now than 10 or 20 years ago. That should not allow us to forgive or forget the dramatic increase in unemployment in recent years. We must do all that we can to reduce it.
    Mr. Varley: Does the right hon. Gentleman accept that by the end of the year he will have presided over the worst and most rapid rise in unemployment of any Secretary of State or Minister of Labour since the early 1930s? I do not believe that he takes any joy from that, but will he confirm that there is a secret report in the Department of Employment that indicates that by this time next year, on the basis of unchanged economic policies, we shall have unemployment reaching 3 million? Does he not regard that as appalling? What will he do to prevent that from coming about?
    Mr. Prior: If it was secret, the right hon. Gentleman would not know about it. However, as there is no such report, it is not secret, and I am able to deny that there is such a report. As for the record in the past 20 months, the number of unemployed doubled in the first two years of Labour Government.
    Mr. Harold Walker: Then it started to fall.
    Mr. Prior: It started to fall very slightly towards the end of that period. However, neither party, nor any Western European country, has succeeded in dealing with the unemployment problem in recent years. Before suggesting the same old policies that failed last time, Labour Members should have a little more patience with the policy that we are pursuing.

    Assisted Areas (Materials Allowance)
    Mr. Campbell-Savoursasked the Secretary of State for Employment whether he will increase the materials allowance under the short-term employment programme and the youth opportunities programme in the European Coal and Steel Community assisted areas and the development and special development areas; and whether he will bring forward measures to reduce the period before eligibility for such schemes, in such areas.
    Mr. Jim Lester: I am informed that the Manpower Services Commission intends to increase from £300 to £400 across the board the per capita materials allowance of the youth opportunities programme from 1 April 1981. The materials allowance of the new community enterprise programme will also be £400, which is £100 more than the allowance available under the special temporary employment programme, which it will replace from 1 April 1981. The six-week rule for entry to the youth opportunities programme will be retained but will be further relaxed for young people in special need.
    Mr. Campbell-Savours: Does the Minister accept that increasing the material allowances in the DAs, SDAs and ECSC assisted areas will act as a considerable incentive to local authorities to set up special units to help people enter the special temporary employment programme? Does he further accept that, by bringing forward the date

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    of eligibility for STEP, local authorities will be enabled to use the EEC-based readaptations payment scheme, which is available in areas where there have been steel industry closures, to draw people into their schemes from the steel industry?
    Mr. Lester: One is always looking at ways of getting one's hands on European money. However, to try to differentiate the allowances to target them to SDAs, DAs and so on is not helpful. Under existing schemes, they are targeted in a number of places. Over half the places available are already in such areas, which means that the cumulative money available is very much higher. The schemes operate nation-wide to deal with areas that have unemployment equally as Lad as in the SDAs, although that is often concealed in the figures. It is, therefore, not possible to pursue the policy that the hon. Gentleman puts forward to benefit his constituents.

    Skill Training
    Mr. Cadburyasked the Secretary of State for Employment what additional steps he proposes to take to ensure that young people have sufficient skills for industry's future needs.
    The Under-Secretary of State for Employment (Mr. Patrick Mayhew): This year some 25,000 apprenticeships are receiving aid from the Manpower Services Commission, and on 21 November my right hon. Friend announced a major expansion of the youth opportunities programme, which helps to prepare unemployed young people for working life, and an acceleration in the unified vocational preparation pregramme for employed young people. The Government and the MSC are currently considering what further action might be taken to equip young people for industry's future needs.
    Mr. Cadbury: While welcoming the Government's recent moves to expand and improve the quality of the youth opportunities programme, may I ask my hon. and learned Friend to say what progress is being made to encourage industry and unions to move away from an apprenticeship system which is based more on time saving than on the achievement of certain basic standards?
    Mr. Mayhew: The achievement of basic standards to equip young people for a life in industry is very important. The unified vocational preparation programme, which began in 1977 on an experimental basis, is being developed by the Manpower Services Commission, with the encouragement of my right hon. Friend. That programme provides training for young people in work aged between 16 and 18 years, and we regard it as being jest as important in its way as the youth opportunities programme.
    Mr. Golding: Is the Minister aware that, given the dramatic drop in apprentice recruitment this year, the number of 25,000 places is totally inadequate? Will the Department resolve to do better next year?
    Mr. Mayhew: We shall have to wait to see how resources turn out. We shall be guided by what the Manpower Services Commission has to say in that regard. The 25,000 apprenticeships at present aided by the Manpower Services Commission include 1,700 that were added to the programme in response to the rise in youth unemployment.
    Mr. Ian Lloyd: Allowing for the exceptional and exceptionally important work being done in the application of microelectronics in schools in the Birmingham area, would my hon. and learned Friend care to estimate what proportion of the secondary school population of the United Kingdom is receiving some familiarisation with the technology on which their employment in the next two decades is most likely to depend?
    Mr. Mayhew: My hon. Friend puts his finger on a vitally important matter. About half our secondary schools now have access to computer technology training. That is not nearly enough, and the number should be increased.
    Mr. Jim Marshall: Does the Minister accept that, useful though the youth opportunities programme is, it is no substitute for real training in industry? Will he take on board the point made by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) that, if we are to train to meet industry's future needs, the State should provide further cash incentives because of the poor financial position of industry at present?
    Mr. Mayhew: What the hon. Gentleman describes as real training in industry is very important, and it is exactly the subject of the unified vocational preparation scheme, under which employers receive incentive payments for a trainee spending a day or a block of days training away from work and, in some cases, also for workplace training. By July 1979, about 3,000 young people had taken part in that scheme. Two industry training boards — the rubber and plastics board and the distributive industry board — have introduced substantial schemes of their own.

    Unemployment Statistics
    Mr. Canavanasked the Secretary of State for Employment what is the total number of unemployed people in the United Kingdom; and how many are under the age of 25 years.
    Mr. Prior: At 13 November, the number of people registered as unemployed in the United Kingdom was 2,162,874. The latest date for which an age analysis of the unemployed is available is 9 October, when the total was just over 2 million and the number under 25 years of age was 855,023.
    Mr. Canavan: When will the Government face the fact that a major cause of unemployment is the failure of their economic dogma, because extreme monetarism, high interest rates, high inflation, high energy costs, an overvalued pound and savage cuts in public expenditure have destroyed thousands of jobs, including jobs for people under 25? As the annual cost of unemployment is about £10 billion, is it not time that the Government invested such a sum in industry and essential services in order to provide more jobs?
    Mr. Prior: I do not accept the hon. Gentleman's premise, and neither did his Government when they were in office. We are trying to help in any way possible. That is why I have announced a massive extension in the youth opportunities programme of up to 440,000 places next year. For the benefit of the hon. Gentleman and the House, may I say that the number of people being covered by various schemes is at present 668,000, which does not

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    include the people whose jobs are being aided in nationalised industries by the additional resources that the Government are having to put into them.
    Mr. Neubert: Does my right hon. Friend agree that the slight fall in unemployment, which affected relatively few people and occurred just before the Labour Government went out of office, was paid for by rapid price increases for everyone immediately after they went out of office? Will he confirm that he has no intention of taking such a short-term and irresponsible way out of our problems?
    Mr. Prior: I do not believe that taking the short-term course would have any effect on the long-term problems. That is why we are sticking to our policy. The reduction of about 100,000 in the unemployment level in 1978 and the beginning of 1979 reflected the fact that we were at the top of the economic cycle. However, we still had 1·3 million unemployed, which shows the magnitude of the problem that Britain faces.
    Mr. Cyril Smith: Is the Secretary of State aware that in some areas, and certainly in my constituency, unemployment is due not simply to the streamlining of numbers in factories but to factory closures? Is he further aware that the unemployment in those areas is likely to be long-term rather than short-term? What proposals do the Government have for attracting industry to those areas? Does he not take the view that he should consult his right hon. Friend the Secretary of State for Industry about the possibility of reviewing areas that have development area status?
    Mr. Prior: I am continuously in consultation with my right hon. Friend the Secretary of State for Industry on the question of reviewing areas for development area or intermediate area status. As for the hon. Gentleman's statement that a number of firms are going out of business altogether, I agree that that is one of the problems, particularly in the textile industry. That is why it is important to attract, by every means possible, other industries to take their place. That will depend partly on Britain's ability to control inflation and partly on our ability to sell our goods in overseas markets. That is a greater possibility or probability now than it has been for some years.
    Mr. Hordern: Is my right hon. Friend satisfied that there are sufficient incentives for overseas firms to come to this country? Will he have a word with his right hon. Friend the Secretary of State for Industry and his right hon. and learned Friend the Chancellor of the Exchequer to see whether we could provide the sort of incentives that are given in the United States, for example, and to set up free trade zones—not enterprise zones? Will he also consider with his right hon. Friends the possibility of simplifying and reducing the rate of corporation tax?
    Mr. Prior: Those matters go well beyond my portfolio, but I am prepared at any time to consult my right hon. Friends on those subjects. Of course, I am not satisfied with the present position, but, with regard to corporation tax and taxes generally on companies, we have some of the lowest forms of corporate taxes in the world, and I want everyone to know that so that they can take advantage of it.
    Mr. John Grant: Which analysis of the unemployment situation does the Secretary of State prefer—that of his right hon. Friend the Prime Minister or that of his right hon. Friend the Member for Sidcup (Mr. Heath)?
    Mr. Prior: I prefer that of the Government.

    Occupational Mobility
    Mr. Sheermanasked the Secretary of State for Employment what steps he is taking to encourage occupational mobility among the unemployed.
    Mr. Jim Lester: I am informed by the Manpower Services Commission that its plans provide for about 82,500 adults, most of them unemployed, to start training or retraining this year under the training opportunities scheme. Jobcentre self-service vacancy displays give unemployed people ready access to notified vacancies in many different occupations.
    Mr. Sheerman: Is the Minister aware that, in the 18 months of Conservative Government, unemployment in Huddersfield, for example, has risen by 158 per cent.? Is it not a cruel deception for the Prime Minister to go to areas such as Wales and tell people to move if they want a job? Is he aware that my constituents who are willing to move and who obtain jobs in the South-East cannot get a council house transfer and cannot afford to buy a house because of the Government's policy on housing? The concept of occupational mobility is nonsense.
    Mr. Lester: The Housing Act 1980 has made considerable changes to assist people to be mobile. The Government recognise that housing is one of the major factors in mobility. I remind the hon. Gentleman that when the Labour Government were in power they made no changes in housing policy to assist people to be mobile. With regard to adult retraining, the hon. Gentleman knows that there are skillcentres at Bradford, Wakefield and Leeds and that there are also the Huddersfield technical college and the Dewsbury and Batley technical college.
    Mr. Forman: Does not my hon. Friend agree that labour mobility amongst the employed is as important to the country's future as labour mobility for the unemployed? To that extent, will he encourage the move towards the transferability of occupational pensions, which would make a great contribution to achieving that objective?
    Mr. Lester: I understand that the transferability of occupational pensions is currently under review by the DHSS. Of course, it is true that mobility in a real and reasonable sense has always played a part in this country in solving employment and unemployment problems. Birmingham and the Black Country did not exist until comparatively recently in that respect.
    Mr. Ashley: Is the Minister aware of the deep anxiety in North Staffordshire, where unemployment has doubled in the last year, and that the pottery industry, which was highly profitable, has been very badly hit? Instead of trying to shunt people out of these localities, why does he not take action to try to bring work back into the Potteries, where work can be done?
    Mr. Lester: The Department of Industry and the various regional measures that have been introduced exist

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    for that purpose. However, the question concerns occupational guidance — that is, mobility between occupations, not places.

    Unemployment (North-West)
    Mr. Strawasked the Secretary of State for Employment what are the present percentage rates of unemployment for(a)Blackburn,(b)the North-West; and what were the corresponding rates in May 1979.
    Mr. Jim Lester: The unemployment rates in the Blackburn travel-to-work area at 13 November 1980 and 10 May 1979 were 10·6 and 6·0 per cent., respectively. The corresponding rates for the North-West region were 10·9 and 6·7 per cent. The rates are based on figures which include school leavers and are not seasonally adjusted.
    Mr. Straw: Is the Minister aware that over the last 12 months in every town in North-East Lancashire—which is to lose its assistance under the Industry Act—unemployment has doubled, and in one case it has trebled? Is he concerned about that? When his right hon. Friend the Secretary of State asks for patience, and when he describes unemployment as a short-term transitional problem, as he did earlier this afternoon, will he say how long those unemployed in Blackburn and North-East Lancashire will have to wait before the rates are down to the May 1979 level?
    Mr. Lester: If I could answer the hon. Gentleman's last question, I would not be Under-Secretary of State for Employment because I would be possessed of rather magical powers. We are concerned about the problems of the North-West and the problems in those particular towns. The reason why the review of the regional areas was built in was that they could be taken into account. The allocation to the North-West of 82,000 places under the youth opportunities programme in 1981–82 shows how much we recognise the seriousness of the problem.
    Mr. Nicholas Winterton: I recognise the steps that my hon. Friend and his right hon. Friend have taken to reduce unemployment in the North-West and elsewhere, but does he not agree that many of those who have lost their jobs were in the the textile and paper and board industries in the North-West? Does he not also agree that we have opportunities of putting the matter right, like other EEC countries which have acted in their national interest? Will my hon. Friend urge upon the Prime Minister and his right hon. Friends steps that will preserve the manufacturing base of the North-West?
    Mr. Lester: I know how passionately my hon. Friend feels about his constituency and the area around it, and he puts forward his views very strongly. Of course, in our concern for those who are losing their jobs in the textile industry we are constantly in contact with our colleagues in other Departments, putting forward views and trying to support them where we feel there is a sensible way in which we can help the industry. Of course, we are against dumping and illegal labelling, but the textile industry has also needed to rationalise.

    European Community (Unemployment)
    Mr. Adleyasked the Secretary of State for Employment what discussions he has had with his European Economic Community counterparts on unemployment in the Community.
    Mr. Prior: I regularly discuss unemployment with my EEC colleagues, at meetings of the Council and in bilateral contacts.
    Mr. Adley: As rising unemployment is a Community, not simply a British, problem, will my right hon. Friend discuss with his Community colleagues and his Government colleagues here the possibility of starting schemes—such as the Channel Tunnel—that could improve the Community infrastructure and provide employment, both in this country and in the Community?
    Mr. Prior: Yes, Sir. Anything that we can do along those lines will be a step forward. Already, I hold regular consultations with Employment Ministers. However, the last conversations that I had 10 days ago were very gloomy all round.
    Mr. Maclennan: Does the Secretary of State have constructive discussions with his opposite numbers about the expansion of the regional development programme, or does the Government's general opposition to increased public expenditure extend to their attitude towards increased expenditure by the Community on employment measures?
    Mr. Prior: What we should really like to do is to transfer some of the funds which are at the moment devoted to the common agricultural policy to the regional fund and to the social fund. We believe that we must keep up the pressure there before we can agree to an increase in the budget as a whole.
    Sir Anthony Meyer: Is it not clear that the Western world is faced with grave unemployment, for reasons of technological change, and is this not a problem which can be tackled only on a continental basis, by means of massive reconversion to more modern industries which can withstand low-cost competition?
    Mr. Prior: There is a great deal in what my hon. Friend says. We should use our influence within the Community, as my right hon. Friend the Prime Minister did at the recent Community Council, in order to help to bring this about.

    Disabled Persons
    Mr. Neil Thorneasked the Secretary of State for Employment if he is satisfied with the present level of employment opportunities for the disabled in industry and commerce during the current recession.
    Mr. Mayhew: We should like to see more. We support the Manpower Services Commission in encouraging and assisting firms to employ disabled people. We regard that as very important. Our support for the fit for work campaign and its awards scheme reflects that concern.
    Mr. Thorne: Accepting that long-term unemployment for the able-bodied can be soul destroying, and that long-term unemployment for the disabled is devastating, will my hon. and learned Friend please look into the possibility of giving greater encouragement especially to disabled people who have become unemployed through redundancy?
    Mr. Mayhew: I think that my hon. Friend knows that the disablement resettlement officers of the Manpower Services Commission do their utmost to encourage employers not to make disabled people redundant. The

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    Manpower Services Commission is conducting a review into the quota scheme under the Disabled Persons (Employment) Act 1944. That review will very shortly be complete, and my right hon. Friend and the Commission will be considering it as soon as it is made available.
    Mr. John Grant: Will the Minister accept that there is a sharp increase in the number of unemployed disabled people and, more important, that the placings are falling very considerably and proportionately to other unemployed people? Is not that undermining the very schemes that the Minister mentioned—the "Positive Policies" scheme and the fit for work campaign? When will he come to the House and tell us what are the effects of the Government's cuts on the employment of disabled people and, in particular—since he mentioned them—the effect on the number of specialist disablement resettlement officers that the Government are proposing to cut?
    Mr. Mayhew: It is true that, regrettably, placings are down this year. There is no concealing the fact that, unfortunately, there is a long way to go before one can convince all employers that disabled people are in very many cases much fitter for work than is commonly supposed. But my right hon. Friend said that he was hoping to preserve the disabled resettlement service from the effects of cuts and that he would come to the House if that were not possible. The point is that these unfortunate people have to be assisted to the best of the Government's ability, and that is a commitment that we shall honour.

    Economic Policy
    Mr. Newensasked the Secretary of State for Employment what effects he estimates the measures announced in the statement of the Chancellor of the Exchequer to the House on Monday 24 November will have on the level of employment.
    Mr. Prior: I cannot give precise estimates as attempts to calculate the employment effects of measures such as these depend on arbitrary assumptions and on the particular economic model used.
    Mr. Newens: But is it not a fact that, even taking into account the totally inadequate palliatives, the effects of the Chancellor of the Exchequer's action will be substantially to increase the level of unemployment by reducing public expenditure and by increasing the burdens on industry? Does the right hon. Gentleman recognise that even in the South-East and the most prosperous firms the Government's policy is now regarded as an unmitigated disaster?
    Mr. Prior: I do not recognise the last part of what the hon. Gentleman has said. I recognise that his question reflects the outdated belief that changes in the Government's expenditure and revenues are reflected automatically in the level of unemployment. Most people now recognise that life is not as simple as that, and I should have thought that it was time the hon. Gentleman did.

    Unemployed Persons (Registration)
    Mr. Flanneryasked the Secretary of State for Employment what calculation he has made of the numbers of people, in particular women, who, although unemployed, are not registered as such.
    Mr. Mayhew: No such calculaton has been made by my right hon. Friend. However, the general household survey and the EC labour force survey suggest that about ·33 million people, including ¼ million women, may be seeking work though not registered as unemployed and that about two-thirds of those women want work that is part-time.
    Mr. Flannery: Does not the hon. and learned Gentleman realise that the real figure of unemployed is much closer to 3 million than the figure given earlier today? Does that not make the disaster far more catastrophic? What will be done in order to put cash into dying industry — the de-industrialisation of steel, for instance—in order to bring people back into work?
    Mr. Mayhew: The putting of public money into industries that are dying because they have lost their markets — for example, because the markets had disappeared — will not bring down the level of the unemployed. There is only one way in which to bring down the level of the unemployed, and that is for industry to get its house in order and for this country's housekeeping to be put on a sound basis.

  British North America Acts
  Mr. FoulkesTo ask the Prime Minister if she will arrange to meet with the Prime Minister of Canada to discuss the patriation of the British North America Acts.
  The Prime Minister (Mrs. Margaret Thatcher): I have no plans to do so.
  Mr. Foulkes: But does not the Prime Minister realise that we are now on a collision course with Canada? Since the Prime Minister does not have to seek her problems, will she now say to Pierre Trudeau that changes in the constitution of Canada should be decided over there and that he should now abandon his unilateral action?
  The Prime Minister: We have as yet received no request from Canada. When a request comes, we shall try to deal with it as expeditiously as possible and in accordance with precedent.
  Mr. Aitken: Is my right hon. Friend aware that it has been reported all over Canada that the British Government have given Mr. Trudeau some sort of commitment that they will push the 59-clause Bill through this House of Commons as quickly as possible? Will my right hon. Friend confirm or deny those reports, and will she bear in mind that constitutional issues of this complexity must surely be decided not by the Government but by Parliament as a whole?
  The Prime Minister: I know of no 59-clause Bill. On 14 previous occasions this House has been asked to deal with a request from the federally elected Parliament of Canada. It has done so in accordance with well-established precedent, bearing in mind that we are an elected Parliament and that the federal Parliament of Canada is a similarly elected Parliament. When we receive the request, we shall try to deal with it as soon as we can.
  Mr. George: Does the Prime Minister appreciate that there are many advisers outside the Foreign Office who have argued that, unless there is unanimity or near unanimity among the provinces, the Canadian Prime Minister should not proceed to patriate and we should not

  781
  acquiesce? If we acquiesce, we shall be reneging on constitutional obligations not only to the provinces but to the native people of Canada—people who were there 15,000 years before the French or the English ever realised that Canada existed.
  The Prime Minister: If we receive a request, I believe that we have to deal with it in accordance with the statute which governs it—
  Mr. English: Hear, hear.
  The Prime Minister: —in accordance with precedent, and in accordance with the fact: that it is received from a fully democratically elected Parliament and would be a request from a fully democratically elected Parlament to a similarly democratically elected Parliament.
  Mr. Maxwell-Hyslop: Does my right hon. Friend agree bat the only elected body that can make representations on behalf of the Canadian people to another Commonwealth Government, such as our own, is the federal Government of Canada, and that provincial Administrations cannot have any locus standi vis-à-vis the Government of the United Kingdom or the Parliament of the United Kingdom?
  The Prime Minister: I believe that we can receive a request, under the relevant statute, only from the federal Parliament of Canada.

  Prime Minister (Engagements)
  Mr. Stanbrookasked the Prime Minister if she will list her official engagements for Tuesday 9 December.
  The Prime Minister: This morning I held meetings with ministerial colleagues and others, including one with Mr. Kisiel, Deputy Prime Minister of Poland. In addition to my duties in this House, I shall be having further meetings later today, including one with the United Nations High Commissioner for Refugees and another with a group of senior French industrialists, who are here on an official visit.
  Mr. Stanbrook: Will my right hon. Friend note that most people now believe that public sector pensions should not be index-linked only at the taxpayer's expense? Will my right hon. Friend confirm that action will be taken immediately after the Scott committee has reported?
  The Prime Minister: As my hon. Friend pointed out, we are awaiting the report of the Scott committee on index-linked pensions in the public sector. It would be best to wait and see what the report says before committing ourselves in any way. I accept my hon. Friend's point that the existence of such pensions for a particular sector of our people is causing some concern.
  Mr. Foot: Does not the right hon. Lady think that she should have included in her duties today a full and comprehensive statement to the House of Commons on her discussions yesterday in Dublin? Even at this stage, will not she agree to the request that the Opposition made throughout the morning—namely, that she should make a full statement?
  The Prime Minister: No. Those discussions were part of a series of bilateral discussions with our Community partners, which are regularly undertaken with Germany, France, Italy—[Interruption.] They were not even the
  782
  first bilateral discussions to be held between the Government of the United Kingdom and the Republic of Ireland. It would be wrong to make a special statement about that particular meeting.
  Mr. Foot: Will the right hon. Lady take into account that her communiqué, issued afterwards, stated:
  "These discussion, were … extremely constructive and significant."
  Surely any extremely constructive, fresh and significant decisions on such matters should be reported to the House of Commons. The right hon. Lady held a press conference on the matter. She has made a television appearance on this subject. We may wish to encourage the Government in their actions, but we must have the right to cross-examine on such matters. I plead with the right hon. Lady to respond to what I believe to be a feeling that can be found on all sides of the House. Will she make a proper statement?
  The Prime Minister: No. Many of the bilateral discussions that we hold are both constructive and significant. They are a frequent occurrence as a result of our Community relationship. To make a statement on one particular meeting would elevate it in a way that is neither desirable nor warranted.
  Mr. Foot: The right hon. Lady makes a great mistake when she deals with the House of Commons in such a way. Will she tell us the terms of reference that are to apply to the discussions on new institutions and on citizens' rights? Will she tell us how those possible citizenship rights accord or coincide with the nationality Bill which is to be brought before the House? There are a host of questions that the House of Commons has a right to ask.
  The Prime Minister: These are matters that are to be explored. No decision has been made. [Interruption.] No decision has been made. Neither the right hon. Gentleman nor his predecessor required a statement on previous bilateral discussions between the United Kingdom and the Republic of Ireland. Doubtless the right hon. Gentleman and his colleagues will cross-examine my right hon. Friends as they wish.
  Mr. Squire: Will my right hon. Friend comment on the hypocrisy of the protestations of the Leader of the Opposition? The right hon. Gentleman has not even considered—
  Mr. Speaker: Order. Did the hon. Gentleman apply the word "hypocrisy" to an individual? [HON. MEMBERS: "Yes."] The hon. Gentleman will soon say so if he did.
  Mr. Squire: I must have meant "inconsistency". I apologise.
  Mr. Speaker: Does the hon. Gentleman withdraw the word "hypocrisy"?
  Mr. Squire: Yes, Mr. Speaker. Will my right hon. Friend comment on the right hon. Gentleman's inconsistency, given that he has seen lit to withdraw from his Shadow Cabinet any speaker on Northern Ireland, defence and other important matters? Is not this an indication of the importance which the right hon. Gentleman attaches to Northern Ireland? Does not my right hon. Friend agree that that shows a very distorted sense of values?
  The Prime Minister: The right hon. Gentleman has enough problems with his Shadow Cabinet without my becoming involved.
  Mr. Molyneaux: As a result of yesterday's talks in Dublin, will the Prime Minister reaffirm that no concessions whatever will be made to the Maze prison hunger strikers? Secondly, if the joint discussions that were referred to in yesterday's communiqué take place, will the Prime Minister accept from the Ulster Unionist Party a list of subjects that might be appropriate for consideration?
  The Prime Minister: As regards the latter part, the answer is "Yes, of course". No decisions have yet been made. Nor have any terms of reference been established or anything of that kind.
  As regards the former question, I am glad to confirm that there were no concessions as regards the Maze hunger strike. My view is very well known. There can be no possible political status for those crimes, which include murder, carrying explosives and so on. The concessions on civilian clothing, which were made before the hunger strike began, were made to all prisoners in Northern Ireland. Last Thursday, we issued a comprehensive statement on the rights and privileges that are already available to conforming prisoners in Northern Ireland.
  Mr. Meacherasked the Prime Minister if she will list her official engagements for 9 December.
  The Prime Minister: I refer the hon. Gentleman to the reply which I gave some time ago.
  Mr. Meacher: Will the right hon. Lady acknowledge that she has pulled off a truly remarkable double? Given a 6 per cent. forecast fall in national output for this year and next year, we face the biggest slump since the 1930s, yet the money supply—on which altar the real economy has been sacrificed—is escalating out of control at twice the Government's target. If the right hon. Lady thinks that inflation is her one big success, what estimate will she give for the rate of inflation in 18 months' to two years' time, given that M3 is now escalating at 20 per cent. a year?
  The Prime Minister: The hon. Gentleman has made an excellent case for a very much tighter money supply than that now operating. I accept that the money supply figures foreshadowed today are worrying. Perhaps the hon. Gentleman will accept that the main reason for those figures is the very high central Government borrowing requirement for this month. That is a factor that I have been trying to deal with, but I have had precious little support from Opposition Members.
  Mr. Edward Gardner: May I congratulate my right hon. Friend on the constructive character of the bilateral talks that were held in Dublin yesterday? [Interruption.] In any future bilateral talks of that type, will she ensure that one subject of discussion will be the continuing right
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  of citizens of the Irish Republic—who are not citizens of this country—to vote in our general elections? Does not my right hon. Friend agree that a rational and agreed end to such an absurd anomaly would do much to improve future Anglo-Irish relations?
  The Prime Minister: I am grateful to my hon. and learned Friend for those comments. We were trying to improve relations between the United Kingdom Government and that of the Republic of Ireland. As regards the right of citizens of the Republic of Ireland to vote in the United Kingdom, I understand from the Taoiseach that the Republic is prepared to consider giving rights to British subjects so that they can vote similarly in the Republic. That was announced long before yesterday's bilateral discussions. Naturally, we must first proceed with the nationality Bill, which will soon be placed before the House.
  Mr. Foot: Does not the Prime Minister's answer illustrate the grievous wrong that has been done to the House? I speak as one who is strongly in favour of developing as good relations as we can between the London Government and the Dublin Government. Surely, the right hon. Lady must appreciate that many hon. Members in different parts of the House wish to ask questions relating to the nationality Bill and a whole series of matters. Is there not a danger that the right hon. Lady's discussions will have one interpretation put on them in Dublin and another here in London? Will not the Prime Minister provide a proper opportunity, as she is the only person who can answer on the matter for the whole Government, to make a statement to the House — perhaps tomorrow, at the beginning of next week, or certainly before the House rises for the recess—when we can cross-examine her properly?
  The Prime Minister: No, Sir. If the right hon. Gentleman has a question to ask, he has had 15 minutes in which to ask it.
  Mr. John Townend: As my right hon. Friend has made such an excellent start in abolishing quangos, will she try to find time today to turn her attention to wages councils, the activities of which are contrary to the Government's philosophy that wages should be settled on the basis of the individual employer's ability to pay? Will she bear in mind that the awards over the past two or three years have resulted in the loss of hundreds of thousands of jobs of low-ability workers and young people?
  The Prime Minister: I understand what my hon. Friend is saying, but if there were any question of doing what he suggests we should have to consider very carefully what would be put in the place of wages councils. I believe that we should pursue that first through my right hon. Friend the Secretary of State for Employment.
  Mr. Speaker: Statement—Mr. Patrick Jenkin.

Questions to Ministers
Mr. David Winnick: On a point of order—
Mr. Michael English: On a point of order—
Mr. Bob Cryer: On a point of order—
Mr. Harry Ewing: On a point of order—
Mr. Martin Flannery: On a point of order—
Mr. Speaker: Order. I normally take points of order after statements. We are to have a statement. I have notice of an application under Standing Order No. 9 as well, I think from the hon. Member for Mid-Ulster (Mr. Dunlop).
Mr. English: My point of order, Mr. Speaker, relates to Prime Minister's questions—
Mr. Speaker: Order. We cannot pursue the matter of questions now, but—
Mr. English: rose—
Mr. Speaker: Order. If there is a genuine point of order I shall hear it, but the normal courtesies of the House are to wait until we have a Minister's statement.
Mr. English: I am grateful to you, Mr. Speaker. I am sure that you will be aware that at one time points of order were often raised during Question Time. During the time of your predecessor it was suggested that it would be courteous to hon. Members who wished to ask questions if points of order were delayed until the end of Question Time. They are now to be delayed until the end of statements, which can be a very long time. I wish to ask something relevant to an answer given by the Prime Minister. I do not wish her to remain for perhaps half an hour.
Mr. Speaker: The hon. Gentleman and the House know that I cannot rule on points of order about replies by Ministers Ministers are responsible for the contents of their own replies.
Several Hon. Members Several Hon. Members rose—
Mr. English.: I am sure, Mr. Speaker—
Mr. Speaker: Order. We cannot have a standing discussion with each other—at least, not here.
Mr. Cryer: I have a point of order, Mi. Speaker, relating to Standing Order No. 8. I have raised this point before, when you suggested that the Standing Order related only to private notice questions. However, it gives you power to allow questions at the end of Question Time, after 3.30 pin.
If the Opposition make representations about the Prime Minister's making a statement about an important and, in her terms, historic meeting, and she refuses, will you, Mr. Speaker, in those circumstances, when she is abrogating her responsibility to the House, be prepared to use your powers under Standing Order No. 8 to allow my tight hon. Friends the Leader of the Opposition and the appropriate Shadow spokesman to ask questions?
Mr. Speaker: I have already heard the Leader of the Opposition asking questions on that very subject. I shall
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not use that Standing Order in a way that none of my predecessors ever did. I do not propose to put a new interpretation on the rule.

Scottish Grand Committee
Mr. Harry Ewing: On a point of order, Mr. Speaker—
Mr. Speaker: I shall take this one last point of order, and then we shall have a statement.
Mr. Ewing: This is on a different matter, Mr. Speaker. I hope that the whole House will regard it as very important. It is based on the belief that the House is responsible for its Committees once they have completed their work.
This morning the Secretary of State for Scotland and all his Ministers refused to vote for their own policy document in the Scottish Grand Committee. As a result, great uncertainty has been caused about the standing of that document and whether the Government have now re versed their policy in relation to their proposals to close the colleges of education.
Can you help the House, Mr. Speaker, in the serious situation that has arisen because the Secretary of State refused to vote in favour of his own policy document?
Mr. Speaker: As the House knows, I never rule on what happens in a Standing Committee. Statement, Mr. Jenkin.
Mr. Michael English: Order. The Prime Minister is leaving.

Social Security Benefits (Payment)
The Secretary of State for Social Services (Mr. Patrick Jenkin: With permission, Mr. Speaker, I should like to make a statement on the arrangements for paying social security benefits.
The House will recall that last February we debated arrangements for paying social security benefits and the implications for the sub-post office network. Widespread anxieties had been aroused in the country by misleading reports of what were thought to be the Government's intentions arising from a study of payment arrangements carried out last year in consultation with Sir Derek Rayner. Since then the Social Services Committee has studied the matter and issued its own report. The Government are publishing today their reply to the Select Committee, as Cmnd. 8106. Copies are available in the Vote Office. Because we want to consult widely on the changes that we now propose, this reply is in the form of a consultative document. It includes, as I promised last February, the full report of the original study by officials.
The consultative document makes it clear that we stand firmly by my right hon. Friend the Prime Minister's pledge of 28 February that retirement pensioners will continue to have their pensions paid weekly at post offices if they wish. We also repeat our commitment to safeguard the sub-post office network. The Government consider that these commitments can be fully honoured without sacrificing our wish both to give the public more choice and to save taxpayers' money by increasing efficiency.
Three main changes in the system of payment are proposed. The first change is that those who so wish may have their pensions or child benefit paid direct to a bank

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account by automated credit transfer. Such payments would be four-weekly, in arrears. There would be no compulsion.
Secondly, my Department will make a number of internal changes, which will produce useful administrative savings and which the Select Committee recommended should proceed.
Thirdly, we propose that child benefit should be paid four-weekly for most mothers. People in receipt of suplementary benefit, family income supplement, the additional benefit for one-parent families and widows, pensions, together with mothers with four or more children, would be able to continue with weekly payment. This is a much larger group for weekly payment than the team of officials suggested, and it takes account of our concern to protect vulnerable groups.
In the light of the anxieties expressed by the House, the Government have paid particular attention to the effect of these changes on Post Office finances and on sub-post offices. If these proposals were implemented, clearly there would be a reduction in DHSS business in post offices. By about 1987–88 my Department would hope to reduce its administrative costs by about £38 million a year, at today's prices. About £25 million of these savings would come from reduced charges paid to the Post Office. In these circumstances the Government have thought it right to use the opportunity presented by the British Telecommunications Bill to allow the Post Office to conduct across its counters a wider range of business for the public sector.
After discussing this with the Post Office the Government are satisfied that if this Bill is approved there will be considerable scope for new counter business. The Government estimate that, allowing for some expansion of current business, sales volume across the counter should increase by about 8 per cent. in the next five years compared with about 6 per cent. of business likely to be lost as a result of the DHSS changes under the Government's proposals. The Post Office accepts these estimates.
These proposals will save taxpayers' money and provide more modern methods of paying benefits without damage to the sub-post office network. However, we are anxious that there should be full opportunity for public discussion of these proposals. We shall therefore be discussing them with all the main interests, including the National Federation of Sub-Postmasters, over the next three months before taking final decisions.
Mr. Norman Buchan: The Secretary of State purports to say in the statement that his main concern is to allay fears about misleading reports relating to sub-post offices, but we have, sadly, grown accustomed to reading between the lines of frequent ministerial statements. Does not this proposal conceal a number of other extremely serious matters?
Let us look at the question of the post offices, for a start. If the right hon. Gentleman is transferring extra work to the sub-post offices, I take it that, as he has no other means within his power, this is a transfer of jobs from the public sector to the post offices. Has the right hon. Gentleman consulted the other sections of public industry—for example, the gas and electricity boards? Is it not the case that where jobs are to be transferred to the post
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offices there will be a job loss in the public sector, but that the profits will be made within the banks, to which so much of the work will be transferred?
The right hon. Gentleman reiterated the Prime Minister's pledge that retirement pensioners will continue to have their pensions paid weekly at post offices, but we have to look closely at the Prime Minister's pledges, do we not? Was she not on the verge of breaking one firm pledge in relation to the link between pensions and prices, only to be saved by the wets in the Cabinet? If the pension is to continue to be paid weekly to pensioners, will it be a question of opting in or opting out? Will difficulties be laid at the door of the old-age pensioner to get this secured?
There is a contradiction in the statement on child benefits. The right hon. Gentleman said that there would be no compulsion, but there will be compulsion. He also said that most families will be put on a four-weekly payment, with a series of exceptions. By definition, that means that most families will be four weeks' payments in arrears. How much will be saved by that four weeks in arrears for most families? Is it the £50 million that we have read about in the leaks? What will happen to that £50 million? Will it be used for the child benefit allowances, or is it yet another simple cut at the expense of children?
Will the right hon. Gentleman also confirm the figure that he gave earlier this month? In 1978–79 35 per cent. of child benefits were drawn weekly. I understand that that figure has risen to 45 per cent. in a single year. Will the right hon. Gentleman confirm that figure, which he gave in an answer only a few weeks ago? If so, is it not a sign of increasing pressure on all families, and not only those in the category mentioned in the document?
Does the Secretary of State not understand that one of the crucial points of the child benefit allowance is that it is paid to women? If he is putting most families on a four-weekly payment basis, will that not create a number of problems for women who have to budget weekly, because this part of the budget is being attacked by these proposals?
Last night the Chief Secretary to the Treasury referred to the Opposition breaking the consensus on the Welfare State. Is not a quiet counter-revolution taking place under the Government, in that administrative measures and statements of this kind are attacking and eroding the whole basis of the Welfare State? We are pledged to expose, halt and reverse that process.
Mr. Jenkin: I congratulate the hon. Gentleman on his first appearance at the Opposition Dispatch Box in his new job. I shall answer his questions.
Of course, there will be a need to consult other public sector organisations on the additional business that will go to the post offices. That is why we are publishing the reply as a consultative document.
The hon. Gentleman asked whether pensioners would have to opt for weekly payments. No, Sir. There is no way in which my Department can pay pensions or any other benefits into bank accounts without the beneficiaries telling the Department where their bank accounts are and giving the reference numbers. Therefore, they will be opting for automated credit transfers. If they do not opt for ACT, they will continue to be paid weekly.
The effect of paying the child benefit four weeks in arrears will be a saving of £50 million in the year in which it comes in, which we hope will be towards the end of next

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year. But that is merely moving it forward into the following year. No long-term saving will be achieved. I confirm that the latest figure shows that 45 per cent. of mothers cash their child benefit weekly. We estimate that, with the exceptions, about 20 per cent. of families would still be entitled to the weekly payment.
The real point made by the hon. Gentleman was that mothers would be incapable of managing their affairs with the child benefit paid monthly. Is he aware that Belgium, France, Ireland, Italy, Luxembourg and West Germany pay child benefit four-weekly and that Denmark and the Netherlands pay their child benefit quarterly? Is the hon. Gentleman saying that mothers in England or Scotland are incapable of managing their affairs as well as are mothers in other countries? If he takes that view, I do not agree with him.
Mr. Buchan: I am not the only one who takes that view. Almost every group in this area recognises the immense value of a weekly payment going to the mother, so that she may have flexibility in her budgeting because of the problem; that arise elsewhere. For example, does the right hon. Gentleman realise that local authorities that collect rents on a fortnightly or monthly basis have arrears problems?
Is the right hon. Gentleman now admitting, although he did not say so, that, despite the fact that he said that this will not be compulsory, for the bulk of families it will be compulsory?
Finally, does the right hon. Gentleman realise that, Common Market or not, we are concerned with the Welfare State as it has been constructed in this country? The examples of Belgium and France are as nothing compared with the experience that we have had during the past 12 months under this Administration.
Mr. Jenkin: The hon. Gentleman is extraordinarily unconvincing on this subject. I made it abundantly clear that no one will be obliged to take payment into a bank or building society account. With the exception of Chat substantial group of families for which child benefit could be said to be a significant part of the family income, amities will be expected to operate on having the benefit paid four-weekly. This is the pattern in virtually every other West European country and I cannot believe that it is impossible or wrong for this country. This arrangement is overdue. We should have done it some time ago.
Mr. Paul Dean: I welcome the assurances in my right hon. Friend's statement. Will he beware of tidy solutions that administrators like but human nature abhors? Will he hold firmly to the principle of freedom of choice wherever possible, so that the large numbers of people who wish to have benefit, including child benefit, paid into bank accounts monthly will be able to do so and that those who budget weekly and wish to have weekly cash payments will be able to continue that arrangement?
Mr. Jenkin: That is the case for pensioners. I give my hon. Friend that firm assurance. I must make it clear that the Government are proposing consultation on the basis that for the generality of families, apart from the especially vulnerable groups that I have mentioned, child benefit will be paid four-weekly. I believe that that is a right proposal.
Mr. John Golding:Is the Secretary of State aware that moving from weekly to
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monthly payments will cause great hardship? Is he further aware that families operating on monthly salary budgets will not experience the same degree of hardship as families that budget weekly and find it difficult to save money from one week to the next? That is particularly so because of short-time working and the growing difficulty that working people have in managing on their pay.
Mr. Jenkin: The change will not happen overnight. We anticipate that we may be able to begin moving families on to four-weekly payments towards the end of next year, or early in 1982. Families will have between 12 and 15 months' notice of the change. The change will be progressive, as the order books are renewed. I am not talking of families on family income supplement or one-parent families, who will continue to receive benefit weekly. They are exceptions, which do not apply in other European countries, although we believe that they should be exceptions here. It is reasonable to ask the generality of families to make arrangements to tide them over during the changeover period.
Mr. John Wells:What type of other public business might be introduced to the small village post offices to sustain them? I cannot see readily how a village with 400 residents can sustain a post office on the basis of selling railway tickets, for instance, because not many such people travel by train. Perhaps my right hon. Friend will consider abolishing the Tote and allowing postmasters to do its business. May we have a serious suggestion about how the small post offices will survive, since no other public business exists for them?
Mr. Jenkin: I understand my hon. Friend's anxiety. With my right hon. Friend the Secretary of State for Industry I have already had preliminary discussions with the sub-postmasters' representatives. My right hon. Friend has the primary responsibility and wishes to discuss with the Post Office a range of matters that might be open to the sub-postmasters. Obvious examples are the railways and transport generally. The energy industries are also possibilities. Sub-post offices might take over the payment of energy bills and the selling of energy stamps. That would depend to some extent on the success of the Post Office in opening up the new spheres available to it. We understand and accept the need for extra business to make up for the loss of the DHSS business so that we can fulfil our pledge to keep the sub-post office network in being.
Mr. David Penhaligon: May we have a simple assurance that the business and income of the sub-postmaster in the rural village will not decrease as a result of the proposals?
Mr. Jenkin: I do not think that I can give the pledge precisely in that form. I wish to be honest with the House. The Post Office has accepted the Government's estimate that overall, and over a period of about four or five years, the amount of extra business available will more than compensate for the loss of the DHSS business.
Mr. R. A. McCrindle: Am I right in thinking that the Government proposal for the payment of child benefit and family income supplement is that they will be paid on a monthly basis unless the recipient opts to the contrary? If I am correct in that assumption, will my right hon. Friend give me some reassurance that maximum publicity will be given, for the benefit of people who wish to continue to be paid weekly?
Mr. Jenkin: I accept that publicity is important. People who will be entitled to weekly payments for the family income supplement and other payments will have that made clear to them. It will be made clear that they have a choice. We shall take the necessary steps to ensure that they know about that right, so that they can exercise it freely.
Mr. David Steel: Does the Secretary of State understand that many people in the Post Office are just as keen on centralisation as are people in Government Departments? Is he aware that vague assurances about the overall level of Post Office income does not satisfy? What assurances can the Secretary of State give about the future of local village sub-post offices?
Mr. Jenkin: I expect that the Federation of Sub-Postmasters, now that it knows the Government's proposals, will make an early approach to the Post Office about the contract that the federation has with the Post Office on the division of business of the type that we are discussing.
The Post Office has made it clear that it regards the maintenance of the sub-post office network as being of great importance to it, as it is to the Government. We are providing time for consultation. We have not finally made up our minds. We shall study the outcome of the consultations. I made it clear in February, and I make it clear now, that we attach the highest importance to the maintenance of the sub-post office network in the villages and the rural areas as much as everywhere else.
Mr. A. W. Stallard: May I take the Secretary of State back to the reply that he gave to my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), when he referred to practices in other European countries? May we assume that the Secretary of State will soon propose parity with all other EEC countries on pensions, heating allowances, television licences, death grants, and so on? Are we to have parity with other European countries? Is the right hon. Gentleman aware that there are great disparities between benefits paid here and benefits paid in the rest of Europe? Who is to judge which families are to be paid four-weekly? Will the housewife have the right of appeal?
Mr. Jenkin: I shall not be drawn into discussing the amounts of benefits. That is a separate issue. The point is that almost every other European country has for some years managed happily, as have European families, with monthly payments of child benefit.
Mr. Stallard Mr. Stallard But they receive more money.
Mr. Jenkin: The higher the amount of benefit the more the family depends upon it, and the more it might be needed weekly. People in other countries have managed well being paid monthly. I am sure that we can, too. I did not understand the hon. Gentleman's second question.
Mr. Peter Bottomley:I welcome my right hon. Friend's desire to keep the sub-post offices going in order to extend choice and to achieve greater efficiency. Am I right in believing that we are discussing a consultation document? Will it be possible for people in favour of extending choice for families to suggest to the Government that the four-weekly payment should be paid two weeks into the month? Will people be able to suggest
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that the payment should be made fortnightly in order to provide a transition for a year or two, so that an adjustment can be made to monthly budgeting?
Mr. Jenkin: I understand my hon. Friend's anxiety and I am grateful for his general welcome. However, in a year when public expenditure will be under extreme constraint the Government would require a great deal of persuasion to forgo the saving in one year occasioned by the transfer to monthly payments of child benefit. To offer the incentive to people to transfer to four-weekly payments of pensions by automated credit transfer would also involve a cost. I must advise the House that the Government are not prepared to recommend that cost.
Dr. Oonagh Mcdonald: Is the Secretary of State aware that many families who are in receipt of a weekly wage, in addition to the exceptions that he has mentioned, will suffer greatly by the transfer of child benefit to monthly payments? Is he aware that mothers use the child benefit to tide them over from Tuesday to Thursday or Friday, when the weekly wage comes in, and that the money is used to buy food and other essentials? Is he further aware that his comparison with other EEC countries would carry more weight if he were prepared to pay the level of child benefit paid in the other EEC countries, because in all such countries except Ireland the payments are well above those paid in Britain? Will he also tell the House what special arrangements he intends to make to consult the women concerned about this alteration and, in particular, the women's organisations that represent many of them?
Mr. Jenkin: The consultation will be open to anyone who wishes to participate, including women's organisations and organisations representing poor families and one-parent families, such as the Child Poverty Action Group, the National Council for One-Parent Families, and other groups of that sort. I understand the hon. Lady's point about the budgeting customs of many families, but I cannot accept it as a reason for retaining weekly payment for all families for all time. That argument applies equally to countries such as Ireland, which pay small levels of family benefit. They have managed quite satisfactorily. I cannot accept that mothers in this country are less able than people in other countries to manage their affairs on a sensible basis and to accept a change of this kind. That seems a rather demeaning view to take of mothers in this country.
Mr. Speaker: Order. I propose to call two more questions from either side before I call the Front Bench in conclusion.
Mr. Richard Alexander: Whilst accepting my right hon. Friend's objectives entirely, may I nevertheless underline the concern that will be felt by many postmasters and sub-postmasters, not least in my constituency, and urge him to indicate at an early date the much wider range of business that they will receive by way of compensation as a result of the announcement?
Mr. Jenkin: The question of the wider range of business that the Post Office and sub-postmasters will be able to conduct is primarily a matter for my right hon. Friend the Secretary of State for Industry. Provision to enable this to be done is contained in the British Telecommunications Bill, which is currently before the House. That will be the forum for the House to explore

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what may be done. It will be for my right hon. Friend to conduct negotiations and discussions both with the Post Office and with the sub-postmasters to explore the many suggestions that have been put forward.
Mr. Andrew F. Bennett: Does the right hon. Gentleman agree that the major advantage of child benefit is that it is a universal benefit, which is paid to everyone? How can he justify creating first-and second-class claimants in this measure? Is he also aware of the major problem of people with a reasonable income who are suddenly plunged into poverty, perhaps by the husband leaving the family, and that at present child benefit is available immediately to cushion such people while they find other benefits? Will he guarantee that people will be able to move from monthly to weekly payment at a moment's notice if family circumstances change?
Mr. Jenkin: I can give the hon. Gentleman the undertaking that if there are sudden changes in family circumstances my Department responds, and frequently responds very quickly, to meet immediate needs of that sort. This would certainly include arrangements to tide families over in the kind circumstances that the hon. Gentleman has in mind.
Sir Albert Costain: Has the Minister made any calculation as to the loss of income that will be incurred by village post offices affected by these changes? Can he say whether any are likely to close as a result, with the loss of essential services?
Mr. Jenkin: My hon. Friend will recollect that we estimate that the loss of income over the period of four or five years is likely to be about 6 per cent., which would be perhaps about £25 million at today's prices. The estimate that we have made and that the Post Office has accepted is that the additional business from other users by 1987–88 would be about 8 per cent., or between £30 million and £35 million. So, on balance, we would expect the Post Office and sub-post office network marginally to gain front our proposals.
Mr. James A. Dunn: Is the Minister aware that his statement will cause concern among low-income groups, particularly those who are not in receipt of supplementary benefit and may have fewer than four children, such as widows, one-parent families and other similar groups? On what criteria is, monthly payment to be made in those circumstances, if the classification can be sustained that they are low-income groups?
Mr. Jenkin: It must be remembered that one of the categories entitled to continued weekly payment is that of families on family income supplement. When I tell the hon. Gentleman that that would include a one-child family with an income of £67 per week, a two-child family with an income of £74 a week, and a three-child family with an income of £81 per week, I think that he will recognise that that moves quite well up the income scale before people will be obliged to transfer to four-weekly payment.
Mr. J. W. Rooker: Can the right hon. Gentleman clear up one point arising from an answer that he gave earlier? Will he confirm that during the year when the changeover takes place, when 80 per cent. of mothers are deprived of child benefit for four weeks, the Government will spend £50 million less on child benefit than they would otherwise have spent? Will
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he further confirm that that £50 million will simply be lost out of public expenditure on child benefit that year and will not be transferred to the next year? If it is transferred to the next year will it be in the form of an increase in child benefit?
Mr. Jenkin: The hon. Gentleman will recognise that when one postpones the date of payment one moves forward the Government's obligation to pay, and some of that will move into the next financial year. But over the years of a family's entitlement to child benefit for a particular child, the amount of money paid will be exactly the same.

Liverpool (Demonstration)
Mr. Speaker: Does the hon. Member for Liverpool, Scotland Exchange (Mr. Parry) wish to pursue his point of order, which I must warn him in advance will be very thin?
Mr. Robert Parry: Yes, Mr. Speaker. My point of order relates to the statement that appeared in the Liverpool press during the weekend, when the Secretary of State for Education and Science was stated to have accused my right hon. Friend the Leader of the Opposition of whipping up a mob in Liverpool at the demonstration by the unemployed on 29 November. That statement was recorded in the Liverpool Echo as:
"Foot whips up the mob"
We on Merseyside, and particularly the unemployed, are opposed to that statement—
Mr. Speaker: Order. I am sure that the hon. Gentleman is opposed to that statement, but I want a point of order on which I can rule. Political arguments between the two sides take place in the country as well as in the House, but if there is a point of order on which I can rule, I am willing to try.
Mr. Parry: I believe that the speech was made in my constituency, at the Merseyside Conservative ladies' luncheon club, which does not seem to be a deprived organisation. The right hon. and learned Gentleman did not have the courtesy to advise me, although he was speaking in my constituency. We on Merseyside are sick and tired of laughter and jokes from Conservative Members when we are talking about unemployment on Merseyside. Many of the unemployed on Merseyside feel that the real mobsters are hon. Members on the Government side of the House.
The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): Further to that point of order, Mr. Speaker. My right hon. and learned Friend the Secretary of State for Education and Science was here earlier, but unfortunately he could not remain. The hon. Gentleman is quite right. It is a normal courtesy for Ministers to inform hon. Members if they are speaking in hon. Members' constituencies. Those courtesies have a point, and should be observed.
My right hon. and learned Friend intended to observe that courtesy, but I am told—I do not know whether this makes things better or worse—that he wrote to the wrong hon. Member. He tells me that he wrote to the hon.

795
Member for Liverpool, Edge Hill (Mr. Alton). There it is. I apologise to the hon. Member for Liverpool, Scotland Exchange (Mr. Parry).

Questions to Ministers
Mr. Jim Marshall: On a point of order, Mr. Speaker. I have given you notice of the point of order that I wish to raise. I appreciate the difficulties that you face in this area. You will recall that on yesterday's Order Paper I had tabled Question No. 9 to the Secretary of State for Energy. My question was linked with Question No. 24, in the name of my hon. and learned Friend the Member for Leicester, West (Mr. Janner). I certainly had no objection to my question being linked with that of my hon. and learned Friend. However, on today's Order Paper, my hon. Friend the Member for Harlow (Mr. Newens) had tabled Question No. 12, which was reached. That question is almost identical to my own question, No. 24. My question was not linked with that of my hon. Friend the Member for Harlow. While I appreciate the difficulties that you face, Mr. Speaker, I would be obliged if you could ensure that there is fairness between the treatment that different Government Departments give hon. Members. Perhaps you will look into this matter and ensure continuity and uniformity of practice in the linking of questions.
Mr. Speaker: The hon. Gentleman and the House will know that I do not have responsibility for the grouping of questions. I shall, of course, look into this matter, but a variety of attitudes are adopted because different Departments take different views.
Mr. David Winnick: On a point of order, Mr. Speaker. Perhaps I can raise with you a matter on which you ruled previously today. It relates to points of order arising from Question Time. As I understand the position, it is not your wish — and it is perfectly understandable—that points of order should arise during Question Time itself, because that would obviously shorten the time available for questions. However, perhaps you will give further cansideration to your wish that points of order that arise from Question Time should be taken only at the end of statements, private notice questions, and so on.
Perhaps I may give one illustration. Today there was a wish to raise points of order immediately after Prime Minister's Question Time, arising from the lack of a statement on Northern Ireland. Had those points of order been taken then, at least the Prime Minister would have been present. Is it your general wish that this should happen, Mr. Speaker? Will you give the matter further consideration? I believe that hon. Members should have the opportunity of raising points of order arising from Question Time.
Mr. Speaker: The hon. Gentleman has drawn my attention to an important point. I see a difference between what I call general points of order, such as the two about which I was given notice today, and those arising directly out of Question Time. I shall, of course, give further consideration to the matter and make a brief statement on it tomorrow.

Canada (Constitution)
Mr. Michael English Mr. Michael English (Nottingham, West) rose—
Mr. Speaker: The hon. Member for Nottingham, West (Mr. English) felt that we should take points of order earlier, and at his request I did so. I would, therefore, be surprised if he still had the urge to raise a point of order.
Mr. English Mr. English indicated dissent.
Mr. Speaker: Well, the Christmas season is near.
Mr. English: I am grateful to you, Mr. Speaker, I only wanted to ask whether you would supplement the splendid answer given by the Prime Minister earlier in reply to a question about Canada. I am sorry that in accordance with your ruling she has not seen fit to stay to hear my slightly unusual remark. As you will recollect, Mr. Speaker, she said that if, in accordance with precedent, the Canadian Parliament—this is where the matter is a point of order, as it relates to Parliament, and has nothing to do with Government—made a request to this Parliament, the matter would be dealt with as expeditiously as possible. I am sure that all hon. Members would agree with that. The problem is that the precedents are not available to us in the Library. They are far better set out in Canadian words than in British words. In fact, they were set out by M. Guy Favreau, the Minister of Justice of the Canadian Liberal Government of 1965, after consulting all 10 Attorneys-General of every province of Canada. They were set out in a White Paper that was produced on behalf of the Canadian Liberal Government at the time. Perhaps you will arrange for as many copies of that as possible to be available to us in the Library.
Mr. Speaker: I do not know about the latter, but I shall look into it. It would be unwise of me to add anything to the statement made by the Prime Minister. Obviously I am watching this matter as closely as anyone else, because it could well come before me at a later stage for a ruling.

Northern Ireland (Dublin Talks)
Rev. Ian Paisley: 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 Dublin summit and its effect on Northern Ireland's position as an integral part of the United Kingdom."
Yesterday, the Prime Minister, together with three senior Cabinet colleagues, went to Dublin for an important meeting. After that meeting, it was announced that it was "historic, important and constructive". When my hon. Friend the Member for Belfast, East (Mr. Robinson) asked the Northern Ireland Office today for a copy of the communiqué which was issued, he was told that it was not available to Members of the House of Commons, and was referred to the Irish Times.
The Irish Times report certainly does not help my conception of this conference, because it states:
"All Ireland plan may follow talks at Dublin Summit".
That does not help the situation in Northern Ireland. There is a sense of outrage and betrayal in Northern Ireland with regard to this matter. Surely this House should have been given the opportunity today of hearing what happened at that conference, because there is a conflict between what

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the Prime Minister said at her press conference and what the Premier of the Irish Republic said at his. The communiqué refers to
"a wide range of joint studies"
which will be launched, and which will include
"new institutional structures, citizenship rights, security matters, economic co-operation and measures to encourage mutual understanding".
On numerous occasions, the right hon. Lady and her colleagues have assured the people of Northern Ireland, through their elected representatives in the House, that new institutions for Northern Ireland are a matter solely for the Government and Parliament of the United Kingdom and the people of Northern Ireland. But it is now clear from this communiqué that the Republic will have a direct and increasing involvement in these matters. Surely the House should have an opportunity to discuss the issue.
The House should jog its memory and remember that if an attempt is made to coerce the majority of the people of Northern Ireland — who again and again have expressed their democratic wishes at elections set up by the House—it will again have to learn that it cannot do so. This matter should be fully ventilated in the House.
The only forum that we in Northern Ireland have is this House, even though the people of the Province are under-represented in it. I feel that the matter should come before the House. The Government have fallen down badly by making statements at press conferences while at the same time not giving the elected representatives of the people the opportunity to discuss this matter.
Mr. Speaker: The hon. Gentleman gave me notice before noon that he would seek leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the Dublin summit and its effect on Northern Ireland's position as an integral part of the United Kingdom."
The House knows, and I repeat it for the record, that I do not decide whether this matter shall be debated. All that I can decide is whether there shall be a three-hour emergency debate either tonight or tomorrow night. That is the limit of the powers that the House has given to me in this regard. The House has also instructed me to give no reasons for my decision when I make my ruling.
I have given careful consideration to what the hon. Gentleman has said, 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.

Northern Ireland (Dublin Talks)
  BILL PRESENTED
    ATOMIC ENERGY (MISCELLANEOUS PROVISIONS)
    Mr. Secretary Howell, supported by Secretary Sir Keith Joseph, Mr. Secretary Edwards, Mr. John Biffen, Mr. Hamish Gray, Mr. Norman Lamont and Mr. John Moore, presented a Bill to extend the power of the United Kingdom Atomic Energy Authority to dispose of shares held by them in any company and the power of the Secretary of State to dispose of shares held by him in companies engaged in activities in the field of atomic energy or radioactive substances; to extend the power of the Secretary of State with respect to the application of sums received by the Authority; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 12].

    STATUTORY INSTRUMENTS, &c.
    Mr. Speaker: By leave of the House, I shall put together the Questions on the five motions relating to Statutory Instruments.
    Ordered,
    That the draft Hill Livestock (Compensatory Allowances) (Amendment) Regulations 1980 be referred to a Standing Committee on Statutory Instruments, &c.
    That the Sheep Variable Premium (Protection of Payments) (No. 2) Order 1980 (S.I., 1980, No. 1811) be referred to a Standing Committee on Statutory Instruments, &c.
    That the White Fish Authority (Research and Development Grants) Order 1980 be referred to a Standing Committee on Statutory Instruments, &c.
    That the Customs Duties (ECSC) (Quota and Other Reliefs) (Amendment No. 2) Order 1980 (S.I., 1980, No.1867) be referred to a Standing. Committee on Statutory Instruments, &c.
    That the draft Building Societies (Special Advances) Order 1980 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. St. John-Stevas]

St. Lucia (Independence Gift)
The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): I beg to move,
That an humble Address be presented to Her Majesty, praying that Her Majesty will give directions that there be presented on behalf of this House a gift of a clock and gavel set to the Parliament of St. Lucia, and assuring Her Majesty that this House will make good the expenses attending the same.
It is one of the best of both our parliamentary and our Commonwealth traditions that this House offers a present suitable for use in a legislative assembly to the Parliaments of the Commonwealth countries to mark their independence. I am happy to be moving two motions today to give formal authorisation for such gifts. The first motion relates to the gift of a clock and gavel set for the Parliament of St. Lucia. this present was agreed after consultation with the then Speaker of the House of Assembly and is now ready for presentation. It will be on display to hon. Members in the Upper Waiting Hall from Monday to Wednesday next week.
If the House agrees to the motion, and to the following motion relating to a gift to Dominica, a further motion will be moved for leave of absence to be given to a small delegation from the House for the presentation of these two gifts.
I commend the motion as an expression of the friendship and good will of this House to the Parliament

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of St. Lucia. I am sure that I speak for the whole House in expressing our warmest good wishes for the future of the Parliament and people of that beautiful island, which I had the good fortune to visit some time ago.
Mr. John Silkin: On behalf of this side of the House, I am happy to associate the Opposition with this motion. It is a very pleasant and agreeable tradition that such gifts should be made, and it is a symbol of the growing friendship of an independent nation with what was the mother country.
I think that hon. Members on both sides of the House would wish to express our sympathy with the island for the damage that was suffered during the recent hurricane. It was a sign of the friendship and kinship between the two countries that we were able to offer some assistance during that disturbance.
Question put and agreed to.

Dominica (Independence Gift)
The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): I beg to move,
That an humble Address be presented to Her Majesty, praying that Her Majesty will give directions that there be presented on behalf of this House a gift of a Speaker's Chair to the House of Assembly of Dominica, and assuring Her Majesty that this House will make good the expenses attending the same.
Perhaps I may preface my remarks by offering my sincere congratulations and good wishes to the right hon. Member for Deptford (Mr. Silkin) on his becoming Shadow Leader of the House. He is familiar with the procedures of the House as a most distinguished Opposition Chief Whip and, even rarer, as a reforming Chief Whip. That is a rara avis indeed. It is virtually—a contradiction in terms—as rare—we were told by the
800
Leader of the Opposition—as a Tory intellectual. I look forward to co-operating with the right hon. Gentleman in the interests of the House.
I am equally happy to move this motion to approve a gift of a Speaker's Chair from this House to the House of Assembly of Dominica. I again understand that this accords with the wishes of the Speaker of the Assembly. It is a dignified and traditional feature of a legislative chamber.
The Chair will be on display in the Upper Waiting Hall from Monday to Wednesday of next week.
I am sure that the House will join me in supporting the motion, which conveys our warm wishes for the happiness and prosperity of this equally lovely island and for the successful future of the House of Assembly of Dominica.
Mr. John Silkin: I thank the Leader of the House for his good wishes and for his tribute to me. I hope that both of us will recover from it in due course.
I am happy to associate the Opposition with this motion, too. In the case of Dominica, here again we are very happy to be fully associated with what is an excellent traditional symbol.
Question put and agreed to.
Resolved,
That an humble Address be presented to Her Majesty, praying that Her Majesty will give directions that there be presented on behalf of this House a gift of a clock and gavel set to the Parliament of St. Lucia, and assuring Her Majesty that this House will make good the expenses attending the same.
Address to be presented by Privy Councillors or Members of Her Majesty's Household.
Resolved,
That an humble Address be presented to Her Majesty, praying that Her Majesty will give directions that there be presented on behalf of this House a gift of a Speaker's Chair to the House of Assembly of Dominica, and assuring Her Majesty that this House will make good the expenses attending the same.
Address to be presented by Privy Councillors or Members of Her Majesty's Household.

Orders of the Day

  Local Government (Miscellaneous Provisions) (Scotland) Bill
  Order for Second Reading read.
  4.25 pm
  The Secretary of State for Scotland (Mr. George Younger): I beg to move, That the Bill be now read a Second time.
  Since the present structure of local government in Scotland was set up by the Local Government (Scotland) Act 1973, the House has considered two further Local Government (Scotland) Bills, as well as a number of other Bills affecting local authorities in one way or another. It is clear enough from the title of the Bill that its basic purpose is to make adjustments to the present system, not to disturb its structure, which is, in our view, basically sound. It was certainly in accordance with this view that shortly after we took office last year we set up a committee, the Stodart committee, to look at the working relationships between local authorities and to consider whether any changes were necessary in the distribution of functions between the tiers. The committee has now completed its task and, as I have announced, its report is to be presented to Parliament by, I hope, the end of January next year.
  The provisions in the present Bill have no obvious single theme but, looked at overall, they disclose a pattern which is illustrative of our wish to cultivate a strong and healthy local democracy which at the same time recognises its national responsibilities and acts accordingly.
  This means two things. If local government is to be genuinely democratic, authorities must be free to carry out the local functions which they have been given by Parliament without unnecessary interference from the Government. But the other side of the coin is that authorities must keep in mind their responsibility not just to their own electors but to the country as a whole and must ensure that their decisions should reflect national as well as local interests. It must be the responsibility of the Government to see that some local interests are riot pursued regardless of other local interests and of the national welfare.
  The Bill is, therefore, intended not only to achieve a lessening of the Government's controls over local authorities when the national interest is not concerned, and where there is a legitimate national interest in the conduct a local government—namely, in expenditure matters—to extend my powers of intervention. I now turn, therefore, to the provisions of part II in relation to rate support grants. Before offering detailed comment on the clauses in this part, I should like to give the House a brief explanation of the background and the reasons for their introduction.
  At least until Opposition Members left office last year, it was common ground that the Government had a legitimate and, indeed, vital interest in the scale of local authority current expenditure. The reason is self-evident. Expenditure in this category forms a substantial part of total public expenditure—in Scotland, incidentally, it is 40 per cent. of expenditure within the Secretary of State's responsibilities—and it would not be possible to pursue
  802
  sensible fiscal policies if this element were omitted from consideration and influence by the Government of the day. For an example of this, I turn no further than to the right hon. Member for Glasgow, Craigton (Mr. Milian), who is on public record many times during his period of office urging authorities to constrain their expenditure in the national economic interest. Perhaps his most notable contribution was during the debate on the Rate Support Grant (Scotland) Order 1976, when he drew attention to the need for any increases in individual programmes to be offset by reductions in others, to the need to control staff numbers, to the very high rate of growth shown by local authority expenditure relative both to gross domestic product and to total public expenditure, and to earlier statements by his Administration that growth in local authority expenditure should not continue.
  The House will also be aware that majority opinion among local authorities has for many years recognised the principle that they must have regard to the national economic interest, and generally authorities have in the past kept their total expenditure plans reasonably in line with the fiscal policy followed by the Government of the day.
  The right hon. Member for Craigton will remember that he has good cause to be grateful to many Conservative authorities as well as Labour ones who supported him over the cuts that he was forced to make after the IMF walked in to bail out the last Government. That remains true of 1980–81 in that authorities responsible for the greater part of expenditure are now showing a moderate and sensible approach to expenditure levels.
  Some authorities have conspicuously failed to do so, however, and have made it clear that they will seek continual increases in expenditure levels notwithstanding the Government's urgent advice that moderation is essential, in sharp contrast to the constructive and sensible approach of their other colleagues of all parties in local government. I must tell the House and the authorities concerned that the Government simply cannot condone irresponsibility of this kind. We have a responsibility to the entire community to ensure that public expenditure as a whole is managed with proper regard for economic realities. If we fail in this, we shall impose harsh economic and social penalties on the community at large, as the Labour Government succeeded in doing by allowing public expenditure to soar out of control throughout their last period in office — a time when restraint: and moderation were clearly called for.
  When I reviewed the need for means of taking action against the irresponsible minority, it was, of course, tempting to undertake a major revision of the present grant system. But I am anxious to maintain a constructive partnership with local authorities, and during extensive consultations with the Convention of Scottish Local Authorities I was informed that the present system—which seeks to compensate for variations in local needs and resources — is working reasonably well and is broadly acceptable to local authority opinion. I weighed this advice with great care. Having done so, I have concluded that the best course is to graft on to the existing system provision for discouraging high levels of expenditure by selective grant reductions.
  I intend, therefore, that at the outset of each financial year each authority will be offered, through the traditional rate support grant settlement, a level of support closely geared to its local circumstances, and it will receive that

  803
  support in full measure if it avoids planning for excessive and unreasonable expenditure levels. But grant reductions will be made, subject to approval by the House of Commons, if, when striking its rate, an authority proposes excessive and unreasonable levels out of line with the expenditure assumptions made by the Government in making the grant settlement. This power extends an existing provision of considerable antiquity under which the Secretary of State may reduce grant after expenditure has been incurred. That power, although potentially useful, is not fully effective for my present purposes because of the time lag between the expenditure and the grant reduction.
  These proposals do not imply unwarranted interference with local authority autonomy or discussion. Hon. Members will note that authorities will remain free, as at present, to determine their priorities with a fair and substantial measure of support from the Government. For the future, however, assuming enactment of these provisions, the Government reserve the right to modify the level of support which they offer to any individual authority which plans for an excessive and unreasonable expenditure level. We cannot afford to subsidise economic irresponsibility.
  Mr. Robin F. Cook: The Secretary of State referred to the powers as being of "considerable antiquity". I think that he was referring to the powers of the 1966 Act and the legislation that preceded it. Those powers have never been invoked because never has an appropriate case arisen in which the Secretary of State — the right hon. Gentleman or his predecessors — felt that a local authority had so exceeded the expenditure as to afford a proper cause for the use of those powers. Since such a case has not arisen in 15 years, why is it now necessary for him to seek far more sweeping powers which will enable him to meddle at a much earlier stage in a local authority's financial year?
  Mr. Younger: I am not sure whether that is good news. I do not know whether the hon. Gentleman speaks for the Lothian region. If he is saying that he hopes, as I do, that such powers not only have not been used but will never need to be used, no one will be more glad to hear that than I. They have not been used precisely because up to now no local authority has been unwise enough to incur the penalty which previous Governments put on the statute book. In case the hon. Gentleman is getting too excited, may I say that these powers have been repeatedly enacted and re-enacted by successive Labour Administrations, so that there is nothing particularly partisan about them.
  The hon. Gentleman will also no doubt note that there will be no need for the powers to be exercised if all authorities show reasonable sense and moderation. If confrontation occurs, it will be by the deliberate choice of the authorities concerned.
  Implicit in what I have said is that none of the penalty will apply to any authority other than one that has incurred unreasonable or excessive expenditure. Authorities that have not incurred such expenditure will suffer no penalty. It is a truly selective penalty which is extremely fair, and it is a great safeguard for everyone.
  Mr. Gavin Strang: The right hon. Gentleman keeps referring to "reasonable expenditure". It
  804
  is significant that it was he who first referred to the Lothian region. Will he give us an assurance that he will not regard, for example, the subsidisation of bus fares, which many people, irrespective of their political view, consider to have great merit, as being unreasonable? Surely he will not intervene in local government decisions in that way.
  Mr. Younger: I am glad that the hon. Gentleman made that intervention, because it enables me to clarify a point that he may have misunderstood. I have no intention, nor am I taking any power, to look into the particular expenditure of any particular authority on any given revenue item such as bus fares. I am seeking only to take a look at the general planned expenditure of a local authority, and if in aggregate it appears to be unreasonable and excessive I shall have the power to take the action I am seeking in the Bill. It is not a question of my interfering in internal expenditure matters. They will remain matters for local authorities to determine within a reasonable overall level of expenditure.
  Mr. Donald Dewar: The Secretary of State tells us that his proposals will allow intervention at the estimate rather than the outturn stage. He has also agreed that under the powers of the 1966 Act there has never been an intervention by the Secretary of State. Looking back over the past few years, can he say whether there has been a year when, at estimate stage, it would have been reasonable for him to use the new powers?
  Mr. Younger: I have not studied that matter, but I give the hon. Gentleman the same answer as I gave just now. This is a new phenomenon, because under successive Administrations, Labour as well as Conservative, it has been generally agreed that local authorities work sensibly within prevailing national economic policy. This has not hitherto been a partisan matter, because Conservative-controlled local authorities were particularly helpful to the right hon. Member for Craigton when he was in difficulty on the matter. I think that he was good enough to acknowledge that on one or two occasions.
  I hope that this issue will not become one of partisanship, because this is a matter of principle as to whether the local authority set-up works within the bounds of national economic policy. Fortunately, the vast majority of local authorities do, and the vast majority today — authorities of all political persuasions — are working within general national economic priorities. That is how it should be. That is how I hope it will remain. That is why I hope that not only the old powers but the new powers will be used, if ever, very seldom.
  Section 5 of the Local Government (Scotland) Act 1966, which is mentioned in clause 13, empowers the Secretary of State, subject to the approval of the House, to reduce grant to an authority if he is satisfied that the authority has incurred an excessive and unreasonable level of expenditure. Clause 13 extends that power by enabling the Secretary of State, subject to the same conditions, to reduce grant if he is satisfied that an authority, when striking its rate, has planned for an excessive and unreasonable level of expenditure. It also introduces certain additional criteria that will enable the Secretary of State to take into account all relevant considerations when considering whether he is satisfied that a particular level of expenditure is excessive and unreasonable.

  805
  Clause 14 amends the 1966 Act and makes provision for the Secretary of State to substitute a lower rate poundage for actual rate poundage in determining the entitlement to grant under the resources element of an authority, which plans for an excessive and unreasonabe level of expenditure. That will enable the Secretary of State to prevent such an authority from profiting by increased grant under the resources element from a high rate level resulting from unduly high levels of planned expenditure. It offers an alternative or supplementary procedure to that for which provision is made by clause 13. C1ause 15 makes provision for those powers to be effective from the financial year 1981–82.
  Clause 16 makes provision for use by the Secretary of State of estimates of expenditure for purposes of the earlier clauses if an authority fails to provide the required information timeously. It is essentially a contingency provision. Clearly, it would be preferable in all cases to operate on information provided by the authority, but on the other hand it would be foolhardy to create a position in which these important policies could be frustrated by deliberate withholding of information.
  It may also be for the convenience of the House if at this stage I mention a related provision in schedule 3. Paragraph 8 proposes a further amendment to section 5 of the 1966 Act, the general effect of which is to provide the secretary of State with wide discretion to restore to the original recipient all or part of a reduction in grant made under the provisions of clause 13 if its subsequent conduct justifies that, or to distribute up to the amount of the reduction to other authorities if restitution is not made.
  I hope that my general comments on this part of the Bill will be noted not only by hon. Members but by those local authorities that are disposed to ignore current economic realities in framing their expenditure plans. I hope that they will note two points of profound importance. First, there will be no need for me to use the powers, and I certainly have no wish to do so, if all authorities follow sensible and moderate expenditure policies. Secondly, I shall not hesitate to use the powers forcefully and effectively, and to go on doing so in successive years, if they decline to bring their expenditure broadly into line with Government policy. The choice is very much theirs.
  I turn to the question of capital controls, which is dealt with in clause 23. It is no less essential in present economic circumstances to maintain effective control of capital expenditure. Local authorities in Scotland have been generally co-operative in their participation in the financial planning system underlying its exercise of the power to control their capital expenses which section 94 of the Act of 1973 confers upon me, as they were with my predecessor. But the pattern of spending capital is clanging. A tendency to underspend, which was prevalent in many programmes until May 1979, has been followed by a tendency to overspend the diminished resources available. That resulted in minor excesses over cash limits last year. Local authorities have not found it easy to adjust their spending programmes to keep within a reduced cash limit, and for that reason I have had to review my powers under section 94.
  The proposals in clause 23 are intended to improve our controls in two main ways. First, they will enable me to withdraw or vary, during the course of a year, any consent to incur capital expenditure. The power will be available only when the consent in question is not fully taken up. I grant that the power could be used to introduce a
  806
  moratorium on capital expenditure projects during a year, but it is most likely to be used, if at all, when spending by some local authorities proves difficult to rein in and is likely to endanger cash limits. It might then be necessary to delay starts or slow down progress on others.
  Secondly, clause 23 will allow me to extend by order the scope of section 94, either by amending the definition of capital expenses or by bringing within its scope other forms of expenditure akin to capital expenditure, such as certain forms of leasing, as well as to extend the definition of capital expenditure, if necessary, to cover all forms of capital financed from revenue. The present practice of Scottish local authorities is such that such extensions are not required at present, but I must he able to exercise control over expenditure that is included within the relevant cash limits. I stress that I ant seeking a power to take certain action. Before exercising it, I intend to discuss with the convention the need for changes.
  Mr. Jim Craigen: Do I understand that the Minister is anxious to encourage the practice of leasing?
  Mr. Younger: I did not say that. I was simply trying to adjust the measures that are available to any Secretary of State in case there should be a growth of different practices such as leasing. Not only myself but any subsequent Secretary of State would find that necessary if new practices were to come into the way that local government finances its capital expenditure.
  I turn to some of the other provisions of the Bill, beginning with the valuation and rating clauses contained in part I. Part I contains a variety of amendments to the Scottish valuation and rating code. Manifestly, they do not amount to the thoroughgoing reform of the rating system which I know some hon. Members would like to see and which remains one of our long-term objectives. The Bill is concerned not with fundamental changes in the system of local government finance but with improvements in the rating system for the time being. The powers conferred by clauses 1 and 2 might be required as a preliminary to more extensive reforms.
  There is, of course, a strong case for regular revaluations of property to ensure a fair distribution of the rate burden, and on only one occasion has the regular five-year cycle of revaluations in Scotland been interrupted since it was set up by the Valuation and Rating (Scotland) Act 1956. But clearly there is no point in revaluing property if shortly thereafter rates are no longer payable on it, and it therefore seems sensible to introduce some flexibility into the arrangements for revaluations. Clause 1, therefore, will make it possible, by order, to change the dates for revaluations, while clause 2 will enable only certain classes of lands and heritages to be subject to the normal processes of revaluation. To make possible such a restriction in the scope of revaluations is entirely consistent with our policy towards domestic rates, which assumes that radical reform may apply to only one part of the rating system.
  But reform may be some time off. In the meantime, it makes sense to maintain the rating system in good order, and clauses 3 to 11 will make useful improvements to the system in the interests of ratepayers and local authorities alike. The effect of clause 3 is that from the next revaluation, property in the commercial and miscellaneous classes will be valued by assessors direct to net annual value, which is the rateable value.

  807
  Clause 4 concerns the statutory table of deductions from gross annual value to which I have referred. Once clause 3 has taken effect, the table will be required for domestic property only, which will continue to be` valued first to gross annual value. The clause will enable any part of the table to be amended by order and thus introduce a valuable element of flexibility.
  Clauses 5 and 6 relax minor requirements in the area of rating relief on property occupied by charities and on empty property. Clause 7 is intended to reduce the cost of rating authorities of collecting very small rate instalments, while clause 8 seeks to simplify the method of calculating the abated amount of rates due when a valuation appeal is pending.
  Clause 9 will dispense with part-year increases in domestic valuations. Many hon. Members may have received representations from constituents about that matter. At present, assessors are required to alter a valuation roll not only to include new property but also to reflect changes in existing property. That means that ratepayers who alter their property—for example, by building extensions—are liable to be faced with supplementary rate bills in the course of a year. The effect of the clause will be that such increases in domestic values will take effect only at the beginning of the next financial year. That will benefit domestic ratepayers, who will no longer have to face supplementary' rate demands. It will also lead to a considerable saving of uneconomic work in rating authorities. It will be widely welcomed among many people who have been affected in the past.
  Clause 10 makes a minor change in the constitution of the Scottish Valuation Advisory Council, while clause 11 amends the law on the enforcement of rate debts. At present, a sheriff officer enforcing a summary warrant against a rates debtor may seize not only the debtor's own goods or effects but also those in his lawful possession—for example, a commercial ratepayer may have goods on his premises left by a customer for storage or repair. It is unfair that a third party should be at risk of losing his property through no fault of his own, and the clause will remedy that position.
  Part III of the Bill deals with housing support grants. The Housing (Financial Provisions) (Scotland) Act 1978 requires me when calculating the aggregate amount of housing support grants to estimate the aggregate income and expenditure on the housing revenue accounts of all Scottish local authorities, and the aggregate amount of the grants payable is the sum necessary to bridge the gap between reasonable local income and expenditure aggregates.
  This worked well enough when every local authority had an excess of expenditure over income, because the figures for each authority had the effect of increasing the aggregate amount of grant. But the pattern of housing revenue accounts is now changing and we may expect the emergence of housing revenue accounts which are in surplus mainly because inflation has reduced the real burden of loan charges.
  Obviously, if an authority has an excess of income over expenditure the inclusion of its figures will diminish the aggregate amount of housing support grant, with the result that there will not be enough housing support grant to meet the remaining authorities' reasonable need for support.
  808
  The problems which I have described were recognised by the housing finance working party, through which there is close contact between the convention and my Department.
  Clause 18 will therefore allow me to fix the aggregate amount of housing support grants without regard to the income and expenditure of any authority if the inclusion of the authority's figures would diminish the aggregate amont of grants, and this will enable us to ensure that there will be enough grant to meet the needs of the remaining authorities.
  Mr. Cook: Will the right hon. Gentleman take this opportunity to remove some of the confusion created by the clauses? Will he confirm that it is his intention to use these clauses—indeed, they can be used only in this way—only when local authorities are in real surplus and not when he thinks that they should be in surplus?
  Mr. Younger: There is no intention to use these clauses in the way that the hon. Gentleman suggests. They are intended to deal with a position that would be disadvantageous to the generality of housing authorities. The precise purpose is to avoid an injustice to authorities generally if a considerable number of housing authorities that are in surplus are added to the aggregate. That would clearly be wrong and would work to the disadvantage of housing authorities. That is why we have introduced these provisions. There is no ulterior motive. These provisions are intended generally to improve the situation for housing authorities. I am sure that they will do so.
  It is also possible under the prescribed method of distribution that an authority may not receive grant even where it has an excess of expenditure over income, and clause 18 will allow the exclusion of such authorities from the block calculation.
  The purpose of clause 19 is to remove any doubt as to the competence of prescribing a method of distribution which does not allow a grant to be given to every authority. It is merely consequential on the previous provisions that I was mentioning. It also requires any particular exclusion to be stated in the table of grant entitlements which must be included in the statutory report accompanying every housing support grant order brought before the House.
  Mr. Cook: I must confess that I am in a state of greater confusion following the right hon. Gentleman's response to my earlier intervention. I invite the right hon. Gentleman to tell me what is meant by the words that appear on page 8 in lines 24 to 27, which refer to
  "the aggregate amount of relevant expenditure…which could reasonably be expected to be credited to the…housing revenue account."
  If those words refer to some curious figure that
  "could reasonably be expected to be credited",
  what is that other than what he thinks the authorities should be receiving rather than the real amount that they are receiving?
  Mr. Younger: The hon. Gentleman may be slightly put off by the form of the language. This is the normal means of expressing the amounts of expenditure that would normally be part of the credit side of the equation. It is done in this way in all the calculations of housing support grants.
  It is the standard form of language and it will be familiar to those who have dealt with these issues. There is nothing

  809
  sinister in these provisions. COSLA's working party has participated in the working out of these matters. I believe that this part of the Bill will be widely welcomed. However, if there is an unexpected outcome, we shall be able to go into that as we consider the Bill in its later stages. It is intended to be helpful. I think that the hon. Member for Edinburgh, Central (Mr. Cook) will find that his fear is unfounded. I hope that he will.
  Mr. Cook: So do I.
  Mr. Younger: Part IV deals with a number of diverse matters, one of which I have already described — namely, the adjustments to the scope of my controls over local authority capital expenditure.
  Clause 21 and schedule 1 make minor improvements to the provisions concerning the Commissioner for Local Administration in Scotland. The Commissioner has agreed to these amendments, which are mainly concerned with procedures and accountability.
  Clause 22 provides for the relaxation of various controls which the Government exercise over local authorities and gives further expression to our policy that local authorities should as far as possible be free to carry out their functions without unnecessary interference. The controls themselves are set out in schedule 2 and cover a wide variety of matters, such as the approval of various fees and charges, the power to prescribe various forms of documents used by local authorities, and planning procedures. The planning relaxations relate to central Government control over the form and content of structure and local plans in particular cases, to the requirements for all stopping-up and diversion orders over highways to be made by the Secretary of State and to some minor compulsory purchase procedures. These are all quite important relaxations of control by the central Government on local government, and I hope that they will be welcomed not ony in the House but throughout local government.
  We came into office months ago committed to a reduction in the number of non-departmental public bodies, or quangos as they are somewhat inelegantly known, and clauses 24 to 26 provide for the abolition of a number of such bodies which have outlived their useful purpose.
  Mr. George Foulkes: Is it wise at a time when river pollution in Scotland is rapidly increasing—for example, in the Rivers Girvan, Doon and Ayr—to abolish the River Purification Advisory Committee, which has done sterling work? Will the right hon. Gentleman confirm that he has not allowed it to meet for the past year in spite of the chairman asking him repeatedly to allow the committee to meet? Is that not utter folly?
  Mr. Younger: I appreciate the hon. Gentleman's feelings on that score. There is no shortage of advice on river pollution.
  Mr. Foulkes: The right hon. Gentleman does nothing.
  Mr. Younger: Advice on river pollution is available in plentiful quantities. It is not so easy to obtain the large amounts of finance that are needed to take the necessary action. We are not short on advice.
  Mr. Barry Henderson: Is it not the case that the existence and functions of the river purification boards have not been affected?
  Mr. Younger: My hon. Friend is right. I thank him for pointing that out. I was speaking of the availability of advice from the River Purification Advisory Committee.
  The bodies in question were all recommended for abolition in the Pliatzky report published earlier this year. Indeed the abolition of the five new town licensing planning committees was also recommended by the Clayson committee as far back as 1973. Given the age now reached by all the Scottish new towns, it is clear that ample time has been given to the planning of any special arrangements that might at one time have been necessary for them.
  Clause 27 is designed to introduce a measure of fiexibilty in the operation of byelaws made by a water authority or water development board to prevent waste, undue consumption, misuse or contamination of water. Circumstances may arise where a water authority or board feels that the byelaws are inappropriate to, for example, a new type of fitting introduced since the byelaws were made, and in such cases the clause will allow the byelaw in question to be relaxed. That, again, will be generally welcomed by local authorities and those involved in the water service.
  Lastly, I mention clause 28, which suspends the operation of two provisions in the Education (Scotland) Act 1980 that were brought into force as a result of a technical error. They relate to the provision of written summaries of guidance for school leavers. The clause will bring careers service procedures in Scotland back into alignment with those in England and Wales.
  I make no claim that all the provisions of this varied Bill will be welcomed by everyone in local authorities or by Labour Members. I would rather that some of the Bill's provisions—those regarding control of spending—had not been necessary. I regret very much that some local authorities have not responded in a sufficiently positive manner to the advice that I have repeatedly given them in the past year and a half to bring their spending down to reasonable levels. However, events have shown that the powers that I am seeking are necessary and I make no apology for bringing them in. Above all, they are necessary in order to be fair to the vast majority of local authorities, of all political persuasions—Labour and Conservative alike—that are doing their best in very difficult circumstances to get their expenditure under control. I do not suppose that they like doing it any more than I do, but they are doing it and they are being thoroughly responsible in what they do.
  It has until now been common ground between both sides of the House that local government expenditure has to be reasonable in the national economic interest. The right hon. Member for Craigton preached that frequently when he was Secretary of State. I very much hope that he will confirm today that that remains his position. If he confirms it, he, will not have a leg to stand on if he wishes to oppose the Bill this evening.
  I invite the House to approve the Bill.
  5 pm
  Mr. Bruce Millan: I can confirm right away that we shall be voting against the Bill this evening. After this morning, the doubt must be whether the Secretary of State will be voting for the Bill.
  One would suppose from the bland explanation that we have just had from the Secretary of State of the provisions of the Bill that it was a little tidying-up measure of no real

  811
  consequence. However, it is a major attack on local democracy, as I shall prove when I come to the contentious parts of the Bill.
  First, let me mention one or two of the other clauses. Part I of the Bill is concerned with valuation and rating. The amendments sought to be made are mostly technical and can no doubt be dealt with adequately in Committee. With regard to years of revaluation, I do not like any diversion from the normal quinquennial valuation. I say that not in any party spirit. It has happened under Governments of both parties, but it is undesirable that we should not have at least quinquennial valuations. If we do not, it simply gets the system out of date and is potentially unfair to various classes of ratepayer. I do not like the provisions in clauses 1 and 2 that deal with postponing revaluations.
  Mr.Craigen: Does not my right hon. Friend suspect that there is some political calculation here, because 1983 will be the year before the next general election?
  Mr. Millan: Of course I do. I am not quite as innocent as my hon. Friend supposes. That is why I do not like any measure that gives the Secretary of State power to change the year of revaluation. It is open to political manipulation, whichever Government are in power. Scotland has a better record than England on that matter in recent years. However, we can deal with that in Committee, too.
  Clause 23 is again rather more than a tidying-up operation. As the Secretary of State was at least frank enough to admit in his description of clause 23, it will allow him to place moratoriums on local government capital expenditure. To ask us to believe that it is very unlikely to be used for that when the Government are at present imposing moratoriums in England and Wales on all housing capital expenditure and in Scotland on housing association capital expenditure is too much. If the clause goes through in this form, it will be used by the Secretary of State as justification for interfering even more drastically than he has so far with local authority capital expenditure. I therefore do not approve of it.
  Clause 22 and schedule 2 deal with a mass of tiny reductions in the Secretary of State's control over local authorities. However, those relaxations are trivial compared with the massive increased powers of intervention in the affairs of local authorities that the other clauses will give to the Secretary of State.
  Before turning to those clauses, I wish to deal with the housing support grant under clauses 18 to 20. The amendments are technical in one sense. The Secretary of State explained that. If a local authority drops out of the housing support grant calculations, it is necessary to exclude it from the calculations, otherwise a penalty is imposed on other local authorities. From a technical point of view, what the Secretary of State said is valid.
  Unfortunately, the right hon. Gentleman does not understand his own Bill. He gave the wrong answer to my hon. Friend the Member for Edinburgh, Central (Mr. Cook) when he asked whether a local authority dropped out of housing support grant on the basis of its actual housing revenue account being in surplus or on the basis of the figures that are assumed by the Secretary of State, particularly in relation to assumed rents. The Secretary of State said that it is the housing revenue account. It is not. It is the assumed rent that determines whether a local
  812
  authority will drop out of housing support grant. The authorities that lose grant—and at least one authority will lose grant altogether in 1981–1982—do so not necessarily because their actual housing revenue accounts are in surplus but because the assumptions about rents give them a theoretical surplus in their housing revenue account. That is the reason for the provision.
  The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): The right hon. Gentleman is seeking to suggest that there is a sinister purpose for the clause. He uses the reference by his hon. Friend the Member for Edinburgh, Central (Mr. Cook) to the words
  "could reasonably be expected to be credited"
  to imply that. I am sure he will appreciate, if he considers the matter, that those words have been taken from the Housing Act 1978, which was passed by his Government.
  Mr. Millan: I am sorry to disappoint the Under-Secretary. That is not accurate either. The words quoted are a substitute for the words that appeared in the 1978 Act. In any case, what the hon. Gentleman said is irrelevant to my point. Authorities drop out of grant not on the basis of their actual housing revenue accounts but on the-basis of assumptions about rents.
  Mr. Rifkind: That has always been true.
  Mr. Millan: But the Secretary of State gave the wrong answer. He does not know the Bill and he does not know how the system works. He was asked a specific question and he gave the wrong answer.
  I wish to develop the point. It is far more than a technical amendment. The technical amendment is required, because otherwise there could be unfairness to authorities that are still receiving grant. However, one has to consider the matter in the context of what the Government did about housing support grant for 1980–81 and what they are doing for 1981–82. We do not yet have the order for the latter year, and we shall debate it in due course. However, there was a meeting the other day when the Government's decisions were conveyed to COSLA. I do not have the full details of the figures, as they have not been published, but let us consider what is happening with housing support grant.
  The Government are assuming that in 1981–82 local authorities in Scotland will put their rents up by 40 per cent., and the calculation of housing support grant is being made on that basis—a 40 per cent. rent increase, at a time when the Government are asking workers to accept a 6 per cent. wage increase. That is not only for 1981–82. We are told that it will also apply to 1982–83. We discovered that only because somebody leaked a Treasury document to The Guardian. No statement was made in the House, any more than a statement was made about the original 6 per cent. decision. However, the Government are, for 1981–82, assuming rent increases of 40 per cent. in the calculations of housing support grant. According to the latest figures, that means that whereas the housing support grant for 1980–81 was £228 million, the settlement that was announced recently for 1981–82 is only £139 million — a reduction of £89 million in the Government's support to local authorities on housing. I shall deal later with the question of the freedom of local authorities to decide their rates.
  If we look at the housing support grant per house, the figures are even more striking. In 1980–81 it was £255 per

  813
  house and in 1981–82, on the figures that I have available—they may be altered by a pound or two here and there—it is only £156, a reduction of £99 in one year. One does not have to be a Main economist—to use the Secretary of State's words—to know that if there are two further reductions of £99 per house, theoretically every local authority in Scotland will be in surplus within the next few years and the housing support grant will be nil. That is the road down which the Government are going. They have reduced the grant by £99 per house, and if there are similar reductions in two successive years—the White Paper on public expenditure suggests that that is what the Government have in mind — no local authority will receive the housing support grant. These amendments, half of which are technical amendments, will affect the vast majority of housing authorities in Scotland.
  The Minister finds that amusing, but the local authorities will not find it amusing, and when some Conservative Members discover that the reduction in grant for next year for their authorities is considerably more than £99 per house they will not find it amusing when they have to explain to their constituents how the Government are imposing rent increases on local authority tenants by a reduction of grant alone of more than £2 a week. I repeat that if this process continues Government support to local authority tenants in Scotland will be eliminated within a few years. That will he done at a time when all the tax concessions to owner-occupiers are being maintained and are increasing because of the monstrously high interest rates that owner-occupiers are having to pay. The Government will be making a massive attack on local authority tenants in Scotland in 1981–82. That is the significance of these clauses.
  The Secretary of State has the hypocrisy to say that there is still some freedom for local authorities and that they do not have to increase their rents. He says that they can make their own decisions. But the assumption is that there will be a 40 per cent. rate increase, and the housing support grant is being cut accordingly. Then we have a "Catch 22" situation, because the local authorities are free to fix their rents at any level, but as well as having to impose massive rate increases—which will inevitably happen if the housing support grant settlement is imposed on local authorities, unless they raise their rates by 40 per rent.—they are being told that if they do not increase rents on the basis that the Government recommend there will be compensating reductions in their capital allocations. That is despite the fact that the capital allocations have, up to now, related to the local authorities' needs for capital expenditure. That was the reason why the previous Labour Government introduced the housing plan system. Now, for the first time, we have rents and capital allocations intertwined; and if local authorities do not raise rents as the Secretary of State dictates he will cut their capital expenditure.
  The position is worse than that. If local authorities do not raise their rents and if they increase the rates instead, the Secretary of State will have powers under clauses 13 and 14 to decide that that expenditure is unnecessary and excessive and is leading to unnecessary and excessive increases in rates, and he will then reduce their rate support grant. Authorities that do not obey the recommendations of the Secretary of State on rates are faced with the choice
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  of increasing the rates—which many will do—having their capital allocations reduced and penalties being imposed by the rate support grant being reduced.
  What freedom is that for local authorities? It is putting them in a straitjacket, and it is a major attack on local democracy. The Secretary of State said that the Bill was a little tidying-up operation, but it does not disguise the fact that he is taking powers out of the hands of district councils in Scotland and taking away the responsibilities that should rest with them to determine their housing policies in terms of rents, rates and council house sales. That has all been done against a background of capital allocations. But the capital allocations are already being slashed. I was told on 24 July that the capital allocations for 1981–82 were being reduced from £260 million to £190 million—a reduction of well over 20 per cent. in a single year. Those reductions will continue, and there will not be a decent public housing programme in Scotland. That will affect not only new housing but improvements. It has already affected the SSHA, which is laying off a large percentage of its staff, and it is also affecting the housing associations. This Bill constitutes a major attack on local authority housing in Scotland.
  If the clauses on the housing support grant are shameful, those on the rate support grant are even more so. The Secretary of State says that these are just one or two technical adjustments to provisions that have been incorporated in the legislation for many years. The provisions in the 1966 Act go back even further—I think to 1948. They have been around for a long time, but they have never been used. They are not the same sorts of provision as are now provided in the amendments that are being inserted by the Secretary of State. This is a complete transformation of the position and of the relationship between the Secretary of State and the local authorities.
  The Secretary of State is fond of quoting back to me statements that I made about local authorities keeping their expenditure under control. I have always taken that view. I took it in Government, and I take it in Opposition. I do not believe that local authority expenditure should be allowed to get completely out of control. But it is not out of control, and the Secretary of State did not inherit a situation in which many irresponsible local authorities in Scotland were spending excessively.
  The actual expenditure at the end of 1979–80—this was mostly under the present Government—despite what was originally provided in the Budget, was less than had been provided for in the Labour Government' s rate support grant for that year. Indeed, if we look back at what happened under the Labour Government—and, for that matter, under other Governments as well — it can be shown that where authorities have been asked to restrain their expenditure, their response has been extremely good. It is not true that local authority expenditure is out of control.
  It was the Secretary of State who mentioned the Lothian region. Therefore, I want to deal with that region. The picture that is usually given by the Secretary of State is that there were huge rate increases in. the Lothian region in 1980–81 because of an irresponsible Labour authority and that everybody else behaved admirably and impeccably. He has not complained about all the other local authorities in Scotland. Indeed, he goes out of his way to say—[Interruption.] The Secretary of State mentions Strathclyde. Let us look at the figure given by the Secretary of State, in an answer on 1 April 1980, about the

  815
  percentage increase in rates in 1980–81. The figure given for Lothian region—an "irresponsible" authority—was 41·5 per cent. The figure given for Strathclyde was 41·5 per cent.—exactly the same increase. That is a very responsible authority. I note that the Secretary of State is nodding.
  When we look at the regional council increases generally, and not just in relation to Lothian and Strathclyde, we see a pattern which does not support the view that there are some irresponsible Labour authorities in Scotland imposing—
  Mr. John MacKay: Will the right hon. Gentleman give way?
  Mr. Milian: I shall give way in a minute. The hon. Gentleman is from Argyll. He does not have any colleges there and he does not have the Lothian region in Argyll, as far as I am aware. I want to make this general point and then I shall give way. If we look at the situation particularly in the regions, we find that the lowest increase for 1980–81 in terms of percentages was in a Labour-controlled region, the Central region. There are plenty of authorities controlled by friends of the hon. Member for Argyll (Mr. MacKay) which have massive rate increases in 1980–81, including, for example, the Borders region at 37 per cent.
  Mr. MacKay: That is very interesting, but will the right hon. Gentleman read out the rate poundage? It will be seen that Lothian region's rate poundage is significantly higher than that of Strathclyde. Therefore, its percentage is, in real terms, much higher.
  Mr. Millan: It is certainly true that the rate poundage in Lothian is a good deal higher than that in Strathclyde. The test that should be more appropriately applied is that of the amount of rate burden per head of population. One of the worst offenders is the Conservative-controlled Grampian region. There are all sorts of ways of looking at the figures, but in 1980–81 the increase in Lothian, as I indicated earlier, was no higher than the increase in Strathclyde.
  Mr. Cook: My right hon. Friend will be aware and will no doubt wish to bring to the notice of the hon. Member for Argyll (Mr. MacKay) that the proportion of local authority expenditure met in Lothian by rate support grant is a mere 51 per cent. of the total, compared with a 65 per cent. average for Scotland, and that the total per capita expenditure by Lothian region is a mere 4 per cent. above the Scottish average and actually 4 per cent. less than the hon. Member's own Highland region.
  Mr. Milan: The hon. Member for Argyll is not in the Highland region but is at the minute in part of the Strathclyde region, where the expenditure per capita is, I should imagine, a good deal more than it is in the Lothian region taken as a whole. The point is that the Government have been using the Lothian example to give the kind of general impression in Scotland that local authority expenditure is out of control and that there are large numbers of authorities that are spending the ratepayers' money without any regard at all for the consequences.
  With regard to 1980–81, the rate increases everywhere in Scotland—
  Mr. Younger Mr. Younger rose—
  Mr. Milian: Perhaps the right hon. Gentleman will allow me to finish this section of my speech. The rate increases in Scotland as a whole were massive, as I forecast at the time we debated the rate support grant order for 1981. I want to give the reasons why they were massive everywhere. Then, if the Secretary of State wishes to intervene, he can challenge what I say.
  The rate increases everywhere in Scotland were massive in 1980–81 because the relevant expenditure on which the rate support grant was paid was unrealistically low, as we told the Secretary of State at the time. The rate increases were massive because the cash limit was faked by the Secretary of State on a phoney 13 per cent. inflation figure, and the underlying increase on which the cash limit was calculated was a total increase in expenditure of £307 million. The actual increase in expenditure because of inflation turned out to be £400 million.
  Those were the reasons why everywhere in Scotland the rate increases in 1980–81 were very substantial. What is more, the position in 1981–82 will be just as bad, and in some areas it will be a good deal worse.
  Mr. Younger: The right hon. Gentleman really has a nerve to take me to task for a so-called unrealistic cash limit of 13 per cent. when he bequeathed to me a totally unrealistic one of 5 per cent., which was a laughing stock. In case he has got the wrong end of the stick completely, I point out that it is not the contention that a vast number of local authorities are overspending. The contention is that a very small number of authorities are, if I may put it this way, taking the rest of them to the cleaners. The purpose of the powers is to take action against them and to take no action whatever against the vast majority of local authorities of all political persuasions which are spending reasonably.
  Mr. Milan: We shall see what happens with regard to the use of these powers. The point that I was making—the Secretary of State did not answer it—was that the massive rate increases that we suffered in Scotland in 1980–81 were a direct responsibility of the Government's unrealistic and cheating rate support grant settlement of that year. What is more, the Government are obviously set on the same course of cheating the ratepayers in Scotland in 1981–82, because for next year they are to assume a further 3 per cent. reduction in the relevant expenditure, which is quite unrealistic. There will be a reduction in the rate of the grant from the present 68½ per cent. that has been announced by the Chancellor of the Exchequer, and there are to be cash limits which assume a 6 per cent. wage and salary increase for 1981–82.
  The Secretary of State never makes any forecasts about rate increases. He is frightened to do that because he knows what the figures—[Interruption.] I shall give the Under-Secretary of State the record for the last two years of the Labour Government. My predictions were extremely accurate. If the Secretary of State or the Under-Secretary of State want to contradict them, they can do so.
  The overall rate increase in Scotland for 1978–79 was only 6 per cent., and the domestic consumers paid 8 per cent. less than in the previous year. In the last year for which I was responsible, the overall rate increase for Scotland was 14 per cent. If we had had those figures for 1980–81 or could look forward to them for 1981–82, every ratepayer in Scotland would be very pleased. But the fact is that we shall have further massive rate increases in 1981–82.

  817
  What we have in the Bill is a smokescreen. It is trying to make the local authorities the scapegoat and to pretend that these great increases arise not just because of Lothian or one or two other authorities but because all the local authorities are very irresponsible, whereas the Government are terribly responsible.
  There was an interesting editorial in the Financial Times, of all places, on Thursday 4 December. Admittedly, it was talking about England. Nevertheless, what it said is equally true of Scotland. The editorial began:
  "The maladministration of local authority affairs which has become something of a feature of recent Government performance continues to lurch from bad to worse. Ill-conceived attempts to combine hasty but radical reform with arbitrary economies".
  It points out that if the Government could get their expenditure under control — including, for example, defence expenditure—as well as local authorities do, we should riot face some of the economic problems that now surround us. That is the background to clauses 13 and 14.
  The Secretary of State referred to the powers conferred under section 5 of the 1966 Act. However, those powers go back to 1948. They are interesting because they appear in a different form. The original section said that he rate support grant would be reduced not only if a local authority's expenditure had been excessive or unreasonable but also if the local authority had not maintained a reasonable standard in the discharge of any of its functions. The Government wish to slash local authority expenditure. If that measure were applied now, no local authority would be able to demonstrate that it was maintaining a reasonable standard. All local authorities would have their rate support grant cut.
  The provisions set out in the 1948 and 1966 Acts were couched in balanced terms. More importantly, they have tot been used since 1948. The intention behind them was not that the Government should intervene in the legitimate decisions of local authorities. The provisions were included as a means of protecting local authorities against those authorities that behave in a way that might directly reduce the grants available to other local authorities. Part II of Schedule 1 to the 1966 Act will be amended by clause 14. That provision was concerned not with unreasonable expenditure but with overrating. The manner in which the resources element was distributed meant that if a local authority were to overrate—that is, if it were to budget to spend "X" but to overrate for "X"—plus—it would receive an additional grant. That was unfair to other local authorities. However, it has nothing to do with the Government's present attempt to do the job of local authorities.
  Clause 13 gives absolute power to the Secretary of State. He will determine what is excessive and unreasonable. Under the proposed subsection (1A)(b), the Secretary of State may have regard not only to the expenditure of other local authorities but to "general economic conditions". In case something might slip through the net, another little sub-paragraph has been inserted. It states:
  "to such other criteria as he considers appropriate."
  In other words, the Secretary of State can use any criteria for his decision to cut the rate support grant of a local authority. The provisions could not be stated in more absolute terms. I defy the Secretary of State to defend that paragraph. It gives the Secretary of State complete power to intervene in the affairs of local authorities as he chooses
  818
  and without regard to overall circumstances. He can decide to interfere—against the wishes of elected local members — and he can decide the level of a local authority's expenditure.
  The relationship between a Secretary of State and a local authority must be based on an element of mutual trust. That is true whatever Government are in power. Apart from that, the Secretary of State has massive powers over local authorities. For example, he can reduce the rate support grant percentage. Indeed, he will do that. He has absolute control over the capital expenditure of local authorities. The Secretary of State already has massive powers. He is being given an additional power, which represents a direct attack on local democracy. Indeed, it is also a vindictive attack.
  The Government are attempting to make local government the scapegoat for their policy failures. Their policies on unemployment have failed. Their policies on industry have failed, too, and Scottish industry is breaking down on every side. They have failed to prevent massive rate increases in Scotland. Indeed, as a result of their actions, massive rate increases are inevitable in Scotland in the current year. The Government will allow that to happen again in 1981–82.
  We do not intend to allow the Government to make local authorities the scapegoats for the Govermnent's failures. We intend to ensure that responsibility for those failures is pinned where it belongs. namely, on the shoulders of the Secretary of State. That is why we shall vote against the Bill.
  5.34 pm
  Mr. Michael Ancram: I have listened with fascination to the speech of the the right hon. Member for Glasgow, Craigton (Mr. Millan). He said that the Bill represented a major attack on local democracy, and I waited to hear where he thought the major attack would come from. The right hon. Gentleman seemed to suggest that, as the Government were trying to gain a greater degree of control over local government spending, local government autonomy was somehow being diminished. He seemed to suggest also that the Government should rubber-stamp local government expenditure in order to protect that autonomy. I was fascinated by the right hon. Gentleman's argument because two years ago, when he spoke in favour of the Scotland Act, he de fended the idea that power over the revenue and expenditure of the Scottish Assembly should be held by the Government. At that time he told us that that was an extension of democracy. There is a strange divergence in his argument.
  I was also saddened by the right lion. Gentleman's attitude. He spoke about the Government's vindictive attitude towards local authorities. Never once did he speak about the ratepayers. Year after year ratepayers in my constituency have suffered under the policies adopted by the Lothian region council, which has imposed excessive rate increases. If the Labour Party supports and represents the people, the right hon. Gentleman's attitude and concern for ratepayers should be greater.
  Generally, I welcome the Bill because it shows that the Government at least are concerned about ratepayers. Part I contains relief provisions for valuation and rating, and I welcome them. They serve to underline the unsatisfactory nature of the present system of local government finance. As a lawyer, I practised for a short

  819
  while in valuation matters. I know that a veritable jungle exists when it comes to rating valuation. Most of that jungle has been created by regulations and reliefs—similar to those given in the Bill—that try to provide a greater degree of justice in an inequitable and unjust system. The provisions to which I have referred underline the need for reform. Any system that seeks to raise finance for local government should not be based on property alone. Domestic and industrial rating should reflect more the ability to pay. I know that the Government have gone through the options. None of the options proposed in the past have been without problems. None of them have been perfect, but I sometimes wonder whether they were not better than our present rating system.
  Although I accept that the Government cannot come to a hasty decision, I ask them to continue to search for a better formula to replace the present rating system. In particular, I ask the Government to look again at the possibility of having a local income tax. I understand that the main objection in the past has been that where a ratepayer was being paid by an organisation or firm that was not based in his own rating area there would be difficulties in making the requisite deductions under a PAYE system.
  That argument was significant two or three years ago, but I wonder how significant it is now when one takes into consideration the advance in computerisation. I understand that the Government intend to introduce a system of computerisation into the Inland Revenue. In those circumstances, I should have thought that it would be worth considering again a local income tax. I accept, however, that such a system would need one proviso, namely, that in the way that it operated the person paying it would need to understand what proportion of his tax was being paid for national tax and what proportion for local tax. If we are to have local government, it must, obviously, be accountable. Apart from that, I welcome the provisions in part I.
  I welcome part II of the Bill because I believe that it contains a useful extension of powers to control excessive and unreasonable expenditure. If any questions are raised—as they were by the right hon. Member for Craigton—about whether the powers are needed, I believe, contrary to what the right hon. Gentleman said, that we need look only at that band of happy spenders, that flock of cloud-cuckoos who left their own lands and became the controlling Labour group in Lothian region. If I had any doubts about the extension of the power of the Government to intervene in local government, I can only say that, representing as I do an Edinburgh constituency and being an Edinburgh and Lothian ratepayer, those doubts were quickly removed from my mind.
  I shall not go through the whole list, having done so before, but I want to give a number of examples of what I regard as excessive and unnecessary expenditure. Last year, at a time of restraint, there was an increase in staff of about 1,500, many of whom were on the administrative side and not producing anything directly for the consumer.
  I shall give another example. A strange newspaper was pushed through my door the other day called the Lothian Clarion. It appears that this paper is the propaganda sheet of the ruling Labour group in Lothian region. I am told that, as a ratepayer, I am subsidising this publication to the extent of £25,000 a year to provide good publicity for a
  820
  small clique in the Lothian region. I find that the journalist who produces it is, surprisingly, the highest-paid journalist in Scotland. I understand that he receives £1,000 per issue. I am sure that there are not many other members of the NUJ who are subsidised to that extent.
  Then there are the hare-brained schemes for the future. There is a suggestion that all transport in Edinburgh should not just be subsidised, as the hon. Member for Edinburgh, East (Mr. Strang) said, but should be free and that ratepayers should pay for the transport not only of other people in the city of Edinburgh but for the countless thousands of tourists who come there from America, Europe and Australia. It is proposed that those people should benefit from free transport at the expense of either the Government or the ratepayers.
  Mr. Strang: The Lothian region bus system is an example to the whole of. Britain, in that it does not lose passengers at the rate that other areas are losing them. The system makes it easy for working people to travel quite long distances to work. Above all, it promotes energy conservation by encouraging people to go by bus rather than by private car.
  Mr. Ancram: I agree with most of what the hon. Gentleman says, but to suggest that we should provide that transport free is to destroy the system and all its benefits. Even if that did not happen, the ratepayers would still have to pay.
  My main objection to the Lothian region council is what I see as deliberate overspending to create political confrontation with the Government. I understand from remarks that I have heard that it has almost admitted that that is its intention. The council forgets that at the end of the day it is the ratepayers who are hit.
  There is always the danger that attempts by the Government to control local finance can in themselves result in increasing the burden on the ratepayer, because local government passes the cost straight on to the ratepayer. We saw that happen last year. We must be aware of the problems that can result, not just in hardship to ratepayers, who see the cost of living in the capital city of Scotland continually increasing, but in the danger for businesses. The chamber of commerce in Edinburgh the other day suggested that as a result of last year's rate increase 3,000 jobs had been lost in the city, and this at a time when Labour Members, including the Lothian Labour councillors, are crying out against the Government because of unemployment. That cry rings very hollow after the effects of those rate increases last year.
  It is in that light that I have looked seriously at the suggestions and proposals in part II. I and my constituents recognise a growing urgency as the annual rate settlement comes round again. I recognise that it is impossible for the Government to do what I hoped they would do last year, namely, impose a ceiling on rate increases, but I hope that the measures in the Bill will create a degree of control which in itself will give some protection to ratepayers.
  As I understand it, clause 13, and, in a sense, clause 14, will neutralise the increase in local government spending by reducing the rate support grant by a similar amount. Here I have two worries, on which I hope that the Government will be able to reassure me. First, I hope that the retrospective nature of the decision by the Secretary of State on what is excessive and what is not will not be so retrospective that it will shut the stable door after the rate

  821
  increase horse has bolted. If that happens, it will only further endanger the well-being of the ratepayers in the region. I hope that my right hon. Friend the Under-Secretary of State for Scotland will be able to allay that worry when he winds up the debate.
  My second worry is whether the Secretary of State will be able to give sufficient pre-indication to councils of his view of the level at which expenditure becomes excessive and unreasonable by setting out, at an early stage, the sort of criteria mentioned in the new subsection (1A), inserted by clause, 13(b). Paragraph (b) of the new subsection refers to
  'general economic conditions'
  and paragraph (c) refers to
  'such other criteria as he considers appropriate."
  That will at least give regional and district councils the chance to take such matters into account in planning expenditure for the following year.
  I am confident that even Lothian region council, if faced with the certainty that it would not have any extra spending money as a result of excessive rate increases, would not have the temerity or the gall to hit the ratepayer for wheat would be purely political motives. That would be not only irresponsible but an abdication of the right to govern, and even the Labour majority in the Lothian region electorate would not save it.
  In fairness, I should add that I do not believe that the Government can expect local authorities to read their mind. The, Government must give an indication in advance to give the responsible councils the chance to make adjustments
  Subject to receiving those reassurances, I welcome—as I believe my constituents do—the genuine attempt in the Bill at last to provide some control over the councils that decide to fly in the face of national economic need and at the same time expect the ratepayers to foot the bill for their small political ambitions.
  As the right hon. Member for Craigton pointed out, local autonomy is a precious right, but no right is sacrosanct if it is abused. The Bill at last gives a sanction against such abuses. I hope that it will be a warning to people who, like those in Lothian region, have for too long seen themselves as answerable to nobody. I hope that the House will support the Bill.
  5.50 pm
  Mr. J. Grimond: This is the sort of Bill that makes me weep. In spite of piles of recent legislation about local government, there is still a great need for a few simple reforms. Unlike the hon. Member for Edinburgh, South (Mr. Ancram), I do not think that the Bill will achieve them. I do riot believe that it begins to touch the heart of the matter which faces us in local government.
  I was surprised by the complacency with which the Secretary of State spoke of his relationship with the local authorities. I seem to remember a circular sent round by the Under-Secretary, the hon. Member for Edinburgh, Pentlands (Mr. Rifkind), saying that the authorities' level of staffing was totally unacceptable. I seem to remember the Prime Minister saying that one of the most serious matters that faced productive industry was the burden of the rates. I seem to remember many Government spokesmen saying that one of the difficulties of the Government in remaining on course was exactly the high level of public expenditure, both nationally and locally.
  822
  It is true that the local authorities have got their expenditure under much better control than the central Government have, but I thought that whether it was good enough was a matter that the Government disputed. To my mind, the local authorities are expanding without much logic, largely because of the appalling mass of legislation under which they have to operate. They are following very much the course that the Government have followed over the past seven years.
  The first thing that needs to be done is to define local authority functions. At present, in addition to their traditional functions, which are important enough, they are becoming involved in industry, development, agriculture, fishing, archaeology, archives, art, dancing, port management and playgroups, to mention only a few of those that one reads about every day in the newspapers.
  If the Government believe that local expenditure is in danger of going too high, they should cut out some of those functions. However, if, as they seem to say this afternoon, there is really only one local authority in Scotland of which they complain, it is wrong to introduce a Bill such as this for what appears to be a limited purpose—to deal with one authority. After all, the Government have powers already to deal with capital expenditure and the rate support grant. We have already heard quoted the provision in clause 13 which enables the Secretary of State, in cutting the rate support grant, to take into account
  "any other criteria which he thinks appropriate."
  It should be resisted by Parliament if the whole thing is a trivial matter applying to only one local authority.
  The constant growth in the functions of local authorities is causing great problems over finance and in other ways. Local councillors are neither elected nor equipped to deal with most of the problems. They are part-time, busy people.
  Secondly, there is gross duplication. No fewer than five authorities now deal with agriculture in Scotland.
  Thirdly, there is a conflict of interest between the councillor as representing his constituents and as a member of a local authority that is often doing the very things that are complained of. There are extraordinary secondary results. For example, there is the burden put upon Shetland, owing to the increase of rateable values, in paying its contribution for the northern police.
  If the Government intend to see that local expenditure is under better control all round, and if the Bill is not simply a punitive measure against Lothian council, they must make up their minds to take one of two courses. One is to institute a prefectorial system, depriving the local authorities of many of their present powers and making St. Andrew's House directly responsible. I should regret that, but it is true that much of local authority finance comes from central Government. If that were done, at any rate we should know who was responsible.
  The other course, and the one that I hope the Government will take, is to give the local authorities more discretion. It is no good the Secretary of State saying that the Bill relieves the local authorities of many obligations and that it gives them more freedom. The freedom given is trivial compared with the sanctions that may be brought against them.
  If more freedom is given to local authorities, there must be new methods of raising finance. Here I agree with the hon. Member for Edinburgh, South. The Conservative Party promised to abolish the rates. What has happened to that promise? However bad a local income tax might be,

  823
  if anyone now suggested the rating system all the civil servants would say "It would be totally impossible to run such a system." The right step for the Government is to look at new methods of local government finance.
  If the Government are to allow local authorities discretion to take on wider and wider responsibilities—that may be right, if they are properly equipped and financed, and if they take the responsibility — the Government should look at the functions of other public authorities. For example, if the local authorities are going into development, as they are, what about the Highlands and Islands Development Board? If they are going into agriculture, what about the Crofters Commission? I should regret the break-up of the pool of expertise accumulated in the board and the commission, but it is illogical to have five bodies dealing with agriculture in Shetland. There is much to be said for local authorities taking up new functions, but it had better be done clearly and responsibly and be properly financed. In addition, the responsibilities in question must be taken away from other bodies.
  The Bill falls plumb between the two stools. It partly gives the Secretary of State more power and then says "After all, he will not take any responsibility."I understand that the right hon. Gentleman can reduce the rate support grant if he thinks that the local authorities' estimates are excessive or unreasonable, but he takes no responsibility for the consequences. He takes pride in that. He says "I am not concerned with the results. It is up to you to decide what to do with the money. All that I shall say is that you are spending too much." There are no proper criteria for coming to that conclusion. There is a reference to
  "general economic conditions; and
  (c) to such other criteria as he considers appropriate."
  The answer is that if the Secretary of State is to act responsibly he will have to make inquiries into why and how the projected expenditure that he does not like has come to be thought necessary. There is a vast variation among local authorities. It is absurd to apply on a general rule of thumb to Orkney, Strathclyde, the Borders, Edinburgh and everywhere else. How is the right hon. Gentleman to judge? He will have to have more officials so that he can look into the question and decide whether the expenditures are justified.
  There is an extraordinary provision that the Secretary of State may redistribute the amount that he has forbidden to one authority. Will that mean that authorities that have not asked for more will be given more money, which they must spend, because some others have been penalised? This is an extraordinary method of conducting local authority finance.
  We come next to the curious provision in clause 23 by which the Secretary of State may withdraw his consent or vary the conditions upon which consent has been given for capital projects. Already the grants system is extremely wasteful. It encourages authorities all the time to spend every penny they can. How often have hon. Members been told when something is proposed "The Government will pay 75 per cent"? All local authorities with any sense will now enter into irrevocable contracts as soon as they can be assured that a grant has been approved. Instead of spreading the cost over the year, they will enter into such contracts because they cannot be upset by the Secretary of State.
  824
  In the Shetland Times last week there was an article—I do not know how accurate it is—which said that the SIC is proposing to spend £10 million more than the Government are prepared to allow, because the Government have got the figures wrong. I can well believe that. I should like to know how this matter will be resolved. It will be a most extraordinary situation for the local authorities if approved capital projects can be axed. It will kill any planning, proper budgeting or estimating if authorities cannot know months beforehand whether the matter has been approved or will be torn up. Parliament should not lightly pass over that matter.
  I am as concerned as the Government about the constant increase in staff expenditure by local authorities. However, I am not clear that the effect of the Bill will not end up creating more staff. The last time the Conservative Party attempted to reform local government, the result was an explosion in staff expenditure.
  In The Scotsman of 15 October there were some alarming figures. Many local authorities have greatly increased their staff. Lothian has already been mentioned by the hon. Member for Edinburgh, South. But Strathclyde has increased its staff by 1,464 and Shetland has increased the number of staff by 124. I do not think that the Government can say that the position is quite as satisfactory as the Secretary of State made out.
  The point is that the Government either should take some responsibility off the local authorities and the ratepayers or, as I would recommend, should say to the local authorities "Do what you think best—but you must pay for it."
  The Western Isles authority has a considerable number of staff—about 2,000. But the Countryside Commission is now to take part in the planning of the Western Isles. That sort of lunacy uses more staff and causes more expenditure. Yet the Government do not appear to be doing anything about it.
  The Bill will create an ill feeling in some local authorities, and, after a certain amount of trouble, inflation will continue as before.
  It may be argued that, as there is a Bill of this sort for England, Scotland must have one, too. I implore the Scottish Office not to saddle Scotland with this Bill. If it has sensible proposals of a basic nature for local government reform and finance, let it bring them forward on the lines not that local authorities should be more hampered but that they will be responsible to a greater extent for their own expenditure and decisions. Of course, the Government will have to support them up to a point. But we want to move towards a more sensible method of local finance and of making the local authorities and all their constituents more responsible for the way that they conduct their affairs. How can the Government, without an enormous number of staff, know better than the local authorities what their needs are?
  It is true that under the present rating system some people can get rate rebates, so that they do not mind if the rates go up. It is true that industry may have little say in local government. But these anomalies can be tackled.
  Essentially, if we believe in local government at all, the Bill is moving in the wrong direction. I ask the Government to withdraw it and to bring in a more sensible Bill.
  6.3 pm
  Mr. Ian Lang: Since 1 o'clock this afternoon I have been trying hard to work out how a carefully prepared and well argued speech on the teacher training colleges in Scotland might be recycled to apply to the Local Government (Miscellaneous Provisions) (Scotland) Bill. I fear that I have failed, but perhaps some of the less discerning Labour Members will hardly notice the join.
  I welcome the Bill. However, I welcome some of its proposals with sadness, partly because the philosophical thrust of the Conservative Party has always been away from centralisation—for keeping in local hands as much control as possible—and partly because it is a sad reflection on the nature of local government that its participants should now tend to seek to use their position either to defy the Government or to advance a particular party political point of view. The days of selfless civic service seem to be long dead in some parts of the country. Too often, local authority councillors are seen as the frontline troops of the party political battle that takes place in this House, or even as representing a third House of Parliament.
  The crucial feature of our form of representative democracy is balance. The evolution of checks and balances between Government and Opposition and between the different estate; of government is essential as a safeguard of our liberties. The Bill recognises a shift that has developed there. It may be to some extent a result of the 1975 reform of local government, which has few friends in the House or elsewhere. The Bill seeks to restore the balance not just of the relationship between local government and central Government but between ratepayer and local govern merit and, on a wider note, between the individual and the State. In that sense, it could be argued that this is a progressive Bill.
  The biggest shift of all in local government has been the shift in manpower, which accounts for about 70 per cent. of local authority costs. In 1955 there were only 750,000 local government employees in Britain. Now there are 2 million. Fifty years ago the public sector employed 7 per cent. of our work force. Now it employs more than 30 percent. Governments of both political complexions have recognised that problem.
  Mr. Norman Hogg: Does the hon. Gentleman accept that there has been a massive extension in the amount of legislation that local authorities are required to carry out and that the statutory functions of local authorities have changed markedly since the year that he quoted and that that accounts for the increased manpower? It is not that the local authorities wish to increase their manpower just for the sake of providing employment; it is out of necessity.
  Mr. Lang: I accept that there is something in what the hon. Gentleman says. I shall come to that point later. I do not accept that local authorties increase their manpower just because they want to do so. This problem has been recognised by Governments of both political complexions. The previous Labour Government, which the hon. Gentleman supported, succeeded in cutting numbers by about 12,000, with no appreciable loss in services. That proved that it could be done. Now, with local government pending up by one-third in three years and with numbers up by 15,000, there is undoubtedly a need to do that again.
  826
  That represents an increase of about 6 per cent. in local authority manpower. Certainly, no one can claim that there has been a 6 per cent. improvement in the quality of local government service. The new element that has entered the debate is that local government is now adopting—
  Mr. Cook: The hon. Gentleman referred to a most striking figure, and I should be grateful to know his authority for it. He said that local authority expenditure went up by one-third in three years. If he referred to the Government's White Paper on public expenditure, he would see that during the past three years that figure has actually fallen by £45 million in real terms.
  Mr. Lang: I cannot lay my hands on the exact figures at the moment. However, it is clear that local authority employees have increased by 15,000, and that 70 per cent. of local authority expenditure is on manpower. In this area there has been no comparable improvement in the quality of local government service.
  The new element entering into the debate is that local government is now adopting resistance not just to protect its empires but to make a political statement against the Westminster Government. Not all local authorities are alike, but this trend has become increasingly marked in recent years. It is one for which the Bill makes provision.
  The Dumfries and Galloway regional council, for example, employed 34 fewer people this year than it did in January 1975. That figure would have been 80 fewer but for the 46 staff compulsorily transferred from central Government. It was also struck after including increases in the numbers of both police and firemen as a result of changes in establishment and the length of the working week. In June this year the number of employees in the Dumfries and Galloway regional council was down by 26 compared with June last year. Expenses have been well contained, despite its vast population in a widely scattered area. They are consistently low in the league of cost per head in all Scottish local authorities.
  Why should the Dumfries and Galloway regional council be penalised for the extravagance of other regions such as Lothian and Strathclyde, each of which has recruited about 1,500 new employees in the past year? Those local authorities would argue that that was necessary to fulfil the new tasks imposed upon them by the Government. But it is estimated that the new tasks amount to less than 10 per cent. of the increases. If Dumfries and Galloway can absorb such duties without an increase in staff, surely other regions can absorb such increased duties.
  I do not believe that the 3,227 increase in social service workers employed between December 1977 and December 1979 or the 1,113 extra employed on recreation, leisure and tourism are justified by Government requirements. Yet such increases have taken place in the two-year period, at a time of growing world recession and when there is a need for restraint in expenditure at all levels, private and public. Opposition Members who shed heavy tears at the high unemployment level should ask themselves whether they have considered how many productive, wealth-creating jobs have been lost and how many good, long-established companies have had their backs broken by the burden of rate increases—a burden that has been expanded without thought for those who must carry the increases.

  827
  Many hon. Members could give a number of examples of unnecessary expenditure by local authorities. Today's Glasgow Herald carries the announcement:
  "Two Scottish regional councils are to make a joint appointment of a 'dancer in residence' with the help of money from the Scottish Arts Council."
  That is a £6,000-a-year job with Fife and Tayside regional councils, with the assistance of the Scottish Arts Council. I have heard of people tripping the light fantastics, but this is tripping the light incredible. Dancing is a delightful art form, whether it is disco, ballet or Scottish country. I am sure that the Scottish Arts Council is well able to justify its part in the appointment. However, I wonder what on earth a "dancer in residence" has to do with the provision of services in local government.
  Mr. Tam Dalyell: Has the hon. Gentleman had the courtesy, or has he bothered, to make inquiries of the council?
  Mr. Lang: I have not had the opportunity to make such an inquiry, because I was present in the Scottish Grand Committee this morning and in the Chamber throughout the afternoon. I have no doubt that if the councils feel that the appointment can be defended they will manage to so defend it. I am sure that the press will afford them all the necessary courtesies. If precedent is followed, the dancer will soon want a partner. Then he will want an accompanist, and a clerical assistant; and they will all want premises and parquet flooring. I have no doubt that in a year or two the ratepayers of that part of Scotland will be able to attend free concerts by the "Fife Formation Dancers" assisted by the "Central Region Light Orchestra". The two regional councils are leading the Government a merry dance.
  That is why I welcome the Bill. Many of its clauses are non-controversial and enlightened by any standards. I particularly welcome clause 13, which gives the Secretary of State power to reduce the rate support grant to a local authority where estimated expenditure is excessive and unreasonable. I welcome clause 14, which allows the Secretary of State to calculate the resources element according to a lesser rate poundage than the actual rate poundage. I also welcome clause 23, which allows the Secretary of State to withdraw or vary a consent given to a local authority to incur capital expenditure. One overriding criterion should guide the Government in their action. Profligate councils should not benefit from their profligacy and prudent councils should not be penalised for their good behaviour.
  The explanatory and financial memorandum, under the heading
  "Effect of the bill on public service manpower",
  states that some of the provisions
  "should provide some scope in the longer run for minor savings in local authority manpower."
  I hope that the overall effect of the Bill will be much more substantial in relation to local authority manpower. Indeed, I wonder whether the Bill goes far enough. I ask my right hon. Friend to consider making it compulsory for regions and districts to publish their manpower figures annually, broken up by sectors, so that the ratepayer can see what he is paying for.
  I wonder, too, whether my right hon. Friend should take power to impose a maximum ceiling for rate increases in any one year, perhaps related to the inflation rate. I
  828
  recognise that the constituent parts of the retail price index might not be compatible with local government expenditure patterns. However, a limit of perhaps 150 per cent. of the retail price index increase in any one year, except on the Secretary of State's dispensation, might afford some protection to the ratepayer.
  If my right hon. Friend is exercising control through the resources element, the rate support grant and capital expenditure, the pressure on rates, geared as they are by the two-thirds rate support grant contribution, could be considerable. I understand that the other powers will be exercised only after the rate poundage has been determined and that this cannot then be changed for that year. That is, perhaps, a measure of protection. However, I still believe that the added powers that I have outlined might be appropriate. It is vital that the burdens incurred by irresponsible local authorities should not be passed on to innocent ratepayers.
  Mr. Cook: Will the hon. Gentleman give way?
  Mr. Lang: I shall not, since I have already given way to the hon. Member.
  An entirely bogus argument was repeated by the right hon. Member for Glasgow, Craigton (Mr. Milian), that the Government have no right to interfere in local government. I observe in passing that as two-thirds of the cash expended by local government is not ratepayers' money but taxpayers' money, collected by the central Government and distributed by them to local authorities, the Government have not only a right but a duty to intervene in order to protect the taxpayers whom they represent.
  The right hon. Member for Orkney and Shetland (Mr. Grimond) said that in the long run it was desirable to replace rates with a fairer tax. Some form of local income tax, as my hon. Friend the Member for Edinburgh, South (Mr. Ancram) suggested, might be appropriate. That could be levied by the local authority and collected by the Inland Revenue through the PAYE system. The suggestion is that such a system would lead to the creation of 12,000 new Civil Service jobs. However, as my hon. Friend the Member for Edinburgh, South said, the increased use of computers might obviate the problem.
  In the meantime, I wonder whether the Secretary of State will consider whether some items should come off the rates. For example, education is the largest single item of expenditure under the rates and it might be more appropriate for part of that to be taken over by the Government. Perhaps a measure of increased fairness could be arrived at by allowing rate payments to be a deductible expense against income tax.
  Certainly, the burden of taxation has shifted unfairly to rates from income tax. In Strathclyde some ratepayers have experienced a sixfold increase in rates over a seven-year period. Other hon. Members will be able to produce similar examples. Until a fairer tax can be found, the Bill is a welcome measure to protect the individual against high-handed local authorities. It protects the virtuous local authorities from the less virtuous. It protects the Government's overall economic strategy from sabotage at local government level. It reasserts the sovereignty of Parliament itself. For those reasons, I give the Bill a warm welcome and wish it a speedy passage.
  6.17 pm
  Mr. Donald Stewart: I hope that the hon. Member for Galloway (Mr. Lang) will excuse me if I do not deal with his speech in detail. He said that some good firms had had their backs broken. The firms and the CBI agree that the main reason for that is the action by the present Government since they came to power.
  The Secretary of State said that the choice was that of the local authorities. It is obvious that the choice resembles that given by Henry Ford w hen he put his model T on the market. He said "You can have any colour you like so long as it is black." The Secretary of State says that local authorities can have certain powers as long as they do what they are told. The hon. Member for Edinburgh, South (Mr. Ancram) said that local autonomy was a precious right. So it is, but it cannot be bounded by anything that the Secretary of State of the day might wish to do.
  The Bill is an attempt to extend Government control over local authorities. That is ludicrous when the majority of the Scottish people rejected a Conservative Government at the general election. They made it clear that they did not want the present Government's policies. A minority is dictating to the majority in Scotland. That proves that the Government think that the democratic process can be ignored there. As we heard today, the majority view is likely to be sacrificed to the axe-swinging English Treasury, even when members of the Government refuse to vote for and back their own policies. If a Government and their supporters do that, it is time they filed a petition in bankruptcy.
  The explantory and financial memorandum to the Bill suggests that the Secretary of State is relaxing his control on local authorities — for example, in terms of the appointment of social work directors, dealt within schedule 2, paragraph 14, and other items such as the disposal of land forming part of an open space. But the financial rigidity with which it is to be imposed will make it virtually impossible for heal authorities to make local decisions of any importance. Where is the "local" in local government if its hands are tied behind its back and big brother is watching all the time?
  An article in The Scotsman refers to the comparable English Bill, although it also applies to what is being attempted here today. It states:
  "The Government are in the process of making the most decisive step yet in the shift from powerful, financially sound local authorities to dependent, centrally controlled satellites, according to a major critique of recent trends which is published his week."
  The authors of that critique said:
  "Its efects will be within a very short time to replace genuine local government by the dependent outposts of a large central bureacracy … it marks the beginnings of a wholly centralised state."
  That has been done by the Conservatives, who allege that hey are so concerned with freedom.
  The main point of contention is the rate support grant. Local authorities are to have their grant reduced when the Government deem their expenditure to be excessive and unreasonable. Clause 13(b) suggests that the Secretary of state should have regard to similar authorities. But the idea of comparison in Scotland is ridiculous, because of the disparate nature of the authorities in the various geographic areas and the population. Therefore, it is impossible to have arty meaningful comparison. How would one compare my constituency and local authority in the Western Isles, which will have to increase its rates
  830
  by at least 47 per cent. and which has been designated by the Common Market Commission as one of the most disadvantaged areas in the British Isles, with, say, Orkney and Zetland, with its vast input of oil revenues, or with Strathclyde, Grampian, Lothian or any other area? No meaningful comparison is possible.
  Objections to the Government's proposals are coming from a wide area, including independent members and COSLA as a whole. Little account has been taken by the Government of the difficulties caused by rising costs of labour, material and so on, and authorities have already had to trim services. This started at the time when the Labour Chancellor, with his IMF deals, made them go on cutting. If they constantly cut services, there will be opposition from the public about cutbacks in home helps, special provisions for the handicapped and so on. That has already started, and it will increase. Allowances must be made for those costs.
  Allowances must also be made for functions that have been laid upon local authorities by Governments of various colours. If those functions are to be wished upon local authorities, the Government must continue their funding.
  Rates will have to rise sharply if authorities are to maintain their services. It is one choice or the other. The Tories are for ever preaching about protecting the ratepayers. It is not a question of asking ratepayers to subsidise others; it is a question of trying to maintain standards.
  As to housing, the main effect of the Bill is to reduce the housing support grant, which is the Government's contribution to the local authorities housing income. According to Shelter's figures, it would be reduced from more than one-third in 1979–80 to one-fifth in 1981–82. Increased rent must be seen against the background of unemployment and poor housing conditions in many areas, rural as well as urban. It is grossly cynical to contemplate charging more for inadequate housing. Unemployed rent payers will receive a rebate, which must be met by the Government in any case, so there is unlikely to be real gain against the background of Scotland's appalling unemployment figures. It seems likely that the level of support available through the housing support grant will continue to be reduced in the next several years.
  The Secretary of State referred to the abolition of quangos in relation to clauses 24 to 26. One quango that has aroused great opposition in the Highlands and Islands is the Countryside Commission. Local authorities fear, with good reason, I believe, that it will inhibit development. Its control covers 20 per cent. of the Highland region and 40 per cent. of the Western Isles. Members of local authorities in those areas are local residents and, as such, have some regard to their environment. They do not wish to see it spoilt, but they know that people have to live and that there must be some development. This quango is the authority that assured the Inland Revenue that the Vesteys ought to get a big cutback if they kept the whole Assynt estate free of any development whatsoever. That does not engender belief in anything that the Countryside Commission might do. Those authorities have good reason to be afraid. I hope that it will be possible for an amendment to be accepted, if not to wipe out the commission at least severely to clip its wings.
  We oppose the Bill. It has a facade of improvements, but in reality it is chipping away at freedom in Scotland

  831
  and at freedom for the local authorities. It is an attack on the local authorities and, indirectly, an attack on the living standards of the Scottish people.
  6.27 pm
  Mr. John MacKay: I begin with part I of the Bill, which is concerned with the general problem of the rating system. I give a warm welcome — [HON. MEMBERS: "Ah".] I suggest that hon. Members should wait around. I might not give so warm a welcome to other parts of the Bill. However, I give a warm welcome to clause 1. Some considerable time ago, when my right hon. Friend the Secretary of State for the Environment announced that he intended to delay the English revaluation, I asked my right hon. Friend the Secretary of State for Scotland whether he had the same intention. At that point, he said that he did not have the powers. I am, therefore, glad to see that he is taking the first step along that line by seeking those powers in clause 1.
  That means that the revaluation due in 1983–1984 can be delayed if the Secretary of State decides that it should be and comes to the House with a resolution to approve that. I see that the hon. Member for Central Ayrshire (Mr. Lambie) is not in his place. I know that we would agree on this, if not on much else. I know that the revaluation that took place in 1978–79 was a traumatic experience for many ratepayers and householders in Argyll and Ayrshire.
  There are problems still unresolved arising from that revaluation. Indeed, one of them had to be resolved in the other place by putting a clause into the Local Government, Planning and Land (No. 2) Bill to exempt fish farms from rating, because the assessors would not accept that fish farming was an agricultural pursuit. I cannot imagine what they considered it to be, if not an agricultural pursuit. A great deal of difficulty was caused for the fish farming industry and there was a great deal of uncertainty about its future. That industry is of great importance for employment on the West Coast of Scotland and also for the provision of foodstuffs for the people of the United Kingdom. That is one example of the repercussions of the 1978–79 revaluation that is still with us.
  Many other matters are not yet settled. The legal position may be settled but the aggravation remains. For example, one of my constituents is having a triangular battle with the Post Office and the assessor. The Post Office has decided that he lives in a rural area and should have only one postal delivery a day, and that there should be only one daily collection from his local post box. Yet the assessor has decided that he does not live in a rural area and that his rate assessment should, therefore, be considerably higher. The assessor, needless to say—and any hon. Member who has had dealings with the assessor knows that he always wins—has said that he takes no account of definitions that other bodies may give to where people stay. My constituency, like parts of Ayrshire, has been subjected to a traumatic experience as a result of that revaluation.
  At the beginning, some doubt was expressed by the convener of the Strathclyde regional council, but it is now generally agreed that by revaluation alone more than £1 million was removed from the ratepayers of the county of Argyll. That excluded all the other increases that one naturally expects at times of inflation such as we have experienced during the last five or six years.
  832
  I think that I now understand clause 2, but I should like to make a few points about it. I presume that it means that a revaluation in 1983–84, or five years after that if we continue with this system, could be for certain items only. I presume that that is to allow for a separation of domestic and commercial rating and that a revaluation may take place in respect of commercial rating only, thus leaving domestic rating as it is, on the ground that perhaps during the next Parliament the Government will have found a way of removing domestic rating from the scene and financing local government in another manner.
  I am a little suspicious of that method of going about things, because rates weigh heavily on commercial and industrial users. My hon. Friend the Member for Galloway (Mr. Lang) mentioned that point. Whether firms are profitable or are just getting by, the rate bill still comes in and it must be paid. It is not like other forms of taxation where if one makes a profit one pays tax but if one does not the tax man does not come. The rate man always comes.
  Although the right hon. Member for Western Isles (Mr. Stewart) engaged in some knockabout arguments, I accept what he said. If asked, business men will tell us that high interest rates are a problem, but the House is not being honest if it fails to realise that the same business men will blame high interest rates, high wage increases and rates. They will probably say that all three are to blame. That has certainly been my experience. High interest rates are now on the way down, and it is to be hoped that that downward trend will continue. Wage increases, certainly in the private sector, are moderating substantially, but commercial and industrial people cannot see rates doing the same.
  Mr. Dewar: Perhaps the hon. Gentleman will turn his mind to last year's rate support grant, which was almost certainly the shape of things to come. That forced large rate increases upon local authorities. Will the hon. Gentleman condemn that in the interests of the business men to whom he has just referred?
  Mr. MacKay: That illustrates a problem to which I shall come a little later. It concerns the relationship between central and local government, how much of local government expenditure the central government ought to pay and at what stage the balance between central and local government gets totally out of hand. However, I agree that that is one of the input factors.
  Mr. Foulkes: Perhaps the hon. Gentleman will also agree that many business men are going into liquidation or receivership because they are not getting local authority contracts, as a result of cutbacks in public expenditure.
  Mr. MacKay: I have no doubt that some business men are not getting the contracts that they thought they should. Indeed, one of my criticisms of the Government's general policy of cutting expenditure is that they find it a good deal easier to cut capital projects rather than revenue projects. That applies to every Government, including the previous Government, because in 1976 the IMF came along and did the cutting for them. That fault can be laid at the door of the present Government, just as it can be laid at the door of their predecessors. It would be splendid if a way round that problem could be found, but it appears that it is extremely difficult to cut revenue.
  There is an interesting situation in Strathclyde, where the council is no longer giving financial help under the

  833
  sewerage Acts — which it ought to give — to private developers. It says that it has run out of money, although the staff that is supposed to operate those grants and schemes still exists, in spite of there not being much to do if no grants are given.
  Mr. George Robertson: What should Strathclyde regional council do? Is the hon Gentleman suggesting that it should build the sewerage systems that he considers to be essential, or should it sack the personnel that will be necessary if those sewerage systems are ever to he built at all?
  Mr. MacKay: I think that a balance could be struck. What is the point of retaining staff if there is no work to do? If a reduction in staff could be achieved, some of the money saved could be used to allow some of the most important projects to proceed. However, I find it odd that half-way through the financial year, when it must be obvious and easy to predict the kind of expenditure that one will have, the council has run out of money. I strongly suspect that it has moved the money to some other sphere. In fact, I am pretty certain that it has moved the money to something for which it has under-budgeted. It then diverted the money away from this sphere, presumably because it involves private housing that the council considers to be of lower priority than that to which the money has been devoted.
  I should like to add my voice to those of hon. Members who have already spoken about the basic unfairness of rating. I agree with the point made by the hon. Member for Glasgow, Garscadden (Mr. Dewar) about the balance between central and local government finance. It is difficult to be a local authority when so much of the money comes from the. Government and the rest comes from a system of financing that is unpopular with the portion of the electorate which bears it. The majority of the electorate who do not pay rates really could not care less one way or the other.
  At one stage an hon. Member referred to the Layfield committee, which looked into this matter deeply. I know that it found insurmountable difficulties in all the alternatives. If there were no local government rating, if the committee had looked at some other form of local government taxation as being unsatisfactory and if someone had gone to the Layfield committee — for example, a Labour Member— and come up with the ilea of local rating, it would have rejected that, perhaps a great deal more quickly than it rejected the other systems.
  We have become used to rating. It is simple and inexpensive to collect. It is what we live with. Therefore, when we look at the alternatives we try to find all the difficulties that are associated with them. Sometimes that blinds us to the difficulties of the rating system. There are difficulties associated not oaf with the actual assessments but with the way in which they are based on house values. Indeed, it is doubtful whether they are based on house values at all. At times they seem to be figments of the assessor's imagination. About two-thirds of the average electorate do not pay rates. I do not know whether that is representation without taxation, but it is certainly something like it. It means that a local authority can be less than interested in its ratepayers when it realises that thirds of its electorate do not pay rates. I am not suggesting
  834
  that local authorities are like that, but there must be a temptation to punish the ratepayer on the ground that he forms a minority of the electorate.
  I hope that my right hon. Friends in Scotland and England will look seriously at an alternative to rating, because I do not think that it is a system with which we can continue for ever. We must find some alternative.
  Clauses 5 and 6 also relate to rating like so many other things, attempt to smooth over some of the problems of the rating system. These clauses relate to charities and remissions. I should like to refer to various community activities and assets that people work for, finance and build but find that year after year they are hit by the assessor, who asks for quite a lot of money. I am not talking about elaborate projects; I am talking about facilities such as playing-fields — if they are entirely community-based and have nothing to do with the local authority—pavilions and all the other things which are not charities, which do not get rating relief and which pay annual values.
  At present, I am arguing a case with the Home Office, the assessor and anyone else who wishes to have an argument with me about it. It relates to what are called active television reflectors, which are an important means of getting television reception for many people in remote rural areas. As for the finances for those reflectors, the Highlands and Islands Development Board is very good at giving grants, the local authority is good at giving capital grants and the local community raises a considerable amount of money. That is fine for the capital grant. But then people discover that after the wee bit of equipment is put up on a hill, along comes the assessor and bungs on an assessment that means that they will have to pay rates year after year in order to receive television programmes—a facility that all the rest of us get from a mast that is paid for, in rating, by our licences.
  These are the kinds of unfairness that the charities provision does not stop. They are very real, especially in the small communities. There may well be examples in the cities also. Communities carry out self-help and go for the capital part of self-help and work hard to get the capital but then discover that the assessor knocks them for six because of the running costs that he imposes on them. That is quite unfair.
  If we are to continue with the rating system—this is something that my right hon. Friend might consider in a year or two, when he sees when the next revaluation will be—I think that the suggestion that I am about to make ought to have been in the Bill, but I shall let my right hon. Friend off for the fact that it is not in the Bill on the assumption that there will not, one hopes, be another revaluation. There have been many appeals in my constituency and in Ayrshire. The people who are appealing and questioning their assessments found the procedures most inadequate. They found that the assessor gave them information partially and very reluctantly. They found it very difficult to decide whether they ought to appeal and whether they had any grounds for appealing. When appeals reached the courts, it took some very clever legal footwork by at least one lawyer in Argyll, on appeals committees, to drag out from the assessor the basis on which he had made his assessment.
  That is fine if one gets as far as the appeals committee. It is fine if one can afford a clever legal operator who can work hard at this and make sure that he drags the facts out of the assessor. But how will the ordinary person, looking

  835
  at his rates assessment when it comes in after a revaluation, be in a position to judge whether it is fair, whether he should appeal and whether he should go to the lawyer who specialises in the matter and can help him if it reaches the appeals committee? The assessor ought to be forced to give very much more information to the ordinary ratepayer who questions him before he ever considers having to take the matter to an appeals committee.
  Mr. Peter Fraser: While my hon. Friend is developing this theme of the inadequacies of our appeals system against valuation, will he bear in mind that those who make an appeal, either to the committee or to the court in Edinburgh, traditionally never get their expenses paid, and that this is undoubtedly something of a restraint against proper appeals?
  Mr. MacKay: Absolutely. That is right. I came across this in many circumstances. One group got round the difficulty by banding together and persuading the appeals committee that rather than hear an appeal from every house in the area they should take a test case. They all put their hands in their pockets and got their lawyer. I am happy to say that he was the gentleman who pulled more facts out of the assessor than the assessor had ever willingly let go. Those people got a reduction in their assessment. Therefore, the money that they spent on legal fees was well worth it.
  I come now, taking them together, to parts II and IV. [HON. MEMBERS: "Oh."] I am surprised that Opposition Members have not developed their arguments a little. The right hon. Member for Western Isles did so.
  Mr. Foulkes: We cannot do so. The hon. Gentleman is talking all the time.
  Mr. MacKay: There is a difficult relationship between central Government and local government. In part IV, my right hon. Friend is reducing his control over local government—some of the controls relating to planning, for example. I welcome that, because even though the planning authority—I am not particularly talking about my own—may not always make the correct decisions, I do not think that lots of inbuilt appeals to the Secretary of State necessarily improve the decision-making. However, I hope that my right hon. Friend will ask the local authorities to exercise their planning procedures with a little more feeling for the objectors. At present, an applicant whose application is refused has the power to appeal, but objectors do not have that power. I do not think that there is any way round that problem, but local authorities ought to work quite hard at making sure that objectors feel that their cases are heard. It is not just a case of a letter being put in. Objectors should know that the letter was read and that the point was listened to and answered.
  Like the right hon. Member for Western Isles, I find it a bit of a contradiction that, at the same time as my right hon. Friend is relaxing controls on planning, local plans and the like, the Countryside Commission, in many areas of the Highlands, including parts of my constituency, is being given a little say in the planning procedures as an objector — a say that is not being given to other objectors. The commission does not have to object to the
  836
  local authority in its planning decision. After the plans are passed by the local authority, the commission can put its objections to the Secretary of State, and then the Secretary of State can intervene on the planning decision.
  I am sure that my hon. Friend the Minister remembers two cases in Argyll shortly after the present Government came to office, in which I think it was quite clear from the reporter's report on those cases that the Countryside Commission had absolutely no justification for asking the Secretary of State to call in the plans. I do not know whether the commission has whispered in my right hon. Friend's ear since then, but I am delighted to say that no other planning applications for my part of the world have been called in at the say-so of the commission.
  However, I am a bit worried that the commission is being given rights that no other objector has been given. I accept that in areas of great natural beauty, which we have in the Highlands, more people than just those of us who stay in them have an interest in them. But if the commission could put in its oar at the planning committee stage, so that its opinion was read and listened to by the planning committee, the committee could judge whether the opinions of the commission were valid in certain cases. That would be better than giving the commission a privileged position without anything being in the Bill to give it that position in law. That is a most disturbing thing.
  I come to the other side of the matter. I question to what extent the Government should interfere in local government. We have an obligation to make sure that we do not ask local authorities to carry out tasks that will cost them money and then complain that they are spending money. We have an obligation, along with them, to look at functions that are being duplicated by us and them, and perhaps saving either them or us money, but saving one of us money. When the Stodart committee reports, I hope that it will suggest ways in which the two tiers may be prevented from overlapping as much as they do. They overlap on industry, planning and tourism. They have officials and offices for those matters and others. That is wasteful and unnecessary expenditure. If the Stodart committee makes recommendations along those lines, I hope that the Government will listen carefully to them and talk to the local authorities, and see whether we can remove those extra unnecessary expenses on the ratepayer and the taxpayer.
  The great problem, about which the hon. Member for Garscadden intervened, is that the Government pay two-thirds and the ratepayer one-third. I am being rough about this; we do not need exact figures. No one can say that the Government, on behalf of the taxpayers, should stand aside, take no part and say nothing about overspending by local authorities. Indeed, the one-third who pay rates often look to the Government to help them if their local authority is overspending.
  I shall go into the problem of Lothian. My hon. Friend the Member for Edinburgh, South (Mr. Ancram) has done his bit on that. He has pointed out repeatedly the extra expenditure that Lothian undertakes. It annoys authorities that try to do their housekeeping, including Labour-controlled authorities, to see an authority such as the Lothian authority—in a much more prosperous area than Strathclyde—come out with a higher rate poundage than Strathclyde does. That is unfair.
  However, what is more worrying—my hon. Friend did not mention it, but I read about it in the newspapers, although perhaps it is totally made up by the press; I do

  837
  not know — is that both the Lothian region and, I believe, Dundee are actually spending more money in order to wreck the Government's spending plans and in order to embarrass the Government. I hope that that is not the case, but if it is surely no hon. Member can support such action,. That kind of motive, if it exists, is totally irresponsible. If those local authorities are pursuing that course of action they are bringing the whole of local government into considerable disrepute. That worries me, because local government is an essential part of our democracy.
  Mr. Foulkes: I know that the hon. Gentleman has a lot to contribute, but does he not think that he is bringing this debate into disrepute by continuing at such great length when so many other hon. Members wish to contribute?
  Mr. MacKay: I was just thinking about concluding, but I am greatly tempted now to continue and to annoy the hon. Member for South Ayrshire (Mr. Foulkes), bearing in mind the number of times that he has annoyed me by going on. However, I shall resist the temptation.
  I do not know whether I shall serve on the Standing Committee that examines the Bill. If I do, I shall look for ways—including those that I have mentioned—to insert new clauses or to make amendments to cater for some of the points that I have been advancing. That statement may perhaps guarantee that I am not selected for the Committee.
  On clause 28, Labour Members will be delighted to hear that when I first say the Bill I rushed off to the Library for a copy of the Education (Scotland) Act 1980. They will be equally pleased to know that I have nothing more to say about it, except that I welcome my hon. Friends decision not to implement these clauses at this time.
  6.51 pm
  Mr. Hugh D. Brown: Some of my hon. Friends are being slightly uncharitable about the contributions of Conservative Members. I am referring not just to the length but to the quality of those speeches. Some of my hon. Friends will not be unaware that the conservative Members will reaffirm their vows of silence by the time that they get to the Committee. It is refreshing [or those of us who served on the Standing Committee that examined the Tenants' Rights, Etc. (Scotland) Bill, which sat 30 times, to hear those Conservatives today, because this is the only chance that we have had of understanding some of their views.
  It has been a depressing day for the Government. The performance this morning in the Scottish Grand Committee will be well reported in Scotland. The Prime Minister's irritability at Question Time is being increasingly noted. The only other disaster that can befall the Government today is for the hon. Member for Glasgow, Hillhead (Mr. Galbraith) to make another speech.
  Mr. Dewar: That is unlikely.
  Mr. Brown: Yes. He is bound to have been exhausted by his efforts this morning.
  There is much in the Bill that merits the close scrutiny that it will undoubtedly have in Committee. The Bill is in various parts, not all of which are related or linked. The contribution by my right hon. Friend the Member for Glasgow Craigton (Mr. Millan) was excellent, in contrast
  838
  to the tawdry approach of the Secretary of State. the Secretary of State was far too technical and theoretical. He failed to face the underlying philosophy behind some parts of the Bill.
  I want to deal only with the housing support grant and the housing aspects of the Bill. I understand that clause 23 is part of the mechanism that will or can be used by the Secretary of State to impose restrictions on capital expenditure by local authorities out of revenue. In other words, section 94 of the existing provisions is to be tightened and implemented to make sure that there is restrictive control over the capital expenditure programmes of local authorities. Will the Minister state the existing percentage of capital programmes that are financed out of revenue that could be caught by this provision in the current stage?
  Clause 22 deals with the relaxing of controls. Everyone agrees with it in principle, although we feel that the example given about no longer requiring the sheriff to give permission to increase burial charges is not particularly relevant or likely to be a major issue at the next election. Nevertheless, it is a welcome trend in minor details, and I only hope that the Government, in their inability to produce anything worth while, will rot just gather these statistics together and claim for them more than they are worth.
  I move on to stress the significance of the changes in the level of housing support grant. I remember the debates when we introduced the principle of these grants. Some of my hon. Friends were a little unfair at that time, but I do not complain about that. I think that they now realise that the principles that we were trying to apply were sound. Those principles were to ensure fairness between one housing authority and another.
  The dispute is about the amount of Government support that is injected into the system and the method of distribution. The principle of applying the greatest help to those in greatest need is impeccable. It is a Socialist principle, and that was the rationale behind it. This Government, however, are using the machinery savagely to attack the local authorities.
  My right hon. Friend the Member for Craigton mentioned the figures, and I shall repeat them I understand that the level of Government support in 1980–81 is about £228 million, falling next year to £140 million. That is mainly based on the assumption of rent increases. The Government cannot impose rent increases on housing authorities, but they can make it extremely difficult for the authorities to avoid rent increases if one of the options is a cutback in capital expenditure. That is part of the strategy of attack on the authorities, where the Government are not just being punitive but are preventing them from carrying out the policies on which they were elected and which it is worth while for them to pursue.
  I should remind some of my hon. Friends not to express surprise at what we are receiving from a Tory Government. The Secretary of State was the man who introduced the Housing (Financial Provisions) (Scotland) Act 1972. I see him nodding, so he is not disputing that. I am sure that the right hon. Gentleman will not dispute that it was the intention, properly and fairly stated, that within about 10 years public expenditure committed to public housing should be phased out. The right hon. Gentleman is not disputing that, either. So, by this method

  839
  he is almost back, at his second attempt, on target. That is an outrage in view of the problems being faced by some authorities.
  Glasgow is expecting to have its capital expenditure reduced in 1981–82 from £61 million to roughly £55 million. I know that there may be variations in the figure. That is not a housing policy. It is an attack on local government, because it is consistent with the only policy that the Government have, that of selling off council houses. The Government must find some way of putting pressure on local authorities to see that they reduce capital expenditure, either by savagely increasing rents or by selling council houses. That strategy will fail. That is one of the factors that perturbs me. I hate to put myself in any category, but I am concerned at the unrest that exists in many of Scotland's local authorities. The Government must accept some responsibility for it.
  Some Conservative Members need enlightenment on Labour Party politics. I wish that they would come to us and discuss them instead of getting their information from the Sunday Post, the Sunday Mail or wherever. There are many new, active, almost revolutionary councillors in Scotland. Being revolutionary has nothing to do with Marxism. [Interruption.] I am trying to make a serious point. They are new, keen and, in some cases, young members of Labour-controlled authorities, who may not have been members of the party for very long. They now find themselves in local government and in the majority. It is not surprising that within months of being returned in May with a substantial majority they want to show their strength. I wish that the Government would take on board the strength of feeling that exists in many Labour-controlled authorities on these matters.
  Let us not forget that those councillors are disputing, wrongly in my view, the Government's mandate for selling council houses. There is a strong body of opinion against that. They will not be enamoured of these further attempts by the Government to restrict their ability to manoeuvre and to carry out the policies on which they were elected. I am sorry to have to say that. I am sorry that my hon. Friend the Member for Dundee, West (Mr. Ross) is not in his place. I regret that Dundee district council has taken the decision that it has. I do not think that it has a mandate from the Labour Party to do that. Whether or not it has a mandate does not matter. It has no right to say that it will not implement section 1 of the Act.
  I must make it clear that I do not support that view, even though someone might extract this snippet of my speech for the reselection conference that I shall face some time soon. I shall go even further. I do not agree with the Glasgow branch of NALGO on the action that it has taken. The sooner that NALGO members get off their backsides—
  Mr. Norman Hogg: I wondered when that point would be made. I am surprised at its source. The NALGO position on the matter was determined at a meeting of the national executive on 22 November, which said that it would not encourage NALGO members to engage in activities aimed at refusing to implement the Act. At 3.30 pm today, any decision on the matter was deferred by the national executive so that further consultations could take place. That is the union's position.
  Mr. Brown: I am sure that my hon. Friend appreciates that I was attacking not NALGO as a whole but only the decision of the Glasgow branch that deals with the housing management department. I make no apology for that. I do not care how strongly that branch feels. I did not see any great evidence of the members of the Glasgow branch coming out in their hundreds to help us at the district council and general elections.
  Mr. Norman Hogg: They were all in East Dunbartonshire.
  Mr. Brown: My hon. Friend can justify the actions of NALGO if that is what he wishes, but I think that we are discussing a dangerous principle. I do not accept the right of a handful of people to thwart the elected representatives of either local or national Government. That is something that must be said. I feel strongly about the matter. We are being jockeyed into a position where an assumption is being made that, in some magic way, our Labour colleagues in local government can prevent rent and rate increases or avoid redundancies in such a way that if they accept any of these propositions they will be regarded as Right-wing reactionaries. I am not prepared to go along that road.
  I am disturbed at the Government's attitude towards housing. They are blatantly putting the screw on district councils with housing responsibilities. I could quote the speeches of the Secretary of State and the Under-Secretary who during past years complained that we were not making available enough resources to deal with dangerous housing and houses with damp and condensation problems. The Under-Secretary even supported a quite irresponsible amendment on the housing support grant, and in an unbelievable manner.
  New councillors have been thrust into positions of responsibility. In some cases they are compelled to say to people that, even if their houses are dangerous because of faulty wiring, capital expenditure allocation is such that the programmes will be delayed. If a house is unsatisfactory because of damp or condensation, they are having to tell people that they are sorry but they will have to put up with that because the allocation is not being made. In those circumstances, it is absurd to make wholesale condemnations of Labour-controlled councils which are desperately anxious about the position. They are having to retreat from some of the commitments that they gave at the district council elections. They are genuinely concerned about the responsibility for postponing programmes when people's expectations have been raised.
  The Government should be ashamed of themselves. It is not only their attack on local government that is at fault. Their whole economic strategy and policies are wrong. They should feel ashamed when they consider some of the problems in the deprived housing areas in Scotland, because their first priority was to give concessions to taxpayers earning more than £10,000 a year. That is obscene. Their economic policy is wrong. It is forcing them to introduce legislation such as that before us today. I shall put in the maximum effort not only to vote against the Second Reading but to challenge the legislation throughout the country whenever I have the opportunity.
  7.7 pm
  Mr. Peter Fraser: When speaking from the Government Back Benches, I suppose that it is

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  traditional to welcome a Bill. However, I am bound to say that I do not welcome the Bill—but I must face up, as must all Conservative Members, to the fact that it is, regrettably, necessary. My right hon. Friend the Secretary of State said that it is the responsibility of local authorities to have regard not only to their local areas but to the National interest. Until May of this year, I enjoyed a certain smug complacency on the issue. I represent a constituency that had a Tory-controlled regional council and two Tory-controlled district councils. However, since then I have had to have regard to the district council to which the hon. Member for Glasgow, Provan (Mr. Brown) referred, namely, Dundee district council. The hen. Gentleman deserves some credit for having spoken upon the matter. It was clear from his words that he was referring to that council. He referred to the attitudes of the new, young, wild men in the. Labour Party in local government.
  Mr. William McKelvey: Is it not a fact that the Dundee young councillors said in their manifesto that they would not raise rents? They are now keeping a political promise—something that is rare these days. They should be applauded for it. They were elected with large majorities.
  Mr. Fraser: The hon. Gentleman does not realise that hat attitude is more prevalent than only in Dundee district council. Before the hon. Member for Provan spoke on that issue, it was only the hon. Member for Caithness and Sutherland (Mr. Maclennan), from the Labour Party in Scotland, who had the courage to say that Dundee district council was behaving irresponsibly. Now that the hon. Member for Provan has joined him, I must give him a warning. On Monday of this, week, the hon. Member for Caithness and Sutherland enjoyed a leader all to himself in the Dundee Courier and Advertiser. I wonder whether the hon. Gentleman wishes to have that credit bestowed on him when he goes forward for reselection.
  Mr. Hugh D. Brown: I have stopped giving press handouts. I am not reported on anything that I say, so it does not really matter.
  Mr. Fraser: I shall ensure that the hon. Gentleman receives a copy of the Dundee Courier and Advertiser. If lie does not receive it, I shall make sure that his management committee does.
  There has been a dismal failure in Scotland to show responsibility for the national interest. As my right hen. Friend the Secretary of State for Scotland said, it is a problem that has confronted not only him. It one that confronted his predecessor, the right hon. Member for Glasgow, Craigton (Mr. Milian). The only politically controlled authorities in Scotland that showed responsibility for the national interest were the Conservative ones. My right hon. Friend has paid his compliments to them in the past for the opportunity that they have given him to try ID manage the economy of Scotland in the national interest.
  I was astonished when I read the figures which appeared for the first time during the Summer Recess and which gave the breakdown of the employment of local government officials in Scotland. They revealed that after two and a half years there had been an increase of about 15,000 in the number of local government employees. We were told that Tayside region and Angus district had made
  842
  massive cuts. They made cuts in staffing levels of 3 per cent. If that 3 per cent. had been reflected throughout Scotland, there would have been a decrease in the number of local government employees of 18,000 for 1979–80 rather than an enormous increase over two and a half years.
  Labour Members have recently shown a new-found concern for the private sector in Scotland. If they really have that new-found concern, I ask them to ask industrialists to ask small businesses to ask those in commerce in Scotland if they have truly felt that a 3 per cent. reduction in the level of local government staffing has damaged their businesses or whether alternatively, and far more obvously, it has relieved them of a burden. There will be few companies in Scotland which will be able to come through the deep worldwide recession if they cannot make that 3 per cent. economy. They will have to be fit and lean.
  Through the speeches of my hon. Friend the Member for Edinburgh, South (Mr. Ancram), it is clear that the Lothian region has been elevated to the top of the hit list for the Secretary of State for Scotland. I ask him in the forthcoming months to ensure that he has his sights trained northwards towards the Tay. I suspect that he will have similar problems in that area.
  It has been claimed with no lack of concern by Dundee district that it anticipates increasing rents, if it is permitted to do so, and hope that it will not, by about 200 per cent. The reason for that is that the district follows avidly the economic school represented by the hon. Member for Dundee, West (Mr. Ross). Part of the economic thinking of the hon. Gentleman is that the rates burden for business and industry is irrelevant. He is willing to see imposed upon business and commerce in Dundee an additional rates burden, but he is at the head of the queue waiting to see my right hon. Friend the Secretary of State for Scotland to ask him to pour more money into Dundee to assist business. I think that everyone can see the inconsistency in that approach. Part of the present that my right hon. Friend might give to the hon. Member for Dundee, West is a small pocket calculator.
  The most vexed issue of public expenditure is capital expenditure. I recognise that my right hon. Friend has considerable problems in trying to control all forms of capital expenditure. I raised the issue with him when he gave evidence to the Select Committee in Edinburgh. We should be working harder to secure the essential distinction between revenue expenditure and capital expenditure. The last things that we want are grandiose schemes that will boost the self-importance of certain local representatives.
  I accept that increased capital expenditure cannot be allowed if significantly increased revenue implications can be identified. At the same time, I feel something of a sense of despair when seeking to support capital schemes promoted by Tory controlled authorities that are well aware that they must not in their wake bring in schemes that have high revenue implications. They are as well aware of that as I am, but they find from time to time that they are trapped in elaborate calculations to determine what they can spend when those calculations seem to be but dimly connected with the public sector borrowing requirement or any other measurement of any increase in public spending.
  I hope that the Government will apply the stick firmly to local authorities that are irresponsible, especially on the revenue side. However, I hope that a carrot will be offered

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  to responsible local authorities in the form of a more sympathetic approach to their applications for capital expenditure items. I hope that my right hon. Friend will be able to give effect to what I know he believes to be right, and that if there are sensible capital expenditure programmes in the right areas they will be of benefit to local communities and a boost to the private sector.
  7.17 pm
  Mr. Robin F. Cook: I hope that you will forgive me, Mr. Deputy Speaker, if I preface my remarks by saying that I and a number of my hon. Friends think it unfortunate that on a night when eight Back-Bench Labour Members have been seeking to catch the eye of the Chair none of them will be successful in doing so until nearly eight o'clock in the evening.
  I understand that minority parties have their rights in the House. I understand also that it is for the occupant of the Chair to safeguard those rights. However, it is perhaps unfair that they should be treated consistently as surrogate Labour Members and that we should find ourselves drawing towards the close of the debate to when only one Labour Back-Bencher and four Tory Back-Benchers—it is characteristic that none of the Tories could muster one hour's experience of local government — have contributed to the debate. I shall be obliged, Mr. Deputy Speaker — I think that this applies to some of my colleagues — if you will draw the attention of Mr. Speaker to my remarks.
  Mr. John MacKay: I do not mind the hon. Gentleman hurling insults, but does he realise that I served on a local authority for five years before reorganisation?
  Mr. Cook: I am much obliged to the hon. Gentleman. I accept that correction. I wish that the hon. Gentleman had put that information in his printed biography. I withdraw my earlier remark. I made an error and I apologise. I have acted on the basis of printed information and, as has so often happened, it has misled me. However, that does not alter the fact that we have had four Tory Back-Benchers participate in the debate and only one has served in local government.
  Mr. Deputy Speaker (Mr. Richard Crawshaw): Order. The hon. Member for Edinburgh, Central (Mr. Cook) is wasting time. The Chair is not unmindful of those who have been trying to catch the eye of the Chair as opposed to those who might enter the Chamber later.
  Mr. Cook: The Bill should be resisted by the House because it marks one more step in the relentless march towards central control by the Government over local authorities and local authority decision-making. There is a cosmetic attempt in schedule 2 to pretend that restraints on local government are being removed by the Government. Some of the provisions in schedule 2 amount to no more than pleasing jests. Presumably they are intended to give light relief to those who sit in Committee considering the Bill.
  Surely, that Committee is not intended to take seriously the provision that local authorities should no longer be encumbered with the obligation to lay down standards for cattle grids. The Committee will not be impressed to discover that local authorities will be given their own freedom and discretion on tree preservation and in
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  deciding how they should style their chairmen's title. They are not the stuff of local authority elections. They are not matters that call for further local authority expenditure or staff. To pretend that that is removing in any serious degree central Government control over local authorities is totally bogus.
  It is paralleled in the Bill by clauses that effectively garrot local autonomy by using local authorities' own purse strings to strangle them. Reference was made to clause 23 by my right hon. Friend the Member for Glasgow, Craigton (Mr. Milian). It provides an entirely novel power for the Secretary of State to revoke capital consent that he has given to local authorities, provided that they have not entered into a binding contract. There are no grounds provided in clause 23 as to when the Secretary of State may invoke those powers. He does not have to display any conditions or show that any condition has been fulfilled. He merely has to decide that he will invoke his blanket powers under clause 23.
  That must worry the House. It is a power being sought by a Government who have shown that they are willing, by sudden, disruptive and damaging intervention in local authority affairs, to cut back their capital programmes. They are a Government who are so besotted by their own monetarist dogma that they have introduced a moratorium not only on housing expenditure but even on defence expenditure. They have put thousands out of work, bankrupted small firms and thrown the programmes of the Ministry of Defence and local authorities into disarray, and yet they have the nerve to pretend that these moratoriums somehow will contribute to economic recovery.
  The clause is of rather academic interest to Lothian region, which already is not allowed to spend any capital money unless we speak nicely to the Secretary of State, send him a little essay in justification of the project and wait six months. I should like to share with the House some of the projects that have been caught by the provision. One is the provision of highways and sewers on industrial estates. That is the expenditure which Lothian region wants to undertake and which is called irresponsible. That is the controversial expenditure. That is what the Secretary of State is resisting. Private sector firms are encountering delay in the provision of factory units because Lothian region has not been allowed to finance highways and sewers.
  There is also the provision of a social work centre at one of the growth areas within Lothian region at Livingston. Livingston now has over 10,000 households. It has no social work centre. Therefore, Lothian region applied last spring for permission to construct a social work centre at Livingston. [Interruption.] The hon. Member for Edinburgh, South (Mr. Ancram) finds that funny. I am sorry to see that. He has over his years in public service given an impression of concern for social issues and social services. I am sorry that he sees it as a jest that a major community in the region that he has the honour to represent in this House should be denied such a facility.
  Since the spring, Lothian region has had no response to its application for capital consent. As a result, it has paid £20,000 to the contractor to keep alive the tender which has been held up by the Government. That is not saving money. It is an egregious waste of public money. That is' the kind of consequence of rule from St. Andrew's House.

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  It will become widespread if the House is foolish enough to entrust to the Secretary of State the powers that he is seeking in clause 23.
  Mr. Rifkind: Has the hon. Gentleman considered why the Secretary of State feels it necessary to impose that restriction not on local authorities generally but on the one authority to which the hon. Gentleman refers?
  Mr. Cook: I know perfectly well why the Secretary of state has taken such powers over this local authority. He is seeking a scapegoat. He is seeking to penalise one local authority which happens to have been hounded by the press, with great co-operation from the Under-Secretary of State and his hon. Friend the Member for Edinburgh, South, to whose speech I shall be turning shortly. There is no evidence whatsoever in the expenditure of Lothian region to justify the way in which it is being victimised by the Government. As I said earlier when I intervened in the speech of my right hon. Friend the Member for Craigton, Lothian region is spending exactly 6 per cent. more than the Scottish average per capita and substantially less than many other regions, which does not justify the way in which it has been singled out for treatment by the Government.
  We all know well — I am grateful to the Under-Secretary for drawing our attention to the matter again—which authority will fall Foul of the powers in clauses 13 and 14, if they are carried. It will be Lothian region again. I shall tell the House why the Secretary of State is seeking new powers under clause 13 rather than relying on the existing powers in the 1966 Act. The reason why he is not relying on the powers in the 1966 Act is that they can be invoked by him only when the outturn figures are available He knows full well that the reason why the rate poundage in Lothian region this year is higher than that in other regional authorities is that it refused to accept the right hon. Gentleman's figure of 13 per cent. for price inflation and included a figure of 15 per cent. Lothian, like all other authorities, is heading for a deficit, but it is less than that which has been incurred by other regions. Strathclyde's deficit, even on a proportionate basis, is well over double that of Lothian region. Strathclyde—and one cannot blame it for that — accepted the Government's figure of 13 per cent. as the figure for pi-lee inflation.
  The Secretary of State now knows, because we are sufficiently far through the year, that at the end of this year when the outturn figures arc available he will have very great difficulty using his powers under the 1966 Act. When he gets to court, it will be obvious that the difference between Lothian and other regions is not that it was more extravagant but that it was more prudent than the others in making better allowance for inflation. The Under-Secretary laughs, but it remains a fact that Lothian region's deficit is less than the deficits incurred by other local authorities.
  That is, why the Secretary of State is seeking power that will give him the right to intervene at the estimate stage, although II honestly greatly doubt whether St. Andrew's House is in a better position to provide an estimate for each local authority than the officials and councillors who have represented those authorities over a period of years. However, he will be able in go to court without being encumbered by the awkward reality of discovering the out-
  846
  turn figures across Scotland. That is why there is that provision in the Bill and why the right hon. Gentleman is seeking the power.
  Mr. Rifkind: If the hon. Gentleman really believes that, can be explain why the Lothian region is the only regional authority in Scotland this year that has planned for a growth in its budget? That was a major factor in the rate increases imposed in that area.
  Mr. Cook: It is not a major factor. The factor by which the growth planned by Lothian region increased rates is exactly 2½ per cent. of a total increase of 42½ pet cent. That shows the extent to which it was a major factor. I shall come back later to exactly what that growth was.
  If the hon. Gentleman will allow me, may I first polish off my remarks on clause 13? The other reason why I find it objectionable is the totally outrageous sweep of discretion that it gives the Secretary of State. I noticed that when the right hon. Member for Orkney and Shetland (Mr. Grimond) made his speech he misquoted the conditions in clause 13. He said that the Secretary of State could invoke his powers under that clause on the basis of "such other criteria as were appropriate". The right hon. Gentleman had to correct himself. What clause l3 says is
  "such other criteria as he considers appropriate".
  It would be entirely reasonable to say "other criteria as were appropriate", because that could be tested and challenged in the courts. However, by inserting his own no doubt complex and confused stream of consciousness into the process, the Secretary of State has made sure that no future court can peer into the way he was thinking and the kind of criteria that he considered appropriate.
  What criteria will the Secretary of State consider appropriate? Will it be that there will be a new moon the next week? Will it be that the hon. Member for Edinburgh, South has made another speech attacking Marxists in the Lothian region? We do not know. The Bill does not tell us. The Secretary of State has just left the Chamber in case he might be tempted to tell us what he considers appropriate.
  I wish to draw attention to one other power before moving to my general remarks—the power contained on page 24. It is a new power which has not been mentioned hitherto in the debate. I am not surprised. It is tucked away in a schedule headed "Minor and Consequential Amendments". However, within schedule 3 on minor and consequential amendments there is a whole new set of powers for the Secretary of State concerning what he can do with the money that he has docked from the offending local authority. According to paragraph 8, he can do one of two things. He can restore it to the local authority
  "if he considers that their subsequent conduct has been such as to merit such restoration."
  Never in any Bill have I seen such vacuous, vague and flaccid terminology, giving such a wide and sweeping range of discretion to the Secretary of State. What will be the subsequent conduct that he considers to be such as to merit the restoration of the grant? Is it that an authority has stopped giving interviews to the press criticising him or, in the case of Dundee, that it has decided to drop its opposition to the Tenants' Rights Etc. (Scotland) Act? We do not know. We are not told in the schedule, and it would appear entirely proper for the Secretary of State to base his decisions on any of those examples. He can give the

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  money to other local, authorities "as he thinks fit" — again, untrammelled by any condition, any formula or any challenge in the courts, but simply "as he thinks fit".
  This is arbitrary government with a vengeance. This is a new power that no previous Secretary of State has enjoyed. The right hon. Gentleman can single out particular local authorities and reward them with extra money, and he can penalise other local authorities for unspecified reasons.
  The irony is that, as with so much Government legislation over the past year, this is legislation based on myths—the myths that public expenditure in Britain is too high and is increasing because of local authority expenditure. Our public expenditure level is now one of the lowest in Europe. In terms of the purchase of goods and services, public expenditure has fallen as a proportion of GDP over the last five years. It is totally untenable to argue that local authority expenditure has increased over the same period. If Conservative Members would only pause in the middle of their diatribes and look at the Government's White Paper on public expenditure, they would find that between 1974 and 1980 expenditure by local authorities in Scotland fell by 9 per cent., while expenditure by St. Andrew's House increased by 7·6 per cent. It is not local authorities that are putting up public expenditure. Local authorities have borne the brunt of cuts in public expenditure over the last six years.
  In producing a Bill that imposes new sanctions and new penalties on local authorities, the Government are clearly trying to single out local authorities as a scapegoat for their difficulties, and they have managed it with considerable finesse. Conservative Members criticise local authorities for employing bureaucrats, but the irony is that the Secretary of State for Scotland employs virtually no one but bureaucrats. I do not criticise them for being bureaucrats. Bureaucrats have an important, vital job to do. By comparison, the local authorities employ a small proportion of bureaucrats. The great majority of their staff are policemen, firemen, teachers and social workers. The hon. Member for Edinburgh, South referred to the increase in staff in the Lothian region. The increase for the last 12 months is 589, which includes 86 policemen and firemen, 207 teachers and 218 social workers. They are not bureaucrats. The figures cannot be denied.
  The Under-Secretary of State criticised the Lothian region for new growth in its last budget. One half of that new growth included a mere £1 million for the social work department, to provide more home helps to cater for the increasing number of elderly people in the Lothian region, to provide a laundry for incontinent people who live at home and to provide an alarm system for elderly people who live at home and who do not want to go into a sheltered housing scheme. That last provision will save public expenditure in the long run. If the councils in the Lothian region decide that that sort of expenditure is necessary for their community, they should be free to take that decision and be answerable ultimately only to the community that elects them. If we reach the stage where the Secretary of State is empowered to decide that Lothian region council has made the wrong decision or that the electors made the wrong decision in electing it, we are in danger of extinguishing local authority autonomy.
  I regard that not simply as tragic but as dangerous, because local authorities are an important element of
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  democratic decision-making within our country and form part of the important system of checks and balances which is ultimately the only guarantee of personal liberty. We are dealing not simply with a technical change in the way in which the rating system works but with the fundamental issue of local democracy and the right of local communities to elect local people to reach their own decisions. That is why I think that the House should throw out the Bill rather than pass it as yet a further step on the road to dictatorship by parliamentary majority
  7.35 pm
  Mr. Bill Walker: I welcome the opportunity to speak in this important debate, but I wish that we lived in a country in which a Bill of this sort was not required. I am saddened that we have to introduce a Bill of this nature. Why do we do it? We do it because if democracy is to survive in this country the relationship between local and national Government should and must be better.
  The population at large know that the relationship between the Labour Government and local government was bad, and they know, too, that the relationship between this Government and local government is not good. The population at large wonder why and ask why. I hope that I can make a contribution and shed some light on some of the problem areas. Sadly, I believe that politicians in local government and in Parliament are frequently interested only in scoring political points. Often the view is taken that the end justifies the means.
  This has been an interesting day for Scotland, because it has brought forward two patriots, one from either side of the House, and I do not think we should ignore that. The speech of my hon. Friend the Member for Glasgow, Hillhead (Mr. Galbraith) in Committee this morning and that of the hon. Member for Glasgow, Provan (Mr. Brown) were both good, and they were good contributions to democracy. They were important speeches, which should not be brushed aside humorously.
  I believe that the hon. Member for Provan believes in democracy—and he is a patriot, which is important. It may not be fashionable in some quarters, but the public at large are looking for more people who are patriots—in this House and elsewhere. The hon. Member for Provan and I are rarely likely to agree on political issues, but I hope that he will agree that I frequently speak to Labour councillors and to Labour Members of Parliament. I listen to what they say, although I do not necessarily agree with them. I hope he will agree also that I am not gagged in Committee.
  No one in the House or elsewhere denies that we have a world depression and that there has been a loss of markets, yet some of our wounds are self-inflicted—for example, savage rate increases. The taxpaying, ratepaying industrial and commercial firms, without exception, are looking for substantial reductions in local authority expenditure, particularly in revenue expenditure.
  I hope that the Bill, particularly clauses 13 and 14, will reward the law-abiding councils, such as Tayside and Perth and Kinross, and I hope, too, that it will penalise the non-law-abiding councils. I draw attention to Dundee district council, in which I have an interest because part of my constituency falls within it. Sadly, the history of the city of Dundee is one of constantly inflicted damage. The individuals living there do damage to that city, and local politicians seem almost hell-bent on destruction. They

  849
  refuse to accept the law of the land, whether that law is passed by a Labour Government or by a Conservative one. That is not very clever, because in Dundee we are concerned with the creation of new jobs, and we cannot create new jobs if the image in the locality is damaging to their creation.
  I agree that we must look carefully at the statutory obligations that we place on local authorities. We put statutory obligations on them and then we object when they bring manning levels up to what they regard as necessary to carry out those obligations. That is riot terribly clever, and it is something that we in the House should consider.
  I should like to draw attention to the creation of nonessential jobs that do not arise from statutory obligations. I refer specifically to the activities of Dundee district council. I find it difficult to see how, in times of great economic pressure, it can justify a research officer. It may be that this research officer will help the lord provost or the leader of the administration to seek out new cities which, in the eyes of the political commissars there, would tie suitable for twinning, but perhaps if the council had had a research officer before it would not have carried out the most recent example of twinning.
  In Dundee district it is common knowledge that the chief officials are not allowed to shed any labour, even if they consider it to be surplus. The council ignores the desire of the electorate to get value for its rates. There was me example of the Dundee Standard. The Dundee district council channelled substantial funds towards advertising in that newspaper. Sadly, in the eyes of some people, we have seen the demise of that paper, but that is not the view f the majority of Dundee citizens.
  The controller of audit for local authority accounts, in reply to correspondence that he is having with me, says:
  "The Auditors do not now consider it necessary to pursue the question of duplicate advertising in the Dundee Standard since the point has been rendered academic by that paper's demise"—
  this is the important point—
  "out they will be keeping a watching brief to raise the value for money issues again should there be any suggestion of the standard being revived and the practice of duplicate advertising resumed."
  That is the kind of thing to which industrialists on Tayside and in Dundee object.
  It is important that we recognise that today there are many people in local government who, sadly, feel that they are being got at that somehow they are the victims Of every politician who wants a cheap headline. People who work for local government should recognise, more than anyone else, that they do not generate the nation's wealth. They have to be paid for out of the areas in which the wealth is created. If we have people in jobs that we cannot afford, something will give eventually.
  We also have to recognise the attitude to work of local government employees in some areas. There is not the incentive to do as well in local government as elsewhere. The rewards are not there as they are in other areas. We should recognise that. Coupled with that is the fact that a number of people who work in local government are determined to get the best out of the system as it exists. That includes taking days off for sickness, and so on, in order to decorate their homes.
  Mr. Norman Hogg: This is a scurrilous attack on local employees. Unless the hon. Gentleman is to say who they are and what their practices are, it is unacceptable that he should make that kind of ignorant attack.
  Mr. Walker: I am confident that anyone outside this House who works for local government and who listens to the debate or reads about it will be able to look around his office or department and say "He is the one that we are talking about." The people who work in local government will judge whether I speak the truth as I see it or whether the hon. Member for Dunbartonshire, East (Mr. Hogg) is again making a political point.
  It is important that we do not condemn the majority, who are good workers and want to do their best but whose attitudes are very much influenced by those of the spongers and the scroungers. We all know that it is very difficult today to sack a public servant simply because he is not pulling his weight. I have some suggestions to make on how the Government and other people could look at this problem and deal with it, first in regard to overmanning and secondly in regard to incentives.
  We should perhaps consider having a higher rate of income tax for those who work for national and local government, and a lower rate for those who work in manufacturing and commerce, which generate the nation's wealth. For example, if 75 per cent. of the employees in an organisation could be classified as being engaged in manufacturing or commerce or creating wealth, they would enjoy a lower rate of income tax. That would in some way compensate for the difference between job security and lack of job security.
  Local authorities should get rid of their large architects' departments, quantity surveyors' departments and direct labour departments. They should, instead, put the work out on contract to the private sector at the keenest possible price.
  I draw the attention of Labour Members to the achievements of Tayside region, which has reduced its work force, and thereby made a contribution to a reduction in revenue expenditure, in the year eliding July of this year. There has been a reduction of nearly 500 in staffing levels. If that can be achieved by one region, surely the example can be followed by others.
  I hope that the Government will look carefully at revenue expenditure and use the powers in the Bill which are directed largely at revenue expenditure and stop the insane cutback that successive Governments have made in capital expenditure projects. The nation needs those projects as part of the infrastructure in the battle that we face in competing with other nations. The seeds that we sow will produce the harvest that we get. That was true of the previous Government, and it is true of this one.
  That is why I am unhappy about the introduction of the Bill. I wish that we did not have to introduce a measure of this kind. I wish also that we had responsible authorities, and I am saddened that one of the irresponsible authorities is in my own constituency.
  7.48 pm
  Mr. Norman Hogg: It is extremely difficult to maintain one's good temper and good humour when following a speech such as the one just made by the hon. Member for Perth and East Perthshire (Mr. Walker). Since I entered the House in May 1979 I have not previously heard such a speech. It was quite the most reactionary that I have heard here.

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  I am sorry that the speech was also irresponsible, although the hon. Member is fond of talking of responsibility and insisting that he is the custodian of true responsibility and that everyone else is in error. He would have made a splendid seventeenth century theologian. But his attacks on the Dundee district council and other local authorities have been scurrilous. I am sorry that I have to follow such a speech, because to some extent it has put me off my stroke.
  It is interesting that as the day has been wearing on Conservative Members have started to apologise for the Bill. This morning, in the Scottish Grand Committee, they did not find it possible to support the Government with their votes, and tonight they are apologising for an important measure that is before the House. That is very significant. There is a very big difference between the Conservative Party's rhetoric at the last general election and the reality of what it does now that it is in power.
  We remember all the slogans about Tory freedom—about how the energies of the people were to be released as a result of the great extension of freedom under the Tories. That is very different from what is being proposed in this measure and what has been brought before the House in recent months.
  This morning, when the hon. Member for Glasgow, Hillhead (Mr. Galbraith) made his contribution in the Scottish Grand Committee, it was refreshing to hear a demand that the Government should keep their word and honour their commitment, for that is not what they have been doing since they came to office. It has been no surprise to those of us on the Labour Benches, because we did not expect anything different. What we have been having from the Government most of all is massive cuts in public expenditure.
  Local authorities have had to carry the main burden. Recently, further cuts were announced in the mini-Budget. The Government are legislating in support of their dogma. They are not merely managing the economy but cutting the expenditure of various Departments and of local authorities. The Government legislated in support of their dogma in the Tenants' Rights, Etc. (Scotland) Act. The Bill represents an extension of that type of legislation.
  The public expenditure cuts are having a cumulative impact on local authorities. We are beginning to see how those cuts will bite. Recently, I had an opportunity to discuss the situation with the provost of Cumbernauld, Bill Taylor, and his officers. I was disturbed by the problems faced even by a local authority of that size. I was told that it had overspent by 32 per cent. on comparative estimates—provided by the director of finance—for the period ended 31 October 1980. I was also told that part of the cost was due to under-budgeting by the previous SNP administration, which had sought to keep down rates during an election year. That local authority has no means of achieving the cuts demanded by the Government. It was £200,000 down before the elections. That is equivalent to 1½p on the rates.
  That authority cannot make the cuts required. It faces high interest rates. At present, its loan charges amount to £300,000. The housing support grant has been reduced by £640,000. Such things are happening in local authorities. I have related the experience of one local authority in East Dunbartonshire.
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  The Government plan a wider attack. They wish to interfere directly in local authority expenditure. Governments do that, but this Government wish to extend their powers under clauses 13 and 23. Local authorities will no longer be able to determine their priorities. They will be subject to the Secretary of State's diktat and to his central bureaucracy. My hon. Friend the Member for Edinburgh, Central (Mr. Cook) pointed out that the Secretary of State employed only bureaucrats. He was right. I wish that people would recognise the services carried out by local authorities. The Secretary of State's bureaucrats will dictate to local authorities more and more. Irrespective of local need, the Government will dictate the position. Local councillors will no longer have the right to legislate for their areas without that legislation being subjected to the Secretary of State's approval.
  Council committees will have to wait to see whether their plans have been given the Secretary of State's seal of good housekeeping. I am sorry that so many Conservative Members should have decided to support this measure, despite the fact that some have qualified that support with a degree of reluctance. They intend to go into the Lobby and to defend and support the Bill.
  I am not sure what criteria the Secretary of State will use when determining whether an authority's expenditure is legitimate. I hope that the Under-Secretary will tell us what criteria the Secretary of State will apply when making such decisions. I fear that we shall hear only the expression of the Secretary of State's prejudices and paranoia about local authorities, such as Lothian regional council and Dundee district council. This measure was spawned by the prejudice and paranoia that he has displayed in the House month after month.
  These questions must be answered. We must know what the criteria are to be. I do not know who will serve in Committee, but I am sure that Labour Members will press the Secretary of State on those criteria. I am sure that attempts will be made to table amendments to mitigate his powers. Those who believe that local government should be conducted against a background of maximum freedom will find this measure deeply offensive.
  If the Bill is enacted, the Secretary of State will be given plenty of scope. It is sad that that should be so. I was amazed when I heard Conservative Members pleading for new ways in which to raise finance. The Layfield report has been issued. I should be interested to know what the Government think of it. I hope that the Government will tell us tonight whether they intend to do anything about any of its recommendations. I am sure that Conservative Members and some Opposition Members would welcome changes being made to the rating system.
  When I re-read the Conservative manifesto this morning—something of which I do not make a habit—I noticed that there was no commitment to dispose of the rates, despite the remarks made by the right hon. Member for Orkney and Shetland (Mr. Grimond).
  If the Bill is given a Second Reading, the House will damage the democratic structure of Scottish local government. If the House were to do that, it would approve of the onslaught on democratic institutions that has gone on since the Conservative Party came to power. The Bill will centralise power in the Secretary of State's hands. He has already demonstrated a blind adherence to Cabinet policy and a disregard for the interests of Scotland in favour of the well-being of the Conservative Party. That

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  does not serve the interests of local government. Those who are concerned about the future of local government will oppose the Bill.
  7.57 pm
  Mr. Iain Sproat: The hon. Member or Dunbartonshire, East (Mr. Hogg) began his speech by raying that he was surprised that so many Conservative Members had had to apologise for the Bill. I certainly do not apologise for the Bill. I am equally certain that my hon. Friends did not apologise for the Bill. They were saying—the difference was distinct and clear to everybody on this side of the House—that they did not apologise for the Bill but that they were deeply sorry that the Secretary of State should feel the necessity to bring in such a Bill because a number of local authorities in Scotland had been behaving in a certain way. That is an important distinction that must be drawn.
  I wish to direct a few brief remarks to part II of the Bill and to congratulate my right hon. Friend on doing something that should have been done long ago, namely, acquiring sufficient power to get a grip on local authority overspending. My constituents are fed up with paying, as taxpayers, for the spendthrift habits of certain other local authorities. I ant sure that the constituents of every other hon. Member feel the same, although Labour Members till not admit it.
  Day after day we see examples of ridiculous overspending and waste. In recent months the worst examples f crazy spending by local authorities happen to have been i England: the £10,000-a-year dustmen, the £14,000-a-year janitor, the £500-a-week heating engineer—all draining the poor hard-pressed ratepayer.
  Mr. George Robertson: Anomalies.
  Mr. Sproat: It is no use the hon. Gentleman moaning about ratepayers having to pay for janitors at £14,000 a year. If he knew a few janitors in his constituency on £14,000 a year, he would get on to his local authority. if did not, the ratepayers certainly would.
  Although such stories have not so far surfaced in Scotland, I dare say that it is possible to find examples that are just as appalling. We read in this morning's newspapers of two councils that are to pay on the rates for a "dancer in residence". What a time this is to employ a man on the rates to show people how to do ballet or Scottish country dancing!
  I have no objection to the Scottish Arts Council helping no subsidise that sort of thing, if that is what it thinks is tie best way to spend its money, though I do not. I certainly should object as a ratepayer of Fife and Tayside to the idea that my rates should go towards paying the annual salary of a "dancer it residence". That is simply one example from this morning's newspapers.
  We have already heard from my hon. Friend the Iv ember for Edinburgh, South (Mr. Ancram), who has done so much to bring the legendary activities of Lothian regional council to the attention of the ratepayers, of the it sane waste of. I think, £25,000 a year on a Socialist propaganda sheet, the Lothian Clarion. I wonder what is thought by the ratepayers in Lothian who do riot happen to be Socialists, or who are Labour Party supporters but not of the extreme variety that produce that newspaper, at out the £25,000 of their rates going on that publication.
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  My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) gave the example of the Dundee Standard. What a ludicrous waste of ratepayers' money that is!
  It cannot be said that there is no waste of ratepayers' money in Scotland when we can pluck from the air examples such as the Lothian Clarion, dancers in residence and a research officer fixing up for Dundee to be twinned with an Arab town. With all that sort of rubbish, it is indefensible to say that there is no waste by Scottish local authorities.
  Mr. Ernie Ross Mr. Ernie Ross (Dundee, West)rose——
  Mr. Sproat: The waste must be stamped out, and I am glad that in the Bill my right hon. Friend the Secretary of State is taking steps to do it.
  I now give way to the silent Member for Dundee, West (Mr. Ross).
  Mr. Ross: Dundee district council does not employ a research officer at this time. The decision to twin with the city of Nablus was taken by the local authority, supported by two independent ratepayer members of the authority.
  Mr. Sproat: I am delighted that the authority no longer employs a research officer. That is a sterling example of the excellent work done by my hon. Friend in rooting out abuses. The more he can root out, the better.
  In the past 12 months there has been a cut of about 20,000 in the number of persons employed by local authorities in England and Wales. Some of our English colleagues may say that that is not enough, but at least it is a cut. The biggest and most shocking example of waste in Scotland is that, far from cutting by 20,000, we have increased the numbers by 4,000. That is the scandalous refusal to recognise the economic realities that my right hon. Friend has done so much to try to bring before local authorities. I hope that one of the most important results of the Bill will be that we can crack down on councils that deliberately—as in the case of Lothian—take on more staff at times of economic difficulty in order to bring about a confrontation with the Government.
  The right hon. Member for Glasgow, Craigton (Mr. Millan) made a rather snide remark about Grampian region, a remark which I am sure will have caused great offence to my hon. Friends the Members for Aberdeenshire, East (Mr. McQuarrie), for Aberdeenshire, West (Mr. Fairgrieve), the Under-Secretary of State, and for Moray and Nairn (Mr. Pollock). Grampian has been the best housekeeper of all the regions in Scotland over the years. I recall the conversations that I had with the regional convener, Mr. "Sandy" Mutch, when the right hon. Member for Craigton was Secretary of State for Scotland. Mr. Mutch would say "We have this ludicrous new proposal from the Government, but it is our duty to obey them", and the region would do its best to implement Socialist policy. It ill becomes the right hon. Gentleman to start making attacks on Grampian.
  Mr. George Robertson: My right hon. Friend's comment was that in the last round of rate increases the Central regional council—Labour-controlled—had an increase of 17·3 per cent., which was lower than that recorded in the Grampian region, at 18 per cent.
  Mr. Sproat: That was not what the right hon. Gentleman said. He talked about the rate burden on individuals in Grampian, as the hon. Gentleman will find

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  in Hansard tomorrow. Of course, I accept that point, but what is irritating to us on the Conservative Benches is that the right hon. Gentleman says it in that snide, whining way of his—(Interruption.]—I challenge anybody to deny that that is a fair description of how he spoke this afternoon—without pointing out Grampian must bear almost alone the burden of the oil infrastructure, which is a massive burden on the rates. It has to bear that harsh burden in terms of roads, houses and schools, yet we receive little support from the rate support grant. Grampian is out of pocket by millions of pounds as a result.
  My right hon. Friend said this afternoon that he would look closely at the needs of local authorities. I hope that he will look closely at Grampian's needs in connection with oil development, because the development of North Sea oil is a national necessity. Therefore, it should have national funding rather than rely so heavily on local funding.
  The right hon. Member for Craigton said in vivid language that the Bill was a major attack on local democracy, and other Labour Members talked about cutting away the freedoms and principles on which local government is based. That is rubbish. As so often in politics, we find two excellent principles opposing one another. One is that we should maximise the freedoms given to local authorities. The other is that the Government have a duty to see that the taxpayer gets proper value for money. Those are both valid principles. It just happens that in the present case the one is vitiating the other. Certain authorities, such as the Lothian regional council and Dundee council, are abusing their freedom to such an extent that taxpayers elsewhere are having to fund their crazy Socialist schemes.
  When those two principles come into conflict, my right hon. Friend is right to say that of course we want to maintain the proper freedoms of local authorities but that where they abuse them we must look to our duty to protect the taxpayer. That is precisely what he is doing, and no more. No local authority that keeps within the limits of normal expenditure will ever find itself in danger of being hit under the Bill.
  For all those reasons, I strongly support my right hon. Friend.
  8.10 pm
  Mr. Ernie Ross: I welcome the opportunity to make a few comments on the Bill and to correct one or two inaccuracies about my local authority.
  It gives me no great pleasure to follow the hon. Member for Aberdeen, South (Mr. Sproat). One of the most obscene effects of the Bill will be that unemployment queues throughout the length and breadth of Scotland will necessarily grow. I am certain that in two or three months' time the hon. Gentleman will return to his favourite pastime of attacking those on social security who, because of the Bill, will be condemned to the dole queue for a considerable period. I find it unacceptable to listen to the hon. Gentleman when he addresses the House, because he never takes the opportunity to make it clear that those in the dole queues are not, never were and never will be social security scroungers.
  Despite the hypocritical polemics extolling the virtues of local government that we have had from Conservative
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  Members, the Government's policies will inevitably lead to the destruction of meaningful local democracy. Certainly, nothing could be more accurate than that as regards Dundee. Everything that we are attempting to do through the Dundee district council was made clear prior to the May election. We spelt out clearly what we would do when we took power, and we had the overwhelming support of the people of the city. We also had one of the highest votes in the four major cities.
  No one can argue that the Dundee district council was not democratically elected and that the ratepayers were not fully aware of the policies that we would pursue when we took control of the council—policies directly opposite to the policies pursued by the previous Tory-controlled council, which did nothing to help Dundee's image, employment, housing shortage or other problems affecting the ratepayers.
  Mr. Bill Walker: Is the hon. Gentleman saying that because Dundee district council was democratically elected on the policies on which it campaigned, it can do as it wishes? If so, he must accept that the national Government, who fund two-thirds of the expenditure and were also elected on their policies, can implement their policies, because they hold the purse strings.
  Mr. Ross: It is for the national Government to decide what support they will give to the various local authorities. The Bill seeks to prevent local authorities which disagree with the allocation from seeking to raise revenues legitimately by increasing rates. The Bill sets out to deny that right to the Dundee district council and other local authorities which are not prepared to accept the Bill and the policies pursued by the Government.
  The myth that cuts are necessary to help to restore the economy and are in a sense a patriotic duty has been well and truly hammered home by the media and by Conservative Members, but no one standing in any dole queue in Scotland would agree with that now.
  Mr. Peter Fraser: Given the hon. Gentleman's support for the Labour-controlled Dundee district council, will he make it clear whether he supports the council's intention to raise rents in the city by 200 per cent. in the next financial year?
  Mr. Ross: I shall come to that point later. I support my colleagues on the Dundee district council in everything that they do. I am prepared to say that here or on any other public platform.
  Conservative Members have not commented on the pressures on local authorities because of the massive interest debt that they have to pay. The Bill does not seek to alleviate that interest debt. The policy of selling council houses can only add to that debt and make it more difficult for local authorities to make both ends meet. I am not an expert on local rates. Therefore, I should like to quote the comments of the treasurer of the Dundee district council when he addressed the local branch of NALGO recently. He said:
  "The situation facing Dundee District Council was that because of Government restrictions on public expenditure at the present time and, in particular, its attacks on council housing and council tenants, the present Labour Administration must consider a variety of horrifying alternatives. One of these alternatives was the possibility that 2,000 of the council's 3,000 employees were facing the prospect of redundancy within the next few months. In order to stand still the District Council was faced, through

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  Government cutbacks in expenditure, the emptying of reserves by the previous Tory Administration and inflation in general, with finding £11 million more Man last year from local sources.
  As Councils only have three real sources of income and Government grants were being slashed almost on a weekly basis, the only alternatives, in order to maintain services at their present level, were increasing council house rents or rates. Even if council house rents were raised the £3 per week the Government was demanding, a rates increase would still be required, and council tenants would be faced with an increase in rents and rates of something like £4 per weak. The Labour Administration regarded this as completely unacceptable and yet another symbol of the Tory Government attacks on working people and their families. Dundee's rents were already above the Scottish average."
  He went on to make it clear that
  "the Trade Union representatives would be involved in consultation with the Administiation at all times and in a spirit of co-operation he was sure ant they could together overcome tie difficulties which faced the council, its employees and the general public."
  It is in that spirit that I support my local authority colleagues in their effort to offset the worst examples of Government policies.
  I should like to comment on some of the speeches made by other hon. Members. I apologise for not being present when the hon. Member for South Angus (Mr. Fraser) made his speech. Unfortunately, I had to leave the Chamber. However, I understand that the hon. Gentleman referred to the public comments made by my hon. Friend tie Member for Caithness and Sutherland (Mr. Maclennan) in his attack in the local media on the Dundee district council. No one in Dundee would accept D. C. Thompson as an unbiased or objective observer of local politics or anything else in this country. We regret that my hon. Friend the Member for Caithness and Sutherland did not feel it necessary to inform his colleagues of his intention. It is up to him whet her he supports us, but when he goes to the organs of D. C. Thompson to attack us we find it unacceptable and a matter that he must justify to his local party.
  The hon. Member for Perth and East Perthshire (Mr. Walker) said that the Dundee district council was hell-bent on destruction, with the creation of new jobs being ruined by the image of the locality. He referred also to the research officer that we intended to appoint to assist the local authority with its responsibilities. He also referred to the local authority advertising in the Dundee Standard. I here is a good possibility that the Dundee Standard will recommence publication very shortly. The hon. Gentleman can then pursue his comments with the Ombudsntian.
  On 23 October the hon. Gentleman, with his hon. Friend the Member for South Angus, attended a one-day conference in Dundee organised by the Dundee district council. The one comment teat was made time and again by those who took part in the conference, the one comment that came back from every seminar that was organised in an attempt to attract industry, was that the lack of o infrastructure held back Dundee's ability to attract industry. The one comment made time and again was that the main responsibility lay with the way that the media had failed to give any balance d coverage of what was happening in Dundee and simply ran scare stories that tended to worry people from time to time.
  An attack on workers in Dundee was made in the Scottish Grand Committee. The Dundee and Tayside chamber of commerce has trade it clear that the type of ill-informed and irrational comment made by the hon.
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  Member for Perth and East Perthshire has done more damage to Dundee's image than has anything else. The hon. Member forgot to say that Dundee district council has appointed a sports supremo and has lowered its charges for use of the leisure centre. It has done that because of the need and because of the present Government's policy. It has taken that action to ensure that the unemployed do something instead of hanging about and becoming involved in activities that allow people to suggest that they are having holidays in the Bahamas or are social security scroungers.
  Comments have been made about the Tayside regional council. In last Thursday's article "Man about the Town House" in the Evening Telegraph and Post, the convener of the Tayside regional roads department is quoted as saying:
  "There has been a virtual ban on staff replacements and this has left 48 jobs unfilled. That has been adversely affecting efficiency because there has been a staff imbalance in that department. A close look at the situation has shown that of the 48 unfilled jobs 29 can be removed from the establishment permanently. This has been agreed. What happens next is that some of the remaining 19 jobs will be filled to correct the imbalance."
  I place beside that quote a reply that I received from the Under-Secretary of State, who said on 13 November 1980 that 12,916 young people under 18 who had not entered employment since leaving school were registered as unemployed in. Scotland. The corresponding figure for Dundee was 637. He said that the number of males registered for more than one year as unemployed in Tayside was 2,774. At least 19 people have been registered at the employment exchange for at least a year because of the policies adopted by Tayside regional council. We do not accept such policies.
  I refer Government Members to the decision by Dundee district council to create 90 jobs for young people to ensure that they are not committed to the dole queues as Government policies dictate. I shall vote against the Bill. It does nothing for Scotland. It does nothing for Dundee. It does nothing for the unemployed. Government Members would do well to remember that the Bill will create further argument and further social and class divisions. At the end of the day, Goverment Members will be rewarded through the ballot box by their removal. We shall get rid of the Bill, just as we shall get rid of the Conservative Government.
  8.25 pm
  Mr. Donald Dewar: I read a preview of this week in Parliament in the Scottish press; which described the Bill that we are discussing as "tedious". I do not know whether it is tedious, but it is complicated. In order to understand it, one must refer to previous legislation and put together a kaleidoscope. The Bill raises a general principle and defines the differences of approach to local government democracy.
  I declare a non-interest. Occasionally I visit the Dundee district and the Lothian region, but I represent neither. My interest in the Bill is that it will affect not only contentious local authorities. The hon. Member for Aberdeen, South (Mr. Sproat) referred to the Lothian legends that were put about by the hon. Member for Edinburgh, South (Mr. Ancram). I agree that the Lothian region's reputation is a legend, and probably a Tory myth. It does not bear much

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  relation to reality. I congratulate the hon. Member for Aberdeen, South on being careful with words for once and on getting their meaning more or less right.
  The legislation will affect local authorities throughout Scotland. It will affect Strathclyde and Glasgow district and others. It deals with the nature of local democracy and the rights of local authorities to do their own housekeeping, to establish their own priorities and to keep them. It deals with the ability of local authorities to represent fairly and faithfully to the electorate the remit given at the ballot box.
  When one reads the cold and dispassionate prose of a Bill, one is often left wondering what it means in practice. We must know more than that which is interpreted by a person of common sense and good will. We must know what Secretaries of State for Scotland, particularly Conservative Secretaries of State, will do in practice when they operate the measures in the Bill. Having listened with care to the Secretary of State, I am still unclear about the exact impact of some of the measures, particularly clauses 13 and 14 and later clauses dealing with local government structure. We feel that we are facing something that is either unnecessary—which I do not really believe, although I should like to—or distinctly sinister. That fear is shared in responsible local government circles. The feeling is extremely dangerous in itself.
  The Bill contains such phrases as "excessive and unreasonable expenditure". One is entitled to ask what is "excessive and unreasonable". The difference between the new formula and section 5 of the 1966 Act is the point in the spending process at which the Secretary of State might intervene. Under the new legislation, that can be done at the point when estimates are before the local authority rather than waiting to see the ultimate outturn.
  The Under-Secretary of State, to his credit, is always competent on details. I am sure that he has a sound knowledge of what has happened to local authority expenditure in the last three or four years. I repeat that I should like him to consider whether what has happened in Lothian or in any other local authority over the past four years has justified the activation of clause 13 at the estimate stage on the ground that the proposed expenditure was "excessive and unreasonable". If he says that that procedure will not be activated, as happened with the 1966 machinery, we shall at least acquire some understanding, though perhaps in a negative way, of the Government's intentions. If he describes circumstances in which it will be activated, he will provide an interesting guideline by which to evaluate the proposals.
  Let us look at the bland statement in the explanatory and financial memorandum. It merely says that clause 13
  "extends the Secretary of State's powers".
  That is no help in trying to understand the Government's intention. The Secretary of State is a reasonable man, as we all know. That is his constant pose. He agrees with almost any proposition that is put to him, until he is called upon to take action. I want to know how he will interpret the measure. Perhaps his surrogate, the Under-Secretary, can shed some light on the matter.
  I do not believe that this measure has been introduced as some sort of legislative lumber. Surely we are not to be put through an exhausting Committee stage—I can promise the House that it will be exhausting—purely and simply to tinker with the fine print of a legislative
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  enactment that, since 1948, has never been used by Secretaries of State of either party. That would be a pathetic situation, and, to be fair to the Government, I do not think that that is the case. The legislation must mean something, and we are entitled to know what it does mean.
  The hon. Member for Edinburgh, South, in his somewhat intemperate but typical attacks on his local authority, made clear that he thought that its actions were excessive and unreasonable. Perhaps the Under-Secretary will tell us whether this year, for example, he would have used the new machinery and, if so, what the effect would have been on the expenditure of that local authority.
  I have seen some minutes of a meeting that took place on 17 October 1980 between the Secretary of State and the COSLA finance committee. Clause 13 was discussed at the meeting. The minute said—I assume that it was an agreed minute:
  "Spending performance relative to the guidelines would not be the sole determinant when the Secretary of State considered the use of his powers to reduce grants. The Secretary of State would also have regard to trends in the volume of local authorities' expenditure and other relevant considerations."
  It was put to me very forcefully by senior local government representatives that they had pressed hard for a definition of those "other relevant considerations" but that they ended up none the wiser. I hope that we shall be given some information by the Under-Secretary before tonight's long watch is over.
  I share the genuine concern that exists, as I think the Minister will accept, about the predicament of local authorities in Scotland. If my suspicions about the Bill's importance are justified, the Bill is clearly another "cabin'd, cribb'd, confin'd" threatening piece of legislation, amounting to a major attack on the freedom and room for manoeuvre of Scottish local authorities.
  Government policy is forcing up rates inexorably and dramatically. In Strathclyde, which is by far the largest local authority in Scotland, the shortfall in cash limits was about 5 per cent. That authority was given certain cash limits, although the calculation was made on the likely outturn of wage increases and prices, and those cash limits turned out to be far too conservative. If one takes 1 per cent. shortfall as representing 2p in the Strathclyde rate, the shortfall will amount to a rate increase of nearly 20 per cent. for the coming year before anything else is included. That has been enforced by Government policy. Strathclyde is left with a deficit of about £30 million, which has to be funded initially out of the new rate.
  If one assumes that in the coming year cash limits will be calculated on an estimate of pay increases of 6 per cent. and price increases of 11 per cent., it will be seen that there will be a cumulative process, which will leave local authorities in an extremely unpleasant and unsound financial position, through no fault of their own but entirely due to the guidelines being enforced by the Government.
  That is the first part of the problem. The Government are deliberately forcing up rates by substantial amounts. Also, as we all know, they are attempting to force authorities to cut the services that they are providing for their areas. If a local authority wishes to manoeuvre, as I believe is its democratic right, and tries to reduce the impact on the services it provides by raising rates, it will be caught under clauses 13 and 14.
  It is a serious situation. No doubt the Secretary of State will say that in real terms the rate support grant during the

  861
  coming year is likely to fall by only 3 per cent. But it is much more than 3 per cent. A region such as Strathclyde or any other major local authority has an immense number of statutory obligations that must be met.
  Those obligations include the pupil-teacher ratio, the lire services and the sewerage services. That 3 per cent. will inevitably have a heavy impact on the limited areas of discretionary services.
  I have heard it suggested by responsible local authority officials and elected members that the impact on discretionary services could be as much as 30 per cent. Even if one says 3 per cent., it will not end up as 3 per cent. There was supposed to be a fall of 2 per cent. last year in the value of the rate support grant, but it ended up as a fall of 7 per cent. once the cash limits had been involved. If one takes the same sort of ratio, that 3 per cent. may become 11 per cent., and its impact upon discretionary services such as the home help service and nursery school places will be nothing short of catastrophic.
  It is not irresponsible for an elected local authority to say "We would like to raise the rates to a limited extent hi an effort to try to preserve humane and decent services." After all, the local authorities will eventually take the consequences at the ballot box. Yet, if they say that, they will be immediately clobbered by the Government in respect of next year's rate support grant. That is a thoroughly bad situation for the whole structure and credibility of local democracy in Scotland.
  The situation is infinitely worse with regard to housing authorities. My right hon. Friend the Member for Glasgow, Craigton (Mr. Milian) quoted the alarming—that is not an overstatement—figures for the housing support grant and said how that would tumble wider the Government's present plans at a time when, at lest in comparative terms, more and more is being done for those who are holders of mortgages.
  As someone who used to practise law and is still in touch with those who do, I should point out that the proof of the pudding is the practical advice that men of business give their clients. If someone comes into a law office in Scotland at present and discusses his financial situation, he will be told that the best legal advice is "Get the biggest possible mortgage you can, because it is such a bargain, given the tax concessions that are attendant upon it." Someone who earns a substantial middle-class salary and who has a mortgage of only £2,000 or £3,000 is a financial mug. He is plain daft, and will be told so by his professional advisers. At the end of the day, that makes the point as dramatically and Practically as needs be.
  Although the housing support grant is being cut by 10 per cent., the situation is much worse than that, because Government policy will deliberately force up council house rents by up to 40 per cent. I represent a constituency in which there are 26,000 council houses. A lot of those people are now in genuine hardship because of the general impact of the Government's economic policies and, to be fair, the general recession that is affecting the industrial world. If council house rents in Scotland are forced up from £5·83 to £8 a week, as is contemplated, the impact will be considerable. Of the 10,300 householders in the Drumchapel scheme, about 25 per cent. are currently receiving rent rebate and another 1,098 are paying their rent direct. It is being deducted direct from benefit by the local authority, in consultation with the DHSS. One possible result of forcing up rents in the way that has been suggested is the ludicrous proposition that more and more
  862
  people will have to get rebates. It is not a practical social policy to say in defence of unreasonable limits that 43 per cent. of the population is so poor that it is not being asked to pay the whole amount in any event.
  Where does that 43 per cent. go? If wages are held down to 6 per cent. and inflation to 15 per cent., and if council house rates are pushed up by 40 per cent., we shall end up with 80 per cent., or some such figure, in areas such as mine receiving a rebate. As a result, the whole system will be reduced to an unjust farce. More importantly, a lot of people in my area—perhaps because of bad take-up, or because they are on the margin—will have to bear this increase directly, arid they will quite properly resent that.
  I am not one of those who believe that one can have an indefinite freeze on house rents or that house rents should in some way never reflect general inflation trends. However, at a time of economic recession I object to forcing up artificially the rent levels in council housing by a factor of three, four, five or six times what the Government are asking in terms of pay rates and several times the going inflation rate. It makes no sense whatsoever. It will breed frustration, dissent and genuine and well-justified anger in constituencies such as mine.
  At the same time as the Government are doing that, they are cutting back on the capital allocation that will be available to local authorities. One may visit an area such as Drumchapel, or Garscadden, at the bottom end of my constituency, or Garscube Netherton, and sit in a house that was built in the early 1930s and has never been rewired since then. If the local authority representative says "I know that it is dangerous. I know that the plugs are overheating and that there have been many fires in the scheme. But I am awfully sorry, we have no money to rewire. And, by the way, the Government are asking us to raise your rent by 40 per cent. for this totally unsatisfactory house", that is a recipe, again, for something positively explosive.
  It is not just a "Catch 22" situation for the local authorities; it is "Catch 22" squared. It is a thoroughly unrealistic position into which to place elected local representatives. It is a squalid travesty of social justice. It is positively wrong—I use these words with care—and bordering on evil to say, as the Government are now saying, that we should link the capital available for housing inprovements to the level of rents.
  Housing capital should clearly be a matter of need. We may not be able to satisfy the need as generously as we want because of general financial privation and lack of public finance. We all accept those realities. But to say that if we do riot force up council house rents to a predetermined level that the Government want we shall have less money for rehabilitation, rewiring, and tenants' grants is basically an evil concept and one that should be thoroughly rejected.
  There is far too much in the Bill that smacks of centralism of the worst sort, but it also smacks of a total insensitivity to the realities of life in housing schemes, certainly in industrial central Scotland, part of which I represent and in which I operate.
  The Bill is fundamentally wrong. Therefore, it cannot be put right in Committee. That is why I shall vote against it tonight and why I shall be right to do so.
  8.42 pm
  Mr. Albert McQuarrie: In following the speech of the hon. Member for Glasgow, Garscadden (Mr. Dewar), one has the impression, as has been so often the case this evening, that we are discussing not the Local Government (Miscellaneous Provisions) (Scotland) Bill but a housing and rents attack Bill for Opposition Members. In fact, this is a small Bill which
  "makes a number of changes to existing legislation relating to financial and other matters concerning local government."
  It also
  "provides for improvements in the valuation and rating system."
  It
  "provides for changes in the Secretary of State's powers to reduce rate support grants".
  In that connection, the hon. Member for Garscadden said that clause 13 stated only that it extended the Secretary of State's powers—full stop. What the hon. Member did not read, and what I would have expected him to be doing anyway, with his legal mind, was reading the small print, which says that clause 13 not only extends the Secretary of State's powers but gives the Secretary of State
  "powers to reduce any element of rate support grant payable to a local authority where he is satisfied that the authority's estimated expenditure is excessive and unreasonable."
  That is the important factor in clause 13. Concerning the Secretary of State's powers, that is the factor in which we are interested.
  However, the Bill involves a wide range of changes. There are 33 clauses and four schedules. Many of the clauses are minor clauses and certainly not totally committed to the RSG or to rent increases, as we have heard from Opposition Members.
  In the limited time available to me, I should like to comment on the clauses that cause me concern. Clause 6 empowers a rating authority to grant a rates remission in respect of land and heritages unoccupied and unfurnished for three months. I have no objection to such a remission being granted where there are genuine reasons for the land and heritages remaining unoccupied. However, properties are often held in that state by their owners for one simple reason—greed. The owners wish to obtain a greater rent, and it would be wrong if the Bill were to entitle them to a remission of rates when they are not making the property properly available.
  Mr. Rifkind: I think that my hon. Friend may have misread the clause. The law presently provides that the three months during which property has been unoccupied must be in one financial year if it is to secure a rates remission. The Bill simply means that the three months can be spread over two financial years. It is a tidying-up procedure of which I am sure my hon. Friend will approve.
  Mr. McQuarrie: I accept my hon. Friend's explanation. In my local authority experience, however, I have encountered such cases as this. I hope that the Bill will not enable a person who has property empty purely for the purpose of seeking a higher rent to obtain a rates remission.
  Clause 7 causes me concern because it changes the arrangements by which householders can pay their rates by instalments, replacing the prescribed sum by one of £20. It also gives a local authority power to fix such lesser figure as it may think appropriate. This may not seem a great deal of money to most people, but it is to elderly persons who live in properties in Scotland with low
  864
  rateable values. It will cause these people worry if the local authorities fix the figure at £20 and if they are therefore required to pay their rates in one fell swoop instead of the weekly instalments to which they are accustomed. I hope that the local authorities will think seriously before fixing the figure at £20 or even at a lesser amount.
  Clause 13 has been the subject of comment from both sides. It covers rate support grant. It could be unlucky for some, to echo the call in the bingo halls, and justifiably so. In spite of what Labour Members have said, a number of local authorities in Scotland have simply increased the domestic rate year after year to finance grandiose schemes, which are of no benefit to ratepayers, such as the construction of huge edifices to house the bureaucrats and their massive empires that have been created over the years.
  I am sorry that no part of the Bill in any way abolishes the domestic rate. If it did, we might be able to rid our local authorities of the problem of a continually increasing domestic rate. My party's manifesto in 1974—the hon. Member for Dunbartonshire, East (Mr. Hogg) referred to it—promised that the domestic rate would be replaced with a new tax based on ability to pay. I realise that my Government are not accountable for that manifesto, but the abolition of the domestic rate is a must if the never-ending spiral is to end.
  What is the point of reducing the rate support grant if the authority is to retain the right to increase the rates, penalise ratepayers and thereby obtain the money denied it by the Government? That is what will happen with local authorities that refuse to remain within the cash limits. If rating authorities are to be controlled and compelled to implement the Bill, further provision should be made to safeguard ratepayers from blatant disregard by the authorities of strict controls on spending.
  I support my hon. Friend the Member for Aberdeen, South (Mr. Sproat), who spoke in praise of the Grampian regional council and the way that it had considered the rate support grant and operated its rating powers. That applies also to my district council of Banff and Buchan and to the district council of my hon. Friend the Member for Moray and Nairn (Mr. Pollock). Those district councils, and the Grampian region itself, have looked after the interests of the ratepayers. If local authorities continually resist the overtures of the Government to impose a realistic rate, we must give serious consideration to a total reform of the dometic rate to bring it under the control of the Government. That would be a more satisfactory position for the electors.
  I am delighted to note that the Bill abolishes the Scottish River Pollution Advisory Committee.— [Interruption.] The sections applying to the appointment, constitution and function of that body under the Rivers (Prevention of Pollution) (Scotland) Act 1951 will cease to have effect. I am sorry that the Bill does not propose to abolish that Act—[Interruption.] The Act has been used illegally for many years by river bailiffs to hound farmers—[Interruption.]
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. I have to listen very carefully in a Scottish debate, and I cannot hear if hon. Members continue to interrupt.
  Mr. McQuarrie: Because Opposition Members live in towns, they have never heard of river pollution on farms. As I said, the Act has been used illegally for many years

  865
  by river bailiffs to hound farmers in Scotland and to penalise them when they have protected rivers on their farmlands from erosion. The bailiffs wasted the time of the courts by presenting prosecutions and then withdrawing them after the farmers had been involved in considerable costs in preparing a defence against this needless, action. Perhaps the Secretary of State will bear that point in mind when he is considering amendments to the Bill.
  Schedule 2 relaxes the control over local and other authorities. I refer especially to the items connected with section 24 of the Burial Grounds (Scotland) Act 1855. It is proposed to remove an authority's requirement to have its scale of fees for burials approved by a sheriff. I do not think that that alteration is necessary, because the existing section of the Act is satisfactory. It provides a safeguard for the ratepayer. Far too many local authorities are charging extortionate rates for burials in an effort to make more use of cremations. The curb on the authorities' powers through requiring them to seek the approval of a sheriff for any proposed increase in the charges should re main in the Act. [Interruption.] I should hate to bury the hon. Member for Stirling, Falkirk and Grangemouth (Mr. E wing).
  Opposition Members will be interested to know that I have examined all the clauses of the Bill and not simply the housing support provision. I hear someone saying that it is a burning issue. Yes, it is a burning issue, but it is not the whole Bill. With regard to the Cremation Act 1902, I am sorry to say that no provision has been made in the Bill to amend the charges for medical certificates before a cremation can take place. I accept that it is right that two doctors should certify a death before cremation takes place, but I can see no reason why the family doctor, who is already paid by the National Health Service, or the doctor in the hospital who initially certified a person as de id should be paid an additional fee for signing the death certificate, especially as the cost of both of these certificates has to be met by the deceased's relatives. [Interruption.] It may be that some Labour Members are deceased in their places and are not taking in these important points.
  Mr. Deputy Speaker: It does not sound as if they are.
  McQuarrie: Perhaps they look it, Mr Deputy Speaker. I am sure that my hon. Friend the Under-Secretary of State will want to consider these matters when the Bill has been finalised.
  I turn, finally, to clause 11, which seeks to diminish the powers of sheriffs' officers
  "to poind, seize, remove or secure property belonging to … the debtor".
  The actions which all hon. Members will be aware of in relation to the recovery of debt by the seizure of goods by sheriffs' officers are some of the most degrading incidents in modern society. The terror and shame that are inflicted on some debtors should not be tolerated in any decent society.
  The Bill will go a long way to improve the present situation, but I should have liked to see additional clauses writ en into it to protect the citizen from the sudden dawn raids which are regularly reported in the press, too often with a heavy-handedness and a total disregard for the feelings and circumstances of those concerned, many of whom have been forced into debt through no fault of their own.
  866
  I welcome the elements of the Bill. I hope that my right hon. Friend the Secretary of State will take due cognisance of the serious matters that I have raised—they may have seemed flippant to Labour Members—and that require the consideration of the House before the Bill is given a Third Reading. I welcome it and I shall be supporting it.
  8.57 pm
  Mr. John Home Robertson: I hope that the hon. Member for Aberdeenshire, East (Mr. McQuarrie) will forgive me if I do not take up his remarks on cremation and river pollution. I want to dwell on other, perhaps more relevant, and perhaps more important, areas of the Bill.
  I suppose that it was inevitable that the Government would produce a Local Government (Scotland) Bill sooner or later, in spite of the unhappy experience of a Conservative Government's earlier foray into that area when they gave the people of Scotland the doubtful benefits of regionalisation. I am afraid that the people of Scotland will be rather disappointed by the miscellaneous provisions that the Government have laid before the House. They are a pitifully miscellaneous set of provisions in many respects.
  The Government came to power with a mandate to roll back the power of Whitehall and to boost the influence of local institutions. In fact, they have chosen to do exactly the opposite. If anyone has any doubt on that score, I advise him to look at the cover of the Bill, where, for example, it is stated that part II, which deals with rate support grant,
  "adds to existing powers possessed by the Secretary of State."
  It adds that clause 13
  "extends the Secretary of State's powers to reduce any element of rate support grant".
  We are seeing no reduction in Government control over local authorities in the Bill. One might have hoped that such a radical Government as this would consider the possibility of doing something about domestic rating. A number of hon. Members, especially Conservative Members, have referred to the undesirable aspects of the rating system. I feel strongly about it. It is one of the most unfair and arbitrary forms of revenue raising known to man. It is disappointing that the Government are doing nothing on that front.
  One might have expected such a radical Government as this to consider revising the two-tier system of local authorities. I understand that that issue has been left to the committee that is chaired by my distinguished constituent, Mr. Anthony Stodart, who, I gather from the Secretary of State, will report in January, by which time the Bill will be in Committee and there will be little likelihood of the Committee considering that aspect of local government.
  Parts I and II cover rating and the rate support grant system. In commenting on the provisions dealing with the rating system, it should be emphasised that they do not reduce the burden on Scottish ratepayers by one penny. They merely bring the whole convoluted system into line with the procedures in England and Wales. To that extent, there is no joy in them for those of us who would like to see a radical review of the local government finance system.
  The Secretary of State's claim that he is the ratepayers' friend is wearing thin. People know that it is the right hon. Gentleman, rather than local authorities, who is responsible for the rates explosion over the past two years.

  867
  My right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) gave the figures for rate increases over the past year. He said that rates in Lothian region and Strathclydes had increased by 41·5 per cent. and in the Borders region by 37 per cent. He also mentioned other regional councils. Virtually all the increases in rates are a direct result of the Government's fiddling with the rate support grant and its relevant expenditure.
  It should again be emphasised and re-emphasised that it is the Government's fault, and not predominantly the fault of local authorities, that the explosion in rating has taken place.
  The Secretary of State's vendetta against Lothian regional council has already been touched on. It is a squalid and arbitrary confrontation, set up by the Government for purely political purposes. I have two comments to make. The first is that Lothian region is correct, and remains so, in making a stand against the cuts in education, social services, home helps and so on that the Secretary of State is asking it to impose. The second is that it might have been politically misguided in taking its excellent idealism just that little bit further and budgeting for growth, because that decision has enabled this opportunist Government and Secretary of State for Scotland to give the impression to the people of Lothian and Scotland generally that the whole of Lothian's huge rate rise is attributable to the growth element in the budget.
  Nothing could be further from the truth. The Secretary of State knows as well as we all do that the growth element in Lothian region's budget accounts for only a few pence in the rates. It is at most 3 per cent. The biggest portion of the rate increase is attributable to the activities of the Secretary of State and his tampering and tinkering with the rate support grant.
  In spite of those facts, the Government are using the confrontation with Lothian as a pretext to bring in unprecedented and draconian new measures that will enable this and future Governments to make savage and direct attacks on the activities of individual local authorities throughout the country.
  It is worth dwelling on the fact that not only Lothian and Strathclyde have had high rate increases. The Borders region, controlled by the Conservatives and some of their friends, has also had a massive rate increase. In that case it was entirely the result of the Secretary of State's tampering with the rate support grant. It is a fine spectacle these days to see the so-called Marxists of Lothian regional council standing shoulder to shoulder with the backwoodsmen of the Borders region at the Convention of Scottish Local Authorities when they protest at the fact that the Government are compelling them to cut their essential services and continue to fleece their ratepayers.
  I wish to deal now with housing and the housing support grant. As we know, the Government are steadily increasing the proportion of the housing revenue account of local authorities that comes from rents. In 1979–80 it was 49 per cent. of the housing revenue account. It was 50 per cent. in 1980–81 and it will increase to 63 per cent. in 1981–82. Where is that money coming from?
  Many of us had hoped that if local authority tenants had to pay more in rent at least they would derive some benefit from reductions in their rates. But no, the rate fund contribution to the housing revenue account is to remain static at about 16 per cent. throughout this period. The
  868
  only beneficiary of this rejigging of funds for the housing revenue account will be the Chancellor of the Exchequer and, through him, those privileged few who have benefited from the Government's tax cuts. Their contribution to the housing revenue account will drop from 35 to 34 to 21 per cent. over the three years in question. If the Government intend to keep to their expenditure plans up, to 1984, rents will continue to go up and rates will continue to go up—I am glad that the Under-Secretary of State does not dissent—while the better-off taxpayers will benefit.
  I spoke earlier about massive increases in rents. In the East Lothian district, in my constituency, the council found it necessary to put up rents last April by 17 per cent., or 81p. The Government say that that increase was wickedly irresponsible and that rents should have gone up by 30 per cent., or £1·40 a week. That is a directive from a Government who claim that their prime aim is to reduce inflation. Yet they are compelling local authorities to put up rates by 30 per cent., and, as we understand, they want them to raise rates by 40 per cent.—over £2 a week—next year. The Government are guilty of a number of dishonest tactics, but the practice of compelling local authorities to do the Chancellor's dirty work has gone beyond a joke. Tenants and ratepayers are paying more, and only supertax-payers are paying less.
  The Bill will penalise the more responsible local authorities. Councils which manage their affairs properly and provide decent services, with reasonable rents and reasonable charges, such as the East Lothian council in my constituency, will have their Government subsidies cut, which will mean that the ratepayers will have to pay more. Other authorities with high rents and high charges—on which the Government seem to be keen—and councils which provide rock-bottom services will do very well out of the scheme. What is more, there will be no penalties under the Bill for local authorities that underspend and provide substandard services. That is deplorable.
  The Prime Minister talks about incentives and enterprise, but her Secretary of State for Scotland has produced a ludicrous rag-bag of counter-incentives, which is a charter for Tory joy-riders, who do not give a damn about the standard of services that are provided in their areas. Those are the so-called responsible local authorities that the Government want to encourage.
  A great chunk of the Bill deals with the powers of the Secretary of State over unreasonable councils. It is for him to define what is an unreasonable council, but who can protect us from unreasonable Secretaries of State? The Secretary of State is unrepresentative, and if we did not know that before we certainly discovered it this morning, when he could not find any hon. Member to vote for his wretched colleges of education measures.
  I am under pressure to get a move on, despite the fact that I have been present in the Chamber throughout the debate.
  This is a deplorable Bill, which will do nothing but damage to local authorities and will do nothing to roll back the influence of the Government. I sincerely hope that the House will reject it.
  Mr. Deputy Speaker: I understand that the winding-up speeches are timed to begin at 9.20 pm, and I should like to be able to call two hon. Members before then.
  9.10 pm
  Mr. Alex Pollock: I think it was my right hon. Friend the Secretary of State who, in opening the debate., stressed that the main thrust of the Bill was a med at local authorities likely to ignore economic realities. In that sense, I think that I can fairly say that the local authorities within my own constituency need have little to fear from his measures, since they have a most creditable record in that field, partly because of the traditions of thrift and canniness in the North-East and partly because of the excellence of the representatives on those local councils.
  I wish merely to make two brief comments in relation to part IV of the Bill dealing with miscellanous matters. Clause 22 is headed
  "Relaxation of control over local authorities"
  and refers in turn to schedule 2, which includes a commendable list of subjects—which have been touched on in part by my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie)—from burial grounds through cremation to methylated spirits, over all of which the iron fist of the Government is to be relaxed. That schedule extends to nearly nine pages, and inasmuch as we need legislation to reduce legislation that is certainly not one page too many. But what concerns me is that there are two measures which are lot in the Bill which might usefully have been considered by the House when looking at it in Committee. One has been touched on already by my hon. Friend the Member for Argyll (Mr. MacKay) — the question of the role of the Countryside Commission in planning matters affecting the Highland region. It is a matter of some concern, as my hon. Friend the Under-Secretary of State well knows, and here I would take with me from the Labour Benches at least the hon. Member for Caithness and Sutherland (Mr. MacLennan). That is perhaps something for which to be grateful.
  The other matter on which I should like to touch is the Government proposal to consider the introduction of charges for planning applications going through local authorities. That is a measure that could well have merited consideration within the framework of a Bill such as this, so that the whole idea and implication of it could have been more fully considered by the House. None the less, in spite of those reservations, I am sure that I speak for my constituents when I say that we welcome the determination of the Secretary of State to keep a firm grasp on the nation's finances and to keep his responsibility for having the money spent in a responsible fashion.
  9. 13 pm
  Mr. George Foulkes: I am forced to be brief, but commendably, following the hon. Member for Moray and Nairn (Mr. Pollock), I may have a few more minutes than I expected.
  I have only three points to make. There has been some criticism today — my hon. Friend the Member for Glasgow, Provan (Mr. Brown) was among the critics—of councillors in local authorities. It will be much more difficult to get anyone to serve in a local authority once the Bill gets, through, because it will be totally frustrating for local authority members. They will have no power, no freedom and no authority whatever. They are being snatched from them. What do they get? They get power over fees for cremation, the safe of methylated spirits and the provision of cattle grids. I can imagine Dick Stewart
  870
  and other people enjoying that great new freedom. But in the areas of real control of capital and revenue expenditure they will be circumscribed by the Secretary of State, as my colleagues have pointed out on a number of occasions.
  I get fed up hearing time after time from Conservative Members about the bureaucrats in local authorities. As hon. Members have said, these are home helps, teachers, bus drivers, bin men—people providing vital services. Whatever the hon. Member for Edinburgh, South (Mr. Ancram) may say—I have corrected him on previous occasions and will continue to do so—only a very small percentage are involved in administration.
  My second point concerns quangos. In an intervention, I complained about the abolition of the River Purification Advisory Committee, which will save a very small amount. I was going to say a "piddling little amount", but that seemed inappropriate. Yet it is doing a vital job.
  I could suggest how the Secretary of State could save a great deal of money. He could get rid of a number of quangos in Scotland by getting rid of new town development corporations. They are homes for many retired brigadiers, who can earn a great deal of money. Many of them hold the elected members of local authorities in contempt. I hope that power will be handed over to the elected members of local authorities as quickly as possible.
  Thirdly, I turn to the most serious matter. I think that my hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) said that the authorities that underspend would not suffer any penalties. I disagree. Authorities that underspend will suffer penalties. Given the current level of expenditure by every region with the exception of the Lothian region, the regional councils stand in default of the Social Work (Scotland) Act 1968. Those local authorities have not only powers but duties. In part II, section 12 states:
  "It shall be the duty of every local authority to promote social welfare by making available advice, guidance and assistance on such a scale as may be appropriate for their areas."
  It could be argued that Grampian, Tayside, Dumfries and Galloway are in default.
  Section 14 states that it shall be the duty of every local authority to provide adequate home help for households in need. Tayside, Grampian, Dumfries and Galloway stand in default of that section.
  Section 15 states:
  "it shall be the duty of the local authority to receive the child into their care".
  Again, I contend that Dumfries, Galloway, Tayside and Grampian are in default of that section. The sooner that action is taken against authorities that are not carrying out their statutory duties, the better. However, such action should not be taken against Lothian region, which is carrying out its responsibilities.
  I, for one, would support the Secretary of State if he took action against those defaulting local authorities. We have been given a hundred reasons for voting against the Bill. I have given three more.
  9.17 pm
  Mr. Barry Henderson: I hope that the hon. Member for South Ayrshire (Mr. Foulkes) will forgive me if, in the interest of brevity, I do not take up his remarks.
  This is a modest Bill. It might be said that it could have been wider in scope and that it could have been introduced

  871
  earlier. It is badly needed, because there is a need to control the total amount of money that local government spends. Last year the amount spent in Scotland totalled £3,750 million. That is quite a lot of peanuts. The taxpayers, for whom the Secretary of State for Scotland is responsible, coughed up 68·5 percent, of that amount. No one who coughs up 68·5 per cent. of £3,750 million could fail to take an interest in the total amount spent.
  The Bill is desperately needed because justice must be done to the prudent authorities. We have heard much talk of freedom. One of my fundamental political beliefs concerns the freedom of a citizen to do what he wants. However, there is a point at which one man's freedom conflicts with that of another. It is the legislator's business to draw a boundary between those two interests. Therefore, my right hon. Friend the Secretary of State for Scotland is right to ensure that a local authority that enjoys the freedom to spend at will does not take away money from another local authority that has been careful with its money over a lengthy period and taken reasonable care of its ratepayers' services.
  If I had more time, I should have taken up with my hon. Friend the Under-Secretary a number of questions about capital allocations. It cannot be right to continue the present system, under which if capital works subsequently obtain a contribution for the whole or part of the cost from another source—even a private company, for example—the total gross expenditure is deemed to be part of the authority's capital allocation. A letter that I have just received from my right hon. Friend in response to that point was not satisfactory and requires further work in the Department.
  I should like my hon. Friend the Under-Secretary to clarify the question of the use of proceeds from the sale of council houses. A number of people are confused about this. Some have the impression that the proceeds can be applied to build houses over and above the number authorised under the housing capital plan and that the present capital allocations could be exceeded by an amount equivalent to that realised by the sale of council houses. On the other hand, there are those who say that the money can only be invested in, or otherwise applied to, a capital purpose connected with the housing revenue account.
  I hope that as well as providing a greater reduction in controls my right hon. and hon. Friends will note what a number of my hon. Friends have said about long-term rating reform.
  9.21 pm
  Mr. George Robertson: This has been a remarkable day in Scottish politics. This morning there was the Government's humiliation in the Scottish Grand Committee, where they could not even face the prospect of voting for their own proposals. That was followed by this major debate on one of the most far-reaching Scottish local government measures that we have seen. The debate has been characterised by a list of Government supporters dragooned into making speeches and obliged, by means of a smokescreen, to divert attention away from the key areas of the debate and on to such esoteric subjects as cremation, methylated spirits and rating and valuation.
  One of those who spoke tonight and did not speak this morning, but who was also one of the main abstainers on the Government side, was the hon. Member for
  872
  Edinburgh, South (Mr. Ancram). He came out with his rehearsed and many times delivered speech about the alleged iniquities of the Lothian region. By the purest of coincidences, there came into my hands this evening a document leaked from one of the 1974 elections, in which the hon. Gentleman was given his come uppance by the electors of Berwick and East Lothian. In the hon. Gentleman's October election address, printed in the blue of his party, we read:
  "You Know Ancram Works For You!"
  As if to provide some proof, there are reprints of a number of newspaper headlines, only some of which I shall read out. They include:
  "Public transport needs immediate help says MP".
  "MP stresses urgent need for more houses".
  "MP's plea to Healey for small firms aid".
  "MP wants maternity ward kept open".
  Last but not least, in the true vein of most of the Conservative speeches tonight, there is the headline:
  "Central Government should subsidise festivals, says Ancram".
  The report in small print underneath should interest the hon. Member for Aberdeenshire, East (Mr. McQuarrie):
  "Financial assistance from central government should be made available for Festivals, Common Ridings and Gala Days",
  said the doomed Member for Berwick and East Lothian, the Mad Marxist of Morningside.
  Mr. Ancram: Would not the hon. Gentleman accept that after five months of Labour Government that was the sort of thing that all hon. Members were asking for?
  Mr. Robertson: That poor answer shows that it requires a great deal of rehearsal for the hon. Gentleman to make some of the statements that he is noted for in the House.
  The Bill is no less than a Christmas catalogue from the Government for more centralisation, more bureaucratic paternalism and more of that kind of sanctimonious "We know best" attitude which have come to characterise the Government's relationship with elected local government. In this one area of government outwith the Palace which is still left in this country where the sanction of the ballot box prevails, the Bill and its big brother, the Local Government, Planning and Land (No. 2) Act 1980, mount a full frontal attack on the foundations of local government accountability and representative democracy. What price Tory freedom when big brother Government must usurp the role of the ballot box? What price local discretion when Whitehall and New St. Andrew's House can pull all the strings, and not just most of them?
  If there is financial excess or parsimony in local government, why not let the final arbiter be the ballot box? Has the party that stemmed from local government, the party of Austen Chamberlain among others, so little faith in the intelligence, perception or judgment of the electorate that it must now impose this galaxy of controls, reserve powers and constraints to protect the elector from his own folly, or, perhaps, his own wisdom?
  The new powers in the Bill on rates, spending, grants, lending and borrowing, definitions, time limits and timetables bring to the Scottish Office an entirely unprecedented and unique new role of overseeing and directly controlling the work and functions of local government in Scotland. They give the commissars of New St. Andrew's House some more Politburo powers to

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  eliminate the freedom of action of any but that small elite behind the closed doors who make Scotland's decisions for the Scots.
  Do the Government really care about local democracy? Do they care about the lasting damage that they will cause through the Bill to local government in Scotland?
  Only nine years ago, in 1971, it might conceivably have been thought that the Conservative Government cared about the basic principle of local representative democracy. In February 1971 the Conservative Government published a White Paper entitled "Local Government in England". The keynote of that document quoted in the Layfield committee's thorough-going report on local government finance was:
  "A vigorous local democracy means that authorities must be given real functions—with powers of decision and the ability to take action without being subjected to excessive regulation by central government through financial or other controls … above all else, a genuine local democracy implies that decisions should be taken—and should be seen to be taken—a; locally as possible."
  That White Paper followed only 12 months after a White Paper from the Labour Government which had in almost identical, terms reaffirmed the commitment of that Administration to the rights, duties, obligations and responsibilities of local government.
  What happened to the consensus of 1970 and 1971? Thereafter, the Layfield committee and the Wheatley Royal Commission on Local Government in Scotland also tackled the vexed question of the relationship between local authorities and the Government, especially as affected by local authority finance. That is what we are debating this evening. We are not talking about cremations, the liberation of methylated spirits Administrations or the minutiae of rating and valuation. It is essentially an assault on local authority responsibility and accountability. The Layfield committee's report clearly stated:
  "The increasingly detailed intervention by the government which has been occurring is incompatible with that measured consideration of local expenditure needs and priorities, judged by local conditions and requirements and with local taxation decisions reflecting local expenditure decisions, which lies at the heart of fully responsible local government."
  The Wheatley Commission came down clearly on the side of local authorities and maximum flexibility. The commission said that the Treasury view was for
  "local authorities to raise more of their own finances, so that they have 'sufficient incentive to take spending decisions responsibly and to secure economy and value for money'."
  The whole tenor of the detailed studies on local authorities and their finances in the last 10 years is decisively in favour of less Government intervention, more local autonomy, more responsibility and more chance for the electorate to make the ultimate decision on the capacity of local government to look after itself.
  What do the Government intend to do? In July last year, the Secretary of State was interviewed by Mr. David Scott of The Scotsman. Mr. Scott is a perceptive reporter and he asked the question that came first to mind, given the rumours about the intention of the Secretary of State for the Environment for local government in England. Mr. Scott asked:
  "There has been talk of legislation to limit rates rises. Can you confirm that this is a possibility?"
  The Secretary of State replied:
  "There has been some discussion on this in the South. But I am my own master in Scotland on this matter and I do not envisage that this; action will be necessary as I expect local authorities; in Scotland to act in a responsible manner."
  874
  No one can tell me that the Bill was dreamt up in the last two or three weeks, or even in the lead-up to the Queen's Speech. It was predestined throughout the last Parliament.
  The Bill has three principal functions hidden behind a smokescreen. First, it tightens up the regulations relating to the rate support grant by providing more power to intervene and interfere arbitrarily. Secondly, it tightens the housing support grant and accelerates the trend to higher rates, lower support and massive cuts in resources for housing which was envisaged in the public expenditure White Paper. Thirdly, it tightens capital control through the various loan sanctions that already exist in the Scottish Office portfolio. Capital consent and sanctions which were, as the Layfield committee said, designed originally purely as a safeguard against local authority impropriety are now to be strengthened and tightened so that the commissars at New St. Andrew's House can have the same power as the commissars in the Department of the Environment in declaring moratoriums on all council house building programmes when the whim arises.
  Clause 13 is remarkable. Its powers are unprecedented, arbitrary and absolute. The Secretary of State can do what he wants with any local authority which transgresses any standard that the right hon. Gentleman cares to invent. The Secretary of State is extending the powers in the 1973 Act, which go back to 1948 and which have never been used.
  The Bill allows the Secretary of Slate to compare the expenditure performance of one local authority with that of others, to make a comparison in relation to the general economic conditions and, to ensure that nobody fails to get caught, to do anything else that he brings to mind. His powers are absolute. The Secretary of State will have power to invent any criteria and to apply them to any local authority in Scotland. One is driven to ask why he bothered to include clause 13 (a) and (b) when he has clause 13 (c).
  It is interesting to make a comparison with the Local Government, Planning and Land (No. 2) Act — that tome that rivals the Bible in size and which was enacted recently. The power that the Secretary of State for Scotland has taken unto himself is substantially greater than that which even the Secretary of State for the Environment thought relevant to the English provision. Section 5 of the Local Government, Planning and Land Act provides for the Secretary of State for the Environment to reduce any element in any authority's rate support grant, on one condition only. That condition is a comparison with other local authorities. He does not have the fail-safe, "Catch 22" devices invented by the Scottish Office to give this draconian power to the Secretary of State for Scotland. Moreover, even if the Secretary of State wanted to reduce the level of rates in the way that has been suggested, could this possibly work? It is still open to a local authority to rate in a future year for the shortfall in its rate support grant element in the year that has been affected.
  The powers contained in clauses 13 and 14, and the new additional powers for a moratorium contained in clause 23 on loan consents, will mean more interference, more meddling, less flexibility and less and less responsibility and accountability in local government in Scotland. We are asked to accept at face value the modest, moderate intentions of the Secretary of State for Scotland, who tells us that he will not use the powers against anyone other than the ultimate transgressor on any conditions that he cares to invent. He says that in a reasonable manner to a reasonable reception in a reasonable House, but the history

  875
  of the Government over the past 12 months clearly indicates that they will indeed use these powers. They will use them ruthlessly, regularly and arbitrarily against anyone who offends against their prejudices.
  Mr. Lang: Will the hon. Gentleman therefore say whether the Labour Party, if it is ever returned to power, will repeal this measure?
  Mr. Robertson: Yes. I dare say that the provisions regarding cremations, methylated spirits and the various other matters that have ranked so high among the priorities of Government Members tonight will have to be the subject of some consideration. But, so far as these draconian powers are concerned, the answer to the hon. Member for Galloway (Mr. Lang) is quite clearly "Yes".
  What can we learn from the past 12 months of Tory Government? What can we learn from their attitude to local authorities? They have used local councils as stalking horses for their own discredited ideologies. Local authorities have been left to do the dirty work for Ministers who swan around the public engagement circuit. Local authorities are left to take the decisions about sacking teachers, closing old folks' homes, cancelling adult training centres, indefinitely postponing promised house modernisation programmes or cutting back on the fostering of unwanted children, while Ministers juggle with the intricacies of the PSBR and hide behind the subversive legal jargon of this kind of meddlers' manifesto.
  All the draconian powers against which the Conservatives have set their faces over the years are contained in the Bill to inflict damage on local authorities that they will arbitrarily pick upon. This debate has produced from the Government Benches speeches of great length without great content, but the Government have still not told us which are the local authorities with such dreadful records that these draconian powers had to be introduced.
  My hon. Friend the Member for Edinburgh, Central (Mr. Cook) gave us chapter and verse of the Lothian experience and the detail that contradicts all the mad gesticulations of the hon. Member for Edinburgh, South. My hon. Friend the Member for Dundee, West (Mr. Ross) was too modest in his defence of his city's district council, which, let it be said, in the last round of rate increases cut its rate by 14 per cent. It was surrounded by Tory district councils that increased their rate and a Tory regional council that increased it by 18 per cent. [HON. MEMBERS: "It was a Tory council".] Dundee was not Tory-controlled at the time the rates were fixed.
  The statistics produced in their own selective way have shown that the profligacy cannot be substantiated in any of the ways put forward by Conservative Members. The Conservative Party cries for freedom and the dismantling of controls but gives us a Bill of new controls that are more draconian, arbitrary, sweeping and pernicious than any that have been seen in this country before. Conservative Members cry, when it suits them, for local government discretion and democracy, yet they rob local government of all its powers, discretion and mandate. They cry for control of inflation, yet they impose on local authorities conditions which demand huge rate increases and new burdens on services. They cry tears for the level of the
  876
  unemployed, but every week they shamelessly exhort local councils to sack and dismiss more and more of their employees, who will have no hope of alternative work.
  This is a Government without principle, scruple or vision. They are a Government without support in Scotland. This is a dangerous, needless and senseless Bill, which will damage the very foundation of local democracy in Scotland. It must be vigorously resisted, and I call on all my right hon. and hon. Friends to vote against it this evening.
  9.40 pm
  The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): The speech of the hon. Member for Hamilton (Mr. Robertson) will, if nothing else, be memorable for the fulsome if unintended tribute to the Dundee Conservative group and its decision last May.
  Before turning to the provisions of the Bill, it would be right for me to preface my remarks by offering my congratulations to the right hon. Member for Glasgow, Craigton (Mr. Millan) on his appointment to the Shadow Cabinet. For the second year running, having been frustrated by the democratic processes of his party, the right hon. Gentleman was rescued by the powers of patronage—
  Mr. Foulkes Mr. Foulkes rose—
  Mr. Rifkind: It would appear that he has confounded the fears of his friends and the prophecies of his enemies and shown for the second year running—
  Mr. Dennis Canavan: The hon. Gentleman crawled to Thatcher and she appointed him.
  Mr. Deputy Speaker: Order. Perhaps I will be allowed to hear what the hon. Gentleman is saying.
  Mr. Rifkind: The right hon. Gentleman has clearly shown that resurrection is still possible even in the 1980s.
  Mr. Foulkes: Will the hon. Gentleman give way?
  Mr. Rifkind: I will later, but not at the moment.
  It looks as though the whole Shadow Scottish team will be with us for some time to come, contrary to the expectations of a few weeks ago. We were told that the election of the right hon. Member for Ebbw Vale (Mr. Foot) would lead to a radical change in the Scottish team. We were told that that aged revolutionary, the hon. Member for Renfrewshire, West (Mr. Buchan), would be the new Shadow Scottish Secretary and that the hon. Member for Edinburgh, Central (Mr. Cook) would be his radical deputy.
  Mr. Foulkes: On a point of order, Mr. Deputy Speaker. Perhaps the Under-Secretary can tell us to which clause he is referring.
  Mr. Ted Graham: Santa Clause.
  Mr. Deputy Speaker: It is a rather long preamble.
  Mr. Rifkind: In the Opposition's attitude to the Bill, we have seen that rather than a revolutionary revival of the Labour Party it is the ancient regime that is back again. There has been a restoration of the Bourbons. They have learnt nothing, but it would appear from their speeches that they have forgotten everything about their own practice in local government, the severe curbs that they placed on local government and the major reductions in manpower that they forced local authorities to observe during their own period in Government.

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  There are two main previsions in the Bill, and I shall concentrate my remarks on them. However, I wish to comment briefly on certain points that were raised during the debate. The right hon. Member for Craigton and some of his hon. Friends spoke a great deal about housing. They will appreciate that the Bill has only a marginal affect on housing.
  Even if the right hon. Gentleman's worst prophecies were correct—which they are not—it would not alter the fact that he and his friends, if they understand the clauses that relate to housing support grant, will wish to vote for them. It is for that reason that the Convention of Scottish Local Authorities has not criticised these clauses and recognises that they arc highly desirable. None of the other comments that we had from the Opposition on housing matters today bore any relevance to the contents of the Bill, and they can be debated at the proper time when the housing support grant will fall to be considered by the House.
  My hon. Friends the Members for Edinburgh, South (Mr. Ancram), for Aberdeenshire, East (Mr. McQuarrie) and for Galloway (Mr. Lang) spoke of the problems of the rating system and indicated their wishes to see a reform of that system. They will be aware that the Government have for some time been conducting a review of that system. But I say to my hon. Friend the Member for Edinburgh, South that when he says that he supports a local income tax I am not sure whether he has considered whether he would really wish the local authority to which he has devoted his remarks to have control over the level of tax that he would pay on that basis.
  My hon. Friends the Members for Galloway and for Perth and East Perthshire (Mr. Walker) talked respectively about the publication of manpower statistics and direct labour departments. These are provisions in the Local Government, Planning and Land Act. There will, therefore, be the introduction of the very policies in favour of which they spoke as a result of that legislation.
  The major point now in dispute between the two sides of the House concerns the extent to which the Government should he entitled to intervene in the business of local authorities and override a local discretion.
  Mr. Canavan: Zero council housing.
  Mr. Rifkind: I shall come that point if the hon. Gentleman will contain himself.
  I believe—I do not think that I am saying anything controversial in this respect—that there are three major areas in which any sensible Government would recognise the need for national interest and for the national Government, on occasion, to override what local authorities would wish themselves to do. I do not dispute the views of local authorities when elected members say that they are elected in the same way as MPs and have the same local mandate as MPs. They are quite correct in that assumption. They are also correct to say that they often recognise local priorities more effectively than any national Government could hope to do. They are equally correct in saying that they are often aware of local circumstances and local pluralities that might justify different treatment for their locality compared with other areas.
  But, as against those perfectly valid comments, there are major areas in which the national interest must prevail.
  Mr. Canavan Mr. Canavan rose——
  Mr. Rifkind: I shall give way to the hon. Gentleman shortly, if he lets me conclude this point.
  Mr. Henderson: The hon. Gentleman has not been here.
  Mr. Rifkind: It is certainly true that the hon. Gentleman has not been present for virtually the whole of the debate.
  There are certain areas in which I think all hon. Members would accept that the Government must have the right to intervene — for example, in the setting of regulations, such as fire regulations and road safety regulations, and matters of that kind, where the public as a whole accept uniform standards.
  There are also matters of great political controversy on which, although they could be implemented locally, successive Governments have fought general elections and received the endorsement of the electorate to implement policies locally against local wishes. For example, the previous Government took such a position on comprehensive education irrespective of local authorities' wishes. I freely accept that the present Government have taken a similar position because of the endorsement of the electorate, in the same way as the Labour Government claimed such an endorsement when we dealt with the question of the sale of council houses. to sitting tenants.
  These are not controversial matters, in the sense that all parties and Governments acknowledge that right when an election has been fought and won on that basis.
  Mr. Canavan: Will the hon. Gentleman give way?
  Mr. Dick Douglas: Will the hon. Gentleman give way?
  Mr. Rifkind: I give way to the hon. Member for Dunfermline (Mr. Douglas).
  Mr. McQuarrie: He has not been here, either.
  Mr. Deputy Speaker: Order.
  Mr. Douglas: Just because one does not make a lot of noise in this place, that does not mean that one has been absent.
  I have raised this matter previously. Will the Undersecretary give some indication of where in the Tory manifesto there was provision for the disgraceful sale of the Ministry of Defence houses in Brucefield, Dunfermline? Miller of Edinburgh will make over £1 million by sitting on their backsides. The hon. Gentleman knows that, because he met a deputation of my constituents on this matter. They are being sold down the river by the disgraceful way in which the present Government have abrogated their responsibility.
  Mr. Rifkind: The hon. Gentleman can raise that point when we debate housing matters. I have previously answered him on the subject and have corresponded with him about it. I shall not take up the small amount of time remaining to extend the debate on an issue that is irrelevant to the Bill.
  The third major area in which any Government, including the previous Government, must recognise the rights and duties of the Government to intervene is when the expenditure of local authorities has inevitably a significant effect on the national economic strategy of the Government of the day.
  My hon. Friend the Member for Fife, East (Mr. Henderson) and other hon. Members spoke of the huge

  879
  sums—running to thousands of millions of pounds—that are spent by local authorities. No one questions that their spending of that money must affect the total of public expenditure as well as the Government's counter-inflation policies, irrespective of which Government are in power. Since total local authority expenditure is relevant to national government and must be considered in the context of the national interest and given the major contribution that the Government and Parliament make towards it, it is naive and unrealistic to suggest that the Government should not have the final say on what they give local authorities to finance that expenditure.
  We are considering here not powers to prevent local authorities determining the level of rates but the extent to which the Government should be able to decide how much money they give to local authorities. To suggest that it is improper or illegitimate for the Government to do that is so naive and out of touch with reality and the practice of the last Labour Government as to be neither credible nor objective.
  The right hon. Member for Craigton knows that by the substantial pressure that he put on local authorities while he was Secretary of State he succeeded in reducing local authority manpower by the greatest amount in any one year over the past 20 years. The drop was between 10,000 and 12,000. It was done not because the local authorities wanted to do it but because of the pressure that the right hon. Gentleman quite rightly put upon them. When he suggests that somehow it is acceptable for local authorities to be pressed by a Labour Government but improper for a Conservative Government to do the same, he demonstrates an inconsistency that does not impress the House. In suggesting that Labour Governments are somehow different from Conservative Governments in this respect, the right hon. Gentleman reminds me of the remark that was once made that whereas under Conservatism man exploits his fellow man, under Socialism it is the other way round.
  There are two differences between the attitudes of this Government and those of its predecessor. First, the Labour Government had the support not only of Conservative local authorities but of Conservative Members of Parliament when they sought, in the national interest, to reduce local authority spending. However, the support of Labour Members for this Government in pursuing that course is conspicuous by its absence.
  The second major difference is that over the past 18 months — and particularly in the Bill — we have consciously sought to take powers that will be applied not indiscriminately against all local authorities but selectively against local authorities that are primarily responsible for our current problems. It is unfair to local authorities that act prudently to find that in spite of their prudence and their reductions in expenditure they are penalised and treated the same as all other local authorities.
  If there is one major difference between the Bill and the previous legislation, it lies in the selective nature of the powers provided. We do not apologise for that; on the contrary, we are proud of it. The local authorities prefer it to the bludgeon that the right hon. Member for Craigton used when he was Secretary of State.
  Many of the comments of Labour Members have referred to the power to withdraw grant from a local authority that is proposing to spend, or is spending, sums
  880
  that are judged to be excessive and unreasonable. We have been told that this is a radical and draconian new measure quite different from any previous legislative power. I refer those who hold that view to the terms of the 1966 Act. It was enacted by a Labour Government and it repeated the terms of the 1948 Act, which was also enacted by a Labour Government. It provided specifically that when a local authority's spending was, in the view of the Secretary of State, excessive and unreasonable, rate support grant could be withdrawn.
  The only significant difference between the provisions in the Labour Government's Act and the provisions in the Bill is that under the Labour provisions the local authority had to have spent the money before grant could be withdrawn. In our case, we propose to act on the budget for proposed spending. The Labour Government, through the provisions in their Act, wished to close the stable door after the horse had bolted. We prefer to do it before the damage has been done. That seems a more sensible course of action. When Opposition Members question whether the term "excessive and unreasonable" is a proper approach to these matters, they should remember the comments of the Labour Minister in charge of the Labour Government's measure when it passed through the House. It was the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), who said:
  "One does not give more money to those who behave extravagantly. All that one can do is to take away money."
  He continued, in regard to the excessive and unreasonable criteria:
  "this is the only sensible way of going about it without denying that local government rests on local democracy."
  He ended his remarks by saying — and this sounds phoney in today's circumstances:
  "This is not a party matter; it is a matter which involves every hon. Member."—[Official Report, Scottish Grand Committee, 7 July 1966; c. 176–8.]
  That was the attitude of the Labour Minister when he put forward proposals to deal with excessive and unreasonable expenditure. It is sad that his Labour successors whom we see before us today take such a puny and indefensible attitude when dealing with a similar problem.
  My hon. Friend the Member for Edinburgh, South asked whether the powers would be sufficient to prevent local authorities that are determined to spend excessively from doing so. Of course, he is right. There is nothing in the Bill that can veto a proposed rate increase by a local authority. That cannot be done under any of the provisions. Any rational local authority would think hard about continuing with proposals to spend excessively and unreasonably, knowing that the powers would be available to my right hon. Friend. In Scotland once it has fixed its rate, such an authority has no power to fix a supplementary rate. If, as a consequence of its excessive and unreasonable proposals, it loses an equivalent amount of rate support grant, the authority would penalise its ratepayers without having a single extra penny of resources to make available for its excessive and grandiose schemes.
  Mr. Cook: The Minister said that the advantages of the measures is that they shut the door before the horse has bolted. Surely he will confirm that he said that the powers, if invoked, will come far too late to affect the rate that has been struck. As a result of the measures, the ratepayers will end up paying the rates that he thinks excessive and unreasonable, but they will not receive the services because he is withholding the grant to pay for them.
  Mr. Rifkind: It is precisely that reason that will convince any rational authority not to embark on that course. I am glad that the hon. Gentleman has confirmed the value of the proposals. Some local authorities do not object to penalising their ratepayers if that gives them more money to spend on grandiose schemes. No rational authority will wish to incur the opprobrium of the public and, at the same time, not have an additional penny to spend on its favourite projects. If we are dealing with rational authorities, which, for the most part, we are, that will be a sufficient and adequate response to deal with the problems raised by hon. Members
  The question before the House is whether, given that in the case of one or two Scottish authorities there has been excessive expenditure, the powers are reasonable or unreasonable. Will they be used selectively or indiscriminately? Opposition Members suggested that there will be an indiscriminate use of the powers. They have not provided one iota of evidence, because the truth of the matter is that it will depend on the attitude of local authorities. I have no doubt that the vast majority of local authorities will moderate their expenditure and will try to keep their spending plans in line with the national interest. If they do so, they have nothing to fear.
  The Opposition do not know why they are opposing these measures, which merely add to the powers that Labour Governments have used. Their reaction against the Bill is Pavlovian and does not command the respect of the people of Scotland. I call upon my right hon. and hon. Friends to support the Bill. They can be sure that the people of Scotland will welcome what they do.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 315, Noes 260.

  Division No. 15]

  [10 pm

  AYES

  Abse, Leo

  Browne, John (Winchester)

  Adley, Robert

  Bruce-Gardyne, John

  Aitken, Jonathan

  Bryan, Sir Paul

  Alexander, Richard

  Buck, Antony

  Alison, Michael

  Budgen, Nick

  Amery,Rt Hon Julian

  Bulmer, Esmond

  Ancram, Michael

  Burden, Sir Frederick

  Arnold, Tom

  Butcher, John

  Aspinwall, Jack

  Butler, Hon Adam

  Atkins, Robert(Preston N)

  Cadbury, Jocelyn

  Atkinson, David (B'm'th,E)

  Carlisle, John (Luton West)

  Baker, Nicholas (N Dorset)

  Carlisle, Kenneth (Lincoln)

  Banks, Robert

  Carlisle, Rt Hon M (R'c'n )

  Beaumont-Dark, Anthony

  Chalker, Mrs. Lynda

  Bell, Sir Ronald

  Channon, Rt. Hon. Paul

  Bendall, Vivian

  Chapman, Sydney

  Benyon, Thomas (A'don)

  Churchill, W. S.

  Benyon, W. (Buckingham)

  Clark, Hon A. (Plym'S'n)

  Bevan, David Gilroy

  Clark, Sir W. (Croydon S)

  Biffen, Rt Hon John

  Clarke, Kenneth (Rushcliffe)

  Biggs-Davison, John

  Clegg, Sir Walter

  Blackburn, John

  Cockeram, Eric

  Blaker, Peter

  Colvin, Michael

  Bonson Sir Nicholas

  Cope, John

  Boscawen, Hon Robert

  Cormack, Patrick

  Bottomley, Peter (W'wich W)

  Corrie, John

  Bowden, Andrew

  Costain, Sir Albert

  Boyson, Dr Rhodes

  Cranborne, Viscount

  Braine. Sir Bernard

  Critchley, Julian

  Bright, Graham

  Crouch, David

  Brinton, Tim

  Dean, Paul (North Somerset)

  Brittan, Leon

  Dickens, Geoffrey

  Brocklebank-Fowler, C.

  Dorrell, Stephen

  Brooke, Hon Peter

  Douglas-Hamilton, Lord J.

  Brotherton, Michael

  Dover, Denshore

  Brown, M.(Brigg and Scun)

  du Cann, Rt Hon Edward

  882

  Dunn, Robert (Dartford)

  Kitson, Sir Timothy

  Durant, Tony

  Knight, Mrs Jill

  Dykes, Hugh

  Knox, David

  Eden, Rt Hon Sir John

  Lamont, Norman

  Edwards, Rt Hon N. (P'broke)

  Lang, Ian

  Eggar, Tim

  Langford-Holt, Sir John

  Elliott, Sir William

  Latham, Michael

  Emery, Peter

  Lawrence, Ivan

  Eyre, Reginald

  Lawson, Nigel

  Fairbairn, Nicholas

  Lee, John

  Fairgrieve, Russell

  Lennox-Boyd, Hon Mark

  Faith, Mrs Sheila

  Lester Jim (Beeston)

  Farr, John

  Lewis, Kenneth (Rutland)

  Fell, Anthony

  Lloyd, Ian (Havant & W'loo)

  Fenner, Mrs Peggy

  Lloyd, Peter (Fareham)

  Finsberg, Geoffrey

  Loveridge, John

  Fisher, Sir Nigel

  Luce, Richard

  Fletcher, A. (Ed'nb'gh N)

  Lyell, Nicholas

  Fookes, Miss Janet

  Macfarlane, Neil

  Forman, Nigel

  MacGregor, John

  Fowler, Rt Hon Norman

  MacKay, John (Argyll)

  Fox, Marcus

  Macmillan, Rt Hon M.

  Fraser, Rt Hon Sir Hugh

  McNair-Wilson, M. (N'bury)

  Fraser, Peter (South Angus)

  McNair-Wilson, P. (New F'st)

  Fry, Peter

  McQuarrie, Albert

  Galbraith, Hon T. G. D.

  Madel, David

  Gardiner, George (Reigate)

  Major, John

  Gardner, Edward (S Fylde)

  Marland, Paul

  Garel-Jones, Tristan

  Marlow, Tony

  Glyn, Dr Alan

  Marshall Michael (Arundel)

  Goodhart, Philip

  Marten, Neil (Banbury)

  Goodhew, Victor

  Mates, Michael

  Goodlad, Alastair

  Mather, Carol

  Gorst, John

  Maude, Rt Hon Angus

  Gow, Ian

  Mawby, Ray

  Gower, Sir Raymond

  Mawhinney, Dr Brian

  Grant, Anthony (Harrow C)

  Maxwell-Hyslop, Robin

  Gray, Hamish

  Mayhew, Patrick

  Greenway, Harry

  Mellor, David

  Grieve, Percy

  Meyer, Sir Anthony

  Griffiths, E.(B'y St. Edm'ds)

  Miller, Hal (B'grove)

  Griffiths, Peter Portsm' h N)

  Mills, lain (Meriden)

  Grist, Ian

  Mills, Peter (West Devon)

  Grylls, Michael

  Miscampbell, Norman

  Gummer, John Selwyn

  Mitchell, David (Basingstoke)

  Hamilton, Hon A.

  Moate, Roger

  Hamilton, Michael (Salisbury)

  Monro, Hector

  Hampson, Dr Keith

  Montgomery, Fergus

  Hannam, John

  Moore, John

  Haselhurst, Alan

  Morris, M. (N'hampton S)

  Hastings, Stephen

  Morrison, Hon C. (Devizes)

  Havers, Rt Hon Sir Michael

  Morrison, Hon P. (Chester)

  Hawkins, Paul

  Mudd, David

  Hawksley, Warren

  Myles, David

  Hayhoe, Barney

  Neale, Gerrard

  Heddle, John

  Needham, Richard

  Henderson, Barry

  Nelson, Anthony

  Heseltine, Rt Hon Michael

  Neubert, Michael

  Hicks, Robert

  Newton, Tony

  Higgins, Rt Hon Terence L.

  Nott, Rt Hon John

  Hill, James

  Onslow, Cranley

  Hogg, Hon Douglas (Gr'th'm)

  Oppenheim, Rt Hon Mrs S.

  Holland, Philip (Carlton)

  Osborn, John

  Hooson, Tom

  Page, John (Harrow, West)

  Hordern, Peter

  Page, Richard (SW Herts)

  Howe, Rt Hon Sir Geoffrey

  Parkinson, Cecil

  Howell, Ralph (N Norfolk)

  Parris, Matthew

  Hunt, David (Wirral)

  Patten, Christopher (Bath)

  Hunt, John (Ravensbourne)

  Patten, John (Oxford)

  Hurd, Hon Douglas

  Pattie, Geoffrey

  Irving, Charles (Cheltenham)

  Pawsey, James

  Jenkin, Rt Hon Patrick

  Percival, Sir Ian

  Jessel, Toby

  Peyton, Rt Hon John

  Johnson Smith, Geoffrey

  Pink, R. Bonner

  Jopling, Rt Hon Michael

  Pollock, Alexander

  Joseph, Rt Hon Sir Keith

  Porter, Barry

  Kellett-Bowman, Mrs Elaine

  Prentice, Rt Hon Reg

  Kershaw, Anthony

  Price, Sir David (Eastleigh)

  Kimball, Marcus

  Prior, Rt Hon James

  King, Rt Hon Tom

  Proctor, K. Harvey

  883

  Raison, Timothy

  Taylor, Robert (Croydon NW)

  Rathbone, Tim

  Taylor, Teddy (S'end E)

  Rees, Peter (Dover and Deal)

  Tebbit, Norman

  Rees-Davies, W. R.

  Temple-Morris, Peter

  Renton, Tim

  Thatcher, Rt Hon Mrs M.

  Rhodes James, Robert

  Thomas, Rt Hon Peter

  Rhys Williams, Sir Brandon

  Thompson, Donald

  Ridley, Hon Nicholas

  Thorne, Neil (Ilford South)

  Ridsdale, Julian

  Thornton, Malcolm

  Rifkind, Malcolm

  Townend, John (Bridlington)

  Rippon, Rt Hon Geoffrey

  Townsend, Cyril D, (B'heath)

  Roberts, M. (Cardiff NW)

  Trippier, David

  Roberts, Wyn (Conway)

  Trotter, Neville

  Rossi, Hugh

  van Straubenzee, W. R.

  Rost, Peter

  Vaughan, Dr Gerard

  Royle, Sir Anthony

  Viggers, Peter

  Sainsbury, Hon Timothy

  Waddington, David

  St. John-Stevas, Rt Hon N.

  Wakeham, John

  Scott, Nicholas

  Waldegrave, Hon William

  Shaw, Michael (Scarborough)

  Walker, B. (Perth)

  Shelton, William (Streatham)

  Walker-Smith, Rt Hon Sir D.

  Shepherd, Colin (Hereford)

  Wall, Patrick

  Shepherd, Richard

  Waller, Gary

  Shersby, Michael

  Walters, Dennis

  Silvester, Fred

  Ward, John

  Sims, Roger

  Warren, Kenneth

  Skeet, T. H. H.

  Watson, John

  Smith, Dudley

  Wells, John (Maidstone)

  Speed, Keith

  Wells, Bowen

  Speller, Tony

  Wheeler, John

  Spence, John

  Whitney, Raymond

  Spicer, Michael (S Worcs)

  Wickenden, Keith

  Sproat, Ian

  Wiggin, Jerry

  Squire, Robin

  Wilkinson, John

  Stainton, Keith

  Williams, D.(Montgomery)

  Stanbrook, Ivor

  Winterton, Nicholas

  Stanley, John

  Wolfson, Mark

  Steen, Anthony

  Young, Sir George (Acton)

  Stevens, Martin

  Younger, Rt Hon George

  Stewart, Ian (Hitchin)

  Stewart, J.(E Renfrewshire)

  Tellers for the Ayes:

  Stokes, John

  Mr. Spencer Le Marchant

  Stradling Thomas, J.

  and Mr. Anthony Berry.

  Tapsell, Peter

  NOES

  Abse, Leo

  Carter-Jones, Lewis

  Adams, Allen

  Cartwright, John

  Allaun, Frank

  Clark, Dr David (S Shields)

  Alton, David

  Cocks, Rt Hon M. (B'stol S)

  Anderson, Donald

  Cohen, Stanley

  Archer, Rt Hon Peter

  Coleman, Donald

  Armstrong, Rt Hon Ernest

  Concannon, Rt Hon J. D.

  Ashley, Rt Hon Jack

  Conlan, Bernard

  Ashton, Joe

  Cook, Robin F.

  Atkinson, N.(H'gey,)

  Cowans, Harry

  Bagier, Gordon AT.

  Cox, T. (W'dsw'th, Toot'g)

  Barnett, Guy (Greenwich)

  Craigen, J. M.

  Barnett, Rt Hon Joel (H'wd)

  Crowther, J. S.

  Beith, A. J.

  Cryer, Bob

  Benn, Rt Hon A. Wedgwood

  Cunliffe, Lawrence

  Bennett, Andrew(St'kp't N)

  Cunningham, G. (Islington S)

  Bidwell, Sydney

  Cunningham, Dr J. (W'h'n)

  Booth, Rt Hon Albert

  Dalyell, Tarn

  Boothroyd, Miss Betty

  Davidson, Arthur

  Bottomley, Rt Hon A.(M'b'ro)

  Davies, Rt Hon Denzil (L'lli)

  Bradley, Tom

  Davies, Ifor (Gower)

  Bray, Dr Jeremy

  Davis, Clinton (Hackney C)

  Brown, Hugh D. (Provan)

  Deakins, Eric

  Brown, R. C. (N'castle W)

  Dean, Joseph (Leeds West)

  Brown, Ron (E'burgh, Leith)

  Dempsey, James

  Brown, Ronald W. (H'ckn'y S)

  Dewar, Donald

  Buchan, Norman

  Dixon, Donald

  Callaghan, Rt Hon J.

  Dobson, Frank

  Callaghan, Jim (Midd't'n & P)

  Dormand, Jack

  Campbell, Ian

  Douglas, Dick

  Campbell-Savours, Dale

  Douglas-Mann, Bruce

  Canavan, Dennis

  Dubs, Alfred

  Cant, R. B.

  Duffy, A. E. P.

  Carmichael, Neil

  Dunn, James A.

  884

  Dunnett, Jack

  McKay, Allen (Penistone)

  Dunwoody, Hon Mrs G.

  McKelvey, William

  Eadie, Alex

  MacKenzie, Rt Hon Gregor

  Eastham, Ken

  Maclennan, Robert

  Edwards, R. (W'hampt'n S E)

  McNally, Thomas

  Ellis, R. (NE D'bysh're)

  McQuade, John

  English, Michael

  McTaggart, Robert

  Ennals, Rt Hon David

  McWilliam, John

  Evans, loan (Aberdare)

  Marks, Kenneth

  Evans, John (Newton)

  Marshall, Dr Edmund (Goole)

  Ewing, Harry

  Marshall, Jim (Leicester S)

  Faulds, Andrew

  Martin, M(G'gow S'burn)

  Field, Frank

  Mason, Rt Hon Roy

  Fitch, Alan

  Maxton, John

  Flannery, Martin

  Maynard, Miss Joan

  Fletcher, Raymond (Ilkeston)

  Meacher, Michael

  Fletcher, Ted (Darlington)

  Mellish, Rt Hon Robert

  Foot, Rt Hon Michael

  Mikardo, Ian

  Ford, Ben

  Millan, Rt Hon Bruce

  Forrester, John

  Miller, Dr M. S. (E Kilbride)

  Foulkes, George

  Mitchell, Austin (Grimsby)

  Fraser, J. (Lamb'th, N'w'd)

  Mitchell, R. C. (Soton Itchen)

  Freeson, Rt Hon Reginald

  Morris, Rt Hon A. (W'shawe)

  Garrett, John (Norwich S)

  Morris, Rt Hon C. (O'shaw)

  Garrett, W. E. (Wallsend)

  Morris, Rt Hon J. (Aberavon)

  George, Bruce

  Moyle, Rt Hon Roland

  Gilbert, Rt Hon Dr John

  Mulley, Rt Hon Frederick

  Ginsburg, David

  Newens, Stanley

  Golding, John

  Oakes, Rt Hon Gordon

  Graham, Ted

  Ogden, Eric

  Grant, George (Morpeth)

  O'Halloran, Michael

  Grant, John (Islington C)

  O'Neill, Martin

  Grimond, Rt Hon J.

  Orme, Rt Hon Stanley

  Hamilton, James (Bothwell)

  Owen, Rt Hon Dr David

  Hamilton, W. W. (C'tral Fife)

  Paisley, Rev Ian

  Hardy, Peter

  Palmer, Arthur

  Harrison, Rt Hon Walter

  Park, George

  Hattersley, Rt Hon Roy

  Parker, John

  Haynes, Frank

  Parry, Robert

  Healey, Rt Hon Denis

  Pavitt, Laurie

  Heffer, Eric S.

  Pendry, Tom

  Hogg, N. (E Dunb't'nshire)

  Penhaligon, David

  Holland, S. (L'b'th, Vauxh'll)

  Powell, Raymond (Ogmore)

  Home Robertson, John

  Prescott, John

  Homewood, William

  Price, C. (Lewisham W)

  Hooley, Frank

  Race, Reg

  Horam, John

  Radice, Giles

  Howell, Rt Hon D.

  Rees, Rt Hon M (Leeds S)

  Howells, Geraint

  Richardson, Jo

  Hudson Davies, Gwilym E.

  Roberts, Albert (Normanton)

  Hughes, Mark (Durham)

  Roberts, Allan (Bootle)

  Hughes, Robert (Aberdeen N)

  Roberts, Ernest (Hackney N)

  Hughes, Roy (Newport)

  Roberts, Gwilym (Cannock)

  Janner, Hon Greville

  Robertson, George

  Jay, Rt Hon Douglas

  Robinson, G. (Coventry NW)

  John, Brynmor

  Rodgers, Rt Hon William

  Johnson, James (Hull West)

  Rooker, J. W.

  Johnson, Walter (Derby S)

  Roper, John

  Jones, Rt Hon Alec (Rh'dda)

  Ross, Ernest (Dundee West)

  Jones, Barry (East Flint)

  Rowlands, Ted

  Jones, Dan (Burnley)

  Ryman, John

  Kaufman, Rt Hon Gerald

  Sandelson, Neville

  Kerr, Russell

  Sever, John

  Kilfedder, James A.

  Sheerman, Barry

  Kilroy-Silk, Robert

  Sheldon, Rt Hon R.

  Kinnock, Neil

  Shore, Rt Hon Peter

  Lambie, David

  Short, Mrs Renée

  Lamborn, Harry

  Silkin, Rt Hon J. (Deptford)

  Leadbitter, Ted

  Silkin, Rt Hon S. C. (Dulwich)

  Leighton, Ronald

  Silverman, Julius

  Lestor, Miss Joan

  Smith, Cyril (Rochdale)

  Lewis, Arthur (N'ham NW)

  Smith, Rt Hon J. (N Lanark)

  Lewis, Ron (Carlisle)

  Snape, Peter

  Litherland, Robert

  Soley, Clive

  Lofthouse, Geoffrey

  Spearing, Nigel

  Lyon, Alexander (York)

  Spriggs, Leslie

  Lyons, Edward (Bradf'd W)

  Steel, Rt Hon David

  McCartney, Hugh

  Stewart, Rt Hon D. (W Isles)

  McDonald, Dr Oonagh

  Stoddart, David

  McGuire, Michael (Ince)

  Stott, Roger

  885

  Strang, Gavin

  White, J. (G'gow Pollok)

  Straw, Jack

  Whitehead, Phillip

  Summerskill, Hon Dr Shirley

  Whitlock, William

  Taylor, Mrs Ann (Bolton W)

  Willey, Rt Hon Frederick

  Thomas, Jeffrey (Abertillery)

  Williams, Rt Hon A.(S'sea W)

  Thomas, Mike (Newcastle E)

  Williams, Sir T. (Warrington)

  Thomas., Dr R, (Carmarthen)

  Wilson, Gordon (Dundee E)

  Thorne, Stan (Preston South)

  Wilson, Rt Hon Sir H.(H'ton)

  Tilley, John

  Wilson, William (C'try SE)

  Tinn, James

  Winnick, David

  Torney, Tom

  Woodall, Alec

  Varley, Rt Hon Eric G.

  Woolmer, Kenneth

  Wainwright, E.(Dearne V)

  Wrigglesworth, Ian

  Walker, Rt Hon H.(D'caster)

  Young, David (Bolton E)

  Watkins., David

  Weetch Ken

  Tellers for the Noes:

  Welsh, Michael

  Mr. Terry Davis and

  White, Frank R.

  Mr. George Morion.

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

  LOCAL GOVERNMENT (MISCELLANEOUS PROVISIONS) (SCOTLAND) [MONEY]
  Queen's Recommendation having been signified—
  Resolved,
  That, for the purposes of any Act of the present Session to make further provision as regards local government in Scotland and to amend the Housing (Scotland) Acts 1966 to 1980, it is expedient to authorise the payment out of money provided by Parliament of any increase in the sums so payable under or by virtue of any other Act in so far as any such increase is attributable to provisions of the said Act of the present Session, —[Lord James Douglas-Hamilton.]

Northern Ireland (Education)
10.14 pm
The Under-Secretary of State for Northern Ireland (Mr. Philip Goodhart): I beg to move,
That the draft Education (Northern Ireland) Order 1980, which was laid before this House on 28 October 1980 in the last Session of Parliament, be approved.
Before I describe the scope of the order, I hope that I shall not be too far out of order, Mr. Deputy Speaker, if I welcome the appointment of the right hon. Member for Mansfield (Mr. Concannon) as the Opposition spokesman on Northern Ireland. When I heard the news last night my first instinctive reaction was one of spontaneous delight. I am glad that his long and distinguished service in the Province has been recognised by the leader of his party. In between the 700 flights that he made while a Minister there, he made many friends in Northern Ireland, who, I am sure, share my delight at his appointment.
I do not wish to guide the Leader of the Opposition in any way, but I am sure that many will hope that this does not mean that the hon Member for Stalybridge and Hyde (Mr. Pendry) will now be moved down from his responsibilities, for both in substance and in shadow he has served Northern Ireland well.
The order makes several amendments to the Education and Libraries (Northern Ireland) Order 1972, which is the principal enactment governing education in Northern Ireland. It also repeals certain redundant nineteenth century legislation.Of the various articles in the order, article 3 is the most significant. It will have the effect of replacing the duty on education and library boards to ensure chat sufficient nursery schools and classes are
886
available in their areas by a discretionary power to provide nursery education. It will thus bring the Northern Ireland legislation into line with that for Great Britain—into line, that is, with the provisions of sections 24 and 25 of the Education Act 1980, and with what has always been the position in practice.
I should like to stress that the removal of the duty on education and library boards to secure the provision of education for the under-fives does not reflect any lessening of the Government's commitment to the value of nursery education in Northern Ireland. This is clearly demonstrated by the fact that between September 1979 and September 1980 650 additional places were provided in nursery schools and classes, bringing the total there to almost 6,200. An additional 100 places will be provided later in this school year.
Another important factor is the number of other 4-year-olds in Northern Ireland schools. These currently number nearly 17,000, which, together with the 4-year-olds in nursery schools and classes, means that 77 per cent. of the 4-year-olds in Northern Ireland are provided with an early start to their education.
Mr. Tam Dalyell: Is there a Government policy on the question of 4-year-olds who are Catholics or Protestants going to their nursery schools together? Do the Government have any view on this matter?
Mr. Goodhart: It so happens that the number of 4-year-olds who go to classes in controlled primary schools and those who go to classes in maintained primary schools is almost precisely the same. With regard to the provision of nursery school education, some children are in Protestant nursery schools and some are in Catholic nursery schools. I am assured that there are some mixed nursery schools as well. It is a matter of parental choice.
Rev. Ian Paisley: Will the hon. Gentleman make it clear that there is no such thing as a Protestant nursery school? There are State nursery schools but not Protestant nursery schools.
Mr. Goodhart: I readily accept that point.
Mr. James Kilfedder: Is it not disgraceful that infants between the ages of 3 and 5 years should be divided on religious lines? Will the Minister give the percentage of 3 to 5-year-olds in Northern Ireland who have places in nursery schools or nursery classes?
Mr. Goodhart: As I said, about 77 per cent. of 4-year-olds have primary or nursery school places. About 40 per cent. of 3 to 5-year-olds receive pre-school education.
It remains the Government's objective that when resources permit provision should be expanded to a level that ensures its availability to all nursery-aged children whose parents wish them to have it. Section 12 of the 1980 Act also provides that the discontinuance of nursery schools in England and Wales is subject to the approval of the Secretary of State for Education and Science. A similar amendment is unnecessary for Northern Ireland, because the existing provisions of article 11A of the 1972 order already require the approval of the Department of Education to the establishment or discontinuance of a nursery school or class.
That brings me to the removal of some of the Department of Education's supervisory powers over education and library boards. Hon. Members will

887
appreciate that as boards are financed entirely from central funds it is not possible for them to have the same freedom of action as local authorities in England and Wales. However, articles 4 to 6 represent a modest relaxation of detailed control. Article 4 frees from departmental control the amount of fees that may be charged for board and lodging at primary, intermediate and special schools. This, in fact, is a purely technical point. Article 5 removes the requirement that library fines and certain charges for library services be authorised by regulations. Borrowing of books will continue to be free of charge. An Order in Council would be needed to change that. Article 6 removes the Department's detailed control over boards in respect of their organisation of and participation in education conferences.
The remainder of the order is of a technical or administrative nature. The purpose of article 7 is to make it clear that, in the case of educational maintenance allowances and boarding allowances, payments may be made to parents and, in the case of students' awards, payments of fees may be made direct to the institutions they attend. This, of course, already happens in practice. Article 8 will regularise the situation where by expenditure on free books for non-fee-paying pupils at controlled grammar schools has been on an extra-statutory basis since September 1978, when grammar school scholarships were abolished.
Essentially, article 9 is a restatement of existing law, which enables the Department to prescribe in regulations the rates of salaries and allowances payable to teachers. The Examiner of Statutory Rules has expressed doubts as to whether the existing provisions allow the Department the necessary discretionary powers to decide exceptional or individual matters, and an additional paragraph — paragraph (4)(b)—has therefore been inserted to deal with the Examiner's criticism. This makes explicit provision for salaries and allowances, in cases where it is proper to do so, to be calculated upon a basis determined by the Department.
To sum up, these three articles—articles 7, 8 and 9—are technical amendments, which do not represent any change in either policy or practice.
The other articles tidy up the statute book by removing unnecessary provisions.
I commend the order to the House.
10.26 pm
Mr. Tom Pendry: I echo the Minister's remarks about my right hon. Friend the Member for Mansfield (Mr. Concannon). Having served with my right hon. Friend in the Northern Ireland Office, I know that he will do a first-class job. I am sure that the House would like to wish his predecessor—my hon. Friend the Member for Pontypridd (Mr. John)—well in his exacting new job.
At first glance the order may appear to be an updating and progressive measure, bringing Northern Ireland into line with twentieth century education practices, especially if we look at article 10, which is to repeal no fewer than four nineteenth century Acts. Indeed, one is 167 years old. But on closer examination the order is seen to be more one of retrenchment and retrogression in educational services, certainly in the main article, article 3.
888
There is one bright spot that we should applaud. One of the main provisions in the proposal when first published is no longer before the House. Thanks to the good sense of hon. Members on both sides of the House, but more particularly the good sense of Members of another place, the school transport proposals have been withdrawn. If that article had remained, the hardships already experienced by families in Northern Ireland would manifestly have been made worse.
Before I turn to the principal effect of the order I should like to refer to article 5, which is ostensibly a technical rearrangement of the powers to impose fines for overdue books. I question whether giving individual education and library boards the power to levy fines, and removing the role of the Department of Education in such decisions, will not lead to an increase in those fines.
All the boards in the Province have made drastic cuts in their budgets this year. Under the article, what is to stop them from raising money from fines and other library service charges? For example, the Belfast education and library board has already reduced its spending this year by £2½ million, and there has been a 16 per cent. reduction in travel expenditure by the Western education and library board.
Clearly, the boards are suffering from a cash crisis as a result of Government policies. Consequently, I should like an assurance that the new power given to the boards will not result in prohibitive increases in library fines and general library charges in an attempt to raise additional funds. Any backhanded taxes on the use of books by the people of Northern Ireland, who are already starved of leisure resources, will be strongly resisted by the Opposition and, more important, by the library users.
I turn to the principal effect of the order, resulting from article 3. I was surprised and bemused by the Minister's comments about the Government's intentions on nursery education. He told us that the Government's aim was not to downgrade nursery education. On the contrary, they would have us believe that the provision of nursery places is high on their list of educational priorities. I believe that the converse is true.
It is plain from article 3, which replaces a duty on education and library boards to provide nursery places with a mere discretionary power, that the Government have not the least intention of increasing the number of nursery places. Instead they are providing a channel whereby the boards can reduce the number of nursery places when the exigencies of cash limits and cuts force them to curtail services to the public.
I believe that behind the order lies a multitude of sins. I totally reject the false logic that the abolition of a legal obligation, however loosely that obligation has been applied in the past, will lead to an increase in the number of nursery places. Once discretionary power replaces an obligation, the encouragement to provide education facilities for the under-fives is largely removed, especially in this difficult economic climate.
In saying that, I join the Minister in welcoming the fact that the number of nursery places provided in Northern Ireland has increased by 650 in the year up to September. That followed an increase of 625 the year before. I draw different conclusions from the Minister. I believe that is clear evidence that the obligation to provide nursery places has had an effect in Northern Ireland, despite the unrelenting curtailment of public expenditure by the Government. But I have grave doubts about any further

889
increase in the provision of nursery places within the province. Without the force of obligation, the education and library hoards will be faced by no statutory obstacle when planning cuts in nursery services.
I do not wish to be accused of unnecessarily tolling the death knell for nursery education in Northern Ireland, nor am I being unduly alarmist about a substitution of words, but there is clear evidence that the operation of discretionary power in the Education Act 1980 relating to mainland Britain has to date acted to the detriment of the nursery service. I am sure that hon. Members representing constituencies on which it has already had that effect will testify to that.
It is too early to project for next year the exact number of available nursery places on the mainland. However, the indications are that there will be a serious and sustained reduction in the nursery service.
Last August the Secretary of State for Education and Science approved two closures—one in Coventry and the other in Hereford and Worcester. For the coming financial year significant cuts are proposed in nursery education on a wider scale, notably in East Sussex, which has already projected the closure of all nursery schools and classes by 1982–3. In Northamptonshire, one in three nursery places will face the axe. Somerset plans to deplete the nursery service by as much as 50 per cent.
That sort of evidence leads me and my colleagues to conclude that the operation of a discretionary power regarding the provision of nursery education has only one tangible outcome: a gradual but inevitable reduction in the number of available places in nursery schools and classes. All the indications show that the removal of an obligation to provide nursery places is operating to the general detriment of nursery education in mainland Britain.
Can the Minister give an assurance tonight that similar circumstances will not prevail in Northern Ireland within the next six to 12 months? I doubt whether he can give such an assurance. I believe that if he were to do so it would be wishful thinking on his part, because article 3 has and can have only one meaning: that the future of the nursery education service in Northern Ireland will be none other than one of depletion and rundown. Unquestionably this constitutes a back-banded and back-door public expenditure cut.
In this matter our concern is given both purpose and direction by the dire social needs of the people of Northern Ireland. The Opposition have reiterated times without number—I am sure that hon. Members present are sick of hearing it—that Northern Ireland is unique in the scale of social deprivation that prevails upon its people. The Province has a higher rate of unemployment, at 15·9 per cent., than anywhere else in the United Kingdom. It has higher energy costs, higher prices, lower wages and larger households than any other part of the United Kingdom. In short, the nature and proportions of poverty are manifestly larger than in any other region. As there are more poor, so there are more disadvantage children entering schools. Nursery schools are one answer to the ever-expanding problem.
However, in Northern Ireland only 4 per cent. of children under the age of 5 receive nursery education. A mother in England has four times the chance of day care for her child, including care in pre-nursery school groups, and 18 times the chance of putting her child into a nursery school. A report published under the aegis of Lord Melchett in 1977 called "Day Care and Education for
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Children in Northern Ireland" states chat for every 10,000 children under 5 in Northern Ireland there are 447 nursery places. For every 10,000 children under 5 in England there are 1,152 nursery places. The increases in places in Northern Ireland in the last few years are a drop in the ocean. A total of 38,000 places are required to meet the need. The situation in the Province is a disgrace. Every effort should be made to remedy it.
We are far from alone in our criticism of article 3. The education and library boards have expressed grave concern, as have the trade unions, particularly the teaching unions. The parents' associations have also voiced serious doubts about the implications of article 3. The Minister cannot be unaware of the strong advice from the Northern Ireland Department of Education's specially commissioned working party on social priority schools. That report clearly and positively states that nursery schools have an important part to play in areas of deprivation and social priority.
Institutions and churches have declared that they are in favour of increased nursery education. I refer to the Church Board of the Presbyterian Assembly, and the South-East education and library board. The Official Unionists, through their spokesman, William Bell, an ex-mayor of Belfast, say that it is outrageous that there should be any curtailment of nursery services The SDLP has said that a U-turn is involved, and the Republican clubs have made similar statements.
The greater level of poverty in Northern Ireland necessitates a greater level of nursery education. Article 3 will not lead to such an increase. The reverse is true. The available evidence on the operation of a discretionary power for the provision of nursery schools in mainland Britain clearly suggests that a depletion in service is likely to result if a similar change is made in Northern Ireland. Whatever the doubts now, the education boards will soon regard nursery education as less essential than some other education provisions. To remove the reqirement to ensure that sufficient nursery places are available and to replace it with a discretionary power will remove for good, under present economic circumstances, any possibility of nursery services being improved.
Article 3 is bad news for nursery schools in Northern Ireland. It is bad news for the Province, which has to bear such a heavy burden of economic and social deprivation. For those reasons we shall withhold support for the measure.
10.39 pm
Mr. James Kilfedder: I shall concentrate on article 3, which removes the duty on education boards to provide nursery schools in Northern Ireland. It makes nursery school provision different in law from primary school, secondary school and higher education provision.
It was right of the hon. Member for Stalybridge and Hyde (Mr. Pendry) to remind the House that we are debating this order against a background of dire social need, heavy unemployment and a lower standard of living in Northern Ireland than in the rest of the United Kingdom.
At present, an education board in Northern Ireland is required, as a duty, to provide whatever primary and secondary schools are needed in the area. The board is also required to meet the demand for further education,

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whatever it may be. Where a board fails to carry out those functions it could be in dereliction of either a duty or a responsibility.
However, under article 3, an education board will have neither a duty nor a responsibility to provide nursery education in future. A board does not even have to submit a scheme for nursery education, as it does for stationery and books in controlled schools, as mentioned in article 8, or for further education under article 26 of the original 1972 education order.
Despite the fact that until now there was a duty on education boards — it is right to stress this point—to ensure that sufficient nursery schools and places were provided in Ulster, today there is still a deplorable lack of nursery provision. There are countless parents who seek unsuccessfully for a place for their child in a nursery school or class. That situation cannot be tolerated.
There must be about 40,000 children in Northern Ireland within the 3 to 5-year-old age group, yet according to an answer given to me recently there are places for fewer than 40 per cent. of those children. Of course, the ambitious 1975 programme, which the previous Tory Government launched and which should have provided 150 nursery schools in a period of three years simply failed to materialise. The reason is clear. Since 1975, there has been a reduction in the amount of money available for education in the Province. That is an indictment of a Government who are prepared to invest billions of pounds in nuclear weapons rather than in the children who deserve the best that we can provide for them.
Mr. John Biggs-Davison: Oh, really.
Mr. Kilfedder: The hon. Gentleman may disagree—
Mr. Biggs-Davison: I do.
Mr. Kilfedder: —but it is much better to invest in life and the future than in the possibility of nuclear destruction. For example, billions of pounds have been spent on a replacement for Polaris.
Mr. Biggs-Davison: What life will we have if we have no defence?
Mr. Kilfedder: The situation with regard to lack of nursery schools was made bearable by the provision of nursery places for children under 5 in some primary schools. That was possible where there was spare accommodation and teachers. However, even those nursery places are now endangered—I should like the Minister to deal with this point—by the savage public expenditure cuts in Northern Ireland, as a result of which fewer teachers will be employed by the education boards. I want an absolute assurance from the Minister that those nursery places will be increased during the next 12 months.
Whether or not the duty to provide nursery education is compulsory or discretionary, it is clear that none will be provided without Government money. It is not the fault of the education boards, because unless they are provided with money from the Department of Education they cannot provide the nursery places or the schools.
But there is one hidden and perhaps unintended advantage in removing the duty on a board to provide nursery education. Regrettably, the intransigence of some
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clergy has stopped the development of non-denominational nursery schools in Northern Ireland. Like primary and secondary schools, existing nursery schools are now dominated and separated along traditional sectarian lines. I regret that very much.
It was bad enough to have the entire school-going population in Northern Ireland separated at the age of 5 along sectarian lines. Now we have children separated at the age of 3, and the next move, logically, would be the separation of maternity wards into two religious groups. I had hoped that at least nursery schools would escape the denominational blight.
Perhaps the amendment in this order provides the opportunity at last to wean away nursery schools from sectarian control. As I see it, the new situation created by the amendment means that education boards will no longer be under a duty to provide nursery schools, and that where they do so provide nursery schools it must be in non-sectarian, non-denominational schools, and any Church-owned or Church-controlled nursery school will, as I interpret the amendment, henceforth be regarded as an independent school.
I should like the Minister to deal with that very serious point.
10.45 pm
Mr. J. Enoch Powell: I shall be the third hon. Member intervening in this debate to offer a welcome to the new Shadow Secretary of State for Northern Ireland — silent though he remains, perhaps wisely, on this first occasion. During his lengthy service in Northern Ireland under the previous Administration, he won golden opinions and is still warmly remembered for his qualities of common sense, determination and good will. In whatever the right hon. Gentleman did there was no mistaking his real and lively desire to serve the people for whom he had responsibility.
Now that this order in its previous form has been eviscerated by the removal of any reference to school transport, naturally much of the discussion has centred upon article 3. I do not feel, however, that a case can be made out by those who argue that the cause and case of nursery schools and nursery places is damaged by the abolition of what must always have been a bogus "duty" to provide "sufficient" places.
The Minister informed the House that in the previous year and the year before there had been a substantial increase in the number of such places. So presumably previously sufficient places were not being provided, although there was a statutory duty to do so, and the statutory duty has done nothing whatsoever to secure it. More than one speech in this debate has drawn attention to the continuing inadequacy of nursery school places—the fact that there are no more than 40 per cent. of the children aged between 3 and 5 and 77 per cent. of those aged between 4 and 5 in such places. Yet it must be assumed, on the basis of the statute as it stood, that those places were sufficient. Those who argue that those places are insufficient are in fact saying that it was perfect nonsense to have had a duty written into the law which is not written into the corresponding legislation in this part of the kingdom.
I should have thought that all hon. Members know perfectly well what is the real sanction upon failure to provide nursery places and what is the pressure which will, I am certain, result in a continued expansion of the number

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of such places, even under present conditions. It is the determination of parents to secure such places for their children. Those who represent rural areas will be aware of the unceasing pressure exerted by parents upon them and upon others to secure places for their children. Indeed, primary education in the rural areas would be severely lamed if there were not this really very substantial provision, admittedly, mostly not in nursery schools which are no doubt more appropriate to urban areas but in nursery classes in the primary schools.
In short, my hon. Friends and I do not believe that the progress which is necessary will be in any way interfered with or halted—it might even conceivably be the other way round—by the removal of a meaningless duty to provide a meaningless quantum of nursery places.
A word of welcome should be offered to that part of article 9 which takes account of the criticism levelled by the Examiner of Statutory Rules for Northern Ireland at previous regulation-making. The examiner labours diligently in the service of the House and of Northern Ireland. Prom time to time we take a number of his reports together and ventilate them in the Northern Ireland Committee. Obviously that can be done only at relatively long intervals, but his careful examination of orders and his determination to ensure that order-making powers are not misused are of valuable assistance to hon Members in doing what, in the last resort, is our duty, namely, to see that the powers of subordinate legislation are not abused. We should welcome the fact that he has scored the hit that is recorded by article 9.
On article 10 the Opposition spokesman referred to the nineteenth century enactments which were being repealed as spent. He did so with a somewhat derogatory reference to the provision for education in the nineteenth century. Even if it is not necessary for his education, it is desirable to place upon the record that in the middle of the last century public education in the island of Ireland was a whole generation in advance of public education in this country. Those who are familiar with Northern Ireland will be aware that throughout Northern Ireland can be seen the monuments of that provision in the admirable primary schools, built to a similar but not to an invariable pattern, many of them attractive pieces of architecture, which were erected in order to provide public education at a time when that was scarcely dreamt of in this island.
Mr. Dalyell: In England and Wales.
Mr. Powell: I am sorry if I have infringed the susceptibilities of the inhabitants of another kingdom. I could have gone further and drawn attention to the fact that in Wales intermediate and secondary education was long in advance of the corresponding education in England. I was letting this part of the kingdom off lightly, however, and I apologise to Scottish colleagues.
Mr. Pendry: I think that the right hon. Gentleman misunderstood me. I said that at first glance it might appear that this was a progressive measure, but that on further examination it proved not to be so.
Mr. Powell: The hon. Gentleman can be regarded as having made his amende honorable for having failed to take the opportunity to indicate that there was once a period—perhaps still is — when State education in Northern Ireland and Ireland as a whole was setting the pace for other parts of the United Kingdom.
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I refer in conclusion, for it is a significant and constitutionally important matter, to the apparently minor articles 4 to 6, which reduce, as the Minister explained, the supervision of the Secretary of State over the administration and performance of their duties by the education and library boards. I am not sure that the trend which is evinced on an extrememly small scale by articles 4 to 6 is one that should be welcomed.
The Minister rightly said that the status of those boards is different from that of local education authorities in the rest of the kingdom in that they are 100 per cent. agents of the Minister in performing the duties and rendering the services for which he is answerable to this House, but perhaps I may illustrate by a certain example what I mean by the real constitutional importance of the point involved.
I had occasion recently to urge upon the noble Lord Elton, who is the Minister responsible for education in Northern Ireland, the desirability of so rearranging priorities of capital expenditure that it would not be necessary to close the learner swimming pool in Downpatrick—an apparently not unimportant, yet not so very major, matter. I received a reply from the noble Lord, from which I shall quote one or two sentences. He said:
"I consider that the Education and Library Boards, as the education and library authorities for their areas are in the best position to assess the relative merits of competing local needs and demands, and to decide their own priorities within any guidance given by Government and within the financial resources available."
After further argumentation, he concluded:
"In this case I am satisfied that the Board has acted reasonably in its consideration of the matter and I am prepared to accept its judgment of the relative priorities."
I would like the House to linger for a moment on those concluding words
"I am prepared to accept its judgment of the relative priorities."
What Minister, writing to an hon. Member of the House or answering a debate in the House, would say of the civil servants in his Department that they had considered the matter very carefully, that they had weighed it up, and that he was prepared to accept their
"judgment of the relative priorities"?
No Minister could say such a thing. He would immediately be told that the responsibility was not theirs, but his. That is exactly the position of the Secretary of State in Northern Ireland in relation to every aspect of the education and library service. He is responsible, whether he likes it or not, for the priorities. He is answerable for the decisions that are taken—not only in general, and not only for the broad totals within which the Treasury obliges him to work, but for the decisions that are taken within those totals. He cannot pass that responibility off by saying that the boards are the authorities. The boards are not the authorities in the sense of education authorities in this part of the United Kingdom.
Of course, the boards are composed, for the most part, of admirable people who are well informed, well intentioned and who contribute of their best. That is not the point. The point: is that they are in no position to take responsibility. They have no responsibility to the electorate and they have no responsibility for expenditure. That is not their fault: it is the fact of the position. In so far as decisions on the expenditure of this public money and on the provision of those services in Northern Ireland are taken by boards, those decisions are, in the literal, constitutional sense of the term, irresponsible decisions.

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I do not believe that a Minister is entitled, therefore, to shelter behind the views and the judgments of a board. If he cannot accept those judgments and justify them in his own person, he should change them. If he accepts them, he should justify them in his own person without reference to the board.
There is one remedy, and one remedy only, for that constitutional gap. It is that the boards should be given responsibility in the same way as the corresponding local education authorities in this part of the kingdom have responsibility, namely, by the majority of them at least being elected and, consequently, responsible to the electors, and by the expenditure which they control being in part raised upon their authority. Without local election and without local finance there can be no responsibility on the part of local bodies.
I hope that you will not feel, Mr. Deputy Speaker, that this is too large a matter to have been ventilated within the scope of the order. In three of its articles the order is expressly for swearing the responsibility of the Department to supervise the actions of the boards. That may be satisfactory from the point of view of economy and convenience of administration, but the House should be aware that there is an important constitutional principle involved which falls to be dealt with within the contract of Northern Ireland. It falls to be dealt with by giving to the people of Northern Ireland educational administration upon the same basis as education is administered on this island.
11 pm
Rev. Ian Paisley: I associate myself with the remarks of those who have preceded me in congratulating the right hon. Member for Mansfield (Mr. Concannon), who has taken on responsibilities for Northern Ireland as the Opposition spokesman. The people of Northern Ireland know the right hon. Gentleman. They know of his labours, of his energy and of his good will towards them. Although I have had personal differences with him in the past—no doubt I will have in future—I welcome his appointment. We regret that his appointment means that his colleague, the hon. Member for Pontypridd (Mr. John), will speak no longer for Northern Ireland. The hon. Gentleman took a keen interest in the Province and set out to ascertain the views of all parties in the Province.
I cannot accept the thesis of the right hon. Member for Down, South (Mr. Powell) that because the statutory obligation on the boards was not fully carried out it will help them to carry out their responsibilities if we make them discretionary. The figures that have been placed before us—namely, 500 places in every 10,000—indicate that there are not sufficient places in nursery education in Northern Ireland. If the boards were not prepared to shoulder their responsibilities and to discharge them when they had a statutory obligation to do so, we cannot expect them to become over-excited, to take off their coats and to roll up their sleeves when they operate on a discretionary basis.
The figures for the 3 to 5-year-olds are serious. They reveal that Northern Ireland has been neglected in nursery education and will be more neglected in future. The hon. Member for Stalybridge and Hyde (Mr. Pendry) spoke of the black backcloth of the social environment in Northern Ireland. It should be known to hon. Members that many
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mothers who would like to stay at home to look after their young children are forced to go out to work to try to bring up the family budget to a level that will enable them to bring some comfort to their family. This is an important issue that should not be passed over.
The Government are not helping by bringing forth this order. The original draft order was even more serious, because it would have taken away the free transport from children attending primary and secondary schools. We are grateful to the other place. Some people would like to abolish it. However, I am pleased that it has not been abolished and was able to deal with the matter. The people of Northern Ireland owe a debt to the other place. Bills have gone through this House in years gone by that were killed in the other place. I am glad that that provision was, too.
Promises have been made to rural schools in Northern Ireland that if they close certain privileges will be guaranteed and the children will be transported to the schools that they will be forced to attend. Those promises would have been in jeopardy.
We should emphasise that we are very concerned about the decision under article 3. I do not agree with the right hon. Member for Down, South about article 3, but I agree about the other three articles. I, too, do not like the fact that the Minister seems to be contemplating passing the buck. He would be able to say in reply to representations that it was a decision of the board. Public representatives in Northern Ireland are sick, sore and tired of Ministers saying that this or that is a board decision. They cannot defend the decision when faced with the facts.
I do not agree that the people who comprise the boards are well informed and well intentioned. Many are neither. Those of us who have experienced rural schools being closed have been amazed to find board members who do not even live in the area, and some have never had a family. They are either bachelors or spinsters. They take great delight in closing down rural schools. Such people should not be on the boards.
It is amazing that if someone loses an election in Northern Ireland and happens to belong to the Alliance Party he will be nominated to the education board. I could give illustrations. A defeated candidate who is approved of by the Minister will have strings pulled to get him on to the board. That person is not elected, but gets on the board by a co-opting system. I totally oppose such practices.
The remedy is a return to proper devolved government in Northern Ireland. The system that resulted from the report should be tied in to a proper local structure.
11.7 pm
Mr. Goodhart: A number of hon. Members have referred to the article that got away—the article in the original draft, which related to school transport and charges thereto. The hon. Member for Antrim, North (Rev. Ian Paisley) and the right hon. Member for Down, South (Mr. Powell) reminded the House that the clause in the Education (No. 2) Bill was removed in another place. Perhaps those in another place were influenced not by the powerful speech that I made on Second Reading but by that of the hon. Member for Antrim, South (Mr. Molyneaux). Anyhow, I would not wish to take credit from him on that point. He made a most powerful point.
There has been an alliance between the hon. Gentleman and the right hon. Gentleman in casting doubt on the

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Government's intentions with regard to articles 4, 5 and 6. It has been suggested that we are trying to pass the buck without transferring real powers to the library boards. We are not trying to pass the buck, but we are trying to cut down on the passing of letters. It does not seem to be sensible that every item relating to a change in the fine for the non-return of a book to a library or every item for the arrangement of an education conference should have to be referred from the education and library board to the Department of Education, it is sensible to leave decisions on these matters to the library boards, and thus reduce, an excessive volume of administration.
The hon. Member for Stalybridge and Hyde (Mr. Pendry) took leave of his normal good common sense when he suggested that the education and library boards were likely to make good any deficiencies in their financial allocations in the coming year by imposing draconian fines on those who were a little ate in returning their books to the library shelves. I think that one can trust the good sense of the ladies and gentlemen concerned. Perhaps one or two have been unsuccessful at district council elections at some time in the recent past.
However, most of the discussion on this order has naturally turned on article 3. The right hon. Member for Down. South was right when he said that the legal requirement to provide nursery places for every child in Northern Ireland—as for every child in the rest of the United Kingdom—as was the case before the passage of the Education Act 1980, was a bogus right, which no one had believed existed. However, there can be no doubt that once that legal obligation had become common knowledge the library boards and the Government would have been open to litigation. While the existence of this legal right would not have provided a single nursery school place, it might have provided a large number of legal cases, which would have taken a great deal of time to sort out.
The hon. Member for Stalybridge and Hyde quite rightly drew attention to the fact that the need for education at the pre-5-year-old level is greater in Northern Ireland than it is elsewhere in the United Kingdom. He went on to parade some statistics, and suggested that provision for the education of the under-fives was grossly lacking. When one takes into account the provision that there is for under-fives in the primary schools, the position in Northern Ireland can be seen to be a great deal better than it is elsewhere in the United Kingdom.
In England, the provision for the under-fives is for 58 per cent. of the children, whereas in Northern Ireland it is for 77 per cent. The differential is most certainly in favour of Northern Ireland, and I have no doubt that when we consider the allocation for education in Northern Ireland For the coming financial year we shall find that that differential in favour of Northern Ireland will be maintained, and even expanded.
I commend the order to the House.
Question put and agreed to.
Resolved,
That the draft Education (Northern Ireland) Order 1980, which was laid before this House on 28 October 1980 in the last Session of Parliament, be approved.

Northern Ireland (Education)

  ANGUILLA BILL [Lords]
  Ordered
  That, in respect of the Anguilla Bill [Lords].notices of Amendments, new Clauses and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the 3ill has been read a second time.—[Mr. Cope.]

North Ayrshire District General Hospital
Motion made, and Question proposed. That this House do now adjourn.—[Mr. Cope.]
11.17 pm
Mr. William McKelvey: I welcome the opportunity to debate the question of the protracted delay in the building of the North Ayrshire district general hospital, and I am particularly glad to see among my Scottish colleagues those of my colleagues from Ayrshire. I hope, Mr. Deputy Speaker, that in the course of the debate my hon. Friend the Member for Central Ayrshire (Mr. Lambie) may catch your eye.
This project for a new 700-bed hospital was initiated by the former Western region hospital board and design team that was appointed in March 1965. Work then started on the site in August 1972, and the projected date of completion was to be around May 1977. However, on 19 March 1979 the local health council requested the Secretary of State to hold a public inquiry into the delay in hand-over and commissioning of the North Ayrshire district general hospital.
The response from the Scottish Home and Health Department of 4 May 1979 was that
"a public inquiry can elicit much information, but its proceedings are likely to be protracted and might not directly assist (indeed, might even prejudice) the Health Board's chances of recovery of excess costs from offending parties. The Board has given priority to ascertaining what is technically wrong at the hospital and to finding means of putting the problems right, while at the same time attempting both to establish responsibility for the problems and to maintain as far as possible, their rights to appropriate legal action. In these circumstances, it is not considered appropriate to consider further the question of a public inquiry at this stage."
I believe that a similar type of reply was given to my hon. Friend the Member for Central Ayrshire when he asked a parliamentary question on 23 May 1979.
Those requests had been prompted when, on 27 November 1978, the Ayrshire and Arran health board issued a press release announcing that there would be at least a six-month delay in the hand-over to the North Ayrshire district general hospital. The main reasons for the delay were identified as involving two areas. First, there were serious plumbing problems in the form of unacceptably high levels of lead and copper in the water supply. I understand that the technical reason for that was that earlier plumbing had been dealt with and some solder had got into the water supply. I am glad to say that that was cured by the perpetual running of water over a period of some months.
The second and more serious problem concerned the ventilation system to the main five-storey ward block and to the main theatres. At that time, Mr. Carson — the area health board chairman—stated:
"The Board cannot accept a building which has identifiable problems of such a worrying nature."
No one could blame him for that. Indeed, we share his concern. The problems were much more serious than had first been envisaged.
On 28 September 1979, the Ayrshire and Arran health Board issued a press release indicating that it would be at least 18 months before the North Ayrshire district general hospital was commissioned. In fact, the health board hoped that the remedial work required and some additional

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work would be carried out at the same time, thereby, it was hoped, reducing the time lag, then estimated at three years, to 18 months.
Again, there was a press release dated 17 April 1980. It stated:
"It was seven months ago when the Board announced it would be 18 months to three years before the hospital would take its first patients."
In July, the first part of the hospital complex, the college of nursing and the administration blocks, were handed over and brought immediately into use. The new hospital was to serve North Ayrshire and would allow the closure of Torrance House — a small hospital with limited resources — and the closure of Kilmarnock infirmary, which has a capacity, at present, of about 130 beds. It is well over 100 years old and is totally inadequate and unsuitable by modern standards.
Since the new hospital was expected to open in 1977, few or no improvements have been made to the deteriorating and overcrowded conditions that prevail in Kilmarnock infirmary. Consequently, the entire staff are valiantly struggling against mounting difficulties in order to maintain a reasonable standard of patient welfare. One can imagine the despair felt by these dedicated people in such conditions. Since further delays will affect them, they will not move to the new hospital for about three years. Since the Government have embarked on an all-out austerity programme, they have little hope of any money being spent on improving the conditions at Kilmarnock infirmary. It would be particularly unwise to spend large amounts on that area, because a fairly short period of time might be involved.
It is a scandal that we should play on the fact that such workers are prepared to put up with intolerable working conditions because they are responsible for their patients. They put the welfare of their patients before their own. Among the workers and all the senior staff in Kilmarnock hospital, there is growing concern that out-of-date machinery is beginning to break down. That gives rise not only to serious concern about the patients in Kilmarnock infirmary but to delays for those waiting for treatment or operations.
The main design fault was apparently in the ventilation system, which proved to be inadequate and did not comply with the necessary high standards of today. The extensive remedial work will mean that this brand new building will not be fully operational until March 1982. It is almost five years behind schedule. It is an indictment of the original designers that the capital building costs of £9 million have obviously soared during the delay. I shudder to contemplate what the final bill will be. I am not sure what the present estimate is. As a result of inflation, I am sure that several millions of pounds have been added to the bill.
It is much more difficult to estimate the social cost, which cannot be measured in pounds. People will undoubtedly be in difficulties. Patients who need the facilities of the new hospital will be denied them for some time to come.
I should like to ask a number of questions, which I hope will be answered tonight. I begin with what is virtually a plea from the local health council, which asks when, oh when, the North Ayrshire district general hospital will be open to accept patients. Fears are now being expressed that it may be as late as the autumn of 1982 before patients will
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be admitted. Some people feel a growing concern that by the time the hospital is open the estimated cost of running it will be more than £12 million a year. There might well be no cash available to open it, so in 1982, when eventually—five years behind schedule—we have this fine hospital, there may well be no money to staff it. Then we shall have to return to the almost Dickensian conditions in Kilmarnock infirmary and try to make some improvements there.
Secondly, why were the problems in the ventilation system in particular not recognised until after the due completion date of May 1977?
Thirdly, it is understood that the area health board will be going to litigation. Indeed, a writ was served on the consulting engineers in September. Why has it taken so long for this action to be raised?
Fourthly, what part, if any, has the Common Services Agency played in this long-drawn-out affair? Who in that body is responsible for overseeing the condition of the project? The agency is evidently the scrutineer of any plans or projects such as the North Ayrshire district general hospital.
Fifthly, will the Secretary of State hold a public inquiry into the whole affair? If, for reasons previously stated, this might in some way prejudice the health board's chance of getting back some of the money spent because of the errors, will the Secretary of State be prepared to set up a commission to investigate hospital building, not only at the hospital in question but throughout Scotland?
There has been a catalogue of disasters in new hospital building. It is passing strange that in this age of technological advance we seem, particularly in Scotland, unable to produce consulting engineers who can design and build a proper facility. We have had trouble at Ninewells, Inverclyde Royal, the sick children's hospital in Glasgow, which some people say is virtually falling apart, and the hospital that we are debating.
I look forward to the Minister's reply.
11.27 pm
Mr. David Lambie: I am grateful to my hon. Friend the Member for Kilmarnock (Mr. McKelvey) for allowing me to take part in this short debate. I am glad to see that my hon. Friend the Member for South Ayrshire (Mr. Foulkes) is also present, because, as an Ayrshire Member, he is concerned about the delay in finishing the North Ayrshire district general hospital, which will serve the whole of Ayrshire.
I should like to add my voice to the demand for a public inquiry, not only into the delay in completing the North Ayrshire district general hospital but into hospital building in general in Scotland. My hon. Friend mentioned the Ninewells hospital in Dundee, which took 10 years to build. The original estimated building time was four years and the initial cost was estimated to be £10·2 million. The final cost was £19·5 million. The tremendous delay has resulted in increased public expenditure, which the Undersecretary is always telling us the Government want to cut.
The twenty-fifth report from the Committee of Public Accounts for 1979–80, dealing with the Royal Hospital for Sick Children in Glasgow, told us that the site works there started in July 1968. The planning team started work in November 1965. That hospital should have been commissioned in 1971, but remedial work is still being carried out. The Committee carried out an investigation and took oral evidence on the reason for the delay.

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Following the evidence that was given to the Committee, we were told that the original cost was £4½ million. The repair cost is £7¼ million, nearly double the initial cost of the project. That is why people in Scotland are becoming disturbed about what is happening to hospital building in our country.
Much the same comments apply to the hospital that is the subject of the debate, and we have raised these matters because of pressure from local people and the local health council. No one seems to know what is going on. The Minister must tell us tonight what is going on so that not only do we know what is happening but the information is available to our constituents and the health council.
In February 1976 the cost of this hospital was estimated at £9½ million. What is the estimated cost now? A press statement issued by Ayrshire health board on 17 April 1980 carried a statement by the chairman of the board, Mr. Carson, a friend of my hon. Friend on the projected programme of corrective and post-contractual work. It said:
"Mr. Carson emphasised the boldness and imagination of the proposed scheme, and went on: 'We have reached this stage only with the willingness and co-operation of everyone concerned—the design teams, the main contractor and the engineering sub-contractors, the Common Services Agency and our own staff. No one should underestimate the complexity of integrating the various works'."
That statement was made eight years after the commencement of the hospital, and now we are getting this great enthusiasm about what is to be done through cooperation. The Minister should tell us why there was not this co-operation eight years ago. Why has the design team been sacked? Mo one knows that the design team has been sacked. Everyone is afraid to say that that is the case. I am laying tonight that the original design team has been sacked, and the Minister has to verify that statement.
Not only has the original design team been sacked, but, as Mr. Carson said on 17 April, a new design team has been appointed. Everyone is enthusiastic now and they will get on with the hospital, but when will it be opened? On the last occasion on which the House dealt with Scottish questions, in reply to a question that I asked about the-completion date I was told that it was hoped to open the hospital in the autumn of 1982—10 years after the start of the hospital.
I ask the Minister to deal with the matters raised by my Ion. Friend. The Common Services Agency's building division is concerned with the design, building and commissioning of new hospitals. It acts as agent for both the Secretary of State and the health boards. It is supposed to provide information, advise the health boards and build projects. It can supply architects, design staff and so on on it may appoint private firms to do the work. It does all that, but major building projects must be authorised by the Scottish Home and Health Department.
The design team has been sacked. That was necessary and should have been done years ago. I want to know, as did certain members of the Public Accounts Committee, who in the Common Services Agency is responsible for what has been done. My hon. Friend the Member for Fife, Central (Mr. Hamilton) asked about the chief architect in the CSA. Has he been sacked? Has anyone else been sacked for this catalogue of disasters? Has anyone in the Scottish Home and Health Department been sacked? There has been a tremendous increase in the costs of these projects. Money has been wasted. People have been paid
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for doing jobs that they did not do. Have any of the people concerned in the Scottish Home and Health Department been sacked?
Is it not possible to ask the Select Committee on Scottish Affairs to take evidence on the activities of the CSA in regard to this hospital? The Minister has a tremendous responsibility in this matter. Public money has been wasted in Dundee and Glasgow, and now in Ayrshire. He must speak up and give us answers that we can give to our constituents.
11.35 pm
The Under-Secretary of State for Scotland (Mr. Russell Fairgrieve): I am grateful to the hon. Member for Kilmarnock (Mr. McKelvey) for giving us the opportunity to discuss briefly this evening the problems that have arisen at this hospital. I am also glad that the hon. Member for Central Ayrshire (Mr. Lambie) has caught your eye, Mr. Deputy Speaker.
As the hon. Member for Kilmarnock will know, I have had the pleasure of visiting the hospital. It is not yet opened, but it is a most beautiful and attractive hospital. It is far from obvious to the outsider why it cannot be occupied at once. It is regrettably true, however, that the problems with the ventilation system do not permit this. The air conditioning, for that is what we are talking about, is just not up to the job, even when turned to full power: and when that is done the noise level in the wards is intolerable.
There is a lot that I should like to say in the limited time available to me in this debate, but I feel I am duty bound to answer first some of the questions put to me. Thereafter, I may try to make some general remarks about the hospital.
I will try, first, to answer the questions put to me by the two hon. Members. Obviously, the questions overlap. I, as a layman, have asked time and time again why it is taking so long to get the wards open at this hospital. The clinical considerations govern the doctors' views of when the theatres should be opened. They do not want the wards opened with patients there before the theatres are ready. We are quite correct in that regard in thinking of early 1982, although the nurses' section and the administrative block are open now.
As regards costs, I am glad to say that in respect of this hospital the final cost in real terms is coming out at some £21 million and the remedial works themselves are expected to cost only about 1 or 2 per cent. of this figure.
Why were not the problems with the ventilation discovered earlier? Those of us who have had a Jot of experience in industry—it is rather like building a car or anything else — know that until the whole thing is switched on one does not find out the faults. Until the whole lot was switched on, it was not found that the ventilation was not working. I am glad that the hon. Member agreed that: in the case of the water what was needed was turning the taps on and letting them run. It was not a question of late action. Action was taken immediately the faults in the ventilation system were discovered.
The CSA came into the picture only in 1974, long after the hospital had started to be planned and built, when the reorganisation took place. The CSA is an advisory body and not an executive body.
Mr. George Foulkes: I do not think that it is so easy to gloss over the role of the Common

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Services Agency so lightly. Does not the Minister think that it might be much simpler for health boards to deal with the design team and the builders direct without the intervention of the CSA and that the intervention of that third arm causes confusion, delay and difficulty? Will he take account of that?
Mr. Fairgrieve: I shall take account of that. However, I cannot accept the argument. The CSA is there to help. Health boards are dealing with the design team and the subcontractors direct. The CSA is there for advice if so required. The CSA is not part of the Department. It is part, basically, of the Health Service. The health board is not dissatisfied with the role that the CSA has played in this matter. Therefore, I suggest that the hon. Member take up the question of the CSA with the health board itself.
As regards the public inquiry, time and time again we have explained that the object of the health board, the people in Ayrshire and the Department is to get this hospital commissioned as soon as possible. A public inquiry would definitely cause delay. It would also prejudice the action that we have already taken so that those who have caused this problem can be brought to some form of justice — which will be done. We have issued a protective writ, so we are not time barred.
Mention was made about hospital building being a catalogue of disaster. I must deny this. There have been far more problems south of the border than we have had in Scotland. There have been only three, shall we say, disasters: the one that we are discussing, Ninewells at Dundee and the sick children's hospital, Glasgow.
Mr. Lambie: That is more than enough.
Mr. Fairgrieve: As a proportion of the number that we have built since the Second World War, it is not bad going for the course. Every one of these can be put down to trying to take short cuts. Dundee was design and build, for political reasons. Yorkhill's problems arose out of political reasons—"We must build it immediately." The problem in this instance was not a mistake but, as we have said, a fall-out within the design team.
The design team has not been sacked; it has been changed.
Mr. Lambie: Disappeared.
Mr. Fairgrieve: It has not disappeared. Three-quarters of the design team members are the same. There have been changes in the design team. Some of its members are no longer with the team. The team has not been sacked; it has been changed by up to one-third of its members.
Let us get the facts right before we go rushing round in various devious channels which are not always strictly factual. I have mentioned the public inquiry and Dundee. I have also referred to what is going on. I regret that the hospital will not be open to receive patients until 1982. I have made inquiries.
There is no question, as has been suggested, of the hospital not being able to be run by the board. The finance is available. The board is at the top end of the Scottish health authorities' revenue equalisation programme. The hospital has no problem of not being fully commissioned. Therefore, that gets another canard out of the way.
Having answered the questions that were put to me, I think that I am now entitled to make some remarks on how we are progressing.
Mr. Lambie: What about the Select Committee?
Mr. Fairgrieve: I have been asked whether there could be a public inquiry into the whole principle of hospital building in Scotland. I have already given our fine record compared with the rest of the country and the reasons why we have trouble in three hospitals. The Secretary of State asked for a seminar in the Scottish Office, during which he spent three hours looking into the whole question of hospital building, commissioning and so on in Scotland. A very detailed exercise was carried out on that score. I hope that hon. Gentlemen are satisfied on that point.
After we changed the design team, it was necessary for the firm to look into the whole problem, find out what was there and what was wrong with it and make recommendations on how to put it right. This may be old hat to Opposition Members, but I still think that we should put it on the record. The health board was aware that this was likely to be a lengthy process and was very keen to make an early start on using the hospital. Hence, it agreed that there would be a phased hand-over with departments being transferred to the board for commissioning and subsequent bringing into use as necessary remedial works were completed.
The first departments—this is often forgotten—were handed over on schedule. That was not mentioned by the two hon. Gentlemen who spoke tonight. These were the administration block and the college of nursing, and they have now been in use for some months. Thereafter the design team found it necessary to revise its original handover programme. As I said earlier, the board members insisted on meeting the design team and the CSA building division to discuss the problems and the reasons for the slippage. They were most concerned to know whether there would be any further slippage. Those meetings duly took place. The consulting engineers naturally felt unable to give any absolute guarantees but satisfied the board that, in their opinion, the majority of the problems had now been diagnosed and that the new timetable would be met. This envisages the ward blocks being handed over to the board in February and April 1982.
It is not for me to say, but we are trying to do everything that we can to advance that date. A period of commissioning is then necessary, but the hope is that the first patients can be admitted some six months thereafter. I should like to mention at this point that current indications are that good progress is being made and that the timetabling is being kept. I can assure hon. Members that the health board is pressing vigorously for the work to be completed as soon as possible. It had been struggling for this for some time, and it is its wish that this fine new hospital, which I have had the pleasure of going round, should be brought into use as soon as possible.
There is absolutely no truth in the suggestion that the board has been dragging its feet because it considers that it cannot meet the running costs of the hospital.
Mr. McKelvey: Will the Minister deal with the question of Kilmarnock infirmary and the fate of the patients and staff there?
Mr. Fairgrieve: I cannot possibly go into that question tonight. It is a separate matter. There will be no problem about dealing with patients in the area, if that is what the hon. Member is asking.

905
The board is quite determined in due course to pursue those who are judged to be at fault. It has taken certain legal steps to prevent the possibility of any actions which might be found necessary being time barred.
I conclude by emphasising the positive situation. All concerned are pressing on as hard as they can with getting this excellent hospital put to rights and into use. They
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deserve every encouragement that we can give them. For those reasons, if for no others, I am grateful to the hon. Member for bringing up the subject for debate tonight.
Question put and agreed to.
Adjourned accordingly at fourteen minutes to Twelve 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 Chelmsford.

Africa: Cuban and Soviet Involvement
Lord Gisborough: 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 is their latest assessment of the number of Soviet-sponsored Cuban military and civil personnel in Africa and whether they have any plans to demonstrate their continuing opposition to this foreign interference in African affairs.
The Secretary of State for Foreign and Commonwealth Affairs (Lord Carrington): My Lords, we estimate that there are more than 40,000 Cubans in Africa, of whom about three-quarters are military personnel. We have made clear to Cuba and the Soviet Union our concern about the involvement of their forces in Africa and we shall continue to take opportunities to put this message across.
Lord Gisborough: My Lords, while thanking my noble friend for that Answer, may I ask whether he can say whether the severe threat of world conflagration caused by one of these irresponsible rulers of small states in Africa, with their excessive army training and supply of weapons, has been, or will be, raised in particular at the conference in Madrid?
Lord Carrington: My Lords, I do not think that Madrid is perhaps quite the right place for that, but it has certainly been raised on a number of occasions by the previous Government and also by the present Government. We shall certainly continue to do so. I do not think that the presence of these Cuban troops in Africa helps the cause of world peace at all.
Lord Goronwy-Roberts: My Lords, is it a fact that these figures—30,000 actual military personnel and another 10,000 or so in support—represent a remarkable escalation over the past year or so? As I recall, and perhaps the House may also recall, we were all concerned about a year ago because 12,000 Cuban military personnel were present, mostly in Angola. I should also like to ask the noble Lord this: Is the concentration mostly in southern Angola, and has he reason to think that this will exacerbate the position in Namibia, which is now hopefully moving slowly towards a solution?
Lord Carrington: My Lords, my recollection—I may be at fault and I shall have to look it up—is that the figures have not changed very much over the past 18 months. The noble Lord's recollection may be correct, but I do not think it has changed very much
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during my period in this office. The figures for Angola are that in total there are about 25,000, of whom some 6,500 are civilians. The rest are in the form of garrison troops rather than front-line troops, as I think the noble Lord will agree. This is an added reason why a settlement in Namibia would be of the greatest possible value, because the Angolan Government have made it clear that when the Namibian situation is settled they will ask for the recall of the Cuban troops.
Lord Brockway: My Lords, arising from that answer, is the Minister aware that those of us who want self-determination in Africa are absolutely opposed to either Soviet or Cuban troops being there? However, is it not also the case that South African troops are in other African countries, and French troops are in other African countries? Should not that be balanced by a demand for the withdrawal of all foreign troops?
Lord Carrington: My Lords, I think the circumstances in which troops are in various countries vary from place to place. I do not think one can necessarily say in all cases that this is a bad thing. I am afraid I do not know of any case where South African troops are stationed outside South Africa, but if the noble Lord has any instance of it I shall be very interested to know.
The Earl of Lauderdale: My Lords, can my noble friend say whether any significant number of these Cuban troops are in Abyssinia or the Horn of Africa?
Lord Carrington: Yes, my Lords, there are some in Abyssinia and there are some Soviet troops in Ethiopia as well. I think there are probably something like 12,000 Cubans in Ethiopia.
Lord Hankey: My Lords, would the Government agree that this form of imperialist aggression by using satellite troops from Cuba and other countries—the East Germans in Aden, for instance—is really a very dangerous development? Is it not true that a great many people regret very much that none of us was able to do anything at the time in order to stop it happening?
Lord Carrington: Yes, my Lords, I think I would agree with the noble Lord.

Insurance: EEC Tenderers
2.42 p.m.
Lord Chelwood: 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 why tenderers in the EEC bidding for contracts under the Public Works and the Public Supply Contracts Directives are not free to buy the relevant insurances in the markets of their choice; and when they expect this anomaly to be ended.
Lord Lyell: My Lords, a draft directive which would liberalise the provision of insurance services across national frontiers within the European Community has been under discussion in Brussels for a considerable time. Until that directive is adopted, the EEC Treaty permits member states to maintain their own national requirements for matters covered by the directive, provided that those requirements are not discriminatory. At present all member states restrict to some degree the freedom of their nationals to insure abroad. The Government are doing all they can to bring the negotiation of the insurance services directive to an early and successful conclusion.
Lord Chelwood: My Lords, I am grateful for that reply. May I ask my noble friend whether he agrees that the prevarication and delay which have dogged this draft directive for direct insurance services, other than life assurance, really do fly in the face of the spirit and the letter of the treaties? Is he still reasonably confident that his prediction on 13th October, that it would be "months and not years"—it has been seven years already—before this directive is agreed, is still valid, and, should the estimate prove to be overoptimistic, would not the only thing be for us to appeal to the court?
Lord Lyell: My Lords, I am very grateful for what my noble friend has said. In answer to his question as to months and not years, I would reiterate and emphasise again what I said to the noble Lord, Lord Bruce, on 13th October this year, that we are taking a very grave view of the prevarication. It is just under two months since I last mentioned this matter to the noble Lord, Lord Bruce. We hope to have something more to report at the end of next year, when I understand that it will be our turn to have the presidency of the Commission.

Iran: Detention of British Subjects
2.44 p.m.
Baroness Faithfull: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether direct representation continues to be made to the Ayatollah Khomeini so that he personally is aware of the distress and concern of Christians and those of other religions in this country at the continued detention in Iran of the missionaries Dr. and Mrs. Coleman and Miss Jean Wadell and the businessman Mr. Andrew Pyke.
Lord Carrington: My Lords, Her Majesty's Government are profoundly concerned at the continuing detention of four British subjects in Iran. But direct representations from a foreign Government to the Ayatollah Khomeini himself would, in our judgment, not be effective or indeed helpful. We believe the best way to bring our concern to his attention is to continue our persistent representations to the Iranian authorities and to senior Iranian figures, with help
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wherever possible from other intermediaries. These efforts will continue until we succeed in obtaining the release of all those detained.
Baroness Faithfull: My Lords, may I thank the Minister, the Foreign Secretary, for that reply which, I am sure, will bring, at any rate, some comfort to the families, to the friends and to the many people known to the four who are detained in Iran at the moment. May I ask the Foreign Secretary whether he agrees that Ayatollah Khomeini bases his life, and the life of his nation, on his religious beliefs? Therefore, would it be possible for a group of Christians from this country to make representations personally to the Ayatollah, so that he will understand that the Christians in this country have a deep concern for those and other people held in Iran?
Lord Carrington: My Lords, I think we all share my noble friend's concern about this matter, and anything which anybody can do to make possible the release of these British subjects should be done. I think it really is up to the leaders of the Christian Churches themselves to decide whether a move of that kind would be helpful.
The Lord Bishop of Chelmsford: My Lords, we all, I am sure, feel this deep concern for the four people mentioned in the noble Baroness's Question. But may I ask the noble Minister, the Foreign Secretary, a further question about the harassment and detention of other members of the Episcopal Church, and of other Christians in Iran who are Iranian citizens? They, also, are of deep concern to us. Could the Foreign Secretary inform us whether these matters were discussed when an Iranian delegation recently visited this country, and what transpired as the effect of that?
Lord Carrington: My Lords, in answer to the right reverend Prelate, the Iranian delegation which came over the other day, with the intention of seeking our support in respect of the Tran/Iraq conflict, was told by me in very specific terms of our anxiety at the fate of the four British subjects who had not been allowed consular access. Indeed, we do not even know where they are, and this is a state of affairs which is very far from satisfactory. I made it plain that there could be no question of an improvement in relations between Britain and Iran until this matter had been settled. The response that I received was that they were worried about our attitude and they would do what they could to sort this matter out legally, as soon as possible. We must wait and see, but so far there has been no indication of any movement.
Lord Nugent of Guildford: My Lords, can my noble friend confirm that the presence of these four people in Iran was solely for the purpose of serving their religious faith, and had not the remotest connection with any political purpose of any kind?
Lord Carrington: My Lords, three of them are missionaries and one, I think, is a helicopter pilot. There have been no charges levelled against these British subjects, but there have been accusations that they have been engaged in espionage. Anybody who

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knows the four people concerned will know that these accusations are wholly ludicrous.
Lord Hylton: My Lords, pending the release of these detained prisoners, will the Government try to arrange for regular visiting of them by the International Red Cross?
Lord Carrington: My Lords, the Red Cross have visited them and we have had reports, though of course necessarily second-hand through the Red Cross, that all four British subjects are well. I hope very much that they will continue to be visited.

Prisoners in Police Custody at Christmas
2.48 p.m.
Lord Gainford: 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 arrangements are being made over the Christmas holiday period for prisoners who are at present being held in police stations.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, Chief Officers of Police will make appropriate arrangements for the care and custody of any prisoners who, as a result of the prison officers' industrial action, have to be detained in police cells over the Christmas period.
Lord Gainford: My Lords, I thank my noble friend the Minister for that reply. If there are any privileges in ordinary prisons for prisoners to receive visits from their families over the Christmas period, may I ask him whether such privileges can be extended to prisoners in police stations without any breach of security?
Lord Belstead: My Lords, the police are, of course, charged with looking after the prisoners concerned at the moment and, although they do not have to conform to prison rules, the police use their discretion to allow normal rights and privileges to prisoners wherever possible. I am absolutely certain that all will be done which can practicably be done to make sure that Christmas for prisoners—if there are prisoners in police cells at that time—is not cheerless.
Baroness Birk: My Lords, since I understand that a number of prisoners are spending most of their days in police vans travelling between police stations because there is not sufficient room for them in police station cells, may I ask the noble Lord what arrangements will be made for them and whether it is the case that a number of prisoners are travelling around in very small, confined cages within police vans?
Lord Belstead: My Lords, that is not my information, but I will certainly look into the matter for the noble Baroness.
Baroness Trumpington: My Lords, would not the Government agree that the police have been coping
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magnificently with the extremely heavy burden which has been put upon them?
Lord Belstead: My Lords, I am grateful to my noble friend for saying that, because I very strongly believe that to be true. We must hope that the Prison Officers' Association will soon end their action so that prisoners may enter the prisons where they belong and so that the police may be able to get on with their primary duties.
Baroness Macleod of Borve: My Lords, could the noble Lord tell us how many prisoners are detained at present in police cells?
Lord Belstead: My Lords, about 3,500.
Lord Morris: My Lords, may I ask my noble friend what arrangements have been made over the Christmas holiday period for the police then on duty in police stations?
Lord Belstead: My Lords, that is an operational matter for chief constables.
Baroness Faithfull: My Lords, may I ask whether special constables are now helping the police who are very overburdened?
Lord Belstead: My Lords, I take on board, and I am sure that any members of the police service who read these exchanges will take on board, the burden of the question which my noble friend has asked; but again this is a matter for individual chief constables.

Social Security: Payment Arrangements
Lord Denham: My Lords, with the leave of the House, at a convenient moment after 3.30 this afternoon my noble friend Lady Young will repeat a Statement on arrangements for paying social security benefits, which is to be made in another place.

Hybrid Instruments: Select Committee
2.53 p.m.
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That, as proposed by the Committee of Selection, the Lords following, together with the Chairman of Committees and any one Lord of Appeal, be named of the Select Committee on Hybrid Instruments:

Bacon, B.

Beaumont of Whitley, L.

Cawley, L.

Clwyd, L.

Collison, L.

Cork and Orrery, E.

Drumalbyn, L.

Fletcher, L.

Lee of Newton, L.

Reay, L.

Stamp, L.

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Teviot, L.

Wise, L.

—(Lord Aberdare.)
Lord Elwyn-Jones: My Lords, before the House approves this order, I should be grateful for the guidance of the noble Lord the Chairman of Committees as to the procedure which will be followed in dealing with two orders: the Merseyside Development Corporation (Area and Constitution) Order 1980 and the London Docklands Development Corporation (Area and Constitution) Order 1980. In the Minutes of Proceedings of 2nd December, the noble Lord the Chairman of Committees reported that in his opinion they would require to be enacted by a Private or Hybrid Bill; in other words, that they were hybrid orders.
Before turning to the substance of the matter, a minor, preliminary matter arises from the form of the Motion. It sets out the names of the members of the Select Committee and reads:
"together with the Chairman of Committees and any one Lord of Appeal"
without indicating that the Lord of Appeal will be the chairman of the committee, which would be in accord with Standing Orders. I apprehend that in Standing Orders no amendment of the Motion is required to put the matter in order, but perhaps the noble Lord can assist us about that.
If I may turn to the substance of the matter about which I desire the guidance of the noble Lord, no public inquiry of any kind has been held in relation to the proposed setting up of these development corporations. I am particularly concerned with that which relates to London's Docklands as I had the honour to represent for a great many years part of the Newham constituency. As the House will remember from our discussions during the various stages of the Local Government Bill, the orders give to the Secretary of State unprecedented powers to enable the land and powers of several local authorities to be acquired and taken over by a Quango appointed by him. Hardly any individual or interest in the area will not be affected by the proposed powers that are to be granted.
Absence of any previous inquiry may well be a matter which the Hybrid Instruments Committee may take into account in considering whether there should be a full inquiry into these orders by a Select Committee. Those who will be petitioning against the orders are anxious to know what the procedure will be should a Select Committee be set up and an inquiry take place. In such a case it would be appropriate for the Secretary of State or the Government, whoever will have the responsibility for dealing with the orders, to be required to seek to justify the orders in respect of the designated areas by such arguments and evidence as may be thought fit to be brought forward. It would then be the turn of the petitioners to challenge that case and to bring forward such evidence as they in turn require.
This procedure would accord, as I am advised and verily believe, with the procedure followed by previous Select Committees which have considered previous hybrid orders. The most recent was the Solus Petrol (No. 2) Order. It is a matter of great importance for the petitioners, preparing as they now are for the subsequent stages of the proceedings before Parliament.
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I should be grateful to the noble Lord if he could give such guidance to me and, more importantly, to them as to the course of events that is likely to be followed.
Lord Aberdare: My Lords, I am very grateful to the noble and learned Lord for having put this question. I will certainly do my best to explain the procedure, although it is somewhat complicated. As the noble and learned Lord has correctly said, what has happened so far is that the orders have been laid and that I reported on 2nd December that in my opinion both orders were hybrid. Under our Standing Orders this means that petitioners now have until 16th December to petition against the affirmation of these two orders. I apprehend that such petitions are likely to be laid, in which case these petitions, and the two orders, will be referred to the Hybrid Instruments Committee, which is the committee I am seeking your Lordships' approval of this afternoon.
I can confirm to the noble and learned Lord that the chairman of that committee will be the Lord of Appeal, whichever Lord of Appeal sits upon it. I am very grateful to him for pointing this out. There is no need to amend the Motion, but on future occasions we will ensure that the Motion is put in such a way that it is quite clear that the Lord of Appeal will be the chairman of the committee.
The procedure then is that the Hybrid Instruments Committee consider the matter. First they have to consider the locus standi of the petitioners. If they agree that the petitioners have a locus standi, they then go on and eventually advise the House whether in their opinion the orders should be investigated further by a Select Committee. If the House so decides, that Select Committee will consist of five Lords. The names will be proposed to the House by the Committee of Selection.
When the proceedings take place before the Select Committee, it will be the first time that such a procedure has happened since the fairly recent establishment of the Hybrid Instruments Committee. But it would be appropriate for them to follow the same procedure as used to be followed by other Select Committees to whom hybrid instruments were referred as a result of a report of the old Special Orders Committee, and the one that the noble and learned Lord referred to, the Solus Petrol (No. 2) Order 1966, was the last of those.
But we now have a different committee, the Hybrid Instruments Committee, and under that procedure I am sure that the Select Committee should follow the same procedure, which is to say that the onus would be on the Government to show the grounds on which the order had been made. In other words, probably they would have to make their case first. This follows from the fact that these are affirmative orders which the Government would have to ask the House to approve before they could take effect. So I think I can confirm all the points that the noble and learned Lord made.
Lord Elwyn-Jones: My Lords, with leave, I should like to thank the noble Lord for guiding us through this somewhat difficult course, full of potential hazards on the way, and I thank him very much for his help.
On Question, Motion agreed to.

Standing Orders (Private Bills)
Lord Aberdare: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That a Select Committee on the Standing Orders be appointed; and that, as proposed by the Committee of Selection, the Lords following, with the Chairman of Committees, be named of the Committee:—

Aylestone, L.

Cawley, L.

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

Mancroft, L.

McNair, L.

Mowbray and Stourton, L.

Redcliffe-Maud, L.

—(Lord Aberdare.)
On Question, Motion agreed to.

Companies (Fees) Regulations 1980
3.2 p.m.
Lord Lyell: My Lords, I beg to move that the Companies (Fees) Regulations 1980 laid before the House on 25th November be approved. The purpose of these regulations is three-fold: first, to raise the fees for public search and related services; secondly, to prescribe fees for the re-registration of companies under the Companies Act 1980 and, thirdly, to consolidate all the fees for the statutory services provided by the Company Records Office.
The Companies Registration Office, which is the responsibility of my right honourable friend the Secretary of State for Trade, is charged with the initial registration of certain documents which such companies are required to deliver to the Registrar, and for providing means of public inspection of those documents. The register now contains almost 800,000 companies, and the Registrar receives about 2 million documents each year. The public search facilities are used extensively by many sectors of industry and commerce, with over 10,000 inquiries being received each day.
I think it right to emphasise to your Lordships that, although the workload of the office has increased considerably over the last five years with 20 per cent. growth in the number of companies on the register and a comparable increase in the number of documents handled, the number of staff has hardly changed and, indeed, has already been reduced during the last 18 months. This increase in productivity, to which I pay tribute, is particularly noticeable in the field of public search, where, with ultimately the same resources, approximately 30 per cent. more inquiries are dealt with than in 1976.
The principal objective of these regulations is to ensure that the costs of maintaining the Companies Registration Office are covered by its revenue. Although the costs of the main services—incorporating companies, registering their documents, and providing public access to that information—have increased in recent years, such annual increases have been matched by increased revenue from the greater numbers of companies being formed and delivering documents for registration. Although the most recently published figures (contained in the Annual Report on Companies
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for the year ended 31st December 1979) showed a surplus of £2·8 million, derived from costs of £10·6 million set against revenue of £13·4 million, in the current financial year that surplus has been significantly reduced and in 1981–82 the office would incur a deficit of some £600,000 on the basis of present fees. The increases now proposed will enable a reasonable surplus to be maintained at least in the coming financial year. It is necessary, in any event, to prescribe at this time the new fees required for the re-registration of companies under the Companies Act 1980. Part I of that Act comes into operation on 22nd December of this year, creating a new category of companies called Public Limited Companies (PLCs). The fees proposed are in line with the existing fees for registration and re-registration under the 1948 Act.
The reason for increasing the particular fees covered by the regulations is that we believe that, in each particular service provided by Government, charges should reflect reasonable costs. For many years, the facility for inspecting company records has been heavily subsidised by the fees paid by companies for the privilege of incorporation and their subsequent filing of statutory documents. It was not until the Companies Act 1976 came into operation, however, that certain fees (such as that for the public inspection of documents) could be changed without amending primary legislation. Although, as already stated, it has not previously been necessary to look for any change, we have taken the opportunity provided by the need for this review to go some way to redress the balance between the various fees. Nevertheless, none of the increases now proposed will fully reflect the costs likely to be incurred in providing these services.
I hope your Lordships will bear with me if I now outline the increases in the particular fees. First, the search fee has remained unchanged since 1844 and it represents nowadays the cost of producing a set of what are known as microfiche copies—of which I have an example here—of almost all documents delivered since the company was incorporated. The average cost of producing these little microfiches is about £1·30; the proposed fee of £1 is, we believe, reasonable in the circumstances. But I noted with interest that the equivalent to the value expressed by one shilling in 1844 is now £1·17, and while the fee for entry to a place which I am sure will be familiar to many of your Lordships—the London Zoo—was also one shilling when it opened in 1847, that charge is now £2·75. I hope your Lordships will not think that I compare animals in the zoo to company lawyers, but on that basis we consider that the service provided by the Companies Registration Office, which now attracts over 2½ million inquiries a year compared with under ½ million inquiries five years ago, still represents exceptional value for money.
In future 16 per cent. of revenue will be derived from search and related fees, which compares with 1·5 per cent. at present, although these services will still account for over 26 per cent. of the total costs. We are considering means, however, to provide a partial search service at some future date, for the benefit of those individuals—or, indeed, their agents, who account for over 60 per cent. of the total inquiries—who do not need access to the full record of a company. Indeed I am told that as a result of a sample

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that was taken in July this year it was found that 114,000 separate searches were made in some depth and that approximately 55 per cent. of persons who required access to accounts just required the current accounts—one set of accounts—and that is why we believe this partial search will provide a relevant and cost-effective service.
The second type of service which is rendered are things called certificates of fact, and these currently attract three separate fees of 25p, 50p or 75p according to the amount of information which is required. These fees were fixed many years ago—indeed well into the 19th century—and the cost of producing such a certificate is today estimated at just under £3, to which must be added the cost of obtaining the company's record. It is for that reason that we propose to introduce a flat rate of £3·50 for the first such certificate supplied on any one occasion and £2·50 for any subsequent one relating to the same company supplied on the same occasion. This fee includes the fee for extracting a copy of the company's records in order to provide the certificate, although this would be refunded if the inquirer had already made such a search.
Thirdly, we come to certified copies provided by the Registrar, a service which currently attracts a fee of 3 pence, three new pence, per page. This will be increased to 30 pence per page together with the search fee if the Registrar has to extract the company's records in order to produce and certify a copy of the document.
The remaining statutory fees remain unchanged because the income received in respect of each service covers the costs involved. The fees for registering a company or for changing its name were fixed in 1973 and the fee of £20 for registering a copy of an annual return was fixed in 1975. Although the costs of the services concerned have also increased, increased efficiency will enable these fees to remain unchanged for the time being.
My Lords, this has been a fairly long and complicated explanation. I am very grateful to the House for bearing with me. I beg to move.
Moved, That the regulations laid before the House on 25th November be approved.—(Lord Lyell.)
3.12 p.m.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for having given such a lucid explanation of the statutory instrument. Perhaps it is proper for me to declare an interest, in that my own firm, Halpern and Woolf, have a direct financial interest, however moderate, in the subject matter of the debate.
The practice seems to have grown up in recent years for changes in company fees to be accomplished by statutory instrument. They were established in 1948 under the Companies Act, Schedule 3, and they were changed some 19 years later in the Companies Act 1967. So for 19 years the fees remained unchanged. Since that time there has been almost a spate not of Acts but of regulations. There was one in 1973, No. 2062, another one in 1975, No. 596, and another one which is now before your Lordships. The use of statutory instruments does have certain disadvantages
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in that of course one can reject or accept them but not amend them. It is for consideration whether, after reviewing all the circumstances in regard to the company position in this country, it might have been possible to have brought in some amendments, but obviously one cannot do it with a statutory instrument.
It seems rather on the face of it that the idea of the provision of a service to the industrial and commercial community at large which would in the normal way attract at any rate some contribution from the taxpayer has now been completely abandoned. The declared objective is to make the company registration service and all the ancillary offices that go with it self-supporting. Well, my Lords, it does not apply in every department, because in 1975—I am well aware under an administration of my own party persuasion—the fees for filing of annual returns of companies were moved upwards from £3 to £20. With some 750,000 companies on the register as at the end of November, this means that the Government have received revenue to the tune of some £15 million. I am quite certain that the cost merely of storing annual returns of companies, of which the overwhelming mass are private companies, certainly does not amount to this amount of money. Therefore, those, mainly private, companies that are filing annual returns, for which the charge in 1948 was very much less, some 25p, are subsidising the maintenance of the entire records office to a very considerable degree.
This is something I should have thought the Government of the day would have looked at again before they came out with this regulation, because of course this does weigh extremely heavily on small businesses. Twenty pounds per annum may not appear to be very much, but when it is added on to other expenditure it does amount to quite a fair sum. However, it remains £20 in the regulations. As to the inspection charge, which has now gone up from 5p to £1, of course what the noble Lord says is true—it has been there a long time. I would only say that it remained unchanged for a century, from 1847 to 1948. So the effective change so far as we are concerned is from 1948 onwards, and that means an increase of some twenty times. I am well aware that these matters are not of very considerable financial moment, but they all add up and they do amount to a burden, particularly on the small firms with which the Government profess to be very much concerned.
I am bound to say that the changeover from the registry in London to Cardiff has not been without its difficulties. I have made very careful inquiries as to what happens now when one goes along in London to get the microfiche. I am told that on average it takes about half an hour longer per company to get the information that one wants as compared with the old days when the records were here. Moreover, the microfiche does suffer from one disadvantage. Whereas when the original documents were available for inspection, one could get the information even though in some cases it was only faintly written on the documents admitted to the registry, now, when the microfiche is used, you find a very large number of cases where, owing to the defects in the original documents, which would have been seen on direct visual inspection, one no longer gets the same degree of clarity from the microfiche.

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The noble Lord did say that there had been an increase in productivity in the Companies Registry Department owing to the fact that staff had to some extent been run down, I do not know whether by dismissal or by way of natural wastage. I am bound to say that I think that the putting of the old Companies House service under undue financial constraints is possibly a little shortsighted. The service that one gets at the moment is not as good as it was previously, even though it is steadily improving and I would not wish to cast any aspersions upon it. I would question the desire to make it self-balancing, on the basis that it receives either from the companies concerned or from the public. Very often today, and particularly in these times of financial constraints and uncertainties, large numbers of creditors find it necessary in regard to individual companies to go along and use the search facilities. Very often they are people to whom every pound counts, and one does not, therefore, look with any favour upon the endeavour to raise these fees too far.
I thank the noble Lord for the extent of his reply and the very lucid way in which he explained the contents of the regulations. I personally—and I can speak only for myself in this instance—am not entirely happy with the way in which this matter has been dealt with. I would have much preferred a regulation which gave some relief to small companies. But, on the whole and in view of the findings of the Joint Select Committee that the matter really was not of sufficient consequence to be brought to the attention of your Lordships, I entirely support what the noble Lord has said.
3.22 p.m.
Lord Lyell: My Lords, we are very grateful for the reception by the noble Lord, Lord Bruce of Donington, of these regulations. The noble Lord mentioned the microfiches. I noticed that during the course of my remarks the microfiches even found their way over to the noble Lord. I hope that they have all come back, because I should not like it to be a self-fulfilling prophecy of what the noble Lord was worrying about—perhaps the reduction not only of staff, but also of microfiches in Cardiff. Apparently they are all back, but we can deal with that matter later.
I should like to reply to some of the points raised by the noble Lord, Lord Bruce. I take, and indeed the department takes, very seriously, as he put it, the spate of regulations amending fees. I think that the House would agree that this is the third occasion in seven years when we have altered the fees. I believe, for that reason, that the House would agree that it would be better that we should try to amend the fees in, one might say, a block. That would mean that we would be doing it in the form in which I have presented it this afternoon. But we do, of course, note the point raised by the noble Lord, Lord Bruce, that it is very difficult, if not impossible, to amend statutory instruments.
The noble Lord mentioned the question of the large income derived from registering and, indeed, maintaining records of private companies—I think he said that the vast majority of companies in the registration office at Companies House, Cardiff, are, indeed,
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private companies. I think that it is accepted by the business community—small companies, small businesses, large businesses and the commercial world at large—that incorporation for limited liability is, to some extent, a privilege. I believe that businesses and the commercial world accept that, and that we should, as far as possible, try to cover the costs of supplying this service in this way. Does the noble Lord, Lord Bruce, wish to make a quick point?
Lord Bruce of Donington: My Lords, I was referring to the annual returns rather than the fees payable on the registration of the company.
Lord Lyell: My Lords, I am so sorry. The noble Lord was typically precise—and I apologise if I have been less precise than I should have been—but I think he will accept "one of the many fees" as spelled out in the regulations. I think that it appears on page 2. I called it the "fees", and I am sorry if I was not precise.
We noted the remarks of the noble Lord about the disadvantages of the microfiche and especially the defects in ordinary documents which were readily discernible by the naked eye when we used to go to Companies House and pull out the thick files. However, we would stress to the noble Lord, and indeed to the House, that it takes no longer to get hold of records now than previously in the old Companies House in London. Indeed, under the old system one out of five searches was abortive or even extensively delayed because other searchers were using the files which the searcher wished to obtain.
I understand that microfiche records can be, and are, in the large majority of cases kept and retained by searchers. But the House will note that even those of your Lordships with eagle eyesight would find it rather difficult to obtain any meaningful information from these little microfiches, and, indeed, a special machine is required to use the microfiches. However, that kind of equipment is extensively used in commerce these days, and I understand that users of the information obtained from Cardiff are ready and willing to have such visual aids. So, the microfiche records can be of great use to them.
We believe that the complaint rate is higher than it need be. The rate is now 0·1 per cent. as regards searches with the new system in Cardiff, and I understand that the complaint rate in London, when the thick files could be pulled out and we could go and inspect the original documents for ourselves, used to be in the region of 8 per cent.—that means that one search in 12 was the subject of a complaint. That is why we would suggest that the new system is making use of the technology available to us, and we hope that it will not be another 136 years before the search fee goes up again. Indeed, that is a span of years which is little more than applies to some of the more long-lived Members of your Lordships' House! I hope that I have answered the points raised by the noble Lord, Lord Bruce. If I have missed any, I shall write to him.
On Question, Motion agreed to.

Building Societies (Special Advances) Order 1980
3.28 p.m.
Lord Cullen of Ashbourne: My Lords, I beg to move that the Building Societies (Special Advances) Order 1980, laid before this House on 25th November, be approved. This order increases from £25,000 to £37,500 the limit above which a sum lent to a person by a building society is treated as a special advance.
Under the Building Societies' Act 1962, special advances, which also include all loans to companies, are limited to a certain proportion of all loans made in a year. This proportion is normally 10 per cent., but is reduced if special advances exceeded that proportion in the previous year.
The special advances limit was introduced in the Building Societies Act 1960 for prudential reasons, so as to distinguish between normal loans to finance owner occupation and larger loans which may be more akin to business transactions and thus provide societies with a less secure investment. The Act prescribes that the limit may be increased by order of the Chief Registrar of Friendly Societies with the consent of the Treasury.
The special advances limit was originally set at £5,000 and has been increased five times since then. The present limit of £25,000 was set in 1979. The original figure was chosen as the sum up to which a person might be expected to borrow from a building society so as to buy a house for himself and his family. The limit should therefore increase approximately in line with the increase in house prices and the consequent expansion in the size of building society advances.
Last year the Government felt that the increase in the special advances limit should not only reflect the movement in house prices, but should also take into account the difficulties that home buyers were facing at that time. This year the situation in the housing market has very much eased and the demand for mortgages is much lower. An increase to £37,500 will do a great deal to restore a reasonable freedom of action to the building societies.
Raising the limit will help a number of societies, particularly those operating in the South-East, where high house prices have led to a demand for larger loans which has made the special advances limit a real constraint. Increasing the limit will also save a certain amount of administrative inconvenience for building society branches, which have to go through a special procedure for each loan which is treated as a special advance, as well as for the Registry of Friendly Societies. It will also enable the societies to compete on more equitable terms with the clearing banks and other financial institutions which operate in the home loans market. This does not mean that societies will immediately make more loans of over £25,000 at the expense of lending to first-time buyers, for example. In fact very few societies have been making special advances up to the permitted 10 per cent. of total advances.
The average building society advance in the United Kingdom in the third quarter of 1980 was less than £14,000, and it is reasonable to expect that the vast majority of advances will continue to be well below the limit. The societies make considerable efforts to
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ensure that first-time buyers and those at the lower end of the market are helped to the greatest possible extent.
Under the terms of the Building Societies Act, societies may work to the new limit in the financial year which begins after the date on which the order comes into operation. Since the financial year of most societies begins on 1st January, the new limit will affect them almost immediately. Other societies will be able to take advantage of the new limit as their current financial year ends.
The special advances limit was originally introduced as a limit for prudential reasons. An increase to £37,500 is fully justified by the movement in average house prices and mortgage advances over the past several years. It will help building societies in competing with the clearing banks and particularly assist those smaller societies which need to make high value loans because of higher house prices in their areas. I invite the House to approve this order.
Moved, That the draft order laid before the House on 25th November be approved.— (Lord Cullen of Ashbourne.)
3.33 p.m.
Lord Ponsonby of Shulbrede: My Lords, I should like to thank the noble Lord for laying this order before the House and explaining the contents of the order to the House. Whilst we accept that an order of this kind is inevitable, we must inevitably question the policies which have led to a 50 per cent. rise in the limit in a very short period of time. As the noble Lord told the House, the limit of £25,000 was set only in 1979, some 12 months ago, which indicates a level of some 50 per cent. inflation during a period of 12 months.
Ironically, the figure of £25,000 also relates to the figure at which income tax relief is granted for mortgages. Noble Lords are bound to wonder whether the fact that the Government have made this order today heralds an increase in the limit figure for mortgage relief. I wonder if the noble Lord would care to comment on whether there is any intention by the Government to increase the maximum figure for mortgage relief to £37,500 as well.
I should perhaps comment for a second or two on the noble Lord's remark that the purpose of this order is to restore freedom of action to the building societies. I think that one of the truths which is becoming more and more evident is that the building societies are finding themselves less able to compete with the clearing banks as the clearing banks are becoming able to offer better terms for mortgages than the building societies, and the building societies are not so competitive as they were in the past. No doubt this is a part of the reason for this order. While not objecting to the order, I should be particularly pleased to hear the noble Lord's reactions to some of the remarks I have made.
Lord Cullen of Ashbourne: My Lords, the noble Lord asked why we have made a 50 per cent. increase this year after having made an increase last year from £20,000 to £25,000. Up to 1975 the Government endeavoured to set the special advances limit in relation to the movement in average house prices and

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advances. The 1979 limit was set rather too low, reflecting the situation in the housing market at that time, and we now feel that a larger increase is called for for this year. If we were fully to increase the limit from its 1960 value in line with the movement in average house prices it would have to be increased to around £45,000, which would be an increase of 80 per cent. A more gradual approach seems called for, bearing in mind the demands on societies to finance the whole range of the mortgage market. By raising the limit to £37,500, the Government are going a long way to restore the long-term relativity.
The noble Lord asked me a rather trick question about the £25,000 figure. I would say that there is no link. It is purely coincidental that the present special advance limit of £25,000 happens to coincide with the tax position on mortgages. I can certainly not give the noble Lord any help in this matter whatever. Regarding the competitiveness of the building societies, I think the reason why the Registrar of Friendly Societies wanted this increase made was for the small companies in the areas where house prices are above average. I hope I have answered the noble Lord's questions to his satisfaction.
On Question, Motion agreed to.

Social Security: Payment Arrangements
3.38 p.m.
The Minister of State, Department of Education and Science (Baroness Young): My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Social Services. The Statement is as follows:
"The House will recall that last February we debated arrangements for paying social security benefits and the implications for the sub-post office network. Widespread anxieties had been aroused in the country by misleading reports of what were thought to be the Government's intentions arising from a study of payment arrangements carried out last year in consultation with Sir Derek Rayner. Since then the Social Services Committee studied the matter and issued their own report. The Government are publishing today their reply to the Select Committee (Cmnd. 8106). Because we want to consult widely on the changes we now propose, this reply is in the form of a consultative document. It includes the full report of the original study by officials.
"The consultative document makes it clear that we stand firmly by the pledge of my right honourable friend the Prime Minister of 28th February that retirement pensioners will continue to have their pensions paid weekly at post offices if they wish. We also repeat our commitment to safeguard the sub-post office network. The Government consider that these commitments can be fully honoured without sacrificing our wish both to give the public more choice and to save taxpayers' money by increasing efficiency.
"Three main changes in the system of payment are proposed. The first change that we have in mind is to enable those who so wish to have their pensions or child benefit paid direct to a bank account by
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automated credit transfer. Such payments would be four-weekly in arrears. There would be no compulsion.
"Secondly, my department will make a number of internal changes which will produce useful administrative savings and which the Select Committee recommended should proceed.
"Thirdly, we propose that child benefit should be paid four-weekly for most mothers. People in receipt of supplementary benefit, family income supplement, the additional benefit for one-parent families and widows pensions together with mothers with four or more children, would be able to continue with weekly payment. This is a much larger group for weekly payment than the team of officials suggested and it takes account of our concern to protect vulnerable groups.
"In the light of the anxieties expressed by the House, the Government have paid particular attention to the effect of these changes on Post Office finances and on sub-post offices. If these proposals were implemented then clearly there would be a reduction in DHSS business in post offices. By about 1987–88, DHSS would hope to reduce its adminstrative costs by about £38 million a year at today's prices. About £25 million of these savings would come from reduced encashment charges paid to the Post Office. In these circumstances, the Government have thought it right to use the opportunity presented by the British Telecommunications Bill to allow the Post Office to conduct across its counters a wider range of business for the public sector. After discussing this with the Post Office, the Government are satisfied that if this Bill is approved there will be considerable scope for new counter business. The Government estimate that allowing for some expansion of current business sales, volume across the counter should increase by about 8 per cent. in the next five years compared with the 6 per cent of business lost as a result of the DHSS changes under the Government's proposals. The Post Office accepts these estimates.
"These proposals will save taxpayers' money and provide more modern methods of paying benefits without damage to the sub-post office network. However, we are anxious that there should be full opportunity for public discussion of these proposals. We shall therefore be discussing them with all the main interests, including the National Federation of Sub-Postmasters, over the next three months before taking final decisions."
3.43 p.m.
Lord Wells-Pestell: My Lords, we are grateful to the noble Baroness, Lady Young, for repeating that Statement made by her right honourable friend the Secretary of State for Social Services in another place. There are a number of questions I wish to put to her. The Statement says:
"Because we want to consult widely on the changes we now propose, this reply is in the form of a consultative document".
Are we really to understand—and I ask this quite firmly—that they are proposals and are not in fact at this stage intentions? It continues:
"we stand firmly by the pledge of my right honourable friend the Prime Minister of 28th February that retirement pensioners will continue to have their pensions paid weekly at post offices if they wish".

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However, we also remember that the Prime Minister before the election gave an assurance that pensions would be continued either in line with prices or earnings, whichever was the greater, but within a comparatively short time the Prime Minister went back on that, and some of us understand that she would have reduced the pension had it not been for a few noble Lords in this House, perhaps in the Cabinet, who prevented that from happening. I may be quite wrong about that, but I do not think I am. We want to be perfectly certain, therefore, that any undertaking given today will be carried out.
What exercises the minds of my noble friends and myself is that there is to be a change whereby those in receipt of child benefit can have their money paid direct on a credit transfer and that such payments will be four-weekly in arrears. The Statement says "there will be no compulsion", but if one looks further on, the Statement goes on to say:
"Thirdly, we propose that child benefit should be paid four-weekly for most mothers".
The implication is that people in receipt of child benefit will have no option but will have their money paid four weeks in arrears. This is a very serious matter for a family dependent on child benefit week by week. Why is it that such payments, although made four-weekly, are not made two weeks in arrears and two weeks in advance as is roughly the position with the present retirement pension? It is important that one should not have to wait four whole weeks to get one's benefit in arrears. Payment should be somewhere in the middle, say two weeks in arrears and two weeks in advance.
Can the Minister confirm that the number of people in receipt of benefit payments weekly has increased from 35 to 45 per cent. in the last year, indicating that more and more people have found it necessary to ask for their pensions to be paid weekly? If that increase has occurred in the last year, surely it is important that they should have an opportunity of continuing to get their pensions weekly. The Statement later refers to the administrative costs and says:
"About £25 million of these savings would come from reduced encashment charges paid to the Post Office".
Is there a hidden redundancy in that? In other words, how many jobs are likely to be lost by this proposed change? It goes on:
"there will be considerable scope for new counter business".
I appreciate it may be difficult for the Minister to answer this, but is she in a position to say what new counter business is likely to come the way of the Post Office?
To be frank about all this, is this not really being introduced for no other reason than to save something like £50 million in payment benefits in a year, by paying them in arrears so that £50 million less is paid in the first financial year? In other words, is this not a way of saving in the sense that payment does not appear in one year's accounts but in the next? I am not suggesting there will be that amount of saving and that people will not get their pensions. Of course they will. It just seems to indicate that £50 million is expected to be saved in benefit expenditure in the financial year when child benefit is paid in four-weekly
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payments. If that is so, it really is not good enough. It is those who are in the greatest need who receive this money and w ho want it weekly, and I hope that there will not be the compulsory element that the Statement suggests.
3.50 p.m.
Lord Banks: My Lords, I should like to join in thanking the noble Baroness for repeating the Statement made in another place. We on these Benches welcome the Government's intention to seek the widest possible consultation on their proposals. We are glad that no compulsion is proposed in regard to moving to direct payment to bank accounts, and we welcome the fact that retirement pensioners will be able to continue to draw their pension weekly and to do so at the post office. However, like the noble Lord, Lord Wells-Pestell, I am very doubtful about the proposal to make child benefit payable monthly in arrear for most mothers, even though they will still be able to collect it at the post office. To make a monthly payment possible is one thing, but to make it compulsory for most mothers is another. Do not the Government consider that where there is weekly payment of wages it is best to have weekly payment of benefit?
We welcome the Government's belief that they can safeguard the sub-post office network, and I wish to emphasise that we on these Benches regard the rural post offices as a very important social service. We should like to be assured that the Government will seek to maintain them, even if the increased across-the-counter-sales which they expect do not meet the losses caused by their proposals.
Lord Hawke: My Lords—
Noble Lords: Order, order!
Baroness Young: My Lords, I should like to thank both the noble Lords, Lord Wells-Pestell and Lord Banks, for their welcome of the Statement. With regard to the first point raised by the noble Lord, Lord Wells-Pestell, regarding consultation, I should like to make it clear that this is a consultation document and we welcome the views of all those who are interested in the matter. The views should be sent to the DHSS by the end of February. This is an important matter, and in every sense this is a consultation document.
On the very important point about payment of retirement pensions I wish to make it quite clear that we have decided that retirement pensioners and widows should continue to receive their benefits weekly at the post office, if they wish to do so; but at the same time we think that there may be some people who would prefer to receive their payments less often than weekly, and therefore we are making possible direct credit to a bank account at either four-weekly or 13-weekly intervals.
With regard to the question that the noble Lord raised concerning my right honourable friend the Prime Minister, I should make it quite clear that she said that pensions would keep up with prices; and we have stood by that.
The noble Lords, Lord Wells-Pestell and Lord Banks, referred to difficulties that might arise if child benefit is paid at four-weekly intervals in arrears. I think

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we all recognise that the first time this occurs there will be a difficult transition for some people, because clearly the system will be different, but of course they will not receive any less money; it will come at less frequent intervals. There is no question of there being less money. No one would have the money paid into a bank account unless he agreed to do so. The recipient would need to have a bank account and he would have to give the details of it. So although the benefit will be paid at four-weekly intervals in arrears, it will be paid at a post office.
There is the protected group who would have the right to have the benefit paid weekly if they wished. It is hard to say that there could never be difficult cases, and in such instances it would be possible to go to a local social security office and ask to have the benefit paid, if that were necessary. But there would be the protected group that I have indicated in the Statement.
The noble Lord, Lord Wells-Pestell, asked me whether there would be any hidden redundancy involved and whether there would be a reduction in the size of the Civil Service. In fact more staff will be needed in the DHSS in order to give the public the option of having benefits paid directly into bank accounts. The extra staff, who might eventually number 300, will be required because it will take more staff time to adjust payments following a change of a beneficiary's circumstances with this particular payment method. However, the calculations on savings that we have made represent net savings and include the number of extra staff.
It is difficult for me to give an answer about the precise nature of new counter business, but I can say we believe that this will depend upon the competitiveness and the marketing skills of the Post Office; but I understand that it has in mind work for transport authorities and possibly for the energy industries as well. The power to undertake this work will be included in the new telecommunications Bill, which is currently before another place.
We believe that at the end of the day real savings will accrue from these new proposals, and we think it right that the savings should be made in the administrative parts of the budget rather than on the benefits themselves.

Contempt of Court Bill [H.L.]
3.56 p.m.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I rise to move that this Bill be now read a second time, and, if I may, I would seek the indulgence of the House should my voice prove somewhat hoarser than usual. I shall try to make it carry as well as I can. I regard this as an important Bill, though, mercifully, it is not quite as long as some of those Bills which have occupied your Lordships' attention in the past Session, and although your Lordships will wish to discuss it, both now and at later stages, I hope that it will not give rise to too much controversy.
I fear that I can offer your Lordships very few surprises. On 7th May last, in reply to an Unstarred Question kindly put down by the noble Lord, Lord
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Ardwick, I had the melancholy task of informing your Lordships that my poor little ewe lamb had been squeezed out of the warm fold of last Session's business by the more imposing flocks of my colleagues' legislative proposals; and in the course of that short debate—if I may switch my metaphor—I disclosed almost every card that I held in my hand. Therefore, what I have to say this afternoon will seem to many of your Lordships little better than vain repetition.
However, may I begin with one or two general philosophical sentiments. The first is that it is well known that from time to time politicians make asses of themselves; that lawyers, including judges, make asses of themselves, and that journalists also from time to time make asses of themselves. I am a politician, a lawyer, and a journalist, and therefore in a sense I can speak from the receiving end of all three. I am probably also the only person speaking in this debate who has been accused twice in his lifetime of contempt: once of contempt of court, and once of contempt of the House of Commons. Therefore I can speak from personal experience of being at the receiving end of that, too.
Conscious as we are of one another's shortcomings, it is very great fun for all three of our great professions to make fun of one another. But, my Lords, the truth is that none of us can get on without the other two. Each is essential to the wellbeing of the others, and since we all three live in glasshouses, we must be careful how often we throw stones; let him who is without sin among us cast the first. So that is my first general sentiment.
My second is this. In the judgment in the Sunday Times case the court was divided. The court was divided in the House of Lords, and it was divided at Strasbourg; and the reason for its division at Strasbourg, in particular, is that the Strasbourg court is a court of human rights based on the convention which we were discussing when Lord Wade introduced his Bill. There are two potentially conflicting human rights contained in the convention. The first is the human right contained in Article 6, which says this:
"In the determination of his civil rights and obligations or of any criminal charge against him everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".
That is the first right involved in these cases.
The second is the right enshrined in Article 10 of the convention, which relates to freedom of expression and which begins with the unqualified words,
"Everyone has the right of freedom of expression"—
and, of course, the freedom of the press is only a particular case of freedom of expression for everyone else. A free press cannot exist except as the possession of a free people, any more than a free people can continue to enjoy its liberties under the rule of just laws without a free press.
The Strasbourg court was divided in its opinion on the result of the Sunday Times case, but the members were all agreed on the principle to be applied when the two sets of rights came potentially into conflict. Justice, they said, comes first, but only to the extent—and here I quote—
"necessary in a free society";
and, when seeking an explanation of the word "necessary" in this context, the court explained that

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they intended it to carry a meaning somewhere between "desirable" and "indispensable". Whatever my opinion may be regarding the semantics of this, I venture to adopt the principle.
Even before the Sunday Times case I was of the opinion that the law of contempt was in need of clarification and revision; and since newspapers circulate more or less indifferently in each part of the United Kingdom, I was also of the opinion that it was necessary—and here I use the word in the same sense as the Strasbourg court—that the law of contempt should be identical throughout the realm. It was for this reason that in 1971, in conjunction with the Lord Advocate of the day, I caused the Phillimore Committee to be set up under the chairmanship of the late Sir Harry Phillimore. That committee reported to my noble and learned successor and predecessor in 1974, and through no fault of his—at least, I believe it was no fault of his—it remained lying on the shelf unimplemented five years later, when I became Lord Chancellor for the second time.
In the meantime there had been a Government discussion paper and a parliamentary debate, but no action. For aught I know, had it not been for the Strasbourg decision and various other incidents to which I shall come in due course, it might have gone on lying there. As the noble and learned Lord, Lord Elwyn-Jones, will testify, like Popes, Lord Chancellors have few divisions at their command in the mighty struggles which take place in the couloirs of power under the cloak of government. But at last my little ewe lamb has emerged into the open, and, with your Lordships' help, I hope that this time it will be allowed to grow up into a big sheep. Make no mistake: this is a liberalising Bill, and it is intended to be a liberalising Bill. If anyone doubts that, let them look first at Clause 6, the saving clause for the provisions which deal in the main with the strict liability rule and the Strasbourg decision. In that clause nothing is put outside the law which was inside it before the Bill became an Act, and no defence available before the Bill becomes an Act will be taken away by the Act. That is paragraph (a) and paragraph (b) of Clause 6.
Before I come to deal in detail with the clauses, may I, since this is a Second Reading, say what in the main the Bill does not do? The substantive parts of the Bill do not deal with intentional contempt. That is Clause 6(c), although the sentencing clause, to which I shall come, certainly does include it. They—that is to say, Clauses 1 to 6—do not deal with intentional contempt. For instance, they do not deal with throwing a tomato at the judge, intimidating witnesses, deliberately destroying evidence, and so forth. Equally, the Bill does not deal with civil contempt, apart from the sentencing provisions and one or two procedural provisions at the end. That is to say, it does not deal with deliberate disobedience to an order of the court—for instance, an injunction.
Apart from a number of provisions with which I shall have to deal one by one, the first six clauses deal with the so-called rule of strict liability in criminal contempt. That is the rule which puts editors and newspapermen generally in most fear. Moreover, they do not deal with the payment of potential witnesses—that is excluded by the definition in Clause 2—
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such as that which occurred in the Thorpe case. The Press Council acted in that matter so vigorously that, rightly or wrongly—and I think I referred to this on 7th May—I thought matters could safely he left as they stood; and when I announced this decision I think it was tolerably well received both in this House and outside it.
There are three main purposes in the first six clauses: first, to implement the main recommendations of the Phillimore Report with what I hope to persuade the House are minor deviations; second, to harmonise the law of England and Wales with the majority judgment of the Strasbourg court in the Sunday Times case; and, third, to harmonise the laws of England, Scotland and Northern Ireland into a coherent set of rules. The Phillimore Committee recommended that strict liability should be limited to publications. That is, for instance, why it cannot apply to the payment of witnesses; it is limited to strict publications. Your Lordships will find that provision in Clause 2(1) of the Bill. It is this provision, of course, which, with the other, excludes payments to witnesses. This is a liberalising provision.
The Phillimore Committee also recommended that the strict liability rule should be limited to publications which create a risk—and here I quote the words—that,
"the course of justice in the proceedings in question will be seriously impeded or prejudiced".
That is also a liberalising provision. It is achieved by Clause 2(2) of the Bill, and in my opinion it is perhaps the most important clause in the whole Bill. It is the better for being short, and it is made short deliberately because it is designed to be comprehensive—absolutely comprehensive—and because it is intended to be without qualification or exception. It follows exactly the words of the Phillimore Report, and for my part I can think of no better to express the purpose. It puts an end, of course, to the prejudgment criterion which was adopted by your Lordships' House in the Sunday Times case.
The Phillimore Committee also recommended that the times between which the strict liability rule should apply should be more precisely defined. That is a clarifying and therefore a liberalising recommendation. We seek to do that by Clause 2(3) and Schedule 1 to the Bill. Schedule 1 contains a deviation from the detailed recommendation of the report to which, if I may, I will return when I come to deal with the schedules.
Clause 4 also follows paragraph 141 of the Phillimore Report. The need for it was brought to notice by the Border Television case, as it came to be called. The law of defamation, as your Lordships know, protects reports of legal proceedings if published contemporaneously and in good faith. Clause 4 extends a similar protection to the law of contempt while retaining to the court the right to postpone reports by an explicit order postponing for that purpose. The reason for that is that there are cases where a premature release of facts in open court could prejudice current proceedings. An obvious example is the so-called "trial within a trial" when evidence of a confession is given and the judge has to decide as to whether it was properly obtained or not. It would be slightly inconvenient, to say the least, if, the judge having decided that it was inadmissible, the jury were able to read it in the papers the next morning. I think

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there were subsequent proceedings which have shown the same point in relation to the Kray and Poulson affairs. These are referred to in the Phillimore Report in paragraphs 134 to 140. In fact, our intention is that editors should know so far as possible exactly where they stand. If there has been an order deferring, then they have to be careful; if there has been no order deferring they are perfectly safe.
Before I move on to the schedules, I point to what I believe to be the useful provisions of Clause 3 which, of course, as the noble and learned Lord will know, reproduces existing statute law, dating, I think, from 1960, protecting publication of matter where the newspaper is, without negligence, ignorant either that the proceedings are active (and here I use the word in the clause) or, in the case of the distributor, where without negligence he is ignorant that prejudicial matter is contained in a given publication. Clause 5 is new. Clause 5 implements the recommendation of paragraph 142 of Phillimore in favour of a special defence of general public discussion of matters of public interest to which the prejudicial matter is of merely incidental importance.
This brings me to Schedule 1 of the Bill which, as I have said, deals with the defined time limits before and after which the strict liability rule cannot apply. The Phillimore Report discussed this at length in paragraphs 115 to 132. There are really three vital points to be protected. The first, and to my mind by far the most important—and I hope that your Lordships will agree with me in this—is to safeguard the rights of a man charged with a serious crime to have a fair trial, the fount of justice so far as possible unpolluted by premature and prejudicial publicity. So far as regards jury trials and, to a lesser extent, before lay magistrates, this is of the first importance. So far as regards professional judges and judges of appeal the cases are obviously rarer and the danger less pressing. Magistrates' courts and tribunals, to which I shall refer later, are in the main in an intermediate position, but in these cases enforcement does not normally rest with the court at risk but with the High Court or its equivalent in Scotland.
The second principle to be protected—and this is of only slightly less importance—is the protection of editors so that they know exactly where they stand. The third, which is mainly of importance in defamation proceedings where the civil jury still persists as an institution, is to prevent the abuse of the so-called "gagging writ" by postponing to the last convenient moment the point of time for the commencement of the rule.
In civil proceedings we have sought to give effect to these principles by making the point of time at which proceedings become active the setting down of the action in the High Court, or, as the case may be, the fixing of the date of trial. That can be found in paragraph 12 of Schedule 1. In criminal proceedings, we have selected the grant of a warrant for arrest, the arrest without warrant, or the preferment or service of an indictment or charge. That can be found in paragraph 4 of Schedule 1.
The selection for England, but I think not for Scotland, of the warrant deviates from the precise recommendation of Phillimore. Phillimore recommended a slightly later point of time for the commencement of
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the risk, namely the point of charge or service of the summons. It treated the arguments in paragraph 123 (where they are set out at length) as finely balanced. Our choice has given rise to some discussion, some of it rather ill-informed since I think the difference between the two recommendations can only apply to a very small minority of cases. I recommend the acceptance by the House of paragraph 4 of Schedule 1 as it stands, with my confidence considerably increased by the fact that, so far as I understood, it accords with the very well informed opinion both of the noble and learned Lord, Lord Elwyn-Jones, and the noble Lord, Lord Wigoder, in their speeches of 7th May.
It puts the quietus to the genuine and well-founded anxiety of the press as to the possibility of liability before proceedings begin—the imminent proceedings which have caused so much trouble—while at the same time safeguarding the accused from prejudicial publicity during a police search for a wanted man. The principal argument recognised by Phillimore in favour of the earlier point of time appears to me to be overwhelming. The disadvantage, it says, of the later point of time—and here I am quoting:
"is that it would allow comparatively unrestricted comment during a police search for the wanted man, which might culminate at any moment in an arrest and charge".
Coupled with the main test in Clause 2 (namely, that in order to attract the rule there must be, as is stated in subsection (2) of Clause 2 a publication which creates a risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced) and coupled with the defence of innocent publication in Clause 3 of the Bill, reinforced by the new defence provided by Clause 5, I take the same view as I think the noble and learned Lord, Lord Elwyn-Jones, did in his speech on 7th May, that this provides an absolute protection in foreseeable cases.
This did not prevent some rather alarmist writers suggesting that the Bill under discussion would prevent all discussion about Lord Lucan, that source of perennial interest to those who write about such things, on the basis that there is something new to be said about Lord Lucan. I must describe that proposition as slightly preposterous. To begin with, the one argument of overwhelming importance which Phillimore gave for its own and slightly later point of time was that editors might be taken by surprise and would not know that a warrant for the arrest had been issued. I am bound to say that I think that an editor who does not know that a warrant for the arrest of Lord Lucan is out would be slightly unworthy of his job. It is almost impossible to conceive a publication about Lord Lucan which would satisfy the test in Clause 2—until at least his whereabouts are better known, if he is alive at all. In any event, any reasonable comment until he is found is covered by Clause 5. So I am not very impressed by this rather alarmist talk either on practical or theoretical grounds.
That is what I want to say about what I might call the first part of the Bill—that is, Clauses 1 to 6 and Schedule 1. There are a number of points of varying importance to which I should now draw attention in the remaining clauses and schedules. Some of these implement Phillimore, but they are concerned with matters other than the strict liability rule. The first and perhaps in some ways the most interesting

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of these is Clause 7. The law of contempt has seldom been applied outside the ordinary pyramid of regular courts; though it has been held to apply to a coroner's court, an ecclesiastical court, and a court martial.
The reason for this comparative want of authority is that it is only since the war that the whole apparatus of inferior bodies and tribunals has proliferated. To my mind it is clear that no sensible distinction of principle can be drawn between any of the various organs through which the judicial power of the state can be exercised, though a vast array of distinctions of degree and probability could give rise to endless and somewhat profitless discussion. Throughout this field the general principle in the Phillimore Report applies. The law of contempt, says the report:
"is required as a means of maintaining the rights of the citizen to a fair and unimpeded system of justice".
If one prefers to use the language of Articles 6 of the European Convention—which I have already quoted:
"In the determination of his civil rights and obligations or of any criminal charge against him everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law".
We think we have done right by clarifying the position of the High Court and its Scottish equivalents to punish contempt in the lower bodies of this kind. Those who are interested will of course recognise that this endeavour has been rendered necessary by certain obiter dicta in a recent case in your Lordships' House which I will not go into in detail. That is protecting them by virtue of the law of contempt but, save and in so far as they already have it, withholding from them jurisdiction to enforce the law. I made a slight error in the last sentence. What is protected is not the court; what is protected is the proceedings in the court.
Magistrates' courts, for example—and they are not a bad example—have some purely administrative functions. These are not protected by Clause 7. Their judicial proceedings, if they were not already protected, would be; and since the local valuation courts in the rating system were the subject of the House of Lords' decision (to which I have just made reference) I made special inquiries as to whether my advisers thought that the local valuation courts would be now protected if the Bill becomes law. The answer was that it was not intended that they should be, and it is believed that they are not since it is believed that their functions are administrative rather than judicial.
Clause 8 of the Bill derives from the facts which the Criminal Law Revision Committee published in July 1968 and subsequent events which, as a matter of fact, resulted from the Thorpe trial. In 1968 the Criminal Law Revision Committee in their report (Cmnd 3750) recommended no change in the status quo regarding the secrets of the jury room, because they said, at that time, the conventions were understood and observed, and so we all hoped they were.
Nevertheless, they recognised that it was undesirable for jurors to reveal what had passed in the jury room even after the conclusion of proceedings. I am sure that that view is correct, and now that there has been an open and deliberate breach in the convention we must decide what to do. In my opinion, it is essential for the protection of jurors that secrecy should be
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observed, for the protecting of the accused that verdicts, particularly of those of acquittal, should be final and not the subject of subsequent debate, and for the respect in which the administration of justice is held that individual and inconsistent accounts by jurors of the deliberations in the jury room should not be bandied about in public discussion.
My Lords, one can make too much of a meal of this and I hope that I am not doing so. Jurors of course, we all know, do discuss privately with their friends what has taken place; and, provided this takes place after verdict and not before, it may be that no harm comes of it. This is safeguarded by Clause 8(1). Provided that individual cases are not identified, there is also a place for bona fide research in this field, and bona fide research has taken place sometimes of a most useful kind. That is safeguarded by Clause 8(2). It is also possible in pending or subsequent proceedings for some disclosure to take place in the interests of the administration of justice. We seek to safeguard this by Clause 8(3). It is also clear that prosecution in this field is not a proper occasion for private enterprise. This is taken care of by Clause 8(5) which makes it subject to a fine.
Clause 9 follows the lines recommended in paragraph 43 of the Phillimore Report and deals with the use in court of tape recorders, which is a matter which they then thought and which I think to be a necessary provision. Clause 10 is clarificatory; clarification was rendered necessary as a result of the Old Bailey case which was well publicised when a particular journal — not one of the nationals but a political party journal—published the names of two of the victims of alleged blackmail. It follows a footnote in Phillimore (No. 72 on page 60) which was added to the report after the deliberations of the committee were complete, and it follows the line of reasoning set forth in that footnote.
Clause 11 confers powers on magistrates to punish disruption or contempt in the face of the court and allows appeal up to the Crown Court, as indeed appeals to the Crown Court are universally allowed from magistrates. This follows paragraph 36 of the Phillimore Report but with rather heavier sanctions after six years than Phillimore then recommended. Clause 13 and Parts I and II of Schedule 2 apply criminal legal aid to contempt cases, and this of course again follows the Phillimore Report.
Clause 14 and Part III of Schedule 2 follow paragraphs 199 to 208 of Phillimore regarding sentencing powers. I think that they are more appropriately dealt with, if at all, on Committee. Clauses 12 and 15 are adaptations of the Bill to Scottish procedure. In this connection, may I apologise on behalf of my noble and learned friend the Lord Advocate, who is at the moment using his powers as an advocate in Luxembourg and could not be here this afternoon.
Clause 18 and Schedule 4 deal with Northern Irish applications. Clause 19(1) is a definition clause. Subsection (2) follows the Salmon recommendations of 1969 in restricting the application of the law of contempt as it applies to tribunals of inquiry. I do not think I need say anything about Clause 20.
I apologise for the rather "cataloguing" effect of this speech. It is in the nature of the Bill that I should have to explain it clause by clause. I think I can now bring it to a close and I commend the Bill to the House.

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I must tell the House that I consider it to be a most valuable measure. I have taken the opinion from the Law Officers, who took counsel's opinion, and they are satisfied, as indeed am I, that it brings our law into compliance with the Strasbourg decision. I am satisfied that, except in the respects to which I have drawn special attention, it precisely follows Phillimore. I have sought to justify such deviations. It will leave the law, in areas with which it attempts to deal, a good deal clearer and a good deal more liberal than it is at present. No doubt there will be fuller discussion in Committee, but as it is I commend the Second Reading of this Bill to your Lordships. I beg to move.
Moved, That the Bill be now read 2a.—(The Lord Chancellor.)
4.31 p.m.
Lord Elwyn-Jones: My Lords, the House will be grateful to the noble and learned Lord for taking us through the provisions of this Bill, which he has, if I may say so, rightly described as a very important one, dealing as it does with an important branch of the law. I think it was Ogden Nash who said that:
"Christmas is what roses is not a bed of them".
Dealing with the law of contempt comes into the same category. Nevertheless, it is of great importance in the administration of justice in ensuring, or helping to ensure, a fair trial. On the other hand, it is equally important that its incidence should not unduly interfere with the freedom of the press and the right of the public to know what is going on. The Bill before us does not seek to codify the law relating to the press and to publications. Indeed, as the noble and learned Lord has pointed out, the savings provision in Clause 6(c) is very wide indeed. The clause reads:
"6. Nothing in the foregoing provisions of this Act …
(c) restricts liability for contempt of court in respect of conduct intended to impede or prejudice the administration of justice".
Phillimore, of course, attempted to deal with that part of the field of contempt also in various ways, and I should like to ask the noble and learned Lord whether it is the intention of the Government to follow this Bill with a later one dealing with interference with the administration of justice by way of criminal proceedings. Those criminal proceedings, of course, if the recommendations of Phillimore are carried out, would establish indictable offences in that field with a right to trial by jury. Indeed, the Phillimore Report recommends that that should be the procedure in those cases.
However, this Bill deals with a limited, albeit an important, part of the law of contempt. As the noble and learned Lord the Lord Chancellor has said, the most important part is Clause 1 which states:
"'the strict liability rule' means the rule of law whereby conduct may be treated as a contempt of court as tending to interfere with the course of justice in particular legal proceedings regardless of intent to do so".
That applies only to a publication which
"creates a risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced".
As the noble and learned Lord has said, that involves a change in the law by adding "seriously" before "impeded" in line 17 of page 1. We on this side of the House think that the matter could be improved further by requiring that before the strict liability rule
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applies the risk, too, should be serious; so that the provision in Clause 2(2) would read then:
"The strict liability rule applies only to a publication which creates a serious risk that the course of justice in the proceedings in question will be seriously impeded or prejudiced".
That will tend to diminish the bringing of more or less trivial proceedings for contempt.
We have been giving further thought to a further protection which might perhaps be introduced into the Bill, namely, a requirement that the consent of the Attorney-General should be given before contempt proceedings are brought. I do not wish to comment in any detail on a recent case, but it may well be that the intervention of the Attorney-General in that case might have prevented the difficulties which arose. The Attorney-General's consent is required in proceedings under the Official Secrets Act. When I was Attorney-General I received a large number of requests to take proceedings for contempt and I am happy to say that in those six years I took proceedings only once for contempt. I think one must remember that, while one is conscious of the anxieties of the press, it is not a weapon which Attorneys-General have thought it right to use. I am of the view—and I shall be interested to hear what my successor in office as Attorney-General has to say about this—that there would be some benefit and no loss to the public in requiring the intervention of the Attorney-General in this field, his concern being the protection of the public interest and his interventions being impartial and independent.
The strict liability rule is to apply not only to a trial by judge and jury but to a trial by a judge alone. The House may well ask: Is that really necessary? Phillimore thought that it was. The committee pointed out that the strict liability rule was intended not only to protect the judges but others as well, such as witnesses, against being influenced to the point of creating prejudice in their minds. Judges themselves differ in their views on this point. I am delighted to see that in the distinguished list of those who are to take part in the debate there appears the name of the noble and learned Lord, Lord Salmon, who gave evidence to the committee. He said that he would never have contempt in judge-alone cases. He added:
"If a judge is going to be affected by what is written or said, he is not fit to be a judge".
That is typically robust language of the noble and learned Lord, if he will permit me to say so. However, the late Lord Dilhorne, who was not exactly fainthearted, as your Lordships will remember, took a quite different view. In the case of the Attorney-General v. the BBC, in the 1980 3 Weekly Law Reports, page 109, he said:
"This claim to judicial superiority over human frailty is one I find some difficulty in accepting. A man may not be able to put that which he has seen, heard or read entirely out of his mind and he may be sub-conciously affected by it".
There it is: two distinguished judicial minds in disagreement—not for the first time, I may say.
On the whole, I am inclined myself to agree with the Phillimore view, that some degree of control is needed even where, for instance, a civil case is heard by a judge alone. But this is a field where I believe that the intervention of the Attorney-General may be useful in bearing in mind that the fact that the pro-

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ceedings in question are proceedings before a judge alone should be a factor in considering whether proceedings ought to be brought.
Clause 2(3) of the Bill provides that,
"The strict liability rule applies to a publication only if the proceedings in question are active … at the time of the publication".
The noble and learned Lord the Lord Chancellor has taken us through the provisions of the Bill in relation to the time factor. The present test is whether or not proceedings are imminent. When I was in office as Attorney, I received many representations by the press that it was far too vague, and far too uncertain a test of time, and the Phillimore Committee was impressed by that point of view. It recommends:
"In criminal cases the proceedings only become active"—
so that the strict liability rule then bites—
"when an accused is charged".
The formula in the Bill in paragraph 4 of Schedule 1 rejects that and substitutes instead,
"(a) arrest without warrant;"
or,
"(b) the issue, or in Scotland the grant, of a warrant for arrest".
That is not only an earlier event in point of time than the time of charging, but it has been said to me by the press that it is also something of which they are less likely to be aware. In most cases, in practice, there will be little difference in time, for the charge usually follows fairly closely on the arrest. However, the departure from Phillimore has been universally condemned in the press, and I shall be very interested to hear what my noble friend Lord Ardwick, who has very great experience as a distinguished editor, has to say on this point. That which I am pleased to call my mind is a little more open on this matter than it was in May, because I think one really wants to take on board the anxieties of the press and of editors in this kind of field.
As to civil cases, in the Bill civil cases are to be active when the case is set down for trial or the hearing date is fixed. The noble and learned Lord, Lord Denning, has said that this could stifle comment for two years or more. I am not sure whether, in this context, the press would not find itself to be better off with the old test of imminence, importing as that does—I agree it is uncertain—a greater sense of proximity to the date of the actual trial itself than the date of setting down. But here, again, this is a point which we shall have to consider in detail at the Committee stage. Again, it will be interesting to hear the views of our colleagues from Fleet Street on this matter.
What I find a little more worrying in the Bill is that it applies the same tests to appellate proceedings as to whether contempt proceedings should be brought as it does to trials at first instance. Is there really a risk in the minds of three judges of the Appeal Court, of whom one at least will be a very experienced—I will not say hard-bitten; that may not be a very flattering description—Lord Justice of Appeal? Is it really to be feared that that trinity of experienced judges will be affected by comment in a newspaper or anywhere else in their consideration of an appeal, where, generally speaking, the point under consideration is normally a point of law anyway? In my submission, this is a matter which
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we really must look at carefully, because I do not myself feel—and here, again, we have the prospect of eminent judicial figures in the field, including my noble and learned friend, Lord Gardiner, who will be winding up and whose views on this kind of matter we shall, of course, listen to with very great advantage—
Lord Paget of Northampton: My Lords, may I make just one point on what my noble and learned friend has just said? I, certainly, was very worried by the recent case of the two girls who murdered their father. The judge in first instance there underwent an enormous press attack upon him which was utterly and outrageously unjust. Did that not put the judges in the Court of Appeal in a very difficult position, in which they had to balance what I feel was a unanimous desire to reject the attack on the judge, with, at the same time, giving proper weight to what was still a very strong case for mercy?
Lord Elwyn-Jones: My Lords, may I, first, on a point of fact, indicate that the charge was a charge of manslaughter, not of murder. It is a not unimportant distinction.
The Lord Chancellor: My Lords, I think that the noble Lord is right in one sense. That charge was a charge of murder. The plea was a plea of manslaughter. That is what the sentence was about.
Lord Elwyn-Jones: My Lords, I am most grateful. I think that should be put on the record in that way. All I can say about that matter is that, in spite of the avalanche of pressure, the judges of the Court of Appeal allowed the decision to stand—
Lord Paget of Northampton: But, my Lords, may it not possibly have been because of the avalanche of pressure? Certainly, if I had been the ladies' counsel, I should have been terribly anxious that that avalanche of pressure would have the opposite effect to the effect that it did have.
Lord Elwyn-Jones: My Lords, I think that my noble friend is trying to get a little bit both ways. Let us consider the matter again in Committee. It is not at all easy and I do not think he is contending that it is. But I should have thought there were certain risks here. However, let us consider whether we really need to give the three Appeal Court judges the same extent of protection as the trial judge with a jury.
Coming to the other parts of the Bill, I welcome Clause 3, which states the defence of innocent publicacation or distribution. Clause 5 will, I think, go some of the way to meet the criticisms of the Court of Human Rights about the Sunday Times decision. It may be just a Committee point, but should not the word "serious" be introduced into line 4 before "impediment or prejudice", to maintain consistency with Clause 2 of the Bill?
As to Clause 7, which constitutes a very wide extension of the scope of jurisdiction to protect inferior courts, I must say that, at first sight, I was a little startled to see the phrase,
"any part of the judicial power of the State",

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coming into a Bill. I do not think I have ever come across it before. It smacks a little of the imperium of the Roman Emperor—
The Lord Chancellor: It is purely executive, my Lords.
Lord Elwyn-Jones: My Lords, I gather that the noble and learned Lord the Lord Chancellor had a better classical education than I had in Llanelli Grammar School, and I will how to his knowledge on this matter. But it is, nevertheless, somewhat unusual to find this as a phrase in a Bill. More substantially, the description of the province of the law now is almost unlimited,
"The jurisdiction of the High Court … to prohibit and punish contempt of court or in respect of the proceedings of inferior courts extends to the proceedings of all inferior courts, tribunals and bodies (however described and whenever established) which are constituted by law and exercise any part of the judicial power of the State".
Whether the press will find that to be a sufficient definition of the bodies about which they must be careful when they comment or report upon them, I doubt very much. I should have thought there is something to be said for a schedule setting out those bodies. Does it mean that all the tribunals coming under the umbrella of the Council on Tribunals are to be included? As I understood the observations of the noble and learned Lord the Lord Chancellor, administrative tribunals are not to be included. But that description in no way amounts to a sufficient definition. Perhaps this could be looked at again.
Turning to Clause 8, publication of jury's deliberations, I find myself in agreement with what is proposed in that clause, as so skilfully drafted. As it stands, it should remove the fear which existed that jurors would no longer feel free to perform their duties because of possible reprisals by criminals for whose convictions they were responsible, if there were free reporting of what went on in the jury room. On the other hand, academic or other researchers dealing with general issues about jury trials can safely pursue their legitimate studies of the jury system.
At this stage I have no comment to make about Clause 9, and I find myself broadly in agreement with what is proposed in Clause 10. When in due course we deal with Clause 10 it may be convenient to consider the implications of the decision of the court in the case of Miss Harriet Harman, the solicitor for the National Council for Civil Liberties. The freedom of journalists to make full use of documents not only produced but read in open court which has been put in issue by the court's decision in that case is obviously a matter which seriously affects the position of the reporter and of the press. It may well be that Clause 10 will be a convenient stage at which to remedy what seems to many of us to be a very unsatisfactory state of affairs.
Turning to Clause 11, dealing with offences of contempt of magistrates' courts, I wonder whether the magistrates alleged to have been insulted should themselves be the judges of the contempt; or whether or not the arrangements made in regard to High Court judges in the case of contempt—namely, that the facts should be reported to the Attorney and that he should be invited to take proceedings—would be the better course.
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The provision regarding legal aid is obviously a desirable and necessary step. It seems to me that we are in for a very interesting and fascinating time during the forthcoming Committee stage of the Bill, and it is good that during this opening stage we shall—at any rate from this moment on, as indeed was the case before—hear some authoritative observations.
4.55 p.m.
Lord Wigoder: My Lords, both the necessity for and the difficulty of this Bill arise from the fact that there is a conflict between two principles of very great importance to our society. The first principle is that the press must have the right to investigate, to expose corruption and dishonesty and to comment freely upon our legal system as it works. The second principle is the necessity for the legal system itself not to be subject to improper pressures or unfair comment which may pollute its course. It is because there is that conflict that I regret that only one noble Lord, the noble Lord, Lord Ardwick, has had the temerity to challenge the monopoly of the lawyers who have put down their names to speak in this debate. Many Members of your Lordships' House who hold the most distinguished positions in the media could be of the greatest possible assistance when we consider the problems posed by the Bill. I hope that they will find it possible to help during its later stages.
What perturbs me is that lawyers are notoriously a little over-sensitive about their own profession. We tend at times to be over-jealous about our procedures, and sometimes when we discuss them, to verge on the pompous. It is necessary that in its final stage this Bill should represent a proper, true balance between the claims of the law and the claims of the press. That is not going to be so if the debate is left exclusively in the hands of only one of those two professions. Indeed, I venture to think that already there are signs that in this Bill the balance has been tilted unnecessarily against the press.
I want to refer first to two aspects of that matter. The first is the point which has already been made by the noble and learned Lord, Lord Elwyn-Jones. Clause 2(2) refers to the strict liability rule applying to a publication which creates a risk that the course of justice will be seriously impeded or prejudiced. It cannot be sensible that we should legislate to cover every fanciful or remote risk. I respectfully agree with the noble and learned Lord, Lord Elwyn-Jones, that some word is necessary there. I should have preferred the word "substantial" to "serious", but that, at any rate, is not a matter about which we need fall out at this stage.
The other area in which it seems to me that the balance is tilted against the press involves our considering whether it really is necessary to protect judges sitting alone to quite the extent that this Bill sets out to do. I doubt very much whether our judges wish to be mollycoddled, if that is not too strong a term, in the way that is proposed here. The judges who sit in the Criminal Division of the Court of Appeal are not, despite the point made by the noble Lord, Lord Paget of Northampton, going to be influenced by press comment. They may well take account of it. No doubt it is right that they should know what public opinion is about any particular sentence that is passed. But

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anybody who knows the noble and learned Lord the Lord Chief Justice, for example, would not wish to suggest for one moment that he is going to be subject to unfair pressure in any decision which he may make in the Critimal Division of the Court of Appeal.
It seems to me that the only time when strict liability should run in relation to appeal proceedings is on the rare occasion when the Court of Appeal orders a retrial and there are, therefore, going to be further jury proceedings. It is possible that a jury might then be influenced to some extent by comment which appeared in the press.
So far as civil proceedings are concerned, in Committee we should look very seriously at the possibility of limiting the area of strict liability to those civil proceedings in which a jury is known to be going to be involved. I appreciate the argument that sometimes it may happen that the parties to civil proceedings may be said to be prejudiced or put under pressure. However, I should have thought that the public interest in most cases, if not all, outweighs the undesirability of that happening. I believe that in civil proceedings we should concern ourselves only with the comparatively rare cases in which juries are involved. In those two areas it seems to me that at the moment the balance in this Bill has been tilted a little unfairly.
I do not want to suggest that I would wish to take up every point made by the press in the course of its criticisms of this Bill. Some of them are perhaps not entirely well founded. For example, I stand by the view that I expressed in the earlier debate on this subject, that the time when the strict liability rule becomes active is best set out in Schedule 1 and is an improvement on the proposals in the Phillimore Report. I believe that to say that the time should be on arrest without warrant or the issue of a warrant for arrest or the issue of a summons, is as late as one can possibly leave it and that to leave it later than that is to create a risk of very real prejudice to a defendant. I have in mind, for example, cases under the Prevention of Terrorism Act where a person may be arrested and is held at the police station, it may be for seven days or indeed longer, before he is charged. It would be quite improper that during the seven days the press should be totally free to comment on the crime, on the criminal, on the man's previous record, and so on.
The press also claim that they will find this new test will cause difficulties because they may not know whether a warrant has been issued or whether a person has been arrested, but I respectfully agree with the noble and learned Lord on the Woolsack that the provisions of Clause 3(1) give the press a complete defence if their lack of knowledge is one for which they are not to be blamed because they have taken all reasonable care to find out.
The other matter which the press have raised recently arises out of the rather curious case between Miss Harman and the Home Office. I do not wish to embark too far upon that case except to say that it seems to me that neither side came out of those proceedings precisely festooned with credit. One thing that was perfectly clear about that case was that the freedom of the press was in no way involved at all and I believe it to be a misrepresentation of that case to look upon it in that light. In those circumstances
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I am glad that this Bill is not at the moment seeking to make any provision to deal with the specific rather unusual situation that arose in that case.
I have only two other general comments to make on this Bill at this stage. First, in relation to Clause 7, which seeks to extend the jurisdiction on contempt to tribunals, I think perhaps I should declare that I am a member of the Council on Tribunals but of course I am not in any way speaking on their behalf. It seems to me that it is necessary to look with some care at this proposal. Tribunals are intended to be informal, inexpensive places, lacking the formality of the courts, and I am not sure that there is a case for extending contempt provisions to tribunals at all, provided we can make it clear that the criminal law can cope with the sort of disturbances that have taken place, particularly at public inquiries, during the course of the last few years. If that can be dealt with—and I believe it can, probably under the existing criminal law and if not, by a slight amendment to the Public Order Act—then I should have thought it was not necessary to import the whole panoply of contempt proceedings into those informal tribunals.
I am also perturbed at the attempt in Clause 7 to try to define a tribunal as being a body which exercises any part of the judicial power of the state. I can see endless difficulties arising over that attempted definition. Perhaps I may give one example which has already caused some controversy, privately at any rate. Where there is a public inquiry and a planning inspector who makes his recommendation to the Minister, it would presumably be said that he was not exercising any part of the judicial power of the state, but, where the planning inspector gives the decision himself—as is increasingly the tendency nowadays—it may be that that consideration would not apply. I believe we shall have to look with some care at that definition if we decide in Committee that we ought to extend the contempt part of this Bill to tribunals as a whole.
The other clause about which I wish to comment is Clause 8, because I must confess that I am a little unhappy about it. This is the clause which seeks to make it a contempt of court where a jury's deliberations are published and of course it links Clause 8 to publication as defined earlier in the Bill in Clause 2. I do not object to it as it stands, but it seems to me that by inference it is removing from the area of contempt a large number of communications with juries after a case is completed, provided those communications are not published. I can give certain examples of this. At the present moment if, after a majority direction, the jury acquit, nobody knows whether the acquittal is unanimous or by a majority, but, as I understand it, it would now be open to anybody—defendant, counsel, solicitor—to go up to a jury after a case (provided they can get them to talk) to establish whether or not the verdict had been unanimous. Unless publication was involved, it would not be a matter of contempt.
Equally, and perhaps even more unsatisfactorily, if a jury had disagreed upon their verdict it seems to me that it would now be open—if the law was defined in this way in Clause 8—for counsel or solicitor to go up to any juror who was willing to talk after the case, after the disagreement, and discuss which witnesses were found to be satisfactory, which points appeared

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to be impressive, how everybody might do better next time, and to have a general discussion about the facts of the case and the jury's deliberations. There again, unless publication were involved, it seems to me that that would not constitute a contempt under this clause. Indeed, as I read it, it does not deal with the issue where danger might arise to particular jurors if criminals discovered that those particular jurors might have been responsible for their conviction, because, if a juror cared to disclose to, let us say, a defendant's solicitor, that it was the fifth juror from the left in the back row who took the lead in pressing for his conviction. I cannot see that that would be a publication within the terms of Clause 8 as defined in Clause 2. That again is another matter at which perhaps we should look with some care when we come to the Committee stage.
At this stage I do not want to make any further comments on this Bill. It is a Bill full of interest. The noble and learned Lord on the Woolsack was optimistic, as ever, in indicating that perhaps it was not very controversial. I believe there are some areas of controversy into which we can usefully go with great care when we come to the Committee stage.
5.9 p.m.
Lord Salmon: My Lords, the name of "contempt of court" is by no means apt. The law of contempt of court does not, as its name suggests, exist to protect the dignity of judges nor, for that matter, to harass the press. It exists solely to ensure that justice shall be done, and to this end it prohibits acts and words which might obstruct the administration of justice. The horror of trial by press, television, radio, occurs in many foreign countries. I am sure that we should all hate to see it imported into the United Kingdom, and I have no doubt that we never shall. Nor have I any doubt that contempt of court should apply to all jury cases; that is to say, to all indictable criminal cases, and to libel and fraud cases, which in the civil courts are the only cases that now come before a jury. A jury might well be affected and indeed seriously prejudiced by any comments appearing in the press during the course of the trial.
The law, however, does lay down that while the trial is being held the media must confine itself to giving correct reports only of what occurs at the trial. There is no doubt, I think, that a free press has the right, and indeed the duty, to bring before the public facts relating, for example, to fraud and other serious crimes. It is in the public interest that this should be done. Indeed, it is sometimes largely because the facts were discovered and brought to light by the press that criminals are brought to justice.
I confess that I had always thought that in any case tried by a judge alone contempt of court should not apply, because in my view a judge could not be affected by what is written or said out of court. As my noble and learned friend Lord Elwyn-Jones said, I have the temerity to say that if he were he would not be fit to be a judge; I do not resile from that. I am, however, very impressed by Mr. Robin Day's note in the report of the Committee on Contempt of Court. I think I agree with him that in cases tried by a judge alone the minds and evidence of witnesses might be affected, however immune to outside influences the judge
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himself may be. I at the moment agree with Mr. Day that a date might be fixed, so that after that date the media would know that an expression of opinion in relation to the case could constitute contempt of court. That date should be published one or two weeks before the trial and should continue until judgment is given.
I do not think that the criticism of a judgment given at first instance, or in the Court of Appeal or in your Lordships' House, could be a contempt of court. Nor do I think that what may be said or written while an appeal is being heard could be a contempt of court, because to my mind it is quite incredible that Lords Justices and Lords of Appeal could conceivably be affected by anything the media might say or write about the case with which they were dealing.
5.14 p.m.
Lord Mishcon: My Lords, with that poetry of language of which the noble and learned Lord who sits on the Woolsack is such a master, he described this Bill as his "ewe lamb", and the Bill has indeed had a good and faithful shepherd. I believe that by and large he has led the lamb into green pastures, but occasionaly he has led it by still waters, and it is as to which way those waters flow in the main that this Second Reading debate, I suppose, should mainly be directed. I want, if I may, to raise a few points of a general nature which occur to me.
In the first instance, may I say that, of course, as has been so often proclaimed in the learned speeches we have been delighted to listen to, this is a question of balance. It is a very necessary thing that not only have we got balance but we have got certainty, and one of the first findings of the Phillimore Committee was that the law of contempt was gravely uncertain. On this question of balance, I am afraid that I must say, with the greatest respect to the noble Lord, Lord Wigoder, that I believe that lawyers have to be more than careful and I do not think that they are in this connection too jealous of the duties that they have.
One often thinks of the thalidomide case as the starting-off point for seeing that the media should get indeed the greatest of freedom under our law, because of course it was in that case that the Sunday Times was injuncted first by the Divisional Court, and that injunction was then lifted by the Court of Appeal and reinstated by the House of Lords. I must say this—and I say it in the regrettable absence, I am sure only for a moment, of the noble and learned Lord, Lord Salmon, who so learnedly addressed us a moment ago—that it is a question not just of judges. Those of us who are practitioners in the law know that often parties to civil litigation are frightened by press comment of an unfair nature and of an oppressive nature, to the extent that they agree to settle out of court, very often unjustly, because they do not wish to walk into greater and more objectionable publicity.
And, much more important, in the criminal law it is not just the judges, it is not just the jury; it is a question of whether a witness will have the courage to come before the court after having a great deal of adverse publicity. Indeed this applies in exactly the same way in regard to civil cases where there are merely judges who are trying the matters at issue and no juries. Witnesses again are very necessary if justice is to be

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meted out, and the fact that witnesses may or may not attend is a matter of grave consequence in regard to justice.
My Lords, I say this with the greatest respect to the national press and to the media generally: we are not dealing with a terribly tender and careful plant when we are dealing with the media as it has in fact evolved. I make no attack upon the press or the media. It is a necessary function of our democratic way of living; it is one of the bastions of our freedom. But more than occasionally, and certainly in regard to some cases that your Lordships can well remember, they have gone over the bounds of responsibility into an area of sensationalism, upon which they feed, but justice does not.
If I may go from the general to the particular, but not too particular, because that will be for the Committee stage, I listened with the greatest of respect, as one always would, to the noble and learned Lord the Lord Chancellor when he dealt with the definition in Clause 2(2) of this Bill and said that on the advice of the Law Officers, and indeed the advice that they themselves had taken, it would appear that this Bill fulfils the function which indeed it states very clearly in the Preamble it was meant to fulfil, which is to harmonise our law with the Convention on Human Rights, and indeed the decision at Strasbourg to which the noble and learned Lord the Lord Chancellor referred.
That definition does, indeed, follow Phillimore. But what it does not do is to follow the Phillimore recommendation which your Lordships will find on page 28 of the Phillimore Report and, indeed, on page 93 at recommendation 19. That recommendation is as follows:
"It should also be provided by statute that bringing influence or pressure to bear upon a party to proceedings shall not be held to be a contempt unless it amounts to intimidation or unlawful threat to his person, property or reputation".
The Phillimore Committee had the benefit, before it issued its report, of having before it the House of Lords' decision in the Attorney-General v The Sunday Times. Therefore, the Phillimore Committee was able to look at the tests which were applied in that case. What the Phillimore Committee did not have the benefit of when it reported was, of course, the judgment of the court at Strasbourg. The only way in which this definition differs from the definition that was considered by the Divisional Court—and so far as I can sec was followed in the Court of Appeal and the House of Lords in the Sunday Times case—was the transposition of the word "serious" from "serious risk", which was what the Divisional Court was dealing with, to "serious impediment" and so on, which is what subsection (2) deals with.
The Lord Chancellor: My Lords, I think that the noble Lord has made a mistake. The House of Lords, as distinct from other courts, adopted a different criterion, and it was that criterion which was attacked by Phillimore and was the only live issue before Strasbourg. That was the so-called pre-judgment criterion, and it is that which we get rid of in this Bill.
Lord Mishcon: My Lords, I am more than grateful to the noble and learned Lord the Lord Chancellor. I could not have a better teacher and I am most grateful
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for that lesson. I merely alter my point by saying that that at least was the basis or the formula used by the Divisional Court and the Court of Appeal. I beg with the utmost deference to venture to disagree with the noble and learned Lord the Lord Chancellor when he says that that was the only difference that the court at Strasbourg had with our law. Perhaps I may say that I am reinforced in that doubt by my own very noble and learned Law Society which has, in fact, prepared a memorandum saying that the Law Society itself has some doubts at this stage as to whether by merely having—and without adopting the other formula suggested by Phillimore—the definition in subsection (2), to which I have just referred, we do in fact harmonise our law with the convention and we do in fact find ourselves in a position where what we are doing is so adapting our law as not to offend against the Strasbourg judgment.
I shall move from that point very speedily to a point which has been made—and made much more effectively than I can make it—in regard to the matter of the tribunals. In fact, before I make that point there is another one which I should like to make on Clause 4(2). That is a subsection which deals with the power for judges to order that the publication of any report of proceedings should be postponed. It is my submission—and again it is the submission of the Law Society—that the basis upon which that power should be exercised should be clearly and much more precisely stated in this Bill.
One of the main sources of difficulty in relation to contempt law at present is whether courts can order the publication of reports of proceedings to be delayed. I hope that I shall not detain your Lordships too long if I show your Lordships the divergency of judicial opinion upon this matter as it appears now in our law reports. Mr. Justice Lawton as he then was in Regina v Kray (1969) Criminal Appeal Cases R421, said:
"I can see no reason why a newspaper should not report what happens in court even though there may be other charges pending. The reporting of trials which take place in open court is an important part of the function of a newspaper and it would not be in the public interest, in my judgment, if newspapers desisted from reporting trials, and from reporting verdicts and sentences in those trials, merely because there was some indictment still to be dealt with".
In the case to which, I believe, the noble and learned Lord the Lord Chancellor referred—namely, Border Television Limited ex parte the Attorney-General and again in Regina v. The Newcastle Chronicle and Journal Limited ex parte the Attorney-General—the Lord Chief Justice said that every reporter should know about one simple form of contempt, the publication of material:
"relating to offences committed by or alleged against an accused, other than those charged.".
I merely venture to suggest that unless the circumstances in which the judges can exercise their powers to order reports of legal proceedings to be deferred are defined in detail, the confusion which now so often arises may well continue.
My final point relates to Clause 7, to which reference has already been made, and it concerns the question of the tribunals, which may be included unless we are very careful; or, to put it another way, the doubt that may be left as the Bill now stands as to which tribunals may be affected. The noble and learned Lord the

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Lord Chancellor referred, if I remember correctly, to the case of the Attorney-General v. the BBC, which was a case dealt with this year.
Perhaps I may give one quick example of the mess we may be in if the suggestion made by my noble and learned friend Lord Elwyn-Jones is not taken up—namely, either a list specified or another definition given. May I pose the question as to what would happen, for example, with a rent assessment committee? Is that an inferior court, tribunal or body which is constituted by the law, and does it exercise any part of the judicial power of the state? There is no doubt about it: when it fixes rents it perhaps does not exercise a judicial power, but we all know that rent tribunals have the power to order a notice to quit to be deferred. Is that the exercise of a judicial power? It is either necessary to have the list properly scheduled or it is necessary to have a definition like "courts of law", and therefore cut out the administrative tribunals and those which do not exercise the jurisdiction of courts of law. Having said all that, I am perfectly sure that your Lordships will agree that this is a Bill that deserves a welcome.
5.29 p.m.
Lord Renton: My Lords, I am in favour of nearly all this Bill. It seems to me to be well conceived, overdue, and, if I may say so, much better drafted than some of the legislation of last Session. So far as it complies with the judgment of the European Court of Human Rights, it deserves respect. However, I shall not enter into the controversy between the noble Lord, Lord Mishcon, and my noble and learned friend the Lord Chancellor because I would wish to study the sources very carefully before doing so.
I am in favour of the whole of Clauses 1 to 6 and Schedule 1, including what I believe is the most controversial point in those parts of the Bill; namely, as to when criminal proceedings should become active for the purpose of contempt of court and publication. I believe that up until now we have always left things too late. Without citing again the examples in which this danger has arisen, I think the Government have now got it right.
My principal doubt arises on Clause 7. Not for the same reason as that given by the noble Lord, Lord Wigoder, who objects to any extension of the concept of contempt of court to tribunals, if I have understood him correctly. That principle was breached years ago. My objection is to the way in which it is proposed to do it as set out in Clause 7. It has already been briefly referred to by the noble and learned Lord, Lord Elwyn-Jones, but I think that we should consider carefully lines 20 to 23 on page 3, which says that:
"…the proceedings of all inferior courts, tribunals and bodies (however described and whenever established) which are constituted by law and exercise any part of the judicial power of the State".
That, I say with respect to my noble and learned friend, is casting the net too wide. It is also imprecise and will create uncertainty as to whether or not a particular tribunal is covered by the law of contempt. The matter is by no means improved by the wording in Clause 19(1) where we find a definition of the word
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"court", and then a reference to the Tribunals of Inquiry (Evidence) Act.
Surely lawyers, journalists, alleged contemnors, everyone, have the right to know precisely whether or not the proceedings in any particular tribunal will be governed by the law of contempt. It is a very elaborate law. It was already so before this Bill was introduced, and it will not become less elaborate when it has reached the statute book. I do not complain because it is going to become more elaborate, but surely if we can possibly do so we must deal with it now in a way which avoids creating any uncertainty.
There is a simple way out of this difficulty. I suggest that all those inferior courts and tribunals whose proceedings are to be protected by the law of contempt should be listed in a schedule to the Bill. It is not an exact analogy, but we do just that in the House of Commons Disqualification Act with regard to a huge range of appointments within the public service under the Crown. Therefore, there would be no difficulty about having such a list.
Of course some tribunals, not mentioned by my noble and learned friend, have already been given the protection of contempt of court by statute. There is of course the Tribunals of Inquiry (Evidence) Act 1921. That goes back a long way. All tribunals established under that Act have the protection of contempt of court. Then under Section 41 of the Charities Act 1960, which I piloted through its Committee and Report stages in another place with the able help of the noble and learned Lord, Lord Simon of Glaisdale, when he was Solicitor-General, strange as it may seem, we persuaded Parliament to enact that disobedience to certain orders, and very nearly administrative orders, of the Charity Commission might, on application of the Commissioners to the High Court, be dealt with under the law relating to civil contempt. So 20 years ago we already had that precedent. Then there are others, strangely enough, in the Pipelines Act 1962, and also in the Nuclear Installations Act 1965, and the Parliamentary Commissioners Act 1967, which perhaps is more natural because they are presided over by a High Court judge and their proceedings are the subject of public inquiry—some of their proceedings, but not all.
The examples that I have given show, incidentally, that some statutory tribunals which have judicial, or quasi-judicial functions, also have administrative duties to perform. The question will arise for my noble and learned friend to consider, whether the exercise of the administrative powers is also to be protected when the tribunal falls within his definition in Clause 7 of the Bill, because it also exercises judicial functions. We have to be very clear about this. The way to overcome this is surely to have the tribunals listed in a schedule, tabled I would hope by the Government at the Committee stage, and then we should all know what we are about.
The only other thing I wish to mention really arises on Clause 11. It is understood, and has been for centuries in this country, that all contempts of court should be dealt with promptly; especially those committed in the face of the court, a term of art well understood by lawyers. It has a wide meaning and covers a wide range of circumstances. With a few exceptions, up until now all contempts in the inferior courts could

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be punished only on application to the High Court—a quite unnecessary palaver causing delay and expense when the matter should be dealt with as summarily and cheaply as possible. Therefore, in spite of what the noble and learned Lord, Lord Elwyn-Jones, said when he seemed to cast doubt on Clause 11, I welcome it. It gives power even to lay magistrates to deal with contempts committed in their own courts. That is an important change which is fully justified.
5.38 p.m.
Lord Hutchinson of Lullington: My Lords, I should like to start by congratulating the Government on taking a step towards the implementation of the Phillimore Report. As regards human rights, some progress in this direction even after six years is a matter for congratulation. The Bill, I agree with the noble Lord, Lord Renton, is simply drafted and is clear, and it is perhaps what one might call a well-dressed ewe lamb. I would agree with, and I support, certain parts of this Bill. The unintentional prejudice to legal proceedings will only be caught where a publication causes those proceedings to be seriously impeded or prejudiced; the three defences are provided in Clauses 3, 4 and 5.
I agree with Clause 8, the preservation of the privacy of what goes on in the jury room, although I greatly regret its necessity. When the noble Lord, Lord Wigoder, expresses fears in relation to what may happen if this particular clause is passed, of course it is always the result that if you try to legislate to prevent something which up to that time has always been understood as a matter of honour and good sense, then you can always say that what is not prohibited is allowed. It seems to me that, if you are going to venture into this realm, you cannot possibly ever stop people asking individual jurymen what has happened in the jury room, but at least this will go some way towards preventing the publication of what goes on there.
The provision for legal aid I particularly approve of, and the good sense of being able to grant legal aid for counsel only or solicitor only. That said, I have some fundamental reservations about the Bill and I am pleased to find they turn out to be very much in line with those already expressed by the noble and learned Lord, Lord Salmon. I ask your Lordships to appreciate clearly what is the background to the Bill; why must there be a law of contempt? The only purpose surely is to protect the right of the citizen to a fair trial, and that of course includes the right to have resort to a tribunal, a court, which has the respect of the public and which will act independently and without prejudice.
That of course is the ideal, but in reality no court operates in a vacuum. Every court is subject to the pressures of society; courts are manned by human beings—judges, magistrates, lawyers, police officers—none of whom are paragons of virtue, and every individual who goes to court faces some prejudice in one form or another. Of course, the greatest potential prejudice that he faces is to find a judge, magistrate or lawyer who is incompetent, unfair, simply ignorant or too old. Although the noble and learned Lord, Lord Denning, said in his lecture on television, "Trust the judges", when one set of judges is always upsetting
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the decisions of another set, it is difficult to know how to follow that injunction.
I do not know how many of your Lordships watched the television reproduction of the Lady Chatterley trial. Dr. Richard Hoggart, who gave a very perceptive commentary afterwards, pointed out that the significance of the trial was not that it opened the floodgates of pornography in the 1960s and 1970s (which, if I may say so, was a great relief to me and my noble and learned friend Lord Gardiner, as we had between us achieved the prevention of the destruction of that lady) but it was the total inability of an upright and intelligent judge and prosecuting counsel even to be able to comprehend that that book could be a work of art and that anybody could read it without being eternally depraved and corrupted. The jury acquitted, in spite of that incomprehension; and the jury acquitted in the second Kray case, although they knew perfectly well that certain people in the dock had just been convicted of the most outrageous murders.
Trials take place every day in circumstances of prejudice—indecent assaults against children in a local town and rapes of women in a local town—but in fact in court, in that atmosphere in the criminal process, British juries are able, and are shown to have been able time and again, to throw away those prejudices which they naturally always start with, as we all do. When a man is eventually arrested as being the Yorkshire Ripper, he will get a fair trial, and if Lord Lucan should pop up one day, he will get a fair trial, and on the face of it there could be no more prejudice—could there?—than that against those individuals.
I would therefore echo, though alter, the words of the noble and learned Lord, Lord Denning, to "Trust the jury". Juries are far more robust than many people would think. The trouble about the law of contempt is that it has grown up over the years as a collection of empirical decisions by judges in particular cases and instances, up until quite recently never going to appeal. Judges, if I may say so, have displayed to this question a paternalistic approach which is now, at this time, out of date, and have looked upon the legal process over the years as an innocent virgin who must be protected from all pressure, from all prejudice, save that of course of the judiciary itself, and so contempts by outsiders have been met with the severest sanctions after what is usually a totally summary procedure.
The time has come to relax this attitude and recognise the importance of the concept of free expression and simply to define the scope of the law which vitally limits that freedom. With that background, I wish to make a few comments on the Bill. It has already been pointed out—and I support those noble Lords who have pointed it out—that in Clause 2(2) the strict liability applies—
"to a publication which creates a risk that the course of justice—will be seriously impeded";
but it must surely be more than a risk, because every trial is full of risks of that kind; it must surely be "a serious and immediate risk", and I would certainly go along with my noble and learned friend who suggested that the intervention of the Attorney-General might be incorporated into that procedure.
In Schedule I the liability regarding the criminal side arises when the criminal proceedings are active, and

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that is when a person is arrested or on the issue of a warrant. I would still stick to the moment of charging, as suggested in the Phillimore Report. That is the moment when a person is brought within the ambit of the court. It is surely at that moment when the protection should start and when the person requires that protection. There is a good deal of sense in the complaint of the media: how are they to know when that moment is actually reached, whether it is the moment of arrest or the moment of the issue of a warrant.
We all know that persons are taken into custody or are taken to police stations "helping with inquiries" when they are not in fact under arrest, and that police officers' favourite phrase is that a person is "detained", a phrase unknown to the law; either they are arrested or they are not, and usually when persons go to a police station it is said that they "go voluntarily". Photographs of persons being arrested will be taken at riots or affrays at football matches and other such places, and those persons will be taken away to police stations but they may never be charged. I should have thought that in circumstances of that kind there would be difficulties for the media, if the moment that is hit upon is the moment of arrest rather than the moment of charge.
As has already been said with the highest possible authority, that of the noble and learned Lord, Lord Denning, in civil proceedings when a case is set down there would be a gagging of comment of this kind possibly in some cases for a period of up to 18 months or two years. I would absolutely go along with the suggestion contained in Mr. Robin Day's minority addition to the report, that surely it is not beyond the wit of the officials, or the wit of man, to have a list on to which a case goes at a certain time before it is due to be tried, and the media would know that from that time they were in danger.
I find difficult to understand why on earth it should be suggested that judges who are to try cases alone should need protection. I noticed that in introducing the Bill the noble and learned Lord who sits on the Woolsack did not at all mention the matter continuing and covering the appellate stage. If paragraph 14 of the schedule stands, after conviction and sentence all comment which could create a risk of serious prejudice will be prohibited if a notice of appeal has even been lodged. Of course that goes far beyond Phillimore. I must say that to me of all the persons who supported this suggestion the most unlikely was the noble and learned Lord the Lord Chancellor himself; that surprised me. He mentioned that he is one of the rare individuals in this House who has been the subject matter of contempt proceedings. In 1968 an article appeared in Punch under the authorship of a certain Quintin Hogg, who made the following observations about the Court of Appeal, which at that moment had delivered a judgment, or was in the process of doing so:
"Blindness descends upon the judges … Their judgment was unrealistic, contradictory and erroneous. They lambasted the police for not enforcing a law which they themselves have rendered unworkable … Everyone is out of step save the court".
That was described by the judges in the Court of Appeal as rumbustious criticism—not only rumbustious, but regrettably inaccurate, but at the same time criticism
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which was entirely without prejudice; and the Peers' stream of justice still flowed on unsullied.
If the Court of Appeal could withstand the full fury of a Quintin Hogg at his zenith, what fear is there of the News of the World or even the National Council for Civil Liberties or, if I may say so, any other noble Lord in this House? I venture to suggest that the judges need no protection as regards appeals and that those judges who are ignorant or isolated could indeed profit by the knowledge of public disquiet or dismay. I differ entirely from the approach of the noble Lord, Lord Paget of Northampton, in that surely it would be of assistance to a court of appeal to know that there has been disquiet, protest and public outcry. They are not going to be affected by it in their judgment, but it would make it possible for them so to frame their judgment that they can assist people who had in fact been ignorant of the real facts or who have made a wrong protest; or, if they find in the other direction, to show that they were perfectly justified in the attitude which they took. It is really extraordinary to think that any judge of appeal could possibly be affected by comments of that kind.
The only remaining matter that I should like to mention is that in Clause 2, in relation to magistrates' courts, it is not clear to me whether or not the procedural safeguards demanded by Phillimore are implied in the clause—that the accused person should know the charge and must be given time and opportunity to defend himself. So far as Clause 4(2) is concerned, I am also not clear whether there is any appeal against an order by the court if it orders that publication of any such report should be postponed
"for such period as the court thinks necessary".
That would seem to be quite unlimited, and to me it does not appear clear whether there would be any appeal against such an order, bearing in mind that it is a power given to magistrates as well as to judges. So far as the whole Bill is concerned, I end by saying that I would welcome parts of it, and that in my view it is a Bill which could be substantially improved.
5.57 p.m.
Lord Rawlinson of Ewell: My Lords, may I commence by offering my apologies to the noble and learned Lord the Lord Chancellor for not being here when he moved the Second Reading of the Bill. Like most of your Lordships, I am always reluctant to miss any speech by the noble and learned Lord, especially on this occasion since the speech was about contempt of court. The noble Lord, Lord Hutchinson of Lullington, has just reminded the House of an occasion when Mr. Quintin Hogg was brought before the court on a matter of contempt, which was dismissed; and I hasten to add that on that particular occasion I was counsel for Mr. Quintin Hogg.
When the noble Lord, Lord Hutchinson, says, "trust the jury", I wholeheartedly agree with him in that sentiment. But he would be the first to appreciate that we do not actually simply trust the jury, because, for instance, in a criminal trial we make sure that the jury do not know the previous convictions of the person accused. We make sure that the jury do not hear what the soldier said. In other words, we have rules which restrict knowledge given to the jury because it is believed

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that that knowledge would so influence the jury as to be unfair to the person being accused. Therefore, though I believe that the noble Lord, Lord Hutchinson, is right when he says, "trust the jury", one must look seriously at the rules and precautions so that a person can enjoy a fair trial.
Since this appears to be a time for reminiscences, may I point out that my qualification here is that in the case concerning the Sunday Times—the case to which almost every noble Lord has referred—I was party to the proceedings, party in the sense of the matter coming within my office. I was the person who brought the proceedings, and I happened to be counsel in the case itself; so I was doubly involved. Every dart wounded me and every time that, for instance, the Court of Appeal reversed the decision of the Divisional Court I suffered. When I came to the House of Lords I rejoiced. I am glad to say that by the time the matter went to Europe it was the turn of someone else to suffer.
There was a great deal of misconception about that case, to which I shall refer in a moment, but I should like to say that I so much agree with the noble and learned Lord, Lord Salmon, when he said that "contempt of court" is such a misleading name for what we are really seeking to guard against. It is not, as he so rightly pointed out, maintaining the dignity of the law and of the judges, but is indeed that which all born and bred in these islands believe is one of the great rights of every Britisher—that is, to have a fair trial; and that whatever be the crime he may eventually be convicted of having committed, and whatever his previous career and conduct may have been, nevertheless he will come before an unprejudiced jury and get a fair trial. We believe that that is one of the greatest liberties of the Englishman, and one of the paramount matters of importance in any society in which we live.
My Lords, other countries do not share that view. In Europe and in the United States of America they do not consider it so important. Their approach is therefore different; and, of course, that affects the whole consideration of the problem. We have made the decision that the paramountcy lies in the fair trial. As a result of that, freedom of comment has to suffer. But the vice of our system has been uncertainty for those whose duty it is, whose important duty it is, to report and to comment, as to when they are liable to be offending against the principle of the fair trial, thus to be guilty of contempt of court.
The vice on the Continent of Europe and in the United States of America is in the unfairness to the accused. For instance, on the Continent of Europe the person accused may be referred to as the assassin and be treated as the assassin before his trial has even commenced. That is wholly alien to our concept. In the United States of America, where the system of trial is of course very much more similar to ours, nevertheless because they do not have contempt of court they have to have a much longer and a much slower procedure. They have to have the voir dire, where hours and even days can be spent cross-examining members of the jury. It is said that an English case commences when the jury has been selected and an American case ends when the jury has been selected.
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In fact, if you really wished to permit total freedom of comment you really would have to alter the whole of the basic process of the English trial.
I share the view of other noble Lords who have spoken that the Phillimore Committee got it about right. With regard to the cut-off point, whether it should be arrest or charge, I share the view of Lord Hutchinson. Indeed, I made a recommendation in a committee of which I was chairman when the party to which I belong was in opposition, that it should be at the moment of charge. But on reflection I can see the force of the decision which has been taken that it should be at the time of the warrant. "The police are searching for the foul murderer of Mrs. Y. His name is so-and-so; a warrant is out for his arrest". I do not think that that is really wholly desirable. Therefore, on balance I can see why the Government have taken this decision. The quotation which is always used of the Lord Lucan case seems to be very particular, and in general I can see the reason for their decision to make it the moment of the issue of the warrant.
Now I turn to the case of the Sunday Times v. Attorney-General. It was not the distillers who sought an injunction—nothing of the kind. The distillers complained to the Attorney-General and invited the Attorney-General to intervene. The Sunday Times submitted articles to the Attorney-General and sought the opinion of the Attorney-General as to whether or not those articles amounted to a contempt. I gave that opinion, and warned that in my opinion a second article which they were going to publish might be construed as contempt of court. I want to make it clear that the whole of this process was totally and wholly amicable. There were extensive discussions with my officials; and eventually, when my opinion had been expressed that that second article was a contempt of court, then there was the agreement that that should be tested in the courts. So the Attorney-General was a reluctant litigant, but he was doing the duty of the Attorney-General, from which he cannot escape—and any Attorney-General who is a popular gentleman is in my view certainly not doing his job properly as an Attorney-General. I say that in the presence here of a very popular man, the noble and learned Lord, Lord Elwyn-Jones, but he will understand what I mean. The very nature of the office is that you have to carry out tasks in the public interest and in the public name which you would probably much prefer not to do, but it is because of the burden which is put upon your shoulders.
So the implication which I heard on the radio shortly after that case was over, from somebody who ought to have known better, who said, "It is not very pleasant when you hear the Attorney-General banging on the door threatening to send you to prison", is utter and total bunkum, because it was the Sunday Times who asked for the advice, it was the Sunday Times who received the advice and it was the Sunday Times who agreed that this should be tested to see what the law was. So we came to court; and, as I have said, being party and counsel I was very satisfied with the final decision of your Lordships' House—a unanimous decision which upheld the Divisional Court and reversed the Court of Appeal.

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Subsequently, when it went to the European Court of Human Rights, I believe that the approach of that court, because of the tradition of the European systems of law, was totally different. But the prospect of powerful media being able to influence an individual against defending or prosecuting a case is something which I think we should look on with very considerable reserve; and I agree with the noble Lord, Lord Mishcon, when he talked in his speech here today about the power of the press, which we must understand and appreciate. There is a great distinction between the private influence of you going to your neighbour and saying, "If you bring that case against that particular person, I shall never see or speak to you again", and where, for instance, a local newspaper takes upon itself, where there is an action pending, to traduce or attack one of the parties to it and say, "They have no right to bring that case", or "They have no right to defend it". You can translate that to the media, where you can have a whole television programme about a particular case. In my submission that is totally undesirable. Therefore, I believe that the limits which have been introduced in this Bill are the correct distinction and the correct balance.
My Lords, I turn to the point which has interested others this evening in your Lordships' House, about the prejudicing of judges of the Court of Appeal. This, it is said, is never possible. That may be true. I have never been a Lord Justice of Appeal, nor a Lord of Appeal in Ordinary, so I do not know. If they say it will not prejudice them, then, very well, I accept it. But there is another consideration that has nothing to do with them, but it has a lot to do with the rest of us; and it is the effect on public opinion of a vast barrage of comment—a vast barrage of comment all directed in one way. I believe that to permit such a barrage, unlimited, can have an effect upon public confidence in the administration of justice.
If there is a campaign for or against an appellant, then the decision of the judges or Lords Justices will be viewed in the light of that campaign in the press and the media; and either the result may arouse bitter hostility to the Court of Appeal or it will look as though the Court of Appeal has bowed to that campaign. Therefore, it is too much to say that you need not have any restraint upon comment where a matter is going to appeal. I have no doubt that the law of contempt needed reform. It was not right that editors should not have the degree of certainty to which they are entitled. The situation was too uncertain and it put upon them an unfair burden.
I should have liked to see in a Bill a proper codification of all the restrictions upon reporting, of the committal proceedings, of identification in rape complaints, of domestic proceedings and of children, of indecent evidence in matrimonial cases and cases of national security. It would have been far better if that had been in a Bill, but, if so, it would have been a very major and much more substantial Bill. This, clear as it is, is to me another example of what I believe to be our haphazard way of legislating and our haphazard way of making law. But, generally, I think it is right for the Government to have done what they have done. In my belief, we must base our attitude to such matters as this on where lies the paramountcy. And the paramountcy will rest—and
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I trust will always rest—in our country and with our procedures upon the balance of a fair trial for the citizen.
6.12 p.m.
Lord Gifford: My Lords, I approach this Bill from a point of view which I hope is not a controversial one: that we should encourage the widest possible participation of the public in the administration of justice. We have one unique and priceless asset within the common law judicial system; that is, that we actually invite members of the public to take part in the administration of justice by serving on juries; and, like my noble friend Lord Hutchinson, I believe that juries' verdicts are eminently to be trusted. But the participation of the public is needed also and is needed more in those decisions which are left to the judges and other judicial persons acting on their own. Justice, thank goodness! is not done behind closed doors, except in very exceptional cases. The reason why the public are invited and are entitled to come, either themselves or through their representatives in the press, to listen to cases is not in order that they might worship the majesty of the law but in order that they may pass their own judgment upon what is done both in terms of praise and in terms of criticism.
Much has been said this afternoon of the extent to which judges ought to be affected by expressions of public opinion. I take the view that judges ought to take account of public opinion and that the justice that they dispense is the better for it when they do so. I spent part of this summer studying the judicial process in a far-off country, but one which I think has a lesson for us this afternoon. The country is Mozambique, where they hold their trials and hearings amid the largest possible gathering of local people. At the end of the hearing, the judges invite the public to express their views and to ask questions. Then, when that has been done, the judges retire and they consider what is to be done with the case in the light of what the public has said. If they disagree with what the public has said, they can say so and can seek to educate the public to their view. So, in a different way, in this country the public should be encouraged and has the right to express its view of the judicial process, whether it be in newspapers or in public meetings or in demonstrations of a peaceful kind outside the court.
From that point of view, what has this Bill achieved? Certainly, as the noble and learned Lord the Lord Chancellor said in opening, it extends in some cases the circumstances in which it is legitimate for the Press and the public to comment upon pending proceedings—and that is a distinct gain. But there are other aspects of it which are alarming. The first, which has been referred to by many noble Lords, is what appears to be recognition of what is still a grey area of the law: that it is possible to be in contempt by commenting upon proceedings under appeal. That section of Schedule 1, I suggest, ought to be radically altered and the view of the noble and learned Lord, Lord Salmon, be put into law so as to be clear to all. There are other areas where openness seems to be attacked. Clause 9 has not been commented upon very much. That clause prevents the use of tape recorders in court. I would ask, why? Why, in a

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public court, should there not be used a convenient, modern means of recording what has been said?—provided the court is not distracted by the use of wires, microphones and so on. Let the proceedings of the court be better disseminated; let the information be more complete by whatever means are available.
Another provision which seems to attack openness of reporting is in Clause 4(2) which allows a court to make orders preventing the publication of reports of proceedings in any case,
"where it appears to be necessary for avoiding the risk of prejudice to the administration of justice in those proceedings or in any other proceedings pending or imminent …".
This, I would suggest, is a dangerous power. It is not needed. The circumstances in which the press must refrain from reporting proceedings—for instance, when evidence is given of previous convictions—are already perfectly well known.
Of course I accept that safeguards are needed. I think that all noble Lords have been unanimous in saying that jurors should not be subjected to a bombardment of press comment while they are trying to arrive at a verdict. Everybody also would accept that to hound, to victimise or to intimidate a litigant or a witness is something which must be avoided. In relation to this, I think that we must bear in mind that litigants who are great and powerful institutions are much more able to withstand pressure and adverse comment than is the ordinary impecunious individual. It would be much more legitimate, for instance, to campaign against the Attorney-General for bringing proceedings which people think he should not have brought, or to campaign against the Distillers Company, as was the case in the Sunday Times case, or against Sir James Goldsmith, or some great magnate using his financial power to bring proceedings against Private Eye, or cases of that kind than to make the same kind of attack on somebody who is much more susceptible personally and economically to pressure. I do not know whether it will be possible to provide for that kind of distinction in a Bill of this kind. Those safeguards ought to be strictly limited.
Side by side with the view that the public should have the maximum participation in the system of justice, is another point of view; that is, that the judges cannot be relied on to make objective decisions about contempt of their own process. They are, I think, too involved. They overestimate the risks. Let us not forget that the very genesis of this Bill is the fact that a European Court of Human Rights had to put right our own House of Lords for having taken a view which was in their opinion, as a court of human rights, too narrow. They were taking that view as sovereign judges not trammelled by a statute. Contempt of court is of course a judge-made law.
Only last week in the case of Harriet Harman (which has been referred to and on which I do not propose to comment in detail) we heard a judge describing something as a serious contempt which many commentators have considered to be an absurd view. If we look at the Bill in the light of those considerations, there are at least two causes for concern. The first is that it retains the power to deal with contempt of court exclusively in the hands of the judges. Much has been said about the value of juries. Contempt of court is a proceeding
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which can be penalised by imprisonment or very severe fines. Why not let the jury determine whether there has been a risk of serious impeding or prejudice to the course of justice? It is a very vague criterion and one which the judges are likely to interpret very strictly and which the public, represented by a jury, is likely to interpret in the light of common sense. So let there be trial by jury.
The second worrying feature of the Bill is another clause which has not been much commented on, Clause 11, which creates a new offence of wilfully insulting a justice or wilfully misbehaving in a magistrates' court, and subjects that offence to a maximum penalty of one month or a fine of £500. I fail to see the need for this offence. I have been in magistrates' courts from time to time when decisions have been made which outraged the assembled public gallery. There were expressions of that feeling and the court has never found any difficulty in either calling for silence or asking for the police to eject the people who are shouting.
Why do we need a fresh offence of wilful misbehaviour or wilful insult? Let us recognise that what goes on in the courts provokes strong feelings, not just in the minds of the newspaper commentators but in the minds of those who listen. I would say that the balance of this Bill is wrong and that we can make a great deal better; and that we will get it better if we remember that we can trust the public and their representatives and that we should welcome their right to participate in the judicial process. We have talked all along about the need to protect the course of justice; but the course of justice is much better if the public are involved in it.
6.25 p.m.
Lord Ardwick: My Lords, the noble Lord, Lord Wigoder, was good enough to refer to my temerity as the only layman to intervene in this debate. I remember what happened some years ago in another place when a Member found himself in the same situation as I am today. He was noted for his intellectual arrogance and he said that although not a lawyer he thought he could make a valuable contribution to the debate. Pritt, K.C., following him, referred to him rather disparingly as the "almost learned gentleman."
My Lords, my decision to participate in this legal moot is not an attempt to make a valuable contribution, but to enter a plea as the scarred victim of a vague law interpreted by unpredictable judges. I am scarred not by sins of commission but of omission. I have left out too many stories, and left unwritten too much comment. If anybody argues that few editors have been arraigned for contempt, it is because contempt makes cowards of us all—apart from a few brave souls such as Harold Evans or the noble and learned Lord who sits on the Woolsack. Most of us, faced with the law as it is, act as though the better part of valour is suppression.
Seriously, my Lords, it is only seven months since I put down an Unstarred Question on two of the problems which worry, chafe and inhibit journalists, and especially those working on fast-moving daily papers. One of those problems was what a layman might call the test for contempt; or a lawyer might call the definition of strict liability for the contempt of court. The other

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problem was what the starting point of liability should be in civil and criminal cases. That debate of seven months ago was, of course, on a much narrower base than today's which covers the entire subject. But again I propose to concern myself only with the basic problems, leaving the other complexities to the noble and eminently learned Lords whose names are on today's speakers' list.
It is recognised, and certainly was recognised in that debate, that there are strong arguments for and against almost every proposal that Phillimore makes. Yet a consensus emerged in that last debate that on many subjects Phillimore has just about got it right, having examined in considerable depth the practical side of the problems. I must admit that there are those like the noble Lord, Lord Wigoder, whose instinct for freedom is as strong as that of anyone in this Chamber, who are still doubtful about the proposals for fixing the point in time when strict liability should run in criminal proceedings. And we were under no illusions as long as seven months ago, when the noble and learned Lord who sits on the Woolsack spoke to us and made clear that the Government shared Lord Wigoder's doubts.
The Lord Chancellor's conclusion was that the right moment in the criminal law at which to commence the point of liability was arrest or the issue of a warrant. The argument is that editors are protected, first, by the new definition of liability for contempt—that is, it must risk seriously impeding or prejudicing the course of justice—and, secondly, by the defence of innocent publication. That defence enables an editor to plead that he did not know and could not reasonably be expected to know that criminal proceedings were active. But what editors today are wondering is what inquiries should an editor make, or cause to have made, in order later to avail himself of this defence, should it be necessary. For example, if his reporter rings the police and fails to get information although an arrest has been made, is that sufficient evidence of innocent publication? As every journalist knows, some police officers are excessively cautious about giving any information at all, while in other cases there may be a well-established method for providing the press with information, the police may have good reasons for not revealing at that particular moment that an arrest has been made.
In the past, what has given editors most cause for anxiety was that liability begins when proceedings have become imminent—and we have never known how imminent "imminence" is. Now we are to have certainty, but the certainty about imminence is based upon an event about which there is no certain public knowledge: that is, the arrest or the issue of a warrant. At the Committee stage there must be amendments to be proposed for the starting point of liability both in criminal and civil proceedings.
In the May debate, I expressed belief in the Phillimore recommendation that liability should start in civil cases when an action was set down in the superior court because there was no discernible point in time later than that. I am afraid I was overlooking the minority proposal from Mr. Robin Day, who advocated fixing a point in time by the provision of a sub judice list for cases "shortly before trial". What is wrong with that? Another proposal would fix the point when the case came into the term's list. Surely there are, or there
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could be found, discernible points which might be used to hold a fair balance between what the public interest requires and what the parties need to ensure a fair trial. Since May, there has arisen the absurdity of the Harman case, and it is the fear of judges who think like this which lies behind the journalists' concern about the vagueness of the existing law.
The Bill before us is regarded by editors as a mixed blessing. The Guild of Editors, to which I do not belong, goes so far as to say that unamended it may do more harm than good. I do not accept that judgment but they are justifiably concerned about the strengthening of the law of contempt in appellate proceedings and the extension of the law to inferior courts and tribunals. Of course it is impossible, particularly today, to defend all that the press does, and it would be wrong to pretend that newspapers do not have a commercial interest in wider freedom to publish. But that is not the whole story. The freedom of the press to give information is the freedom of the public to have access to that information: the only access they are likely to have. Once again I should like to quote the words of the late Lord Morris of Borth-y-Gest:
"We look to our newspapers to inform us in regard to current events; to give guidance on matters of public importance; to expose all forms of tyranny, corruption, evil practices or harsh dealings. We must not restrict the ability of the press to do all of those things unless it is really necessary to do so".
I am grateful for the distance the Government have come and for the definition of "strict liability" although it is capable of further improvement by insisting, as my noble friend has suggested, that the risk of seriously impeding or prejudicing justice must be "a serious risk". During the subsequent stages of the Bill we must argue very closely its provisions to ensure that the balance between freedom of information and comment, on the one side, and the needs of justice, on the other, has been found and that we have not merely exchanged the hazards of uncertainty for unnecessary frustrations of legitimate and indeed essential press activity.
6.35 p.m.
Lord Morris: My Lords, for obvious reasons, but not for a very long time, I hesitated to intervene in this debate. However, I feel it would be a sad occasion if one thing were to go unsaid. Some 11½ years ago the Royal Commission on the Law of Contempt as it affects Tribunals of Inquiry reported, mercifully shortly. There were eight recommendations. If one were to ignore one recommendation, which is a recommendation to legislate, and another recommendation which goes slightly outside the scope of the Bill, each of the remaining six recommendations, it appears to me, has been embraced by this Bill. As the chairman of the Royal Commission happened to be my noble and learned relative Lord Salmon, it gives me considerable, if vicarious, pleasure to note what must be some sort of parliamentary record.
6.36 p.m.
Lord Gardiner: My Lords, I find myself speaking from this exalted position by request simply to sum up for the Opposition. That does not, of course, mean that this is a party political question. It should

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not be, and I am sure it is not. It is a question on which we all have individual opinions. All I can do, therefore, is warmly to welcome the Bill and to summarise very briefly the points that have been made. We are all equally grateful to the noble and learned Lord the Lord Chancellor for introducing the Bill. We know it would have been his wish, had he been able to do so, to have introduced it during the last Session. We thank him too for the clear way in which he has explained the provisions of the Bill to us. I do not believe I am alone in thinking that, in so far as the Bill carries into law the recommendations of the Phillimore Committee, it is right, and in so far as it departs from them it is wrong. That has always been my feeling about the Bill, and so far as the media are concerned I think that is the sort of view which roughly has been expressed.
If I might start with a question of my own, the Phillimore Committee recommended a definition of "publication"; namely,
"any speech, writing, broadcast or other communication in whatever form which is addressed to the public at large".
That is carried through in the Bill in Clause 2(1) except that these words have been added to it—
"or any section of the public".
We have not had any explanation of this. I should have thought "a section of the public" is the exact opposite of "the public at large" and, like each of the points on which the Bill differs from Phillimore, is restrictive of the right of free speech. I think I am right in saying that there are no differences between Phillimore and the Bill which give more freedom of speech: it is all the other way. This seems to me to be an addition put in—
"or any section of the public"—
which I should think would greatly extend the number of publications which would be subject to the law of strict liability.
On the opening clauses, my noble and learned friend Lord Elwyn-Jones has suggested the insertion of the word "serious"—"serious risk"—and also that prosecutions should be subject to the fiat of the Attorney-General. In that he was supported by the noble and learned Lord, Lord Hutchinson, and I would support both suggestions.
Also there is a very real and understandable controversy as to what, in the case of "strict liability", should be the moment in the criminal proceedings at which they should start and, in particular, whether it should be as proposed by the Phillimore Committee, when the accused prisoner is charged or a summons is served, or, as in the Bill, on arrest. This is obviously a very arguable point. It is one of the points made in a leading article in The Times of 28th November, headed "Too cautious reform of contempt". They preferred the recommendation of the committee to what has been suggested in the Bill. But, clearly, these are very much matters of opinion.
The question of appeals is another point on which The Times was unhappy. It said:
"Why, too, does the Bill put the press at risk of contempt during the period of appeal?"
I have never understood why it should be necessary, so far as appeals are concerned. But this, again, is a
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matter which we can argue about at the Committee stage of the Bill. Some, of course, including the Law Society and, I think, my noble friend Lord Mishcon, have said that this should never apply in a case which is tried by a judge alone and not by a jury.
My noble friend Lord Mishcon, and also my noble friend Lord Gifford, have discussed the question of postponing reports—I will not add to what they said—and also the question of tape recorders. Why a tape recorder should be so unfavourably regarded, I am not sure. A tape recorder is simply the equivalent of the old shorthand note. Why, if somebody is entitled to take a shorthand note in a court of law, he cannot have a tape recorder if he wants to, and why that should be in the nature of a criminal offence, I cannot think.
As regards the defence that the publication complained of formed part of a legitimate discussion of a matter of general public interest, I understand that the clause purports to follow the Phillimore recommendation, but it does not quite do so, because it adds to the statement of that principle the words "in good faith". Perhaps at some time, if not today, the noble and learned Lord the Lord Chancellor might be kind enough to let me know what the effect of those words is supposed to be. In Recommendation (15) the Phillimore Committee said:
"It should be a defence to an allegation of contempt to show that a publication formed part of a legitimate discussion of matters of general public interest and that it only incidentally and unintentionally created a risk of serious prejudice to particular proceedings".
We can go into these matters of detail at the Committee stage, but I wondered why in the Bill itself the words "in good faith" were added.
Clause 7, of which there has been a fairly general review, really will not do as it stands. That is the clause which refers to contempts in relation to inferior courts. At the very least, I should have thought there would have to be a list of them, because here is the constitution of a criminal offence and people must be entitled to know what they can and cannot do,
"in respect of the proceedings of inferior courts … tribunals and bodies (however described and whenever established) which are constituted by law and exercise any part of the judicial power of the State".
I cannot believe that I am the only lawyer in the country who does not understand that at all, and if a lawyer cannot understand it I do not suppose that a layman will be able to.
It is a little disappointing that the Bill does not enact the provisions recommended by the committee on scandalising the court; that is Recommendation (21):
"'Scandalising the court' should cease to be part of the law of contempt. Instead, it should be made an indictable offence both in England and Wales and in Scotland to defame a judge in such a way as to bring the administration of justice into disrepute. Proof that the allegations were true and that publication was for the public benefit should be a defence. In England and Wales this offence should be made a branch of the law of criminal libel".
That has apparently been left over, but, in the context of contempt of court as a whole, one has always to bear in mind that for at least the last 200 years the main objection which has always been made to our law of contempt, apart from its uncertainty, was that it was usually a case complaining about something said about

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a judge. The judge was the accuser, the judges decided, and all the ordinary citizens' rights of protection—namely, trial by jury, a proper indictment and so on—were not applicable. That has always been the main complaint that, so far as scandalising the court is concerned, it should be subject to the ordinary criminal process of the law.
The one thing that is clear is that we are all going to have a very interesting Committee stage of the Bill. Although, as I have said, I am in a sense winding-up for the Opposition, this is not at all a question of party politics, but is something on which we all—lawyers and laymen alike—have our own views.
6.46 p.m.
The Lord Chancellor: My Lords, I am not quite sure how I can sum up this rather rambling debate without transgressing on your Lordships' patience beyond endurance, because what we have really heard, except for one speech, is very largely a long catalogue of Committee points. All I can promise is that they will all be taken into account. I shall have them very carefully analysed and will see what we can do about them.
But I should like, if I may, to come back to one or two points of general principle, because I think that there were times when speakers were a little in danger of getting lost in the trees, without recognising that we were dealing with a fairly well-defined wood. I should like to begin at the point where I started my opening speech, by saying that what we are really trying to do is to reconcile two human rights. One is contained quite clearly in the first sentence of Article 6 of the European Convention, and the other is contained equally clearly in Article 10. The Strasbourg Court quite clearly laid down, both as regards its majority and as regards its minority, that the right thing was to say that Article 6, where necessary, must take precedence over Article 10, but only in so far as it was necessary in a free and democratic society. I have not quoted verbatim from the actual words which I gave in my opening speech, but that was the effect of them.
I must say to the noble Lord, Lord Gifford, whose speech I listened to with interest, that he is quite wrong in saying that the European Court do not have a statute to rely upon, except in the purely technical sense that they were relying upon the Convention on Human Rights, which for this purpose has for them a statutory force, and their decision was based upon their view of that convention—
Lord Gifford: My Lords, I apologise if I did not express myself very clearly. It was the United Kingdom which did not have a statute and, therefore, we had to rely on the House of Lords to interpret—I was submitting erroneously—the law.
The Lord Chancellor: Yes, my Lords. But I think that when the noble Lord reads what he said in Hansard he will find that I have not misrepresented him. If I have, I apologise at once. There is a very clear policy behind the Bill, which is to give effect to the two principles, Articles 6 and Article 10, in the Convention on Human Rights, and to give precedence to Article 6 in the sense in which the court itself, both
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the minority and the majority, intended that it should be given precedence.
I agree with the noble and learned Lord, Lord Gardiner, whom I should like to thank not only in parenthesis but sincerely for the courteous words with which he began his speech, that the point of departure which I make in that search for a balance is identical with his own: that if you are going to do anything this Session you must start from Phillimore, and that the burden of proof rests upon those, including myself, at the point at which they want to deviate from Phillimore.
I must point out to the noble and learned Lord, Lord Gardiner, that the number of deviations which he adumbrated as his own opinion were far more numerous than my peccadillos. Take, for instance, the role of the Attorney-General, with which he began. The noble and learned Lord, Lord Gardiner, and to some extent the noble and learned Lord, Lord Elwyn-Jones, wanted the rule of strict liability to be triggered off by the Attorney-General only, omitting the fact that what we are trying to do and that what Phillimore is trying to do is to protect the rights of individuals who go to law or who have been brought to law on a criminal charge.
I read verbatim the first sentences of paragraph 187 of the Phillimore Report:
"We are sure that the Attorney-General must retain his right to act in the public interest where he thinks fit to do so … We believe, however, that the normal practice should be, especially where the alleged contempt is in relation to criminal proceedings, that the attention of the Attorney-General should be drawn to the matter before any private proceedings are begun".
It is clearly laid down in the discussion on that point that in the last resort the private individual is to have the right to vindicate his own rights to contempt proceedings, where his own rights are in his view invaded, before an impartial and independent court which is there to judge things precisely of that kind. We are not solely concerned with public rights in this case. We are concerned with the right of the individual to have access to a court of competent jurisdiction. This is laid down in Article 6.
May I, in passing, refer again to tape recordings. From what he said about them, I should have thought that the noble Lord, Lord Gifford, had read neither the Bill nor the Phillimore Report. Referring only to what was said by the noble and learned Lord, Lord Gardiner, paragraph 43 lays down clearly the policy which is recommended in relation to tape recorders—that they should be allowed only by leave of the court, which is what our clause says—and gives at length the reasons for it, which I will not rehearse. It is we who are sticking to Phillimore. It is those who have criticised us who, on the whole, have deviated from Phillimore.
We have had a great deal of discussion about the alleged total immunity of the judge alone and the judges in the Court of Appeal from any kind of influence which the press may have. I think that my noble and learned friend on the Cross-Benches, Lord Salmon, whose views I always treat with the utmost respect, was a little too optimistic in his view of judges. He thinks that they are all as robust and courageous as himself. I am not so sure. I do not differ from

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the view expressed by Lord Dilhorne, recently deceased, which is referred to in the Law Society's report:
"This claim to judicial superiority over human frailty",
said Lord Dilhorne,
"is one that I find some difficulty in accepting. Every holder of a judicial office does his utmost not to let his mind be affected by what he has seen or heard or read outside the court and he will not knowingly let himself be influenced in any way by the media. Nor, in my opinion, will any layman experienced in the discharge of judicial duties. Nevertheless, it should be recognised that a man may not be able to put that which he has seen, heard or read entirely out of his mind and that he may be subconsciously affected by it".
I am afraid that we must go into this in a little more detail so that we can see the wood for the trees. We are not, as a matter of fact, concerned only with judges and juries. We are certainly also concerned with magistrates and other laymen who have judicial functions to perform, either in the Crown Court or elsewhere. As the noble and learned Lord, Lord Rawlinson of Ewell, my previous defender, rightly pointed out, we are concerned with witnesses, and we are concerned with the law of evidence.
It is no good having a rule against hearsay or a rule against the disclosure of previous convictions and then blandly to say, "Trust the jury", having pumped into them outside the court everything which they are not allowed to hear inside it. That is carrying things to extremes. When we talk about judges being uninfluenced by what they read, I am not sure that I can accept it. What becomes of the rule that judges are supposed to listen to the arguments of counsel if they have been subjected to some kind of previous barrage of propaganda before counsel has had a chance to present his arguments? These are matters which we have to consider very carefully.
Let us consider also that we are not concerned only with the great national organs. We are not concerned with the organ which the noble Lord, Lord Ardwick, is famous for being connected with. We are not concerned with The Times, the Daily Telegraph, the Observer, the Sunday Times. We are concerned, maybe, with some small local paper. We are concerned with some scurrilous "rag" put out with a view to encouraging demonstrations outside a magistrates' court in order to influence the decision of a small bench of lay justices. We are concerned with organs which may desire in one way or another to cause rude telephone calls to be sent to magistrates who can be identified. We are not simply concerned with the great national organs. The right to freedom of expression and the right to a fair trial is the right of the individual in each case. It does not make sense to talk about Lord Salmon as a typical judge of appeal and Lord Ardwick as a typical editor of a national newspaper. We are talking about people who are possibly less upright, possibly less courageous and possibly less sensible than either.
When I am asked to explain why the words "any section of the public" appear in Clause 2(1) of the Bill, I have only to reiterate what I have just said: Is publication designed to affect only the attenders at a public meeting? Is publication of a small local paper or a small but highly tendentious organ to be entirely excluded from this rule? I should have thought that it was precisely that kind of thing which might most
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seriously offend against it. It is a mere drafting point, but again it is a deviation from Phillimore which I am prepared to defend.
On the other hand, when I am asked to rule against any kind of contempt applying to appellate proceedings or judge alone proceedings, I am bound to say that I cannot find any such rule in Phillimore. What I do find in Phillimore is that the strict liability rule applies only to a publication which creates a risk that the course of justice in the proceedings will be seriously impeded or prejudiced. That is what I find in Phillimore, and if it be true and so far as it is true—and of course there is more than an clement of truth in it, a substantial truth—that when you are dealing with a serious case in front of a High Court judge or an appeal before three distinguished appellate judges or five distinguished Law Lords, you are dealing with a very different kind of court from what you are dealing with when dealing with a magistrate's court or a trial by jury.
I should have said that is exactly what Phillimore had in mind when he recommended a criterion for the triggering off of the rule which was applicable to any kind of court, because if we had a Court of Appeal composed (as the Court of Appeal until fairly recently was composed) of, say, Lord Scarman (Lord Justice Scarman as he then was), Lord Salmon (Lord Justice Salmon as he then was) and Lord Diplock (Lord Justice Diplock as he then was), I do not think anyone would have any more difficulty than Lord Denning in dismissing any conceivable case of alleged contempt as Lord Denning dismissed the case against me. It is absurd to think that such people could be seriously prejudiced. The Bill is designed in the terms of Phillimore precisely to cover all kinds of courts.
Of course I take the point made by the noble and learned Lord, Lord Elwyn-Jones, that it might be well to put the word "serious" in front of "risk" as well as the word "seriously" before "impeded or prejudiced". I will certainly look at that. I took the precaution of trying to find out what the draftsman thought about it while the debate was going on, and he thought it would make no difference at all because that is what the effect would be either way. At any rate I have made this claim for myself and the draftsman, that we were sticking to Phillimore and the noble and learned Lords who preferred the addition were deviating from him.
I have dealt with the point about the Attorney-General and I ought to have dealt with the point about scandalising the court. I think the noble and learned Lord, Lord Gardiner, and perhaps the noble and learned Lord, Lord Elwyn-Jones, overlooked this rather relevant consideration. The Law Commission's report on offences relating to interference with the course of justice has, so I am advised, superseded the Phillimore Committee in the recommendations—contained, I think, in Chapters 6 and 7—to which they were referring, that is reprisals against witnesses and scandalising the court. That report of the Law Commission, which was Lord Gardiner's own child—no ewe lamb, that child—is with the Home Office. I am told that they are favourably disposed, but no announcement has been made and that is why there is no reference in this Bill.
I do not want to talk about the case of Harriet Harman, or anything like that, partly because I suspect

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that it may be under appeal and I might be in trouble if I did, but I should like just to say this to those noble Lords and noble and learned Lords who referred to it, that that was a case in which what was alleged was civil contempt. The Crown claimed Crown privilege for certain documents; the judge in the interlocutory proceedings having perused the documents, allowed—as he is now entitled to do under the House of Lords rulings—the interests of justice to outweigh the public interest element, but only on an undertaking that the documents should be used only in a particular way for the purposes of those proceedings. Whether or not the court was justified in saying that that undertaking had been broken is the issue at stake. Personally I should prefer to express no opinion whatever until the question of the appeal, if any, has been put out of mind.
I agree with the noble and learned Lord, Lord Gardiner, that obviously these questions will be looked at in Committee, no doubt with care, and I hope, so far as I am concerned, with an open mind after I have taken further advice on what has been said. I have said all that I need to say about the cut-off point at the moment. We shall discuss these questions again when we come round to it.
The only thing that I would seriously say to the noble Lord, Lord Gifford, who was the only one, I think, who expressed the view that the Bill gave him cause for alarm, is that any idea that we should introduce the practices of Mozambique into this country, which he seemed to favour, would give me a great deal more alarm than he has ever given to me; and I wonder how he knew that members of the public had been admitted to the Mozambique court. My belief about the courts run by Marxist dictatorships is that the public which gets into the courts would not include me, at any rate, and it would not include many members of the National Council for Civil Liberties or the English press either, and that any comments that that public was likely to make were not so much likely to engender a sense of justice in the judges as to bring pressure to bear upon them to do something which they knew they ought not to do.
Lord Gifford: My Lords, the noble and learned Lord has not been to the courts that I am thinking of. The public are the people of the village and they take a most serious interest and a useful participation in the affairs of the village and the decisions of the court.
The Lord Chancellor: My Lords, I know that the noble Lord, Lord Gifford, is in very good faith, but I suspect that he is a little more naive than he knows. So far as I am concerned, and so far as I think the great majority of Members of this House are concerned, what we are concerned with is basically a law founded on Phillimore. Those, including myself, who want to justify deviations from Phillimore, will have to justify them; but if we are not going to found ourselves on Phillimore we are not going to have a law at all.
In thanking my noble friend Lord Renton for his intervention, I should just like to say to the House that this Bill may be well-conceived, overdue (I think he said) and better drafted than a good deal of the legislation with which we have been dealing recently. I do not quarrel with any part of that, but I beg the House not to
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kill it by kindness. I got the impression sometimes during this debate that everybody said: "This is a jolly good Bill; it ought to have been brought in before", but that nothing was quite right about it. If that attitude is going to be taken, I am afraid we may lose the Bill; so I hope the House will not blame me or claim undue rigidity if I pursue the course proposed by the noble and learned Lord, Lord Gardiner. I start with Phillimore and I demand justification for deviations from it. Having said that, I put the Question, That the Bill be now read a second time.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

Insurance Contracts: ECC Report
7.9 p.m.
Lord Plowden Lord Plowden rose to ask Her Majesty's Government whether they will state their views on the draft EEC Directive on insurance contracts and on the conclusions of the Sixty-fourth Report of the European Communities Committee (H.L. 348).
The noble Lord said: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper. The European Communities Committee considered on balance that the draft directive on insurance contracts would be useful but pointed out a number of serious defects in it. The Law Commission recently published a report on insurance law and adopted a rather different view. At one point they suggest that Her Majesty's Government should be advised to reject the proposed directive. Sub-committee "A" of the Select Committee had the opportunity of an informal discussion with the Law Commission prior to their report being published, but nevertheless the Committee was not as critical of the draft directive as were the Law Commission. There is one fundamental point on which the Select Committee differed from the Law Commission and also from the views of some of its witnesses. This is the proportionality rule. The draft directive seeks to make an important alteration to insurance law in the United Kingdom.
Under our present law a policyholder may receive nothing if the insurer is entitled to refuse to pay under the policy because the policyholder has failed to disclose a material fact or because of a breach of warranty. An example is a decision made by this House in 1925 on marine insurance. I realise that marine insurance is not covered by the draft directive, but the principle of what I am about the describe is applicable to any form of insurance.
Insurances were effected on a ship and her cargo, and there was a failure to disclose to the underwriters that a substantial interest in the ship was owned by Greek nationals. This was at a time when Greek ships were unwelcome in the insurance world; they were thought to be sinking at an alarming rate. This ship sank off Portugal on a fine day. The failure to disclose the Greek interest was material and the insurers were able to avoid their contracts. The proposition derived from this case is that there is a duty on the person taking out insurance to disclose material facts, even if not asked to do so by the insurers. Of course, we know that insurers often do ask many questions of a

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potential policyholder. But what happens if the answer is wrong, honestly wrong and trivially wrong? The result can be drastic.
In another decision of this House, this time in 1922, the case was the insurance by a Glasgow removal firm of one of their lorries. On the proposal form it was asked where the lorry would usually be garaged. By mistake the wrong address was given. The lorry was burned in a fire at its garage on the outskirts of Glasgow. It was held that it did not matter whether or not the mis-statement was material; the answer to the question had been made the basis of the contract by the terms of the proposal form. The answer was wrong, and the insurers refused to pay. The late Lord Haldane observed:
"The result may be technical and harsh, but, if the parties have so stipulated, we have no alternative, sitting as a court of justice, but to give effect to the words agreed on. Hard cases must not be allowed to make bad law".
It is the intention of the draft directive to alter this law. At the moment the policyholder may not receive anything if he has made a mistake in completing the proposal form. Under the draft directive he may receive a proportion of the sum insured. Take the case of the lorry which I have just mentioned. Under the draft directive, the insurers would have been asked what difference in premium would have resulted if the correct answer had been given to the question about where the lorry was to be garaged. If the response had been that the premium would have been doubled, the policyholder would have received one-half of the value of the lorry. In fact, in that case the premium probably would not have been altered. It really did not matter to the insurers whether the lorry was garaged on the outskirts of Glasgow or in the centre. Indeed, the inaccurate answer made no difference to the risk. So under the draft directive the lorry owner almost certainly would have been paid by the insurers. In fact under our present law lie was not.
The Select Committee considered that the proportionality rule was fairer than our present law. But the Law Commission did not like it. They think it will be difficult to operate. Evidence from some of our witnesses, however, showed that some insurers often do settle claims on something approaching a proportionality rule without strict insistance on their legal right. Indeed, my own experience as a director of a British insurance company for over 30 years bears out that a form of proportionality is becoming what one may describe as best practice among such companies. So we have the rule in practice, but only to some extent. It exists in France, and according to some of our witnesses to a limited extent in Italy, Germany and Denmark. But, to be fair, I believe in Sweden, where it has operated, they are about to abandon it next year.
The position one takes on proportionality probably depends to a large extent on who you are. If you are an insurer you will probably prefer the existing British law to the proportionality rule in the draft directive. But the British Insurers European Committee, who gave evidence and submitted a memorandum to us, said that while they would prefer not to have it, if it was necessary in order to secure better harmonisation, they would do their best to make it work. But I
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believe that some insurers really would quite like, in fact almost would prefer, to have some rules about proportionality rather than to have to make up their own rules in difficult cases. If you are a policyholder you would probably say that the draft directive does not go far enough.
The Select Committee took the view that in principle the proportionality rule as proposed in the draft directive was a middle course and about right. Much can be made of the problems of drafting a proportionality rule and the difficulties in its application, and I do not minimise them. But, with respect, I believe that the Law Commission do make too much of these problems. Striking a middle course may be difficult, but we on the Select Committee thought it was fairer. The present law adopts an "all or nothing" approach to the entitlement of a policyholder. Surely justice can be more sophisticated than that. I believe that we should adopt a proportionality principle. I hope that the noble Lord, when he replies, will say where the Government stand on this.
There is another issue which is almost of constitutional importance. The preamble to the draft directive and the explanatory memorandum both indicate that it would be inconsistent with the harmonisation of law in the EEC if member states, after implementing the directive, adopt differing legal provisions on the rights of policyholders. The Law Commission state quite clearly:
"The enactment of the directive by legislation would preclude Parliament from enacting any further legislation within the domain of the directive. In particular, any legislation for the protection of the consumer insured. The enactment of the directive would therefore freeze our law indefinitely in an unsatisfactory state".
Surely, what the directive should do is to provide minimum standards, while permitting improvements under national law. It seems to me a somewhat novel idea that implementation of a directive prevents not merely future law contrary to the terms of the directive but also future law additional to the issues mentioned in the directive, if that law is within the domain covered by the directive. It is also unsatisfactory that this is achieved not by the terms of the articles of the directive, but by inference from its preamble and the explanatory memorandum. I hope that the noble Lord, when he replies, will say whether the Government accept that the directive, as at present drafted, inhibits future legislation. And, if so, whether the Government will seek to obtain a change, an amendment of the preamble, to permit this.
In conclusion, I would mention that this draft directive is only one of a series of measures aimed at harmonisation of the Community laws on insurance. An earlier draft directive is commonly called the "draft services directive". The Select Committee thought that it was essential to the interests of the United Kingdom insurance industry that the draft services directive should be adopted and implemented. It would greatly facilitate our insurance industry to compete in the EEC more effectively than it can at present. The Select Committee consider that the adoption of both directives would be beneficial in this country to both insurers and policyholders. But they considered that the draft directive we are now discussing should not be adopted until the draft services

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directive has been adopted, or that the two should be adopted at the same time.
7.22 p.m.
Lord Banks: My Lords, I must begin by declaring an interest. I am a director of a life and pensions subsidiary company of a firm of Lloyd's Brokers and although life assurance and pensions are excluded from the directive which we are considering this evening, the parent company has, of course, an interest in the subject matter of this particular directive.
The House would wish to thank the noble Lord, Lord Plowden, and his committee for the work which they have done in producing this report which is both concise and comprehensive. I should like too, if I may, to thank the noble Lord for the way in which he has put the Question to the Government this evening.
I regard myself as a federalist, somebody who wants to see a politically united Europe, and that must involve a further application of the supra-national principle in the government of Europe, in the government of the Community. That supra-national principle affects the way in which decisions at the centre are taken. It does not necessarily mean that there should be a multiplication of such decisions, but it does mean that they are taken in a particular way. Certainly very important matters would have to be transferred from national Governments to the centre if we were to proceed, as I hope one day we shall, to economic and monetary union. In those circumstances, it becomes more than ever necessary to avoid any unnecessary centralisation or any unnecessary harmonisation.
It is against that background that I would question whether this draft directive on the co-ordination of laws, regulations and administrative provisions relating to insurance contracts, is really necessary, and I wonder whether the Government are convinced that it is. Is harmonisation of insurance contract law necessary in order to promote freedom of services in insurance and to make it possible to have a free choice of law by which an insurance contract is governed? It is not essential to the functioning of a common market that there should be a common legal system throughout that market. The lack of harmonised law of sale of goods in the EEC has not prevented the creation of a common market in manufactured and agricultural products. The United Kingdom has been a single market for both goods and services for centuries, but the English and Scottish legal systems continue to exist side by side.
The memorandum from the British Insurers' European Committee, which is included in the evidence in the report, states that they feel that:
"co-ordination is not strictly necessary for freedom of services".
Mr. Alan Teale, on behalf of the United Kingdom Insurance Brokers' European Committee said in evidence:
"We would share the view of the insurers that to a large extent the directive has no real merit".
We have heard from the noble Lord, Lord Plowden, of the criticisms of the Law Commission. It seems to me that the Select Committee themselves have had similar doubts, but they conclude, as the noble Lord told us, that "on balance" the draft directive would
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be useful, particularly if it accelerates the adoption of the Linked Services Directive which the Committee regard as essential, as the noble Lord made clear. That is a somewhat limited welcome. Still, I sympathise with what they say about the services directive. Anything which helps to get that into operation deserves some kind of welcome. The directive is also committed to the idea of consumer protection, which again one would welcome.
If we were to accept the view that, "on balance", the directive would be useful, we then run up against the point made by the committee, and emphasised by the noble Lord, that the directive contains serious shortcomings. In that connection, I am not quite clear as to the status of the rapporteur's amendments. They are shown in the annex as amendments which the rapporteur intends to put forward. The rapporteur himself in evidence said that they had been approved by the Legal Committee of the Parliament. I wonder how far they have gone now. Are they incorporated in the draft directive or at least in the Parliament's version of it?—I am not quite clear about that.
The rapporteur's amendments would deal with some of the specific objections raised by the committee and by others, including Lloyd's Underwriters. As the noble Lord explained, one of the major innovations, so far as this country is concerned, in the directive would be the introduction of the principle of proportionality. As he has explained to us, if all the facts have not been disclosed, then the insurer calculates the premium he would have charged, and the proportion of that premium, which the premium actually paid represents, is the proportion of the sum insured paid out. One of the objections raised to that—and it is only one of them—can be summed up in the question: what if the insurer would have declined the risk? The directive originally did not deal with that position. The rapporteur's amendment does, and says that:
"If the insurer can show that a prudent insurer would not have accepted the risk if he had been aware of the circumstances which the policyholder should have disclosed, or if the insurer can show that a prudent insurer would not have accepted the risk unless certain conditions were complied with, he shall not be bound to pay any claim".
That is only one of the objections that have been raised, but I give it as an indication of how the rapporteur's amendments in fact offset many of the objections that have been raised in detail, not to the principle of the directive, but to the details of the directive.
Then there is the question of risks outside the EEC. The report says that the directive is not clear on that point. The rapporteur's amendment would seem to make the directive apply only to risks within the EEC. If that were so, then there is the difficulty to which the report draws attention of two legal frameworks for the same type of contract, not merely for different classes of insurance as would otherwise be the case.
The suggestion is made that the directive should be incorporated into the United Kingdom law when it would apply to all risks in the same class. But the insurers say that if the principle of proportionality—and this is to be seen in the evidence in the report—were in fact adopted in this country for all risks, for risks overseas outside the EEC, then that would create chaos. So there is a difficult problem there, and one

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would be glad to know what the Government think about that.
Then there is the question of warranties. These do not seem to be covered satisfactorily by any amendments put forward by the rapporteur, so far as I can see. The practice of including warranties of various kinds which are described in the report is a particular feature of insurance in this country, and insurers would need to know what the position of these would be under any new directive.
In conclusion, may I briefly say three things. First, I repeat that I doubt whether the directive is necessary. Secondly, I hope that at least the rapporteur's amendments will be included, if they are not already included in the draft. Thirdly, I agree with the committee that the draft directive should not be adopted until the services directive has been adopted, or alternatively that they should be introduced together.
7.32 p.m.
Lord Scarman: My Lords, I should like to congratulate the noble Lord, Lord Plowden, on the very persuasive way in which he introduced this debate. Unfortunately, for reasons over which nobody has any control, the debate comes at a time when it is extremely easy for the Government to give just the sort of answer which ordinarily nobody would wish to hear. They will be able to say with great force that they have not yet reached any views on the draft directive, and they will certainly be able to say with equal force that they have not yet reached any conclusions on the 64th Report of the Select Committee.
The reason for that is one of timing. The Select Committee reported in August of this year at a time when the only record of Law Commission thinking was in their working paper. Now in October of this year, two or three months after the report of the Select Committee, the Law Commission have published an extremely thoughtful, thorough, and lengthy final report on insurance law, non-disclosure and breach of warranty, and in that report they deal at length and in detail with the draft directive with which we are concerned tonight.
I have, as best I can in the time available, studied the Law Commission Report. With all respect to the noble Lord, Lord Plowden, it cannot just be brushed aside as an indication of a preference for a state of the law other than that which is recommended by the draft directive. That report contains a detailed refutation of the validity in a United Kingdom context of the so-called proportional rule which lies at the very heart of this draft directive. I could not, as a lawyer with some experience in these matters, suggest to the Government that they ought to reach any conclusions on the applicability of the draft directive before they have considered carefully, and consulted with others, upon the Law Commission Report.
I hope I shall not weary your Lordships if I indicate very shortly indeed the Law Commission view. Of course, the Law Commission agrees with the Select Committee, and indeed with all others who have studied our present law, that our present insurance law bears far too harshly upon the policyholder. If the duty of disclosure is not fully met by the policyholder, even in a matter which does not touch the risk that has
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eventuated, the insurer can refuse payment against the risk. Similarly, if the policyholder has entered into a so-called warranty and that warranty has been broken even though the breach of the warranty has nothing whatever to do with the loss that has arisen, the insurer can rely on that breach of warranty to withhold payment.
The harshness of this law is ameliorated only by the very fair-minded practice which UK insurers follow, which is not unreasonably to withhold payment even though they are under no obligation to do so. I agree with the noble Lord, Lord Plowden, with the Select Committee, with many others, and indeed with the Law Commission, that that is not a satisfactory state of the law. Reform, therefore, is necessary. The problem to which the Law Commission had to address itself was simply: Do we reform the law along the lines of the draft directive, or do we reform the law along the lines which the Law Commission itself then develops? Reforms which are consistent with the historical pattern of our law, and reforms which would not include the proportionality rule.
The case against the proportionality rule is that although superficially attractive it cannot be enforced in the way in which it would appear from its formulation to be capable of being enforced. I shall not repeat it again—the noble Lord has told us what it is—but the superficial but false simplicity of the rule is that it appears to permit of an arithmetical calculation, based upon the difference between the premium actually paid and the premium that ought to have been paid, in order to achieve how much of the loss the insurer should pay where there has been this non-disclosure.
If it could operate in that way there might be something to be said for it, but in no country in which it operates does it in fact operate as a mathematical formula. If you look at the French law—and it is essentially a French rule—you will find that it reduces to, "Well, the insurer will have to pay whatever the judge thinks is just in all the circumstances". Learned French commentators have said it is an arbitrary, discretionary rule. That of course is the reason why Sweden, which has had the strict proportional rule, has recently passed an Act of Parliament ending it for consumer insurance, and as from 1st January next year it will not be part of the Swedish law so far as consumer insurance contracts are concerned.
I shall not take up time developing the reasons for the Law Commission view. They are all set out in the Law Commission Report. Just two matters I will mention which indicate what a badly tailored rule it is. It assumes that the insurer would have dealt with the new situation which was not disclosed to him merely by increasing a premium. But, of course, there are many other options open to an insurer; he might decline the risk altogether, he might put an excess on the policy, and there are other things he can do. None of those matters can get within the mathematical calculation which lies at the heart of the proportional rule, so it is not surprising that the Law Commission reached the conclusion that the proportional rule was not an adequate or sufficient way for reforming our own law.
Whether the Law Commission is right or wrong is not a question which I think any of us today can answer. All I would say is that we must look at it very carefully. The Law Commission has published this report and

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includes as an appendix to the report a draft Bill of 15 clauses reforming our law in this field. This material was not available to the Select Committee and, speaking from experience as a lawyer and judge, I would not recommend this House to indicate approval, even in principle, of this draft European directive until we have had a very full opportunity of considering the recommendations of the Law Commission.
I must declare an interest. I was the first chairman of the Law Commission, and I am not going to have my Law Commission dealt with too summarily, even in your Lordships' House, and I am certainly not going to have their views dismissed as a matter of preference when they have spent pages and chapters arguing the matter. There is much more to be investigated here than we have yet been able to investigate, and I would not advise the House to introduce into English law a continental principle which has never found any place in it merely because our law needs reforming. We have a law reform body and it has given its views as to the way the law should be reformed. Therefore, since I have not been as kind as I might have been to a rule of French law, I end in the French language: Mes seigneurs soyez prudents.
7.43 p.m.
Lord Bethell: My Lords, I must at the outset declare an interest in two respects, first that I am an underwriting member at Lloyd's and secondly that I represent an area in North West London many of whose electors work in the insurance industry. It is in this second respect that I congratulate the noble Lord, Lord Plowden, and his colleagues on the Select Committee who have brought their traditional and usual expertise and care to bear on a very serious and complicated problem of European legislation.
As usual, the Select Committee, or part of it, has come up with an excellent document, one with which I substantially agree, and I support those who have spoken for some sort of doctrine of linkage between the present draft directive on insurance contracts and the far more important draft directive of principle on insurance service contracts, because it is the second proposal that strikes at the root of the matter and which could mean tens of millions of pounds per year for the British Exchequer. It is that which really matters to the people of this country rather than, if noble Lords will forgive me, the commas and fullstops of the present directive, carefully and necessarily though it has been considered.
The Prime Minister and my noble friend the Foreign Secretary have emphasised in recent weeks the importance of the draft Services Directive and I suggest it is time, in the context of this special debate on the current directive, to point out that we are supposed to have a Common Market, that we are supposed to have a Treaty of Rome and that we are supposed to have Article 59 and the articles that follow it guaranteeing, at the end of a transitional period, freedom of services. We cannot surely have our European Community and its treaty, its constitution, when significant parts of it are simply being passed over, ignored and pushed on one side year after year, meeting after meeting. The transitional period ended more than 10 years ago. There have been more than 30 two-day meetings dealing with the draft Services Directive, and, if anything, we
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seem to be going backwards rather than forwards on it. I therefore strongly urge my noble friend Lord Lyell to consider the idea that we should link the draft directive which is before us with the more fundamental one and indicate, as other noble Lords have done, that the one that is first should come first or at least simultaneously with the one we are at present discussing.
The restrictions placed by certain member states on the choosing of an insurance company of an insurer, seem to me to run contrary to the Treaty of Rome and I doubt very much whether any insurer or policyholder who made a contract contravening those national laws could in effect be called to account in the courts of national Governments. I wonder whether at the end of this debate my noble friend would indicate whether it is the Government's view that the restrictive laws of certain member states, such as France and Germany, are or are not in conformity with the treaty. Is it his view in fact that the European Court would probably override the decision of a national Government convicting an insurer or policyholder of such a violation?
I believe that the way to clarify a doubtful law is to test it, especially when we are dealing with such a new code of law as that of Europe. I therefore urge the Government to treat this matter as a bargaining counter to consider the fact that in insurance we in this country have a most valuable national asset bringing us across the exchanges hundreds of millions of pounds in surplus—about £900 million per year in surplus—and that if we had a services directive that was in conformity with the law of Europe and in conformity with the ideals and constitution of Europe, as it happens this country would benefit considerably. We would benefit, I am advised, to the tune of some £50 million in the first year and larger sums thereafter. The fact that our member state stands to gain from such a directive should not deter us from pressing for it. It is helpful and encouraging sometimes to be able to stand up and press for a more European approach because, as it happens, it would bring our member state greater benefit. I am reminded of another services matter, namely the airlines, which we debated a few months ago in this House, where again it is the British sector of the European market which is the most efficient, which has the best profit record and where a more European approach would benefit this country to the tune of many millions of pounds per year.
I see the directive which is before us as perhaps a necessary hurdle along the track leading to the finishing line of an insurance Services Directive. It may be necessary, but it is probably a hurdle, and I hope the Government will note the lack of enthusiasm expressed in your Lordships' House for this document tous court as it stands. It does not seem to have very much merit other than as a means to an end, and only in that very modest respect can I express the hope that it will become the law of Europe.
7.50 p.m.
Lord Mais: My Lords, it is, I believe, generally accepted that the draft directive is welcomed in this country by both insurance companies and brokers, for the obvious reason that they expect to benefit from greater freedom to operate throughout the Community. However, in certain of the member states

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the restrictions, or the restrictive conditions, are more severe than they are in this country, and therefore to some extent the enthusiasm of the insurance industry is dictated by certain aspects of the draft directive.
However, having said that, I must point out that the main problem is the question of what is the best course for us. Is it for the United Kingdom negotiators to continue with their efforts to greater liberalisation at the risk of further delays, or to take a softer line in the hope that the directives could be adopted in the foreseeable future?
In particular—digressing for a moment—I am very concerned about the situation which exists at present in connection with those who are earners of considerable foreign currency for this country. I refer to the professional consultants—engineers, surveyors, and so forth—who are operating abroad. It appears to me that as they stand things make it very difficult, if not impossible, for them to be provided with adequate liability insurance across a frontier, because as professional individuals they do not come under the category of traders. This is a point which requires examination. It might be possible to undertake such insurance under the law of the country in which the risk was situated, but I understand that so far as United Kingdom insurers are concerned they would find the requirements of the insurance laws applicable in some member states so complex that they would be unable, without undue risk, to enter into contracts subject to those foreign laws. Insurance coming under this heading has substantially increased in recent years, largely due to increased costs both at home and abroad. In my view, insurance of this kind should be—and I hope will be—liberalised without conditions.
It is, I hope, well understood that the idea of the services directive is to create a common market in non-life insurance. The United Kingdom has always been strongly in favour of this. It is of course natural that in the Community member states are in favour of opening up a common market in areas where they are particularly strong, and are not quite so anxious perhaps in areas where they are weak.
In this country we have probably one of the strongest, if not the strongest, most competitive, and extremely efficient insurance industries, and therefore we stand to gain very considerably if we are able to provide insurance in a common market without having to establish companies in other member states with all the costs that that obviously would involve. It would be much easier for Lloyd's, for instance, based in London, to insure risks in other member states without having to think of establishing themselves elsewhere.
I have heard it said—and I think that the noble Lord, Lord Bethell, referred to this—that the United Kingdom could expect to earn between £55 million and £60 million net each year if the services directive were adopted. It is only natural that the prospect that we should gain in this way leads other member states to fear that we might encroach upon, or invade, their preserves. I believe that only the Dutch, the Irish and ourselves are in favour of the services directive in its present form. But, my Lords, other member states who are not in favour of this particular proposal cannot expect to control the Common Market purely for their own ends and to exclude competition from
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outside. That was not what the Treaty of Rome and the Community were all about in the first instance.
Perhaps some noble Lords may be wondering what relevance this has to the insurance contracts directive on which the Select Committee reported. There were those who were not enthusiastic about having the services directive. To them I would say that if we are to have a common market in non-life insurance, we must standardise contracts so that competition is fair. The fate of the two directives is therefore linked. We in the United Kingdom have no particular incentive to change the law, or to change our law, on insurance contracts if that is not accompanied by opening up the common market in which insurers can compete, and perhaps other member states who do not care for the services directive might be reassured to some extent if it were accompanied by a harmonisation of contracts.
It would seem that so far very little progress has been made with regard to the services directive. The noble Lord, Lord Bethell, referred to these delays. As I think he mentioned, and as I believe, it has been discussed at more than 30 meetings of a working party of the Council of Ministers; it has been discussed by the Committee of Permanent Representatives, yet so far nothing appears to have materialised.
As has already been said by the noble Lord, Lord Plowden, both directives should be adopted at the same time, because they are linked. On the other hand, if it were impossible to proceed with both directives together, I would dare to suggest that it would be more important for the services directive to be adopted first, and it would be helpful if Her Majesty's Government could give us some indication as to whether they feel that there is any likelihood of that happening in the foreseeable future, or whether in fact very much progress has been made.
I should like to end by saying that at last it would appear that in connection with the Common Market something is being considered which might be of benefit to this country. I have heard it suggested that we should not see this as any great development, nor make too much of it, nor press too hard for it to be brought to fruition. But I hope that your Lordships will feel that that is not so. It seems to me that this is the first step, and a very important step. It could, and should, open up the whole of the commercial and industrial risk market, including marine, aviation and transport business, to British insurers, to be covered from London. It is, I agree, a first step, but it is nevertheless a very important step indeed.
7.59 p.m.
Lord Cobbold: My Lords, I apologise for intervening unannounced at this rather late hour. I should mention that for health reasons I was unable to attend Sub-Committee A's discussions on this subject during July, but some 50 years ago I spent five years working for a British insurance company in an EEC country, and so I have a residual interest in the matter.
The effects of this directive on the insurance industry in this country could be very wide and very complicated. It is therefore extremely important that the directive should be considered with great care, both in its general implications and in the detailed drafting. The Select Committee's report examines a number of the general implications, setting out the arguments on both sides.

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It also makes various criticisms of the drafting, to which attention should be paid. The drafting is in some places obscure, or at least uncertain.
Much has been said this evening about proportionality, and I should like to add just one word. The noble Lord, Lord Plowden, and others, referred to the arguments in favour and against. There is considerable conflict of evidence on both desirability and practicality, and also—and this is a point which I wish to emphasise—on its effect on international business generally. It would seem to be a change which benefits the policyholders. On the other hand, it is argued that it would be confusing and that in practice it would make little difference because insurers in this country are normally ready to make reasonable compromises. The committee conclude in principle in favour of the proposals. I personally feel that what the noble and learned Lord, Lord Scarman, said has a great deal of force, particularly when he says that the application of this proposal would need a great deal of further discussion before it was definitely accepted.
My Lords, I should like to refer briefly particularly to paragraphs 21 and 22 of the report, and to the position of the United Kingdom insurers' business outside the EEC, on which the noble Lord, Lord Banks, made some pertinent observations. This world-wide business is of course very large and very important to the British insurance market. It is much more important than British insurance business in the other EEC countries. On this question—the question of geo-graphic limitation—the directive is perhaps naturally silent. Presumably, a directive from Brussels could not directly affect non-EEC business, and would therefore cover only business where both insurer and insured were within the EEC. But to implement the directive there would have to be legislation in this country. It seems likely that this could lead to three or more types of insurance law operating in this country; namely, the general insurances—motor vehicles, property, et cetera—within the EEC under this directive; risks outside the EEC under our common law; and possibly life insurance under other EEC directives. Marine, aviation and transport insurance are, anyhow, outside the directive.
Thus there could be three or four insurance laws, with the inevitable problems of definition of the categories. Some differences in the law applying to the different types of insurance may be desirable. There is, for example, already a statute governing marine insurance. But, generally speaking, until now the United Kingdom insurance law has been pretty well uniform. So that harmonisation of the law within the EEC might in fact lead to less harmonisation within the United Kingdom, and to a certain amount of confusion in international business. As is the case in so many proposals from Brussels, harmonisation is a generally desirable end, but it can often cause a good deal of local difficulty.
There seems to me to be a problem here which needs very careful examination. Either non-EEC business would be left as it is, with the complications to which I have just referred of three or four different bases of law, or it might be decided in drafting the United Kingdom legislation to extend the terms of this directive to cover other forms of insurance on a more general basis for the sake of more uniformity. Anyhow, it is
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extremely important that the competitive position of British insurers outside the EEC, particularly in the USA, should not be prejudiced. Interference with existing practice might well reduce the freedom and flexibility for which our market has had such a good name for so many years throughout the world. I shall be particularly glad to hear any comments which the Minister is able to make on this point, which seems to me to raise important and difficult issues.
My Lords, I support what Lord Plowden said in introducing this report, particularly that it would be wise to keep the draft directive to the imposition of minimal standards. Future legislation to improve the rights of policyholders should not be prevented so long as it does not prejudice the competitive position of British insurers. The link with the draft services directive is essential; so is clarification of the territorial limits of the directive. Subject to these points and to various amendments suggested in the report, and to some clarification of the drafting, the committee concludes that the directive should on balance prove useful. I agree with the noble and learned Lord, Lord Scarman, that it is extremely difficult for Her Majesty's Government to take a very definite position at this moment, but we shall be very much interested to hear anything which the Minister can tell us.
8.5 p.m.
Lord Lever of Manchester: My Lords, I am an unadvertised nuisance, but I say in mitigation that at best I can claim to bring a breath of refreshing ignorance to this interesting discussion. I find that the House has a certain problem in having to choose between the recommendations of its Select Committee, as expounded to us today, and the very weighty words of the noble and learned Lord, Lord Scarman, with his vast experience of the law. I am myself deeply in the debt of Lord Plowden, as well as his committee, but particularly Lord Plowden, because of the temperate, lucid and persuasive way in which he presented this issue. But I have to speak with timidity bordering on, or more than bordering on, trepidation in that I find myself preferring the recommendations of the noble Lord, Lord Plowden, to the approach of the noble and learned Lord, Lord Scarman, who has brought the weight of his immense standing and erudition to bear on this matter. I should like to tell the House why.
It seems to me that the noble Lord, Lord Plowden, and his Select Committee approached this question in the right spirit and, with the deepest respect, that the noble and learned Lord, Lord Scarman, approached it in the wrong spirit. I am myself a lawyer, and I practised at the Bar for many years, and I must say that my heart beats more quickly when the noble and learned Lord, Lord Scarman, refers to the great historic traditions of the English law. I wish very much that the Community had incorporated in the Treaty of Rome that, when we came in, the historic traditions of British law would apply throughout the Community; but by some odd happening they did nothing of the sort. They intended that the law which was to operate in co-ordinating the Community's efforts would be the collective effort, which would I hope pay due respect to the contributions we would make, inspired by our traditions.
Of course, the very breadth of Lord Scarman's

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speech, with great respect, was inspired by a spirit which has not taken into account the new world to which we are attaching ourselves in the European Community. Of course every one of us would prefer to do our own thing, but that is the very antithesis of co-operation. It is even more the antithesis when you are dealing with other nations. The whole point of the European Community is that it is a vast and potentially noble and creative development of the postwar period to make the peoples of Europe learn to live with more co-operation—co-operation in the field of politics, co-operation in the field of economics and finance, co-operation in defence and matters of that kind. That is the spirit which I think has been behind the Select Committee's report, and it is the only spirit in which we can approach this matter.
I think the noble and learned Lord is entitled to ask us all that we go home and in due time study with deep care the case for the Law Commission's better improvement of the law. But we are not dealing with a law which is to apply only to our country: we are dealing with a law which is to apply throughout the European Community, and if we want to trade with our insurance policies throughout the European Community it is no good saying that we think that our law would be better in some minute or even important particular. We have to come to a decision as to whether we really mean to be members of the Community and play a part in the co-ordination of its economic and commercial co-operation—making the kind of concessions which cannot be made if you are absolutely infatuated with the notion of doing your own thing, and doing it as it has been done for centuries past, which may have been infinitely superior to the way it has been done by anybody else. But the trouble is that you have to make that simple decision, and I do not think that the noble and learned Lord, Lord Scarman, has made it.
I wish he had raised the curtain of his affright at what is proposed, as compared with the Law Commission's proposals, a little more than he did. I fear that the bogeyman who emerged from his own lifting of the curtain has not scared me. He says that perhaps somebody will want to refuse the risk altogether. As I understand it, if anybody can show a reasonable case that he would have refused the risk altogether and it is not merely a specious way of implementing the existing commonly-accepted harsh effect of the present law, that the genuine insurer could say, "Had I known they were Greeks, or whatever, I would not have insured the risk and nor would any prudent, reasonable insurer"—then I think he appears to be covered by the rule of proportionality.
The noble and learned Lord, Lord Scarman, said that there would be difficulties in interpreting it and that it could not be reduced to the kind of mathematics that could be worked out on a pocket computer. Horror of horrors!—the decision about what the proportion is might end up being at the discretion of a judge. If any noble Lord considers anybody, apart from me, ending up before the noble and learned Lord in a criminal trial, the law here confides to him a considerable exercise of discretion as to whether he binds me over with a rebuke or incarcerates me for the rest of my life. That is all within the discretion of the judges; and nobody regrets it.
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I would tell the noble and learned Lord, if he were here—very flatteringly I hope he would think—that I prefer (and that the best of insurance companies would prefer) that this matter of proportion should be left, with all its perils, at the discretion of a judge rather than at the discretion of an insurance company which inevitably feels itself partial in exercising that discretion; whereas in the case of a judge it would be wholly impartial.
I have studied the details provided and the afterthoughts of those who wanted to make my flesh creep with other horrors of the proportionality rule, such as saying that you could not have an excess taken into account so that if somebody is suing for £1 million and there might have been a £50,000 excess or some such, this can be taken into account in assessing the premium; but if you are dealing with motorcar policies, the commonest type of excess, or theft, where modest excess is provided, it is so irrelevant as to be hardly worth considering. I do not accept from what I read of the matter that the proportionality rule excludes specific warranties upon specific points but deals with the point of warranties of knowledge which are innocently inaccurate and therefore must not be allowed to have the present harsh, inevitable result.
I am a little troubled about the minimum standards of the future being affected. I hope we may leave it open if we want to make our law better than the Commission now wish. I must remind noble Lords that the present rule has been in force without change for a great length of time. I do not think we have to be afraid that we are denying the British public some extra benefits of a speculative kind which are not yet on offer. I mention the final point that the directive is obscure and uncertainly drafted. This is, to say the least, very interesting coming from the noble and learned Lord, Lord Scarman, because I have had occasion to study some of our modern legislation and I must confess that the interpretation of the results of inspection of the Delphic oracle would have been less complicated than the accurate interpretation of some of our statutes. So uncertainty, with the best will in the world and the most detailed mock-Elizabethan drafting by our parliamentary draftsmen, always exists in the interpretation of law. That is what the judges are there to clarify.
My Lords, I come back to the beginning. This is where the British Insurance Association appears to stand. They have recognised that co-operation is a two-way business. If we want the kind of co-operation which would permit our successful insurance people to trade in Europe, then we must accept that we cannot do so if we are offering terms which infringe the general will of the Community about what should be offered to their citizens. If we do insist that our law, which may be superior in a minor particular, is to be the rule, then our prospect of trading there will be remote. I very much welcome Lord Plowden's urge that we should seek to get the other directive applied at the same time. I very much welcome the report of the committee. I find it inspired by the right spirit of Community purpose, by a national contribution to that Community purpose which entitles us to scrutinise, examine and weigh up these things. I am grateful to the committee and to the noble Lord.
8.15 p.m.
Lord Bruce of Donington: My Lords, we on this side of the House would like to join in the tributes which have been paid, justifiably, to the noble Lord, Lord Plowden, and to Sub-Committee "A" which has produced the report on this subject. If I may, I should like to compliment the noble Lord and his committee on the report itself, the 64th Report of this particular Session. It has been drawn up with its usual clarity, which has become one of the hall-marks of the reports that come from the Select Committees of this House. We ought also to express our appreciation to the permanent staff of these committees who are in the main responsible for the marshalling and presentation of the conclusions and of the opinions of the committee itself. We are well served by them and that is one of the reasons why, as I am sure the noble Lord, Lord Bethell, will confirm, the reports which emanate from this House, particularly on European subjects, are very widely read in Europe.
It is a little extraordinary for me to find myself in agreement with practically every noble Lord who has spoken save (for reasons that I will presently explain), my noble friend Lord Lever. I wish therefore to come straight to the concluding and, in my view, decisive opinion of the committee which recommends in paragraph 26:
"They consider that the draft Directive should not be adopted until the draft Services Directive has been, or that the two should be adopted at the same time".
This is one of the courses I shall urge on the noble Lord opposite for the Government to follow for reasons which I will explain.
The Treaty of Rome, in Articles 59 and 60, permits and encourages the freedom of each member state to provide services in other member states. As the noble Lord, Lord Bethell, pointed out, this is one of the cardinal principles on which the Community is based—just as valid as (dare I mention the words?) the common agricultural policy. If the Community means anything outside the common agricultural policy, it means also Articles 59 and 60, which extend to, among other things, the service industries the right to conduct businesses across frontiers, if necessary, from their headquarters in London, Paris or wherever it may be, and across the national barriers. There have been several drafts of the directive. Eventually on 30th December 1975 there was a proposal for a second Council directive stipulating exactly that member states should be allowed to provide services across frontiers. This from my own experience in the European Parliament, in Common with that of the noble Lord, Lord Bethell, is a proposal which would have greatly benefited the British insurance industry had it been enacted and followed, but it has been systematically and deliberately filibustered and postponed.
Every conceivable device has been used by at least two of the member states—and I will name them: Germany and France. Every conceivable endeavour has been made to avoid the second directive being passed and put into European law in conformity with Articles 59 and 60. For two years this directive was before the Economic and Monetary Affairs Committee of the European Parliament, where it had to be considered. It was missed from the agenda from time to time; the rapporteur was absent from time to time; and it needed the utmost pressure, taking nearly two
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years, to get the directive discussed intelligently at all. All this was quite deliberate. I will be quite frank about it: the insurance industry in Germany and France—and this is common knowledge in Brussels, Luxembourg, Strasbourg and everywhere else—is scared stiff of having competition from Lloyd's of London and the other principal insurance companies of the United Kingdom, and is using every conceivable device to ensure that the second directive does not come into operation.
All that the British insurers have been asking for is the right to provide services in other EEC countries in accordance with the laws of the particular countries. They are not asking to export British law into Germany or France. They are asking for the right to sell insurance in France according to the provisions of the French law, and they are asking to be able to conduct insurance business of the type specified in the directive, which is of course non-life, according to German law in Germany. Every conceivable device has been tried in order to avoid this.
The original directive was dated 30th December 1975, and after nearly three years—on the 21st February 1978—a weighty series of amendments to the second directive was brought out and now, once again, we are in the process of detailed discussions on this matter. Even though the European Parliament ultimately agreed with the contents of the amendments contained in the proposal of the 21st February 1978, it is still impossible to get the agreement of France and Germany to it.
It is within this context that I feel that we ought to approach the whole question of this new directive. I entirely concur with the noble Lord, Lord Banks, that it is not necessary for the purpose of the conduct of services in other countries to have a standard form as to the services provided, any more than it is necessary, as the noble Lord cogently pointed out, to have standard goods that are produced in every country for sale in the Community. There is no real necessity for it at all.
If I may put a somewhat jaundiced view about it—and I do it with much sorrow—I am hound to say that the new draft directive which is before us, does not stand a chance of coming into operation anyway, because of course it has been introduced precisely as a further delay to prevent the services directive coming into operation. This is the whole reason for its introduction. The members of Sub-committee A, and their distinguished chairman, have done this new draft directive more than honour in even considering it. I firmly believe that events will prove me right when I say that it was never intended to come into operation anyway.
That still leaves us with the problems that have been raised concerning the defects in our own insurance laws. I am not expert in insurance law but I know enough about it to know that an insurance contract is a contract uberrima fides, of the utmost good faith, and any inaccurate fact on a proposal form, whether or not it is material in regard to the risk, is nevertheless the law, as the noble and learned Lord, Lord Scarman, indicated. In those circumstances, the insurance contract should not be capable of being avoided by the insurers. Therefore the course of action that I would respectfully urge on Her Majesty's Government is this:

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they should decline to give further consideration to this directive save for internal purposes until and unless they have complete agreement on Britain having her rights within the Community under Articles 59 and 60, by the passing without further undue delay of the second directive which I have in front of me.
There is no point at COREPER level, parliamentary level, commissioner level or any other level, in giving consideration to this particular item of harmonisation legislation which—and I entirely concur with the noble Lord, Lord Banks—is probably of dubious value anyway in terms of harmonisation, before they give further consideration to other matters. This is not to say that we do not have some lessons to learn domestically from the directive itself and some of the thought that lies behind it. Indeed, I feel the Government should give very serious consideration to the report of the Law Commission on this subject; and, after having considered that report, and after having considered within that context the provisions of the draft directive, they might then see fit to bring forward their own Bill, applicable in the United Kingdom only, for the purpose of the reform of certain aspects of insurance liability without which I feel that most noble Lords, and not least my noble friend Lord Lever, are somewhat uneasy. This, I think, would be the sensible course: it would be without prejudice.
After all, if we improved our own domestic legislation very much on lines that we took from the draft directive and also from the law Commission's Report, and if at some later stage we suddenly apprehended that our colleagues in the European Community were prepared to work a genuine Community, as distinct from a common agricultural policy, with a lot of small, peripheral items of very little national consequence, it would put us in a much stronger position so to do.
What I have said does not prevent Her Majesty's Government from pressing forward with the utmost degree of co-operation with our colleagues in Europe on matters upon which we can agree, but the time has long since passed—and the insurance industry is one example of it—where we can continue to acquiesce in policies that are now of proven disadvantage to us in money terms (such as the common agricultural policy) and when we can acquiesce without receiving a proper and due degree of consideration for industries in this country, including insurance, which are just as vital in many ways as agriculture and its benefits are to France. We ought to get our European colleagues to appreciate that we are just as interested in the extension of our invisibles, particularly in the field in which we are so expert—the field of insurance—as they are concerned to preserve their advantages under the common agricultural policy. May I say, across party boundaries, that any efforts made by the noble Lord's right honourable friend the Prime Minister to assert Britain's rights along these lines will receive the support of all of us on this side of the House.
8.33 p.m.
Lord Lyell: My Lords, first of all this evening I believe that the Government, and indeed the whole of your Lordships' House, would like to thank, and indeed should thank, the European Communities Committee under the very able chairmanship of the noble Lord,
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Lord Plowden, who introduced the debate this evening, for producing the report on the draft European directive on insurance contract law and also for affording us the opportunity to have what I personally have found to be a fascinating debate, both in the details that have been discussed and in the oratory, the eloquence and the passion that have been expressed by noble Lords in every part of the House.
As your Lordships will appreciate, the directive itself and all its implications are certainly not simple matters. The Government believe that the clarity of the report in dealing with some of the directive's major issues is of great value, though that is not its only virtue. At this stage I hope the House will allow me to declare a small personal interest, in that I am an underwriting member of Lloyd's. I understand that this is in no way incompatible with my duties in your Lordships' House and elsewhere. That is the position as I understand it but your Lordships, I believe, ought to know that I have a small interest to declare.
Five speakers—indeed, probably all those who have spoken—have referred to the recent report of the Law Commission and I should like, on behalf of the Government, to express our gratitude for this substantial and very thorough piece of work. The Government's attitude towards this draft directive takes into account the position of the directive within the development of the insurance market of the European Community. The Treaty which has been mentioned, certainly by the noble Lord, Lord Bruce, and by my noble friend Lord Bethell, provides for freedom of establishment for insurers within the Community and, above all, for those insurers to be free to provide their services throughout the Community.
Despite some notable decisions of the European Court, progress on establishing a common European market has been slow. Those are the words I am advised I should use without arousing further passion. It has now reached the stage where the rules making freedom of establishment effective cover most insurance; but the rules making freedom to provide services effective cover certain limited areas. Your Lordships may be aware that those areas are reinsurance, insurance intermediaries and coinsurance. The next step will be the long-overdue adoption by the Council of Ministers of the insurance services directive. I use fairly calm and, I hope, unemotional language, but I hope the House will accept that there is a driving commitment on the part of this Government to see that the insurance services directive is adopted as speedily and effectively as possible.
We believe that this measure is long overdue and is one which will allow insurance to be provided across frontiers in Europe, in accordance with Articles 59 and 60 of the Treaty. We also believe that the directive will be of considerable importance to policyholders and for business insurance of all kinds, though of considerably less importance for domestic insurance such as the private citizen's car or house insurance in the member states.
The draft of this insurance services directive provides for some limited freedom of choice of contract law, limited in particular to business insurance. The noble Lord, Lord Plowden, and indeed your Lordships' House, would wish to have my comments on the directive we are discussing today, and they would wish

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me to be relevant. This particular directive has evolved as part of the programme for providing freedom of establishment and services for insurance. However, so far as United Kingdom interests are concerned, both insurers and policyholders, we do not see the directive as directly important. Harmonisation of laws on the points it deals with will not, we believe, sensibly reduce the specialised knowledge or advice needed by a United Kingdom insurer or policyholder, when contracting under a law other than that of the United Kingdom. In other words, harmonisation in the way proposed does not seem likely to reduce important barriers to trade in insurance services. Also, there does not seem to be any clear evidence of United Kingdom policyholders suffering from different protection of interests under other laws. I would emphasise that in the United Kingdom we have greater experience than there is in many other member states of freedom of choice of law for insurance contracts.
But that is not the whole story, because introduction of the insurance services directive will allow some freedom of choice of the laws applying to insurance contracts, and this will be an innovation in some member states. Moreover, we see the Community's common insurance market continuing to develop beyond the services directive. It is not reasonable or practicable to ignore the possible arguments of others that they should be sure their policyholders have some defined protection when contracting under a foreign law, wherever it may be. While, therefore, we should be content to see the draft insurance contract law directive dropped, we are prepared to co-operate in further discussion on its adoption, subject to three criteria.
First, that the interest expressed by other member states in its adoption is clear and substantial enough to justify the very considerable efforts involved. The second criterion which we insist on is that there is in the EEC Treaty a proper juridical basis for the directive. Thirdly, we insist that United Kingdom interests are met adequately in the final text of the directive. These three criteria are, we believe, basic to the adoption of this directive and, indeed, to further progress. I do not think any Members of your Lordships' House can believe that there is any lack of continuing European co-operation or commitment in requiring these three criteria, because we want to see this directive adopted.
But reference to the United Kingdom's interests takes me to the second part of the noble Lord's Question, which asks for the Government's views on the conclusions of the Select Committee's report. The Government have, in some way, dealt with these in their initial reaction to the report of the Law Commission. They have said that they want to give all those who are concerned in this directive, in the report of the Committee and, indeed, in the Law Commission's report time to comment on the Law Commission's report. Some comments have already been received on the report, but others will not be in this year and we believe that it is too early to give any kind of considered view.
But the Government have done more than merely be polite. The Department of Trade has prepared a note setting out its initial reaction to some of the points raised by the Law Commission. The Government take the line that the note has been sent to
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every one of the numerous representative bodies who had earlier been consulted about the draft directive, and those bodies include representatives of insurers and consumer interests.
The note has also been sent to everyone who gave evidence to the Law Commission, as well as being submitted to the Select Committee of your Lordships' House on the European Communities. I would emphasise that the note was merely a preliminary reaction and not a final position. But it would not be unreasonable to rehearse some parts of the department's note for, in its tentative way, it meets some of the main points in the Select Committee's report.
First, the Government believe that the directive would be useful, particularly if it accelerated the adoption of the insurance services directive. The Government believe that the adoption of the services directive is long overdue. I stress that and will continue to stress it. The Government are far from convinced that adoption of the insurance contract law directive is a necessary adjunct to adoption of the services directive, but are, as I have said, not opposed in principle to the adoption of the contract law directive which we are discussing this evening.
It may be that one factor which influenced the Select Committee was the attraction, on their merits, of some parts of the directive. Reform of United Kingdom law would, however, be possible without a directive. I would not want to go further on this than to refer to the department's view that reform of the United Kingdom law on the duty of disclosure by an insured to an insurer, and of the law of warranty in relation to insurance contracts, is necessary and desirable. Secondly, the Committee considers that the draft directive requires amendments or clarification on a number of important matters, such as territorial scope and warranties. I think that the Department of Trade's note shows considerable sympathy with most of these points which are made by the Committee and, above all, with the point about not preventing Parliament from legislating in future to improve the rights of policyholders.
The noble Lord, Lord Plowden, in the course of his excellent and concise introduction to the debate this evening, raised a point about the ability of the United Kingdom Parliament to legislate. I think it would be right for me to add that the Department of Trade's note states:
"The Department proposes in further Community discussions on the proposed directive to seek to get its scope clear and to take a critical line on the requirement for uniformity".
I hope that that will go some way to answer that point made by the noble Lord, Lord Plowden.
The important point of proportionality was raised by most of your Lordships who spoke this evening. The department is very mindful of the criticisms from many quarters of your Lordships' House which gave evidence and, above all, from the law Commission, and would reserve its position. It is interesting to note that the European Parliament has proposed limitations on the operation of proportionality that would seem to avoid most of the difficulties which were seen by the. Law Commission.
I wonder whether I may go through some of the points that have been raised this evening. I hope that I shall clear up most of them, but if I miss any

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perhaps I may write between now and when we next meet in your Lordships' House. I hope that I have covered the two queries of the noble Lord, Lord Plowden. I should like to thank the noble Lord, Lord Banks, for his strong support for what I would call the European ideals. I think that the noble Lord, Lord Lever, put it as European co-operation. But the noble Lord, Lord Banks, left no doubt in our minds that he and, I think, his party are very much in support of co-operation in fields of European commerce. But we were very grateful to hear that he gave a great deal of support to the reservations of the Law Commission.
I applaud and congratulate the noble Lord, Lord Lever, on his courage in differing from the noble and learned Lord, Lord Scarman. I certainly found the noble and learned Lord's exposition admirably clear. Perhaps the noble and learned Lord had a slight interest as the founder of the Law Commission, but I think your Lordships will agree that he made a particularly clear and lucid speech which I, and I suspect your Lordships, certainly appreciated. He made one point which bears repeating, which was that the best practice concept, which I think was first mentioned by the noble Lord, Lord Plowden, is used wherever reasonable by insurers, and that the harshness of the law is not too much in evidence so far as insurance contracts and services around Europe are concerned.
My noble friend Lord Bethell asked me about the European Treaty and referred to Article 59. This was referred to by the noble Lord, Lord Bruce of Donington, who referred also to Article 60. My noble friend Lord Bethell asked whether an aggrieved person could take his case to the European Court. I hope that the House will accept that the Commission have been reluctant to take member states to the European Court in advance of the adoption of any directive. The decision would not be certain and would make progress on any directive, especially progress on the services directive which we have been discussing this evening, difficult. The services directive is needed in order to obtain effective freedom. I hope my noble friend will accept hat were a consumer to take his case to the European Court it would not have the effect which is desired by my noble friend, by the whole House and by the Government.
The noble Lord, Lord Cobbold, raised a valuable point. I hope he will accept that the Department of Trade's note to which I referred earlier suggested that he starting point for considering any change in insurance contract law should be that it should apply to all contracts of insurance, including contracts of life insurance. The noble Lord, Lord Cobbold, raised a slightly technical point, but I hope that my answer will go some way towards meeting it.
Every Member of your Lordships' House who has spoken referred at some stage to the services directive. The noble Lord, Lord Bruce of Donington, made a very powerful speech and asked what further strong action we should be able to take to speed the implementation of the services directive. Perhaps both he and the House will note the comment of my right honourable friend the Prime Minister at the meeting
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of the European Council last week in Luxembourg. The Prime Minister said:
"I draw attention to the very slow progress being made on questions such as insurance and air fares where the Community has yet to show its readiness to have freer competition in the service sector".
I believe that the Prime Minister is committed to the desire which has been expressed in your Lordships' House that the second services directive should be pushed through speedily.
Your Lordships will know that the noble Lord, Lord Bruce of Donington, and I dealt with the matter during the last session of Parliament, and indeed earlier today. The Government believe that the service directive is a bell-ringer of European co-operation. I hope that the noble Lord, Lord Lever of Manchester, accepts that the Government's commitment to co-operation in this field is especially strong. However, we believe that our interests are being frustrated, whether or not wilfully, or involuntarily, or needlessly, by this directive. The noble Lord, Lord Bruce of Donington, pointed out the long-time gap—all but five years—since the proposals were first presented.
I hope that this explanation of the Government's view upon the directive which was discussed by the Committee under the chairmanship of the noble Lord, Lord Plowden, and upon the allied directive and other matters has been of some help to the House. I have been unable to give the Government's final view on the directive points raised by the committee, but I hope that what I have said will be sufficient to show that the reaction so far, and the way that that will develop, is aimed at meeting the interests of both United Kingdom insurers and the policyholders whom they serve.

FELIXSTOWE DOCK AND RAILWAY (No. 2) BILL
Brought from the Commons; read 1a, and referred to the Examiners.
  BRITANNIA ROYAL NAVAL COLLEGE: CATERING
  BRITANNIA ROYAL NAVAL COLLEGE: CATERING